CELEBRATING PARTNERSHIPS - listed companykingsmen.listedcompany.com/misc/ar2012.pdf · CELEBRATING PARTNERSHIPS ... us abreast with the latest trends while working with the world

A. Testoni / Abercrombie & Fitch / Adidas / AIA / Aigner / Aldo / Alfa Romeo / Anya Hindmarch / ANZ / Apple / Art Stage Singapore / Asahi / Ascott

International / Asia Pacific Breweries / Aspial / Au Chocolat / Audi / Aussino / Balenciaga / Bally / Banana Republic / Bang & Olufsen / Bank of America

/ Barclays / Bausch & Lomb / Bebe / Bell & Ross / Bershka / Billabong / Binny & Smith / Blackberry / Bloomberg / BMW / Boeing / Bonia / Bottega

Veneta / Boucheron / Braun Buffel / Bridgestone / British Dispensary / British India / Broadridge / Brooks Brothers / Bruno Magli / Bvlgari / Burberry

/ Calvin Klein / Camel Active / Camus / Canali / Canon / Caran d’Ache / Carl F. Bucherer / Cartier / Celine / Cemax Asia / Chanel / Changi Airport Group

/ Charles & Keith / Charles Jourdan / Chaumet / Chevignon / Chevrolet / Christian Dior / Christian Louboutin / Citibank / Clarins / Clubmarc / Coach /

CoCo ICHIBANYA / Coffee Bean & Tea Leaf / Cold Wear / Cortina Watch / Cotton On / Credit Suisse / CVSTOS / Daimler Chrysler / DBS / Debenhams

/ Desigual / Deutsche Telekom / DFS / Diane von Furstenberg / Dickson Group / DKNY / Doosan Heavy Industries / Dubai Aerospace Enterprise /

Dunhill / Economic Development Board / Elecom / Eli Lilly / Elle / Embassy of Ireland / Emporio Armani / Ericsson / Ermenegildo Zegna / Escada /

EQ:IQ / Esprit / Etro / Eu Yan Sang / Football Association of Singapore / Fendi / Ferrari World Abu Dhabi / FJ Benjamin / Ford / Forever 21 / Forever

Jewels / Francesco Biasia / Frey Wille / G2000 / G-Star Raw / Gant / GAP / General Dynamics / Georg Jensen / Giuseppe Zanotti / GlaxoSmithKline

/ Goodyear / Gucci / Guess / Gulfstream / H&M / Hard Rock Café / Harry Winston / Harvey Norman / Havaianas / Heineken / Hermès /

Hewlett–Packard / Hilton International / Hollister / Hong Kong Disneyland / HSBC / HTC / Hublot / Hugo Boss / Hush Puppies / Hyundai / Imagine

Exhibitions Inc. / ING / Invensys / iRoo / IWC / Jack Rouse Associates / JCDecaux / Jim Thompson / Joan & David / John Little / Johnnie Walker / JP

Morgan / JTC Corporation / Korea Aerospace Industries / Kallman Worldwide Inc. / Kate Spade / Kenneth Cole / Kohler / KU DÉ TA / Lacoste / Land

Rover / La Perla / La Senza / Lancôme / LeSportsac / Levi’s / LG / Lockheed Martin / Longchamp / Longines / L’Oreal / Lotte / Louis Quatorze / Louis

Vuitton / Mango / Marina Bay Sands / Marks & Spencer / Maybank / Mayridge / Mazda / MCI / Mercedes-Benz / Merrill Lynch / Michelin / Microsoft

/ Mimco / Miss Sixty / Mitsubishi Motors / Miu Miu / Montblanc / Morgan Stanley / Motorola / MTV Asia / Murex / National Heritage Board / National

Parks Board / Nespresso / Nike / Nine West / Nissan / Nokia / Nu Skin Enterprise / Nuance Watson / OCBC / Omega / OSIM / P&G / Pal Zileri / Pedder

Red / Peugeot / Piaget / Porsche Design / POSB / PricewaterhouseCoopers / Rado / Rabeanco / Raoul / Ralph Lauren / Ray Ban / RBS / Reed

Exhibitions / Renault / Resorts World Sentosa / Richard Mille / River Island / Robinsons / Sacoor Brothers / Salvatore Ferragamo / Samsonite /

Samsung / Sembonia / Sentosa Development Corporation / Sephora / SDD Exhibitions / Shinsegae / Shiseido / Shu Uemura / Siemens / Silvian Imberg

/ Singapore GP / Singapore Sports Council / Singapore Technologies / Singapore Tourism Board / SingTel / SK-II / Sony / Sotheby’s / ST Dupont / Stage

/ Standard Chartered Bank / StarHub / Starwood Asia Pacific Hotels / Stefano Ricci / Steve Madden / Swarovski / Suzuki / Swensen’s / TAG Heuer /

Tax Free World Association / The Body Shop / The Hour Glass / The Soup Spoon / Tiffany & Co. / Timberland / Titan Industries / TNT / Tommy Hilfiger

/ Topshop / Topman / Tory Burch / TOTO / Toyota / True Religion / Twinings / Unilever / Uniqlo / United Overseas Bank / Universal Studios Singapore

/ Uomo / Valentino / Valiram Group / Van Cleef & Arpels / Versace / Victoria’s Secret / Vizona GmbH / Volkswagen / William E. Connor / Wing Tai Asia

/ Witchery / World Sport Group / Yahoo! / Yamaha / Yves Saint Laurent / A. Testoni / Abercrombie & Fitch / Adidas / AIA / Aigner / Aldo / Alfa Romeo

/ Anya Hindmarch / ANZ / Apple / Art Stage Singapore / Asahi / Ascott International / Asia Pacific Breweries / Aspial / Au Chocolat / Audi / Aussino /

Balenciaga / Bally / Banana Republic / Bang & Olufsen / Bank of America / Barclays / Bausch & Lomb / Bebe / Bell & Ross / Bershka / Billabong /

Binny & Smith / Blackberry / Bloomberg / BMW / Boeing / Bonia / Bottega Veneta / Boucheron / Braun Buffel / Bridgestone / British Dispensary /

British India / Broadridge / Brooks Brothers / Bruno Magli / Bvlgari / Burberry / Calvin Klein / Camel Active / Camus / Canali / Canon / Caran d’Ache

/ Carl F. Bucherer / Cartier / Celine / Cemax Asia / Chanel / Changi Airport Group / Charles & Keith / Charles Jourdan / Chaumet / Chevignon / Chevrolet

/ Christian Dior / Christian Louboutin / Citibank / Clarins / Clubmarc / Coach / CoCo ICHIBANYA / Coffee Bean & Tea Leaf / Cold Wear / Cortina Watch

/ Cotton On / Credit Suisse / CVSTOS / Daimler Chrysler / DBS / Debenhams / Desigual / Deutsche Telekom / DFS / Diane von Furstenberg / Dickson

Group / DKNY / Doosan Heavy Industries / Dubai Aerospace Enterprise / Dunhill / Economic Development Board / Elecom / Eli Lilly / Elle / Embassy

of Ireland / Emporio Armani / Ericsson / Ermenegildo Zegna / Escada / EQ:IQ / Esprit / Etro / Eu Yan Sang / Football Association of Singapore / Fendi

/ Ferrari World Abu Dhabi / FJ Benjamin / Ford / Forever 21 / Forever Jewels / Francesco Biasia / Frey Wille / G2000 / G-Star Raw / Gant / GAP /

General Dynamics / Georg Jensen / Giuseppe Zanotti / GlaxoSmithKline / Goodyear / Gucci / Guess / Gulfstream / H&M / Hard Rock Café / Harry

Winston / Harvey Norman / Havaianas / Heineken / Hermès / Hewlett–Packard / Hilton International / Hollister / Hong Kong Disneyland / HSBC / HTC

/ Hublot / Hugo Boss / Hush Puppies / Hyundai / Imagine Exhibitions Inc. / ING / Invensys / iRoo / IWC / Jack Rouse Associates / JCDecaux / Jim

Thompson / Joan & David / John Little / Johnnie Walker / JP Morgan / JTC Corporation / Korea Aerospace Industries / Kallman Worldwide Inc. / Kate

Spade / Kenneth Cole / Kohler / KU DÉ TA / Lacoste / Land Rover / La Perla / La Senza / Lancôme / LeSportsac / Levi’s / LG / Lockheed Martin /

Longchamp / Longines / L’Oreal / Lotte / Louis Quatorze / Louis Vuitton / Mango / Marina Bay Sands / Marks & Spencer / Maybank / Mayridge / Mazda

/ MCI / Mercedes-Benz / Merrill Lynch / Michelin / Microsoft / Mimco / Miss Sixty / Mitsubishi Motors / Miu Miu / Montblanc / Morgan Stanley /

Motorola / MTV Asia / Murex / National Heritage Board / National Parks Board / Nespresso / Nike / Nine West / Nissan / Nokia / Nu Skin Enterprise

/ Nuance Watson / OCBC / Omega / OSIM / P&G / Pal Zileri / Pedder Red / Peugeot / Piaget / Porsche Design / POSB / PricewaterhouseCoopers / Rado

/ Rabeanco / Raoul / Ralph Lauren / Ray Ban / RBS / Reed Exhibitions / Renault / Resorts World Sentosa / Richard Mille / River Island / Robinsons /

Sacoor Brothers / Salvatore Ferragamo / Samsonite / Samsung / Sembonia / Sentosa Development Corporation / Sephora / SDD Exhibitions /

Shinsegae / Shiseido / Shu Uemura / Siemens / Silvian Imberg / Singapore GP / Singapore Sports Council / Singapore Technologies / Singapore

Tourism Board / SingTel / SK-II / Sony / Sotheby’s / ST Dupont / Stage / Standard Chartered Bank / StarHub / Starwood Asia Pacific Hotels / Stefano

Ricci / Steve Madden / Swarovski / Suzuki / Swensen’s / TAG Heuer / Tax Free World Association / The Body Shop / The Hour Glass / The Soup Spoon

/ Tiffany & Co. / Timberland / Titan Industries / TNT / Tommy Hilfiger / Topshop / Topman / Tory Burch / TOTO / Toyota / True Religion / Twinings /

Unilever / Uniqlo / United Overseas Bank / Universal Studios Singapore / Uomo / Valentino / Valiram Group / Van Cleef & Arpels / Versace / Victoria’s

Secret / Vizona GmbH / Volkswagen / William E. Connor / Wing Tai Asia / Witchery / World Sport Group / Yahoo! / Yamaha / Yves Saint Laurent

CELEBRATINGPARTNERSHIPSCELEBRATING

PARTNERSHIPS

ANNUAL REPORT 2012

We cherish the opportunity of working with our clients to create novel experiences as leaders of innovation, communication design

and production. The journey of crafting experiential solutions keeps us abreast with the latest trends while working with the world’s

leading brands. Our versatility and success stems from our long-term partnerships. We continually strive for excellence because our legacy rests in these partnerships, our future, begins with you.

Executive Chairman’s Message

Board of Directors

Senior Management

Financial Highlights

Exhibitions & Museums

Retail & Corporate Interiors

Alternative Marketing

Research & Design

Corporate Information

Corporate Governance Report

Financial Report

Statistics of Shareholdings

Notice of Annual General Meeting

Letter to Shareholders

Proxy Form

0204060812141618202130

116118123

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Design-led, quality and service-driven

To maintain our position as one of the leaders in Asia Pacific

To be an active global player and be recognized as one of the elite marketing communication houses globally

To provide exciting and fulfilling career opportunities for all members through continual expansion and continuous learning

VISION

MISSION

KINGSMEN CREATIVES LTD ANNUAL REPORT 2012

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EXECUTIVECHAIRMAN’S

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Dear Shareholders,

A time to take a step back to review our processes, fortify our foundations and push ahead again…

The year will long be remembered as a defining moment for the Group. On the business front, the Group recorded another year of sterling performance as demand for our specialised services continued to increase. However, it was also a time where we were forced to take a hard look at our own internal infrastructure and processes as a result of two incidents, one in Beijing and the other in Singapore, involving our staff. Appropriate actions have been taken and internal reviews are ongoing to prevent any recurrence.

In FY12, Group revenue increased 11.2% to S$290.2 million, while net profit increased 3.6% to S$16.9 million. More importantly, this good performance was delivered by higher revenue contribution from all our business divisions.

Our Exhibitions and Museums division continued to deliver, posting revenues of S$108.9 million. Key projects accomplished during the year include Art Stage Singapore, Asia Pacific Maritime, Food & Hotel Asia, F1 Singapore Grand Prix, London 2012 Olympic Games, Singapore Airshow, TFWA Asia Pacific, Expo 2012 Yeosu Korea and event launches for BMW. In addition, various museum and thematic works such as Gardens by the Bay, a private art museum at Sentosa, Sotheby’s Visitor Centre in Hong Kong, Guangzhou Hengda Exhibition Centre, Hong Kong Maritime Museum, extension works at Hong Kong Disneyland and a new attraction at Universal Studios Singapore, were also completed.

Our Interiors division saw a 10.0% increase in revenue to S$158.5 million. This was achieved through strong revenue contribution from key customers and brand names like Abercrombie & Fitch, Aldo, Dior, Fendi, Hollister, LVMH, Marks & Spencer, Nespresso, Ralph Lauren, Sephora, Swarovski, Tiffany & Co., Uniqlo and Victoria’s Secret for store fit-out and fixture roll-out across Asia and globally.

Our Research and Design division continued to power ahead, with revenue increasing 19.1% to S$10.2 million. Growth for the division was driven by greater demand for its design consultancy services and its creative design capabilities.

Our Alternative Marketing division continues to gain traction, recording a 41.5% growth in revenue to S$12.6 million. This was led by increasing demand for the team’s brand activation services, which present more effective means for clients to engage and interact with their customers.

While we have done well in 2012 and see tremendous opportunities for us to grow our business in the years ahead, challenges remain. These past few years have seen our businesses flourish, in part driven by demand for specialised services, but more importantly by our determination to succeed. Our administrative support infrastructure and human resource capabilities, however, has not kept pace with the growth of our business. Therefore, our immediate task is to enhance and improve our capabilities in these areas. These ongoing improvements will enable us to match our support functions and processes with the growth of our business.

On the facilities and infrastructure front, we have already begun acquiring better facilities, having relocated our China factory from Beijing to Kunshan, which is an hour’s drive from Shanghai. This new facility will enable us to better

meet the needs of international clients who are now using Shanghai as a beachhead into the vast Chinese market. The Kunshan factory will commence operations this year. In addition, we have also started to reexamine our project management and approval processes, with the objective of increasing efficiency and effectiveness.

With respect to our talent needs, we are actively beefing up the current pool of well-trained and experienced professionals in both the front-line and support services to better serve the demands of our clients. Training and talent development is ongoing and will take on heightened importance, as we better equip our people to take on projects across international boundaries.

On the business front, our exhibitions division is bullish about its prospects, as Asia continues to power ahead. The growing importance of Asia on the world stage has resulted in the shifting and emergence of key lifestyle events that were traditionally only held in the West, into this part of the world. This has presented new opportunities for us to tap into this growing business area. The thematic business likewise looks set for a strong showing these few years as we have already secured several thematic projects, and are pitching for several more in the region.

Our interiors division is expecting to maintain its momentum, as the buoyancy and growth of the Asian economies has led to the emergence of new mega malls and the refurbishment of existing malls across the region. This coupled with the continued entry of new international brands into the region and the expansion of well-established brands into new territories and markets bode well for the growth potential of the division’s business.

We are also thrilled about the potential of our Alternative Marketing business and believe it will grow strongly as brands continue to look for alternative and better ways to engage their customers.

We envisage that this year will be an exciting one for us as we continue to build our resources, tighten our processes and ready ourselves for our next big business push.

In appreciation of the support from our loyal shareholders, the Board is pleased to propose a final dividend of 2.5 cents per ordinary share. Combined with the interim dividend of 1.5 cents declared in August 2012, we would have paid out a combined dividend of 4.0 cents per share in FY12.

In closing, I would like to express my sincere appreciation to all members of the Kingsmen group who have contributed to our growth and helped us to be where we are today. I would also like to record my gratitude to the Board of Directors for their guidance and support during the year. Last but not least, I would like to thank our business associates, clients and shareholders for their continued support and faith in us.

Through strong partnerships, belief in one another and a commitment to succeed, I am confident that we can build an even brighter future for Kingsmen.

BENEDICT SOHExecutive Chairman


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BOARD Of DIRECTORS

Benedict Soh spearheads the strategic planning and business development of the Group. One of the founders of the Group, he has contributed significantly to its growth and has over 40 years of experience in the design and production of interiors and exhibits. Mr. Soh serves as Co-Chairman of the Special Technical Committee on Tourism and Exhibition Services and is also Chairman of Tourism & Hospitality Programmes and a member of the Academic Advisory Board at MDIS. He continues to serve as a board member of the Irish Chamber of Commerce Singapore and is a member of the School Advisory Council of Northbrooks Secondary School. Mr. Soh is also actively involved as a member of the Investment Panel of Spring Seeds Capital and the International Action Crucible of IE Singapore. He was the former President of the Rotary Club of Pandan Valley and was awarded a Master of Business Administration from the University of Hull in the UK.

BENEDICT SOHExecutive Chairman

Lee Hock Lye was appointed Independent Director of the Group in August 2003. He has spent more than 30 years with the HSBC Group, where he held several senior management positions prior to his retirement. Mr. Lee is also Independent Director at R H Petrogas Limited and Business Advisor at Lombard Odier Darier Hentsch. He graduated with a Bachelor of Social Sciences (Honours) degree in Economics from the University of Singapore and is also an Associate of the Chartered Institute of Bankers, UK.

LEE HOCk LyEIndependent Director

Simon Ong spearheads the Group’s strategic planning, creative standards and its day-to-day management. He is one of our founders and has contributed significantly to the growth of the Group. He is currently Chairman of the design cluster in the Manpower, Skills & Training Council of WDA, Design Committee of Singapore Furniture Industry Council and Presidential Advisory Commission of Design Business Chamber Singapore. Mr. Ong is also an IDP member of the Singapore Design Council and a board member of the Association of Retail Environments (USA). A keen advocate of education, he was the former Chairman of the School Advisory Board for Cedar Girls Secondary School, and once served as a member of the Advisory Board for Temasek Polytechnic’s School of Design. Mr. Ong also served as President of the Interior Designers Association (Singapore) and Vice-Chairman of the Potong Pasir CC Management Committee. He was awarded a Master of Business Administration from the University of South Australia and a Masters in Design from the University of New South Wales.

SImON ONgGroup Managing Director

Prabhakaran N. Nair was appointed Independent Director of the Group in August 2003. He began practicing law in 1974 and is an Advocate and Solicitor of Singapore. Mr. Nair is currently a partner of law firm, Messrs Derrick Wong & Lim BC LLP. He obtained a degree in law from the University of Singapore and is a litigation lawyer specialising in Commercial Litigation, Arbitration and Estates and Trusts matters.

PrABHAkArAN N. NAIrIndependent Director

Anthony Chong directs the strategic management and day-to-day operations of the Group’s Exhibitions, Museums and Theme Parks division. He has more than 30 years of experience in marketing and project management of different disciplines that encompass tradeshows, retail interiors and large-scale events. Mr. Chong joined the Group in 1981, was appointed Project Director in 1989, Executive Director in 1999 and became Managing Director in 2011. He was awarded a Master of Business Administration from the Victoria University of Technology in Australia.

ANTHONy CHONgManaging Director, Exhibitions & Museums

Mr. Wong Ah Long was appointed Independent Director of the Group in April 2008. He is currently the Chairman of Utraco Pte Ltd, Executive Director of Utraco Greentech Pte Ltd and Honorary Chairman of Lucrum Pte Ltd. Mr. Wong also serves as Deputy Chairman of the Institute of South East Asian Studies (ISEAS) Board of Trustees and was a member of NUS Board of Trustees (2000-2008). He served as Chief Executive Officer of Suntec City Development Pte Ltd (1996-2005) and Chairman of Pacific Star China Pte Ltd (2005-2007). Mr. Wong graduated with a Master of Business Administration from the University of Singapore.

WONg AH LONgIndependent Director

Left to right: Prabhakaran N. Nair, Lee Hock Lye, Benedict Soh, Anthony Chong, Simon Ong, Wong Ah Long

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Gerald Tay is our Creative Director. Apart from looking after the daily operations of Kingsmen Design Pte Ltd, he also provides creative direction and ensures that design specifications are met up till the realization of the project. Gerald is a member of the Interior Design Confederation (Singapore). He received the Industrial Technician Certificate in Interior Design by the Vocation and Industrial Training Board in Singapore.

gErALD TAyCreative Director

Roy Ong is our Creative Director. He provides creative direction to Kingsmen Design Pte Ltd and manages our team of over 40 designers, ensuring that designs meet the aesthetic, functional and budgetary requirements of our clients. Roy is a member of the Interior Design Confederation (Singapore). He received a Master of Design from the University of New South Wales.

rOy ONgCreative Director

Krez Peok has over 25 years of practical experience in museums, visitor centres, exhibitions, events & interiors and is responsible for the overall management of all six Greater China offices. Krez joined the group in 1997 as Executive Director (Greater China) and became Managing Director of our Greater China operations in 2011.

krEz PEOkManaging Director

SENIOR MANAGEMENT

Alex Wee is the Managing Director of Kingsmen Projects Pte Ltd. He is responsible for the business development, project management and operations of the interiors division. Alex graduated with a Bachelor’s (Honours) degree in Construction Management from University of Newcastle, Australia.

ALEX WEEManaging Director

Francis Yee is the Executive Director of Kingsmen Projects Pte Ltd. He is responsible for the day-to-day operations, sales development and project management of the company. Francis studied Furniture Design and Production at the Baharuddin Vocation Institute and was awarded a certificate by the Industrial Training Board.

FrANCIS yEEExecutive Director

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Judith Low 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 an Auditor with Ernst and Young. Judith obtained her Bachelor’s of Accountancy (Honours) degree from Nanyang Technological University and is a Certified Public Accountant with the Institute of Certified Public Accountants of Singapore.

JuDITH LOWFinancial Controller

Andrew Cheng is our Group General Manager. He is responsible for the Group’s corporate affairs and business development. Andrew has a Bachelor of Economics degree from the University of Tasmania, Australia and is a committee member of the Securities Investors Association Singapore (SIAS).

ANDrEW CHENgGroup General Manager

Francis Chang is the Managing Director of PT Kingsmen Indonesia. He oversees the daily operations of our Indonesia office from design and project management to fabrication. Francis has more than 20 years of experience in interiors, exhibitions and events and six years in architectural construction and management.

FrANCIS CHANgManaging Director

Cheong Chai Keng is the Managing Director of our Malaysia operations. He is responsible for the overall management of the company including sales and marketing, operations and finance. He obtained a diploma in Mechanical Engineering from the Federal Institute Technology.

CHEONg CHAI kENgManaging Director

Stephen Lim is the General Director of Kingsmen Indochina Pte Ltd. He is responsible for the day-to-day operations, sales, marketing and management of our Vietnam offices. Stephen has more than 29 years of experience in operations and project management of exhibitions, events and retail interiors.

STEPHEN LImGeneral Director


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Fy2008 Fy2009 Fy2010 Fy2011 Fy2012

results For the year S$’000 S$’000 S$’000 S$’000 S$’000

Revenue 189,357 241,431 233,631 260,988 290,190 Gross profit 57,336 58,937 62,421 66,665 72,388 Gross profit margin 30.3% 24.4% 26.7% 25.5% 24.9%

Net profit before taxation 18,974 18,927 18,256 19,807 21,554 Net profit for the year attributable to owners of parent

14,176 14,900 13,610 16,327 16,914

At year-endTotal assets 109,261 138,156 144,119 165,646 179,639 Total liabilities 63,841 83,285 86,175 97,634 102,811Share capital# 21,416 21,416 21,697 22,031 22,288 Shareholders’ funds 42,706 51,876 55,600 65,418 73,848 Minority interests 2,714 2,995 2,344 2,594 2,980 Short and long-term borrowings 1,438 1,291 5,290 5,205 4,645 Total funds invested 46,858 56,162 63,234 73,217 81,473 Debt-equity ratio (%)

Excluding minority interests 3.4% 2.5% 9.5% 8.0% 6.3%Including minority interests 3.2% 2.4% 9.1% 7.7% 6.0%

Per Share (cents)Earnings - basic 7.46 7.87 7.17 8.56 8.84 Earnings - diluted 7.46 7.87 7.17 8.56 8.84 Dividends 3.00 3.50 4.00 4.00 4.00 Net assets 22.55 27.39 29.25 34.25 38.53

return on Average Shareholders’ Equity (%)After taxation 36.1% 31.5% 25.3% 27.0% 24.3%

* FY2010’s comparative figures as restated for a prior year adjustment # Share capital excluding treasury shares.

fINANCIAL HIGHLIGHTS

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year ended 31 Dec 11 year ended 31 Dec 12

revenue S$000 % S$000 % Exhibitions & Museums 99,402 38.1% 108,896 37.6%Interiors 144,098 55.2% 158,472 54.6%Research & Design 8,572 3.3% 10,208 3.5%Alternative Marketing 8,916 3.4% 12,614 4.3%Total Turnover 260,988 100.0% 290,190 100.0%

year Ended 31 Dec 11 year Ended 31 Dec 12

revenue S$000 % S$000 % Singapore 114,274 43.8% 121,746 41.9%Greater China 54,245 20.8% 63,125 21.8%Malaysia 22,584 8.6% 28,444 9.8%Vietnam 5,405 2.1% 17,454 6.0%Europe 22,119 8.5% 17,103 5.9%Rest of Asia 17,502 6.7% 14,994 5.2%US & Canada 11,856 4.5% 11,654 4.0%Indonesia 8,795 3.4% 10,660 3.7%Middle East 2,326 0.9% 3,333 1.1%Others 1,882 0.7% 1,677 0.6%Total Turnover 260,988 100.0% 290,190 100.0%

.6%37EXHIBITIONS & MUSEUMS

.6%54INTERIORS

.5%3RESEARCH & DESIGN .3%4

ALTERNATIVE MARKETING

SINGAPORE 41.9%

GREATER CHINA 21.8%

MALAYSIA 9.8%

EUROPE 5.9%

REST OF ASIA 5.2%

US & CANADA 4.0%

INDONESIA 3.7%

VIETNAM 6.0%

MIDDLE EAST 1.1%

OTHERS 0.6%

TURNOVER By GEOGRAPHy

TURNOVER By ACTIVITIES


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group

year Ended 31 Dec 11 year Ended 31 Dec 12 +/–

S$’000 S$’000 %

revenueExhibitions & Museums 99,402 108,896 9.6%

Interiors 144,098 158,472 10.0%

Research & Design 8,572 10,208 19.1%

Alternative Marketing 8,916 12,614 41.5%

Total revenue 260,988 290,190 11.2%

Cost of sales (194,323) (217,802) 12.1%

gross profit 66,665 72,388 8.6%

Other items of incomeInterest income 227 240 5.7%

Other income 3,935 4,405 11.9%

Other items of expenseDepreciation of property, plant and equipment (1,525) (1,614) 5.8%

Staff salaries and related expenses (37,851) (41,168) 8.8%

Other expenses (12,040) (13,727) 14.0%

Interest expense (173) (252) 45.7%

Share of results of associates 569 1,282 125.3%

Profit before tax 19,807 21,554 8.8%

Income tax expense (3,050) (4,131) 35.4%

Profit net of tax 16,757 17,423 4.0%

Profit attributable toOwners of the parent 16,327 16,914 3.6%

Non-controlling interests 430 509 18.4%

16,757 17,423 4.0%

CONSOLIDATED INCOME STATEMENT


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The Group achieved a revenue of S$290.2 million for FY2012, which was S$29.2 million or 11.2% higher compared to S$261.0 million for last year. The increased revenue was mainly due to higher revenue contributions from the Interiors division, the Research & Design division as well as the Alternative Marketing division.

The Exhibitions and Museums division recorded full year revenue of S$108.9 million as compared with S$99.4 million in FY2011.

During the year, the division successfully carried out projects for Art Stage Singapore, Asia Pacific Maritime, Food & Hotel Asia, F1 Singapore Grand Prix, London 2012 Olympic Games, Singapore Airshow, TFWA Asia Pacific, Expo 2012 Yeosu Korea, and carried out event launches for BMW among various other exhibitions and events.

2012 also saw the completion of various museum and thematic works such as Gardens by the Bay, a private art museum at Sentosa, Sotheby’s Visitor Centre in Hong Kong, Guangzhou Hengda Exhibitions Centre, Hong Kong Maritime Museum, extension works at Hong Kong Disneyland and a new attraction at Universal Studios Singapore.

The Interiors division has performed well with higher revenue of S$158.5 million which was S$14.4 million or 10.0% above that of the last year.

The division continues to generate strong revenue from key customers and brand names such as Abercrombie & Fitch, Aldo, Dior, Fendi, Hollister, LVMH, Marks & Spencer, Nespresso, Ralph Lauren, Sephora, Swarovski, Tiffany & Co., Uniqlo and Victoria’s Secret for shop fit-out and fixture roll-out across Asia and globally.

Revenue from the Research and Design division increased by S$1.6 million or 19.1% to S$10.2 million in FY2012, as the Group’s in-house design capabilities strengthened and its design consultancy services grew. The Alternative Marketing division’s revenue of S$12.6 million represents growth of S$3.7 million or 41.5% compared to S$8.9 million for the last year.

REVENUE

The Group’s operating expenses in FY2012 increased by 10.2% to S$56.8 million compared to S$51.5 million in FY2011. This was mainly due to increase in staff salaries and related expenses.

OTHER ITEMS Of EXPENSES

Gross profit increased by S$5.7 million or 8.6% to S$72.4 million in FY2012 as compared to S$66.7 million in FY2011. Overall gross profit margin declined slightly from 25.5% to 24.9%.

GROSS PROfIT

Share of results of associates increased significantly from S$569,000 in FY2011 to S$1.3 million in FY2012. Higher share of profits of associates is mainly contributed by Kingsmen Korea Limited.

SHARE Of RESULTSOf ASSOCIATES

Interest income relates mainly to interest income derived from fixed deposits and bank balances with the banks.

Other income comprises of corporate fees income, rental income, labour service income and other miscellaneous income.

OTHER ITEMS Of INCOME

Profit attributable to Owners of the Company in FY2012 increased by 3.6% to S$16.9 million as compared to S$16.3 million in FY2011.

PROfIT ATTRIBUTABLE TOOwNERS Of THE COMPANy


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EXHIBITIONS& MUSEUMS

Sochi.Park at London 2012 Olympic games, United Kingdom

gardens by the Bay, Singapore

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Changi Airport group at 18th World route Development Forum, U.A.E

Doosan Heavy Industries at Expo 2012 yeosu, South Korea

The Exhibitions & museums division performed well, recording revenues of S$108.9 million in Fy12, supporting significant projects like Asia Pacific maritime; Art Stage Singapore; Expo 2012 yeosu korea; F1 Singapore grand Prix; London 2012 Olympic games; Singapore Airshow; TFWA Asia Pacific and BmW event launches. Various museum and thematic works like gardens by the Bay, Sotheby’s Visitor Centre in Hong kong, guangzhou Hengda Exhibitions Centre, Hong kong maritime museum, extension works at Hong kong Disneyland and an all-new attraction at universal Studios Singapore were also completed. The division envisages 2013 to be another good year, given the emergence of major lifestyle events in Asia, which has created new opportunities for the group. The thematic business is also set to perform well these few years, as there are upcoming projects in the pipeline and the group has already secured several contracts.


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RETAIL & CORPORATEINTERIORS

TAg Heuer, Singapore

Calvin klein Collection, China

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DkNy, Vietnam

Shinsegae Academy, South Korea

The Interiors division continued its growth, posting a 10.0% increase in revenue to S$158.5 million in Fy12. This was attained through strong revenue contribution from key clients and brand names such as Abercrombie & Fitch, Aldo, Dior, Fendi, Hollister, LVmH, marks & Spencer, Nespresso, ralph Lauren, Sephora, Swarovski, Tiffany & Co., uniqlo and Victoria’s Secret for shop fit-out and fixture roll-out across Asia and globally. The division expects to maintain its momentum, given the buoyancy of the Asian economies, the emergence of new mega malls, and the refurbishment of existing ones across the region.


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RESEARCH & DESIGN

Au Chocolat, Singapore

Future Ark Visitor Centre, China

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Club Culture, Indonesia

Indorama Pavilion at Board of Investment Fair 2012, Thailand

The research & Design division’s revenue increased 19.1% to S$10.2 million in Fy12 compared to S$8.6 million last year. This growth was driven by greater demand for its design consultancy services and creative design capabilities. The division has therefore expanded its pool of experienced design professionals and is actively involved in the design management of several retail projects in the region.


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ALTERNATIVEMARKETING

BmW 6 Series gran Coupé Launch, Singapore

The House of Twinings Tea Parlour, Singapore

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The Social Pavilion at The Shoppes at marina Bay Sands, Singapore

New Tiger Brewery Tour, Singapore

The Alternative marketing division saw revenue increase 41.5% from S$8.9 million to S$12.6 million in Fy12, led by growing demand for the team’s brand activation services. In 2012, the division was appointed the activation agency on record for BmW Asia, managing a host of events from the BmW m Power Drive Experience to BmW’s run clinics as part of the Standard Chartered marathon. The division also saw new revenue contributions from clients such as Auric Pacific group, Central Narcotics Bureau and HTC while maintaining active clients like Asia Pacific Breweries, OCBC Bank, StarHub and National Heritage Board.


19

NOMINATING COMMITTEEPrABHAkArAN NArAyANAN NAIr Chairman

LEE HOCk LyE

WONg AH LONg

BENEDICT SOH SIAk POH

SImON ONg CHIN SIm

CORPORATE INfORMATION

DIRECTORSBENEDICT SOH SIAk POH Executive Chairman

SImON ONg CHIN SIm Group Managing Director

ANTHONy CHONg SIEW LINg Managing Director, Exhibitions & Museums

PrABHAkArAN NArAyANAN NAIr Independent Director

LEE HOCk LyE Independent Director

WONg AH LONg Independent Director AUDIT COMMITTEE

LEE HOCk LyE Chairman

PrABHAkArAN NArAyANAN NAIr

WONg AH LONg

REMUNERATION COMMITTEEWONg AH LONg Chairman

LEE HOCk LyE

PrABHAkArAN NArAyANAN NAIr

SHARE REGISTRARBOArDrOOm COrPOrATE& ADVISOry SErVICES PTE. LTD.50 Raffles Place, #32-01Singapore Land TowerSingapore 048623

AUDITORSErNST & yOuNg LLP Public Accountants and Certified Public Accountants 1 Raffles Quay #18-01 North Tower Singapore 048583

Partner-in-charge: Philip Ng Weng Kwai(Appointed since the financial year ended31 December 2012)

BANKERSuNITED OVErSEAS BANk LImITED

THE HONgkONg AND SHANgHAI BANkINg COrPOrATE LTD

DEVELOPmENT BANk OF SINgAPOrE LTD

REGISTERED OffICEkINgSmEN CrEATIVE CENTrE3 Changi South LaneSingapore 486118Tel (65) 688 000 88Fax (65) 688 000 38

COMPANy SECRETARIESJuDITH LOW CHu LI

LOO SHAN SHAN VICTOrIA @ LOO mINg WEI

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Corporate GovernanCe report

Kingsmen Creatives Ltd. (the Company) and its subsidiaries (the Group) is committed to achieving a high standard of corporate governance, and to complying with the Code of Corporate Governance 2012 (the Code). The Company believes that good corporate governance provides the framework for an ethical and accountable corporate environment, which will safeguard the interests of shareholders. The Company is pleased to confirm that throughout the financial year ended 31 December 2012 (FY2012), the Group has adhered to the principles and guidelines of the Code.

1. BoarD MatterSThe Board’s Conduct of Affairs

Principle 1: Every company should be headed by an effective Board to lead and control the company. The Board is collectively responsible for the long-term success of the company. The Board works with Management to achieve this objective and Management remains accountable to the Board.

The principal role of the Board is to:

•set and direct the long-term vision and strategic direction of the Group;•review the performance of Management;•establish a proper risk management system to ensure that key potential risks faced by the Group are properly identified and managed;•conduct periodic reviews of the Group’s internal controls, financial performance, compliance practices and resource allocation;•approve annual budgets, proposals for acquisitions, investments and disposals;•review corporate governance practices; and•set the Company’s values and standards, and ensure that obligations to shareholders and other stakeholders are understood and met.

Delegation by the Board

Board committees, namely the Nominating Committee (NC), Remuneration Committee (RC) and Audit Committee (AC) have been constituted to assist the Board in the discharge of specific responsibilities. The duties, authority and accountabilities of each committee are set out in their respective terms of reference. Further information on the roles and responsibilities of the NC, RC and AC are set out in the sections relating to principles 4, 7 to 9 and 12 of this Report respectively.

Board Approval

Matters which specifically require the Board’s decision or approval are:

•corporate strategy and business plans;•major funding proposals and investments including the Group’s commitment in terms of capital and other resources;•the appointment and remuneration packages of the Directors and Management;•the Group’s quarterly and full-year financial results and annual report for each financial year; •material acquisitions and disposals of assets;•share issuances, interim dividends and other returns to shareholders; and•matters involving a conflict of interest for a substantial shareholder or a director.

While matters relating to the Group’s strategies and policies require the Board’s direction and approval, Management is responsible for the day-to-day operations and administration of the Group.

Board Meetings

The schedule of all Board and Board committees meetings and the Annual General Meeting (AGM) for each financial year is planned well in advance, in consultation with the Directors. The Board meets at least four times a year at regular intervals and on an ad hoc basis, as and when circumstances require. Tele-conferencing at Board Meetings is allowed under the Company’s Articles of Association.


21

The number of Board and Board committee meetings held in FY2012 and the attendance of our Directors at these meetings are as follows:

Board of Directors Audit Committee NominatingCommittee

RemunerationCommittee

Name of Director No. of Meetings Held

No. of Meetings Attended

No. of Meetings Held






Benedict Soh Siak Poh 5 5 5 5# 2 2 1 1#

Simon Ong Chin Sim 5 5 5 5# 2 2 1 1#

Anthony Chong Siew Ling 5 4 5 4# 2 2# 1 1#

Lee Hock Lye 5 5 5 5 2 2 1 1

Prabhakaran Narayanan Nair 5 5 5 5 2 2 1 1

Wong Ah Long 5 5 5 5 2 2 1 1

# By invitation

Board Orientation and Training

A formal letter of appointment is provided to every new director, setting out his duties and obligations. A new director will also receive an orientation package which includes materials to familiarise new Directors with the Group’s business, structure and governance practices relating to, inter alia, disclosure of interests in the Company’s securities, prohibition on dealings in the Company’s securities and restrictions on the disclosure of price-sensitive information.

The Directors are also provided with briefings and updates in areas such as corporate governance, changes to laws and/or regulations pertaining to the Group’s business, and changes in financial reporting standards, so as to enable them to properly discharge their duties as Board or Board committee members.

Further, in order to provide our independent Directors with a better understanding of the Group’s business, the Company conducts visits to the Group’s operational facilities. Directors can also request further briefings or information on any aspect of the Group’s operations or business from Management.

Board Composition and Guidance

Principle 2: There should be a strong and independent element on the Board, which is able to exercise objective judgment on corporate affairs independently, in particular, from Management and 10% shareholders1. No individual or small group of individuals should be allowed to dominate the Board’s decision making.

Board Composition

Currently, the Board comprises six Directors, three of whom are independent. The Board of Directors is constituted as follows:

Executive Directors Mr Benedict Soh Siak Poh, Executive Chairman Mr Simon Ong Chin Sim, Group Managing Director and Chief Executive Officer Mr Anthony Chong Siew Ling, Managing Director, Exhibitions & Museums

Independent Directors Mr Lee Hock Lye Mr Prabhakaran Narayanan Nair Mr Wong Ah Long

Each year, the Board reviews its size and composition, taking into account, inter alia, the scope and nature of the Group’s business and operations. The Board believes that its current composition and size provides an appropriate balance of skills, experience and knowledge of the Group, which facilitates effective decision-making. The Directors provide core competencies such as legal and finance expertise, business or management experience, industry knowledge and strategic planning experience.

Board Independence

The independence of each Director is reviewed by the NC on an annual basis. In determining whether a Director is independent, the NC has adopted the definition in the Code of what constitutes an independent director. Following its review, the Board and NC are of the view that Mr Lee Hock Lye, Mr Prabhakaran Narayanan Nair and Mr Wong Ah Long are independent.

1 The term “10% shareholder” shall refer to a person who has an interest or interests in one or more voting shares in the company and the total votes attached to that share, or those shares, is not less than 10% of the total votes attached to all the voting shares in the company. “Voting shares” exclude treasury shares.

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The independent Directors contribute finance knowledge, legal expertise and business management experience to the Group, and provide the Executive Directors and Management with diverse and objective perspectives of issues that are brought before the Board. The independent Directors also aid in developing the Group’s strategic process, monitoring the performance of Management and operating as an appropriate check and balance.

Chairman and Chief Executive Officer

Principle 3: There should be a clear division of responsibilities between the leadership of the Board and the executives responsible for managing the company’s business. No one individual should represent a considerable concentration of power.

Mr Benedict Soh Siak Poh is the Executive Chairman, and Mr Simon Ong Chin Sim is the Chief Executive Officer (CEO) of the Company. This ensures that there is an appropriate balance of power, increased accountability and enhances the Board’s capacity for independent decision-making.

At the operational level, the CEO oversees the Group’s strategic development, and sets the overall strategy and policies on the Group’s creative direction and standards. The Executive Chairman is responsible for the overall management and development of the Group’s overseas operations and exploring strategic business opportunities.

The Executive Chairman promotes high standards of corporate governance and leads the Board to ensure its effectiveness on all aspects of its role. As part of his administrative duties, the Executive Chairman sets the Board meeting agenda in consultation with the Financial Controller of the Company (FC) and ensures that the Directors receive complete, adequate and timely information. He also encourages constructive relations between the Board and Management and facilitates effective contribution of the independent Directors. In addition, the Executive Chairman is responsible for ensuring effective communication with shareholders.

Board Membership

Principle 4: There should be a formal and transparent process for the appointment and re-appointment of directors to the Board.

Nominating Committee

The NC is chaired by Mr Prabhakaran Narayanan Nair and comprises Mr Lee Hock Lye, Mr Wong Ah Long, Mr Simon Ong Chin Sim and Mr Benedict Soh Siak Poh. The majority of the NC members, including the Chairman, are independent Directors.

The principal functions of the NC in accordance with its terms of reference are as follows:

•to make recommendations on matters relating to the appointment and re-appointment of Directors, Board succession plans for Directors, evaluation of the Board’s performance and training programmes for the Board;

•to determine on an annual basis whether or not a Director is independent; •to decide whether a Director is able to and has been adequately carrying out his duties as a Director of the Company;•to ensure that all Directors submit themselves for re-nomination and re-election at regular intervals and at least once every three years; and•to assess the effectiveness of the Board as a whole, its Board committees and the contribution by each Director to the effectiveness

of the Board.

The date of initial appointment and last re-appointment of each Director is set out below. For key information on the Directors, please refer to the section entitled “Board of Directors’ of this Annual Report. In addition, information on each Director’s shareholding in the Company, if any, is set out in the section entitled “Report of the Directors” of this Annual Report.

Name Position Date of Initial Appointment

Date of Last Re-appointment

Executive Directors

Benedict Soh Siak Poh Executive Chairman 16 December 2002 27 April 2011

Simon Ong Chin Sim Group Managing Director 16 December 2002 26 April 2010

Anthony Chong Siew Ling Managing Director, Exhibitions & Museums 12 August 2003 29 April 2012

Independent Directors

Prabhakaran Narayanan Nair Independent Director 12 August 2003 27 April 2011

Lee Hock Lye Independent Director 12 August 2003 26 April 2010

Wong Ah Long Independent Director 28 April 2008 29 April 2012


23Corporate GovernanCe report

Directors’ Commitments

The NC considers whether a Director is able to and has been adequately carrying out his duties as a Director of the Company, taking into consideration, inter alia, the Director’s number of listed company board representations and other principal commitments2.

Process for Nomination and Selection of New Directors

The Company adopts a comprehensive and detailed process in the selection of new Directors. Candidates are first sourced through an extensive network of contacts and identified based on, inter alia, the needs of the Group and the relevant expertise required. In selecting suitable candidates, the Board, in consultation with the NC, would also consider the Group’s strategic goals, business direction and medium-term needs. The NC then conducts interviews with the candidates and nominates the most suitable candidate for appointment to the Board.

Adopting this comprehensive selection process, the Board recommends that the shareholders approve the appointment of the proposed new director, Mr. Sebastian Tan Cher Liang at the Company’s AGM to be held on 30 April 2013.

Mr. Sebastian Tan Cher Liang was the Co-Founder and Managing Director of Boardroom Limited, where he was responsible for the overall management, operations and development of the Company and its subsidiaries in Singapore, Malaysia, Hong Kong, China and Australia. He relinquished his executive positions in Boardroom Ltd in 2013, but remains an Advisor to the Group and a Non-Independent Non-Executive Director of the Company. Prior to joining Boardroom Ltd, Mr Tan was with Ernst & Young from 1973 to 1993. Between 1993 to 2000, he was Managing Director, Lim Associates Pte Ltd and Managing Director, Ee Peng Liang Consultants Pte Ltd, both companies were owned by Ernst & Young, Singapore. Mr Tan is currently an Independent Director of Freight Links Express Holdings Limited. He is also the Chief Executive Officer of D.S Lee Foundation, Treasurer and Director of the Children’s Charity Association, and a Trustee of Kwan Im Thong Hood Cho Temple. Mr Tan is a member of the Institute of Certified Public Accountants of Singapore and a Fellow of The Association of Certified & Chartered Accountants, U.K. He was conferred the Public Service Medal (PBM) in 1996 for his contribution to charitable causes in Singapore.

Please refer to the Notice of AGM for the resolution put forth for the proposed appointment of Mr. Sebastian Tan Cher Liang.

Board Performance

Principle 5: There should be a formal annual assessment of the effectiveness of the Board as a whole and its board committees and the contribution by each director to the effectiveness of the Board.

Board Evaluation Process

The NC will assess and discuss the performance of the Board as a whole and its Board committees on an annual basis. This process includes a questionnaire prepared by the NC Chairman, the results of which are presented to the NC for review. Following its review, the NC identifies key areas for improvement and requisite follow-up actions, and provides feedback to the Board.

Each Director will evaluate the performance of the Board taking into account, inter alia, quantitative financial indicators such as the Company’s share price performance over a five-year period vis-à-vis the Singapore Straits Times Index and a benchmark of its industry peers, and achievement of financial targets. The Board is of the view that this performance criteria allows for appropriate comparison and addresses how the Directors have enhanced long-term shareholders’ value.

Individual Director Evaluation

There is an individual assessment of each Director’s contribution by the NC. In evaluating the contribution by each Director to the effectiveness of the Board, numerous factors are taken into consideration, including attendance and participation in meetings and commitment of time to director’s duties. The NC also considers other contributions by a Director such as providing objective perspectives of issues, facilitating business opportunities and strategic relationships, and accessibility to Management outside of formal Board and/or Board committee meetings. The performance of each Director is taken into account in his re-appointment or re-election.

Access to Information

Principle 6: In order to fulfil their responsibilities, directors should be provided with complete, adequate and timely information prior to board meetings and on an on-going basis so as to enable them to make informed decisions to discharge their duties and responsibilities.

The Company makes available to all Directors its quarterly management accounts and other financial statements, budgets and forecasts, together with all other relevant information. Detailed Board papers are provided to the Directors before the scheduled meetings so as to enable them to make informed decisions. In respect of budgets, any material variance between the projections and the actual results is reviewed by the Board and disclosed and explained by Management, where required by the Board.

The Directors have also been provided with the contact details of the Company’s senior management and Company Secretaries to facilitate separate and independent access. At least one Company Secretary is in attendance at all Board meetings. Together with Management, the Company Secretaries are responsible for ensuring that appropriate Board procedures are followed and that the requirements of the Companies Act, Chapter 50, of Singapore and the provisions in the Listing Manual of the Singapore Exchange Securities Trading Limited (Listing Manual) are complied with. The appointment and removal of each Company Secretary is subject to the Board’s approval.

The Directors may, in furtherance of their duties, take independent professional advice, if necessary, at the Company’s expense.

2 The term “principal commitments” includes all commitments which involve significant time commitment such as full-time occupation, consultancy work, committee work, non-listed company board representations and directorships and involvement in non-profit organisations.

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2. reMUneratIon MatterSPrinciple 7: There should be a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual directors. No director should be involved in deciding his own remuneration.

Principle 8: The level and structure of remuneration should be aligned with the long-term interest and risk policies of the company, and should be appropriate to attract, retain and motivate (a) the directors to provide good stewardship of the company, and (b) key management personnel to successfully manage the company. However, companies should avoid paying more than is necessary for this purpose.

Principle 9: Every company should provide clear disclosure of its remuneration policies, level and mix of remuneration, and the procedure for setting remuneration. It should provide disclosure in relation to its remuneration policies to enable investors to understand the link between remuneration paid to directors and key management personnel, and performance.

Remuneration Committee

The RC is chaired by Mr Wong Ah Long and comprises Mr Lee Hock Lye and Mr Prabhakaran Narayanan Nair. All the RC members, including the Chairman, are independent Directors. The principal function of the RC, in accordance with its terms of reference, is to set the remuneration guidelines and policies of the Group. The RC also administers the Kingsmen Share Option Scheme and the Kingsmen Performance Share Scheme (collectively, the Schemes). Details of the Schemes are contained in the section entitled ‘‘Report of the Directors’’ of this Annual Report.

The Board considers that the members of the RC, who each have years of experience in senior management positions and/or on the boards of various listed companies, collectively have strong management experience and expertise on remuneration issues. If necessary, the RC members may seek expert advice inside and/or outside the Company on remuneration of all Directors.

Procedure for Setting Remuneration

The Company has implemented a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual Directors. The RC reviews and recommends to the Board a general framework of remuneration and specific remuneration packages for the Board and Management, covering all aspects of remuneration including directors’ fees, salaries, allowances, bonuses, options, share-based incentives and awards, and benefits-in-kind. Each RC member does not participate in discussions, and abstains from decision-making, relating to any remuneration, compensation, options or any form of benefits to be granted to him.

The RC also reviews the Company’s obligations, if any, arising in the event of termination of the Executive Directors’ and/or Management’s contracts of service, to ensure that the termination clauses of such contracts of service are fair and reasonable.

Remuneration policies

In order to maximise shareholders’ value and promote the long-term success of the Company, the Company seeks to attract, retain and motivate senior management and employees by offering competitive remuneration packages. The remuneration of our Executive Directors, Management and employees is set based on, inter alia, the relevant scope and extent of responsibilities, prevailing market conditions, and comparable industry benchmarks. The Company rewards Directors and employees based on achievement of individual performance objectives and the Company’s financial performance.

Executive Directors’ Remuneration

In accordance with the terms of their service agreements, each of our Executive Directors is entitled to, inter alia, performance-related incentives which are linked to the financial performance of the Group and the individual performance of each Executive Director. The terms of our Executive Directors’ service agreements and their remuneration packages are subject to review by the RC. There are no excessive or onerous removal clauses in these service agreements.

Independent Directors’ Remuneration

The independent Directors have not entered into service agreements with the Company. Each independent Director receives a fixed fee, which is determined by the Board, taking into account the effort, time spent and responsibilities of the Director. Such fees are subject to approval of the shareholders at each AGM.

Level and Mix of Remuneration

The remuneration of the Company’s Directors and Key Executives for FY2012 is set out below. No termination, retirement or post-employment benefits have been granted to the Company’s Directors and Key Executives.


25Corporate GovernanCe report

(a) Directors

FY2012 Fees Salary Bonus/ Incentives

Benefits Share Award Total

% % % % % % $’000

Executive Directors

Benedict Soh Siak Poh 12% 30% 57% 1% - 100% 1,212

Simon Ong Chin Sim 11% 30% 58% 1% - 100% 1,202

Anthony Chong Siew Ling 9% 46% 42% 3% - 100% 540

Independent Directors

Lee Hock Lye 100% - - - - 100% 55

Prabhakaran Narayanan Nair 100% - - - - 100% 40

Wong Ah Long 100% - - - - 100% 40

(b) Key Executives

FY2012 Fees Salary Bonus/ Incentives

Benefits Share Award Total

% % % % % %

Remuneration of top 5 Key Executives (who are not Directors of Kingsmen Creatives Ltd)

$750,000 to $999,999

Alex Wee Huat Seng 2% 26% 68% 2% 2% 100%

$500,000 to $749,999

Francis Yee Chee Kong 4% 28% 63% 2% 3% 100%

$550,000 to $599,999

Roy Ong Chin Kwan* 3% 36% 58% 3% 0% 100%

$250,000 to $499,999

Andrew Cheng Oon Teck - 41% 53% 3% 3% 100%

Krez Peok Chong Eng 7% 62% 30% - 1% 100%

Mr Roy Ong Chin Kwan is an immediate family member of Mr Simon Ong Chin Sim, our Group Managing Director and CEO. Save as disclosed above, there is no other employee who is related to a Director, whose remuneration exceeds S$50,000.

Employee Share Schemes

No options were granted to the Directors or employees pursuant to the Kingsmen Share Option Scheme during FY2012.

Pursuant to the Kingsmen Performance Share Scheme, an aggregate of 666,900 fully-paid shares, constituting approximately 0.4% of the total number of issued shares of the Company (excluding treasury shares), were awarded to and accepted by employees of the Group in FY2012. Since the commencement of the Kingsmen Performance Share Scheme, an aggregate of 2,175,950 fully-paid shares, constituting approximately 1.14% of the total number of issued shares of the Company (excluding treasury shares), have been awarded and issued.

No shares have been issued to the Directors, controlling shareholders of the Company or their associates under the Kingsmen Performance Share Scheme, and no participants have been awarded 5.0% or more of the total number of shares available under the Kingsmen Performance Share Scheme. Further details of the Schemes are set out in the section entitled ‘‘Report of the Directors’’ of this Annual Report.

Corporate GovernanCe reportCE

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3. aCCoUntaBlIlIty anD aUDItAccountability

Principle 10: The Board should present a balanced and understandable assessment of the company’s performance, position and prospects.

In line with the Company’s disclosure obligations under the Listing Manual, the Board’s policy is that shareholders shall be informed of all major developments relating to the Company. Information is communicated to shareholders on a timely basis through SGXNet and the press. The Board also provides shareholders with a detailed explanation of the Company’s performance, position and prospects on a quarterly basis.

Management makes available to all Directors its quarterly management accounts and other financial statements, together with all other relevant information of the Group’s performance, position and prospects.

Risk Management and Internal Controls

Principle 11: The Board is responsible for the governance of risk. The Board should ensure that Management maintains a sound system of risk management and internal controls to safeguard shareholders’ interests and the company’s assets, and should determine the nature and extent of the significant risks which the Board is willing to take in achieving its strategic objectives.

The AC and Management are responsible for overseeing the Group’s risk management framework and policies, including reviewing the Company’s business and operational activities to identify areas of significant business risks, and recommending to the Board the appropriate strategy and resources required for managing risks that are consistent with the Group’s risk appetite.

Material transactions are subject to risk analysis by Management and the AC, and safeguard measures against significant risks are established prior to undertaking new projects. In addition, the AC and Management are working, in consultation with KPMG Service Pte. Ltd., to conduct a complete review of the Group’s internal controls and to develop a comprehensive Group Risk Assurance Framework to enhance and strengthen the Group’s internal controls and risk management. The Board, together with Management, will continue to enhance and improve the existing risk management and internal control systems.

The Company’s FC and internal auditors also assist in the risk management process by identifying certain areas of concern that are uncovered through financial/audit checks. The key risks facing the Group have been identified and appropriate measures are in place to mitigate such risks.

Based on the internal controls established and maintained by the Group, work performed by the internal and external auditors, and reviews performed by Management, the AC and the Board, the AC and the Board are of the opinion that the Group’s internal controls, addressing financial, operational and compliance risks, are adequate as at the date of this Annual Report.

The Board has also received assurance from the Group’s CEO and FC:

(a) that the financial records have been properly maintained and the financial statements give a true and fair view of the Group’s operations and finances; and

(b) regarding the effectiveness of the Group’s risk management and internal control systems.

The system of internal controls and risk management established by the Group provides reasonable, but not absolute, assurance in achieving, inter alia, the following objectives:

•safeguarding of assets;•reliability of financial information;•compliance with applicable laws and regulations; and•identification and management of significant risks.

The AC reviews the effectiveness of the Group’s internal controls at least annually. However, the Board notes that no system of internal controls could provide absolute assurance against the occurrence of material errors, poor judgment in decision-making, human error, losses, fraud or other irregularities.

Audit Committee

Principle 12: The Board is responsible for the governance of risk. The Board should ensure that Management maintains a sound system of risk management and internal controls to safeguard shareholders’ interests and the company’s assets, and should determine the nature and extent of the significant risks which the Board is willing to take in achieving its strategic objectives.

The AC is chaired by Mr Lee Hock Lye and comprises Mr Wong Ah Long and Mr Prabhakaran Narayanan Nair. All the AC members, including the Chairman, are independent Directors.

Corporate GovernanCe reportKINGSM

EN CREATIVES LTD ANNUAL REPORT 201227

The AC holds at least four meetings in each financial year. The principal functions of the AC in accordance with its terms of reference are as follows:

•reviewing the Group’s financial statements, and significant financial reporting issues and judgments so as to ensure the integrity of the financial statements and any formal announcements relating to financial performance;

•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;

•ensuring that Management provides assistance and co-operation to the external auditors;•making recommendations to the Board on the appointment, re-appointment and removal of external auditors and approving the remuneration

and terms of engagement of the external auditors; •reviewing the effectiveness of the Group’s internal audit function;•evaluating the adequacy of the Group’s internal controls by, inter alia, reviewing the reports of the internal and external auditors, and

Management’s responses and actions to correct any deficiencies; and•reviewing interested person transactions (as defined in the Listing Manual of the SGX-ST).

In addition, the AC is tasked to commission independent investigations of any suspected fraud or irregularity, which has or is likely to have a material impact on the Company’s operating results or financial position, and to review the findings of such investigations. The AC has reasonable resources to enable it to discharge its responsibilities properly. It has full access to, and the co-operation of, Management and full discretion to invite any Director or Key Executive to attend its meetings.

The AC also meets with the external auditors and internal auditors without Management, at least annually and whenever necessary to review the adequacy of audit arrangements, with emphasis on the scope and quality of audit and the independence and objectivity of the auditors.

The AC receives briefings and updates on changes to accounting standards and other issues which may have a direct impact on financial statements.

External auditors

The AC reviews the independence of the Group’s external auditors annually. The AC has undertaken a review of all non-audit services provided by the external auditors, Ernst & Young LLP, and is of the view that such services would not affect the independence of the external auditors.

The partner in charge of auditing the Group, Mr Philip Ng, was appointed from the financial year ended 31 December 2012. The AC is satisfied with the independence and objectivity of the external auditors, Ernst & Young LLP, and recommends its re-appointment.

The fees payable to our external auditor, Ernst & Young LLP, for FY2012 are as follows:

Fees payable to external auditor for FY2012 $’000

Audit $300

Non-audit $297

Total $597

The Company has complied with Rules 712 and 715 of the Listing Manual in the appointment of its auditor.

Whistle-blowing policy

The Company implemented a whistle-blowing policy in 2010, which provides the Group’s employees and any other persons with well-defined and accessible channels through which they may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters. The AC reviews such policy to ensure that arrangements are in place for independent investigation of such matters and for appropriate follow-up action.

The Company will protect the identity and interest of all whistle-blowers, and treat all information received confidentially. Anonymous reports will also be accepted.

Internal Audit

Principle 13: The company should establish an effective internal audit function that is adequately resourced and independent of the activities it audits.

We have engaged Nexia TS Public Accounting Corporation (Nexia) as our internal auditor. Nexia is a certified public accounting firm and a member of the Institute of Internal Auditors (IIA). In performing the internal audit, Nexia applied the Standards for the Professional Practice of Internal Auditing set by IIA.

The Board recognises that it is responsible for maintaining a sound system of internal controls to safeguard shareholders’ investments and the Group’s business and assets. The internal auditors report primarily to the Chairman of the AC. The audit plan is submitted to the AC for approval prior to commencement of the internal audit.

The AC reviews the adequacy and effectiveness of the internal audit function at least annually to, inter alia, ensure that (i) the internal audit function is adequately resourced and has appropriate standing within the Company; and (ii) the recommendations of the internal auditors are properly implemented.

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4. CoMMUnICatIon WItH SHareHolDerSPrinciple 14: Companies should treat all shareholders fairly and equitably, and should recognise, protect and facilitate the exercise of shareholders’ rights, and continually review and update such governance arrangements.

Principle 15: Companies should actively engage their shareholders and put in place an investor relations policy to promote regular, effective and fair communication with shareholders.

Principle 16: Companies should encourage greater shareholder participation at general meetings of shareholders, and allow shareholders the opportunity to communicate their views on various matters affecting the company.

The Board is mindful of the obligation to provide regular, effective and fair communication with shareholders. Information is communicated to the shareholders on a timely basis. The Company does not practise selective disclosure. Price sensitive information is first publicly released via SGXNET before the Company meets with any group of investors or analysts. The Company’s financial results and annual reports are announced or issued within the period specified under the Listing Manual, and are also made available to the public via the Company’s website.

The Board welcomes the views of shareholders on matters affecting the Company, whether at shareholders’ meetings or on an ad-hoc basis. Shareholders are informed of shareholders’ meetings through notices published in the newspapers, reports and/or circulars provided to all shareholders. Each item of special business included in the notices of shareholders’ meetings is accompanied, where appropriate, by an explanation for the proposed resolution. Separate resolutions are proposed for substantially separate issues at shareholders’ meetings. The chair persons of the AC, RC and NC are typically available at shareholders’ meetings to answer queries relating to the duties of these committees. The external auditors are also present at the AGM to assist the Directors in addressing any relevant queries by shareholders regarding the conduct of audit and the preparation and content of the auditors’ report. The AGM is the principal forum for dialogue with shareholders. In addition, the Company also holds briefings to present half-year and full-year results for the media and analysts.

The minutes of general meetings, which include substantial comments or queries from shareholders and responses from the Board, are available to shareholders upon written request.

5. DealInGS In SeCUrItIeSThe Company has adopted an internal policy on dealings in the Company’s securities, which is in line with the requirements of the Listing Manual and notified to all Directors and employees of the Group. All Directors and employees of the Group are prohibited from dealing in the Company’s securities during the period commencing two (2) weeks before the announcement of the Group’s quarterly financial results, and the period commencing one (1) month before the announcement of its full-year results.

All Directors, officers and employees are expected to observe insider trading laws at all times. In particular, they are aware that dealing in the Company’s securities, when they are in possession of unpublished material price-sensitive information in relation to those securities, is an offence. Our Directors and employees are also discouraged from dealing in the Company’s securities on short-term considerations.

6. IntereSteD perSon tranSaCtIonSDetails of interested person transactions entered into by the Group during FY2012 are set out on page 101 of this Annual Report. When a potential conflict of interest arises, the Director concerned does not participate in discussions, abstains from decision-making, and refrains from exercising any influence over other members of the Board.

To ensure compliance with Chapter 9 of the Listing Manual, the Board and the AC review, on a quarterly basis, all interested person transactions entered into by the Group.

Corporate GovernanCe reportKINGSM


FInanCIal report313738404142434648

Report of The Directors ..............................................

Statement by Directors ..............................................

Independent Auditor’s Report .....................................

Consolidated Income Statement ..................................

Consolidated Statement of Comprehensive Income ........

Balance Sheets .........................................................

Statements of Changes in Equity .................................

Consolidated Cash Flow Statement ..............................

Notes to Financial Statements .....................................

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report oF tHe DIreCtorS

The directors are pleased to present their report to the members together with the audited consolidated financial statements of Kingsmen Creatives Ltd. (the “Company”) and its subsidiaries (collectively, the “Group”) and the balance sheet and statement of changes in equity of the Company for the financial year ended 31 December 2012.

Directors

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

Benedict Soh Siak Poh (Executive Chairman) Simon Ong Chin Sim (Group Managing Director) Anthony Chong Siew Ling (Managing Director, ‘Exhibitions & Museums’) Prabhakaran Narayanan Nair (Independent Director) Lee Hock Lye (Independent Director) Wong Ah Long (Independent Director)

In accordance with Article 107 of the Company’s Articles of Association, Anthony Chong Siew Ling and Wong Ah Long retire, and being eligible, offer themselves for re-election as directors.

Arrangements to enable directors to acquire shares and debentures

Except as disclosed below, neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose objects are, or one of whose object was, to enable the directors of the Company to acquire benefits by means of the acquisition of shares or debentures of the Company or any other body corporate.

Directors’ interests in shares and debentures

The following directors, who held office at the end of the financial year, had, according to the register of directors’ shareholdings required to be kept under Section 164 of the Singapore Companies Act, Cap. 50, an interest in shares of the Company, as stated below:

Direct interest Deemed interest

Name of director

At the beginning of

financial yearAt the end of financial year At 21.1.2013

At the beginning of

financial yearAt the end of financial year At 21.1.2013

Ordinary shares of the Company

Benedict Soh Siak Poh 7,734,439 7,734,439 7,734,439 37,993,060 37,993,060 37,993,060

Simon Ong Chin Sim 7,734,420 7,734,420 7,734,420 37,993,060 37,993,060 37,993,060

Anthony Chong Siew Ling 3,634,761 3,634,761 3,634,761 – – –

Wong Ah Long – – – 36,000 36,000 36,000

Prabhakaran Narayanan Nair 150,000 100,000 20,000 – – –

By virtue of Section 7 of the Singapore Companies Act, Cap. 50, Benedict Soh Siak Poh and Simon Ong Chin Sim are deemed to have interests in shares of all the subsidiaries held by the Company.

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


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Directors’ contractual benefits

Except as disclosed in the financial statements, since the end of the previous financial year, no director of the Company has received or become entitled to receive a 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 a member, or with a company in which the director has a substantial financial interest.

Share options

The Kingsmen Share Option Scheme (the “ESOS”) was approved by the members of the Company at an Extraordinary General Meeting (“EGM”) held on 11 August 2003. On 26 April 2004, the members of the Company approved the grant of incentive options at a maximum discount not exceeding 20% of the market price under the ESOS. The rules of the ESOS were amended and approved at an EGM held by the Company on 29 April 2009 by members of the Company.

Under the rules of the amended ESOS, all directors (including non-executive and independent directors) and employees of the Company and its subsidiaries are eligible to participate in the ESOS. Controlling shareholders are not eligible to participate in the ESOS. All participants of the ESOS are allowed to exercise the options within the exercise period only if they remain under the employment of the Company. The options do not carry any rights to participate in the share issues of the subsidiaries of the Company.

The ESOS is administered by the Remuneration Committee, comprising 3 Board directors, all of whom are Independent Directors. The Remuneration Committee is charged with the administration of the ESOS in accordance with the rules of the ESOS. The members of the Remuneration Committee are:

Wong Ah Long (Chairman) Lee Hock Lye Prabhakaran Narayanan Nair

The ESOS has 2 categories of options, being the market price option and the incentive option. The exercise price for each share of which an option is exercisable shall be determined by the Remuneration Committee at its absolute discretion and fixed by the Remuneration Committee.

There were no outstanding options to subscribe for ordinary shares of the Company pursuant to the ESOS as at 31 December 2012 (2011: Nil).

There were no options to take up unissued shares of the Company or its subsidiaries which were granted during the financial period under review. No other options to take up unissued shares of the Company or its subsidiaries were outstanding as at the end of the financial year. No shares were issued by way of the exercise of the options during the financial year under review.

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Kingsmen Performance Share Scheme

The Kingsmen Performance Share Scheme (the “KPSS”) was approved and adopted by the members of the Company at an EGM of the Company held on 29 April 2009. The implementation of the KPSS is to complement the existing ESOS and allows for participation by (a) Group employees, (b) Group Executive Directors (which refers to directors of the Company and/or any of its subsidiaries, as the case may be, who performs an executive function within the Group), (c) Non-Executive Directors (which refers to independent directors of the Company or directors of the Company and/or any of its subsidiaries, as the case may be, other than a Group Executive Director) and (d) associated company employees. Persons eligible to participate in the KPSS who are also controlling shareholders or associates of a controlling shareholder would be eligible to participate in the KPSS subject to the rules of the Listing Manual of the Singapore Exchange Securities Trading Limited (“Listing Manual”). Under the KPSS, an award of fully paid shares of the Company may only be vested and consequently any shares comprised in such awards shall only be delivered upon (i) the committee administering the KPSS (“KPSS Committee”) being satisfied that the participant has achieved the pre-determined performance targets and/or due recognition should be given for good work performance and/or significant contribution to the Company and/or (ii) the Company decides to pay a pre-determined percentage of a Group employee’s annual cash bonus payment in the form of shares. The pre-determined performance targets for each participant and the pre-determined percentage of a Group employee’s annual cash bonus payment in the form of shares shall be determined by the KPSS Committee in its absolute discretion.

The KPSS Committee consists of the directors of the Company (being the three Executive Directors, Mr Benedict Soh Siak Poh, Mr Simon Ong Chin Sim and Mr Anthony Chong Siew Ling, and the three Independent Directors, Mr Lee Hock Lye, Mr Prabhakaran Narayanan Nair and Mr Wong Ah Long). The quorum for any KPSS Committee meeting shall be three (3) directors, of which two (2) of the directors shall be Independent Directors. The KPSS shall be administered by the KPSS Committee in its absolute discretion with such powers and duties as are conferred on it by the Board, except that in compliance with the requirements of the Listing Manual, no member of the KPSS Committee shall participate in any deliberation or decision in respect of share awards granted or to be granted to him.

The KPSS shall continue in force at the discretion of the KPSS Committee, subject to a maximum period of ten (10) years commencing on the date the KPSS is adopted by the Company in general meeting, provided always that the KPSS may continue beyond the above stipulated period with the approval of shareholders of the Company by ordinary resolution in general meeting and of any relevant authorities which may then be required. The KPSS may be terminated at any time by the KPSS Committee or by resolution of the Company in general meeting subject to all relevant approvals, which may be required, and if the KPSS is terminated, no further awards shall be vested by the Company.


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Kingsmen Performance Share Scheme (cont’d)

During the financial year under review, an aggregate of 666,900 (2011: 777,650) performance shares were awarded to and accepted by 50 (2011: 44) employees of the Company and its subsidiaries.

At the end of the financial year under review, details of the performance shares awarded under the Kingsmen Performance Share Plan are as follows:

Balance as at 1.1.2012

Share awards granted

during the financial year

Share awards vested

during the financial year

Balance as at 31.12.2012

Aggregate ordinary shares awarded to participants since

commencement of KPSS to end of financial year

under review

Detail of Participant (a) (b) (a) + (b)

Group Key Management Personnel 280,380 121,100 121,100 401,480 401,480

Employees 1,191,840 545,800 545,800 1,737,640 1,737,640

Associate of the Company’s controlling shareholders

Ong Chin Kwan 36,830 – – 36,830 36,830

1,509,050 666,900 666,900 2,175,950 2,175,950

No performance shares have been granted to the directors or controlling shareholders of the Company and no participants under the Kingsmen Performance Share Scheme have been awarded 5.0% or more of the total number of performance shares which may be issued by the Kingsmen Performance Share Scheme since the commencement of the Kingsmen Performance Share Scheme.

Subsequent to the balance sheet date up to 21 January 2013, there has been no change in the conditional awards granted, vested and/or cancelled under the Kingsmen Performance Share Scheme.

The aggregate number of shares issued and issuable pursuant to the ESOS, the KPSS and any other share based incentive schemes of the Company shall not exceed fifteen per cent (15%) of the total number of issued shares (excluding treasury shares) in the capital of the Company from time to time.

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Audit Committee

The Audit Committee (“AC”) comprises three (3) Board directors, all of whom are Independent Directors. All of the members of the AC are independent. The members of the AC at the date of this report are:

Lee Hock Lye (Chairman) Prabhakaran Narayanan Nair Wong Ah Long

During the financial year, the AC held four meetings and carried out its functions in accordance with Section 201B(5) of the Singapore Companies Act, Cap. 50, which include the following:

•Reviewing the quarterly and annual financial statements and the auditors’ report on the annual financial statements of the Company before their submission to the Board of directors;

•Reviewing the audit plans of the internal and external auditors of the Company and ensuring the adequacy of the Company’s system of accounting controls and the co-operation given by the Company’s management to the internal and external auditors;

•Reviewing the effectiveness of the Company’s material internal controls, including financial, operational and compliance controls and risk management via reviews carried out by the internal auditors;

•Meeting with the internal and/or external auditors, other committees, and management in separate executive sessions to discuss any matters that these groups believe should be discussed privately with the AC;

•Reviewing legal and regulatory matters that may have a material impact on the financial statements, related compliance policies and programmes and any reports received from regulators;

•Reviewing the cost effectiveness and the independence and objectivity of the external auditors;

•Reviewing the nature and extent of non-audit services provided by the external auditors;

•Recommending to the Board of directors the nomination of the external auditors, approving the compensation of the external auditors, and reviewing the scope and results of the audit;

•Reporting actions and minutes of the AC to the Board of directors with such recommendations as the AC considers appropriate; and

•Reviewing interested person transactions in accordance with the requirements of the Listing Manual of the Singapore Exchange Securities Trading Limited.

Apart from the functions above, the AC will commission and review the findings of internal investigations into matters where there is suspicion of fraud or irregularity, or failure of internal controls or infringement of any Singapore Law, rule or regulation, which has or is likely to have a material impact on the Group’s operating results and/or financial position.

The AC, having reviewed all non-audit services provided by the external auditors to the Group, is satisfied that the nature and extent of such services would not affect the independence and objectivity of the external auditors, and is pleased to confirm their re-appointment. The AC has also conducted a review of interested person transactions.

The AC has also met with the internal and external auditors, without the presence of the Company’s management, at least once a year.

Further details regarding the AC are disclosed in the Corporate Governance Report of the Company’s Annual Report for the financial year ended 31 December 2012.


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Audit Committee (cont’d)

The Company appoints different auditors for its subsidiaries or significant associated companies (as defined in the Listing Manual of the Singapore Exchange Securities Trading Limited). The Board and the AC, having reviewed such appointment(s), are satisfied that the appointment(s) would not compromise the standard and effectiveness of the audit of the consolidated financial statements of the Group. The details of the auditors for the Company’s subsidiaries and significant associated companies are disclosed on pages 80 and 83 of the Company’s Annual Report for the financial year ended 31 December 2012.

Auditor

Ernst & Young LLP have expressed their willingness to accept re-appointment as auditor.

On behalf of the Board of directors:

Benedict Soh Siak Poh Director

Simon Ong Chin Sim Director

Singapore 9 April 2013

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StateMent By DIreCtorS

We, Benedict Soh Siak Poh and Simon Ong Chin Sim, being two of the directors of Kingsmen Creatives Ltd. (the “Company”), do hereby state that, in the opinion of the directors,

(i) the accompanying balance sheets, consolidated income statement, consolidated statement of comprehensive income, statements of changes in equity, and consolidated cash flow statement, together with the notes thereto, are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2012 and the results of the business, changes in equity and cash flows of the Group and changes in equity of the Company for the financial year ended on that date; and

(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 of directors:

Benedict Soh Siak Poh Director

Simon Ong Chin Sim Director



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InDepenDent aUDItor’S reportFor tHe FInanCIal year enDeD 31 DeCeMBer 2012

to tHe MeMBerS oF KInGMen CreatveS ltD

Report on the financial statements

We have audited the accompanying consolidated financial statements of Kingsmen Creatives Ltd. (the “Company”) and its subsidiaries (collectively, the “Group”) set out on pages 40 to 115, which comprise the balance sheets of the Group and the Company as at 31 December 2012, the statements of changes in equity of the Group and the Company and the consolidated income statement, consolidated statement of comprehensive income and consolidated cash flow statement of the Group for the financial year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the financial statements

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act, Chapter 50 (the “Act”) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets.

Auditor’s responsibility

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 comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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InDepenDent aUDItor’S reportFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012 TO THE MEMBERS OF KINGSMEN CREATIVES LTD

Opinion

In our opinion, the consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2012 and of the results, changes in equity and cash flows of the Group and the changes in equity of the Company for the year ended on that date.

Emphasis of matter

Possible outcome from an investigation

On 18 January 2013, the Audit Committee of the Company lodged a police report with the Commercial Affairs Department (“CAD”) concerning certain financial affairs of a subsidiary of the Company, as disclosed in Note 36 to the financial statements. As at the date of this report, the Company has not been informed of the commencement of any investigation and whether any findings that may arise from such an investigation would result in any impact on the financial statements of the Company or its subsidiary. Our opinion is not qualified in respect of this matter.

Report on other legal and regulatory requirements

In our opinion, 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 & Young LLP

Public Accountants and Certified Public Accountants



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ConSolIDateD InCoMe StateMentFor tHe FInanCIal year enDeD 31 DeCeMBer 2012

Note 2012 2011

$’000 $’000

Revenue 4 290,190 260,988

Cost of sales (217,802) (194,323)

Gross profit 72,388 66,665

Other items of income

Interest income 5 240 227

Other income 6 4,405 3,935

4,645 4,162

Other items of expense

Depreciation of property, plant and equipment 12 (1,614) (1,525)

Staff salaries and related expenses 7 (41,168) (37,851)

Other expenses (13,727) (12,040)

Interest expense 8 (252) (173)

Share of results of associates 15 1,282 569

Profit before tax 9 21,554 19,807

Income tax expense 10 (4,131) (3,050)

Profit net of tax 17,423 16,757

Profit attributable to:

Owners of the Company 16,914 16,327

Non-controlling interests 509 430

17,423 16,757

Earnings per share attributable to owners of the Company (cents per share)

Basic 11 8.84 8.56

Diluted 11 8.84 8.56

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

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For tHe FInanCIal year enDeD 31 DeCeMBer 2012

2012 2011

$’000 $’000

Profit net of tax 17,423 16,757

Other comprehensive income:

Foreign currency translation (1,349) 499

Net gain on deemed acquisition of associate – 175

Other comprehensive income for the financial year, net of tax (1,349) 674

Total comprehensive income for the financial year 16,074 17,431

Total comprehensive income attributable to:

Owners of the Company 15,674 16,973

Non-controlling interests 400 458

16,074 17,431


ConSolIDateD StateMent oFCoMpreHenSIve InCoMe


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Group CompanyNote 31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011

$’000 $’000 $’000 $’000 $’000ASSETS (Restated) (Restated)

Non-current assetsProperty, plant and equipment 12 9,206 11,181 11,890 217 201Intangible assets 13 4,823 5,278 5,546 – –Investments in subsidiaries 14 – – – 20,002 20,017Investments in associates 15 8,271 7,748 7,113 5,364 5,944Other investments 16 543 543 543 543 543Other receivables 19 68 56 37 – –Deferred tax assets 25 535 30 – – –

23,446 24,836 25,129 26,126 26,705Current assetsInventories 17 21 62 142 – –Gross amount due from customers for contract work-in-progress

18 17,698 11,346 14,004 – –

Income tax recoverable 223 138 98 – –Amount due from subsidiaries 20 – – – 3,029 953Amount due from associates 20 915 931 714 915 914Prepaid operating expenses 991 493 395 57 17Trade and Other receivables 19 83,264 94,609 73,734 3,065 2,850Cash and short-term deposits 21 53,081 33,231 29,903 2,403 1,961

156,193 140,810 118,990 9,469 6,695Total assets 179,639 165,646 144,119 35,595 33,400

EQUITY AND LIABILITIESCurrent liabilitiesGross amount due to customers for contract work-in-progress

18 1,180 2,421 2,756 – –

Trade and other payables 22 84,026 78,045 67,966 1,536 1,326Deferred income 23 5,231 5,077 3,605 – –Amounts due to subsidiaries 20 – – – – 1,995Amounts due to associates 20 11 – – – –Loans and borrowings 24 2,761 3,152 3,334 – –Income tax payable 7,430 5,979 5,276 537 –

100,639 94,674 82,937 2,073 3,321NET CURRENT ASSETS 55,554 46,136 36,053 7,396 3,374Non-current liabilitiesOther payables 22 116 107 107 – –Loans and borrowings 24 1,884 2,053 1,956 – –Deferred tax liabilities 25 172 800 1,175 27 22

2,172 2,960 3,238 27 22Total liabilities 102,811 97,634 86,175 2,100 3,343Net assets 76,828 68,012 57,944 33,495 30,057Equity attributable to owners of the CompanyShare capital 26(a) 23,266 23,266 23,266 23,266 23,266Treasury shares 26(b) (978) (1,235) (1,569) (978) (1,235)Retained earnings 55,582 46,844 37,835 10,689 7,701Other reserves 27 (4,022) (3,457) (3,932) 518 325

73,848 65,418 55,600 33,495 30,057Non-controlling interests 2,980 2,594 2,344 – –Total equity 76,828 68,012 57,944 33,495 30,057Total equity and liabilities 179,639 165,646 144,119 35,595 33,400

BalanCe SHeetSaS at 31 DeCeMBer 2012


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Attributable to owners of the Company

NoteShare

capitalTreasury

sharesRetained earnings

Other reserves

Equity attributable

to owners of the

Company, total

Non-controlling

interestsEquity,

total$’000 $’000 $’000 $’000 $’000 $’000 $’000

2012 Group

(Note 26(a)) (Note 26(b)) (Note 27)

Opening balance at 1 January 2012, as restated

23,266 (1,235) 46,844 (3,457) 65,418 2,594 68,012

Profit for the year – – 16,914 – 16,914 509 17,423

Other comprehensive income

Foreign currency translation – – – (1,240) (1,240) (109) (1,349)

Other comprehensive income for the year, net of tax

– – – (1,240) (1,240) (109) (1,349)

Total comprehensive income for the year

– – 16,914 (1,240) 15,674 400 16,074

Contribution by and distributions to owners

Dividends on ordinary shares 28 – – (7,664) – (7,664) – (7,664)

Treasury shares reissued pursuant to performance share scheme

– 257 – 193 450 – 450

Transfer to statutory reserve fund – – (512) 512 – – –

Total contribution by and distributions to owners

– 257 (8,176) 705 (7,214) – (7,214)

Changes in ownership interests in subsidiaries

Dividends paid to non-controlling interests

– – – – – (79) (79)

Change in interest in subsidiary 14 – – – (30) (30) 65 35

Total changes in ownership interests in subsidiaries

– – – (30) (30) (14) (44)

Total transactions with owners in their capacity as owners

– 257 (8,176) 675 (7,244) (14) (7,258)

Closing balance at 31 December 2012

23,266 (978) 55,582 (4,022) 73,848 2,980 76,828

StateMentS oF CHanGeS In eqUItyFor tHe FInanCIal year enDeD 31 DeCeMBer 2012


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NoteShare

capitalTreasury

sharesRetained earnings

Other reserves

Equity attributable

to owners of the

Company, total

Non-controlling

interestsEquity,

total

$’000 $’000 $’000 $’000 $’000 $’000 $’000

2011 Group

(Note 26(a)) (Note 26(b)) (Note 27)

Opening balance at 1 January 2011, as previously reported

23,266 (1,569) 39,291 (3,932) 57,056 2,344 59,400

Prior year adjustment 36 – – (1,456) – (1,456) – (1,456)

Opening balance at 1 January 2011, as restated

23,266 (1,569) 37,835 (3,932) 55,600 2,344 57,944

Profit for the year – – 16,327 – 16,327 430 16,757

Other comprehensive income

Foreign currency translation – – – 471 471 28 499

Net gain on deemed acquisition of associate

– – 175 – 175 – 175

Other comprehensive income for the year, net of tax

– – 175 471 646 28 674

Total comprehensive income for the year

– – 16,502 471 16,973 458 17,431

Contribution by and distributions to owners

Treasury shares reissued pursuant to performance share scheme

– 299 – 137 436 – 436

Treasury shares reissued pursuant to grant of share awards

– 35 – 15 50 – 50

Dividends on ordinary shares 28 – – (7,641) – (7,641) – (7,641)

Realisation of revaluation surplus on freehold land and building of an associate, net

– – 148 (148) – – –

Total contribution by and distributions to owners

– 334 (7,493) 4 (7,155) – (7,155)

Changes in ownership interests in subsidiaries

Dividends paid to non-controlling interests

– – – – – (208) (208)

Total changes in ownership interests in subsidiaries

– – – – – (208) (208)

Total transactions with owners in their capacity as owners

– 334 (7,493) 4 (7,155) (208) (7,363)

Closing balance at 31 December 2011

23,266 (1,235) 46,844 (3,457) 65,418 2,594 68,012

StateMentS oF CHanGeS In eqUItyFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012

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NoteShare

capitalTreasury

sharesOther

reservesRetained earnings Equity,

$’000 $’000 $’000 $’000 $’000

Company (Note 26(a)) (Note 26(b)) (Note 27)

Opening balance at 1 January 2012 23,266 (1,235) 325 7,701 30,057

Profit for the year – – – 10,652 10,652Other comprehensive income for the year, net of tax – – – – –

Total comprehensive income for the year – – – 10,652 10,652

Contributions by and distribution to ownersTreasury shares reissued pursuant to performance share scheme – 257 193 – 450Dividends on ordinary shares 28 – – – (7,664) (7,664)

Total transactions with owners in their capacity as owners – 257 193 (7,664) (7,214)

Closing balance at 31 December 2012 23,266 (978) 518 10,689 33,495

Opening balance at 1 January 2011 23,266 (1,569) 173 5,154 27,024Profit for the year – – – 10,188 10,188Other comprehensive income for the year, net of tax – – – – –

Total comprehensive income for the year – – – 10,188 10,188

Contributions by and distribution to owners

Treasury shares reissued pursuant to performance share scheme – 299 137 – 436Treasury shares reissued pursuant to grant of share awards – 35 15 – 50Dividends on ordinary shares 28 – – – (7,641) (7,641)

Total transactions with owners in their capacity as owners – 334 152 (7,641) (7,155)

Closing balance at 31 December 2011 23,266 (1,235) 325 7,701 30,057

StateMentS oF CHanGeS In eqUItyFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012



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ConSolIDateD CaSH FloW StateMentFor tHe FInanCIal year enDeD 31 DeCeMBer 2012

Group

Note 2012 2011

$’000 $’000

(Restated)

Cash flows from operating activities

Profit before tax 21,554 19,807

Adjustments for:

Depreciation of property, plant and equipment 12 3,505 3,416

Loss/(gain) on disposal of property, plant and equipment 6 9 (24)

Property, plant and equipment written off 9 7 22

Provision for Performance Share Scheme 567 486

Bad trade debts written off 19 36 50

Bad debts recovered – (72)

Net allowance for doubtful trade debts 19 742 136

Amortisation of intangible assets 13 202 305

Interest income 5 (240) (227)

Interest expense 8 252 173

Dividend income from available-for-sale investment 6 (49) –

Impairment loss on investment in associates 15 580 –

Share of results of associates (1,282) (569)

Currency realignment (194) 110

Total adjustments 4,135 3,806

Operating cash flows before changes in working capital 25,689 23,613

Changes in working capital:

(Increase)/decrease in gross amount due from customers for contract work-in-progress (6,352) 2,658

Decrease in gross amount due to customers for contract work-in-progress (1,241) (335)

Increase in deferred income 154 1,472

Decrease/(increase) in trade and other receivables 10,073 (21,435)

Increase in trade and other payables 5,884 10,079

Decrease in inventories 41 80

Cash flows from operations 34,248 16,132

Interest paid (252) (258)

Interest received 240 227

Income taxes paid (3,875) (2,762)

Net cash flows from operating activities 30,361 13,339

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ConSolIDateD CaSH FloW StateMentFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012

Group

Note 2012 2011

$’000 $’000

(Restated)

Cash flows from investing activities

Purchase of property, plant and equipment 12 (2,075) (2,778)

Proceeds from disposal of property, plant and equipment 293 80

Proceeds from sale of partial ownership interest in a subsidiary 35 –

Dividend income from available-for-sale investment 49 –

Dividends received from associates 15 160 101

Net cash flows used in investing activities (1,538) (2,597)

Cash flows from financing activities

(Increase)/decrease in amount pledged to banks for banking facilities (4) 177

Dividends paid on ordinary shares 28 (7,664) (7,641)

Dividends paid to non-controlling interests (79) (208)

Proceeds from draw down of loans and borrowings 2,786 3,367

Repayment of finance lease obligations (110) (182)

Repayment of long-term bank borrowings (2,982) (3,195)

Net cash used in financing activities (8,053) (7,682)

Net increase in cash and cash equivalents 20,770 3,060

Effect of exchange rate changes on cash and cash equivalents (787) 506

Cash and cash equivalents at 1 January 31,595 28,029

Cash and cash equivalents at 31 December 21 51,578 31,595



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noteS to tHe FInanCIal StateMentS 31 DeCeMBer 2012

1. Corporate InForMatIonKingsmen Creatives Ltd. (the “Company”) is a limited liability company incorporated in the Republic of Singapore and is listed on the Singapore Exchange Security Trading Limited (“SGX-ST”). The registered office and principal place of business of the Company is located at Kingsmen Creative Centre, 3 Changi South Lane, Singapore 486118.

The principal activity of the Company is investment holding, and the provision of corporate marketing and other related services. There have been no significant changes in the nature of this activity during the financial year.

The principal activities of the subsidiaries are disclosed in Note 14 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.

2. SUMMary oF SIGnIFICant aCCoUntInG polICIeS2.1 Basis of preparation

The consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the Company have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”).

The financial statements have been prepared on a historical cost basis except as disclosed in the accounting policies below.

The financial statements are presented in Singapore Dollars (SGD or S$) and all values in the table are rounded to the nearest thousand ($’000) as indicated.

2.2 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year except that in the current financial year, the Group has adopted all the new and revised standards and Interpretations of FRS (INT FRS) that are effective for annual periods beginning on or after 1 January 2012. The adoption of these standards and interpretations did not have any effect on the financial performance or position of the Group and the Company.

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noteS to tHe FInanCIal StateMentS 31 DECEMBER 2012

2. SUMMary oF SIGnIFICant aCCoUntInG polICIeS (Cont’D)2.3 Standards issued but not yet effective

The Group has not adopted the following standards and interpretations that have been issued but not yet effective:

Description Effective for annual periods beginning on or after

Amendments to FRS 1 Presentation of Items of Other Comprehensive Income 1 July 2012

Revised FRS 19 Employee Benefits 1 January 2013

FRS 113 Fair Value Measurement 1 January 2013

Amendments to FRS 107 Disclosures – Offsetting Financial Assets and Financial Liabilities 1 January 2013

Improvements to FRSs 2012 1 January 2013

- Amendment to FRS 1 Presentation of Financial Statements 1 January 2013

- Amendment to FRS 16 Property, Plant and Equipment 1 January 2013

- Amendment to FRS 32 Financial Instruments: Presentation 1 January 2013

Amendments to FRS 101 – Government Loans 1 January 2013

INT FRS 120 Stripping Costs in the Production Phase of a Surface Mine 1 January 2013

Revised FRS 27 Separate Financial Statements 1 January 2014

Revised FRS 28 Investments in Associates and Joint Ventures 1 January 2014

FRS 110 Consolidated Financial Statements 1 January 2014

FRS 111 Joint Arrangements 1 January 2014

FRS 112 Disclosure of Interests in Other Entities 1 January 2014

Amendments to FRS 32 Offsetting Financial Assets and Financial Liabilities 1 January 2014

Amendments to the transition guidance of FRS 110 Consolidated Financial Statements, FRS 111 Joint Arrangements and FRS 112 Disclosure of Interests in Other Entities

1 January 2014

Amendments to FRS 110 Consolidated Financial Statements, FRS 111 Joint Arrangements and FRS 27 Investment Entities

1 January 2014

Except for the Revised FRS 19, Amendments to FRS 1, FRS 110 and FRS 112, the directors expect that the adoption of the other standards and interpretations above will have no material impact on the financial statements in the period of initial application. The nature of the impending changes in accounting policy on adoption of the Revised FRS 19, Amendments to FRS 1, FRS 110 and FRS 112 are described below.

Revised FRS 19 Employee Benefits

The revised FRS 19 Employee Benefits is effective for financial periods beginning on or after 1 January 2013.

The revised FRS 19 removes the corridor mechanism for defined benefit plans and no longer allows actuarial gains and losses to be recognised in profit or loss. The distinction between short-term and long-term employee benefits is based on expected timing of settlement rather than employee entitlement. The revised FRS 19 is to be applied retrospectively.

Amendments to FRS 1 Presentation of Items of Other Comprehensive Income

The Amendments to FRS 1 Presentation of Items of Other Comprehensive Income (OCI) is effective for financial periods beginning on or after 1 July 2012.

The Amendments to FRS 1 changes the grouping of items presented in OCI. Items that could be reclassified to profit or loss at a future point in time would be presented separately from items which will never be reclassified. As the Amendments only affect the presentations of items that are already recognised in OCI, the Group does not expect any impact on its financial position or performance upon adoption of this standard.

FRS 110 Consolidated Financial Statements

FRS 110 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by FRS 110 will require management to exercise significant judgment to determine which entities are controlled, and therefore are required to be consolidated by the Group, compared with the requirements that were in FRS 27. Therefore, FRS 110 may change which entities are consolidated within a group. The revised FRS 27 was amended to address accounting for subsidiaries, jointly controlled entities and associates in separate financial statements.

The Group is currently determining the impact of the changes to control and expect that the adoption of FRS 110 in 2014 will likely lead to more entities being consolidated to the Group.


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2. SUMMary oF SIGnIFICant aCCoUntInG polICIeS (Cont’D)2.3 Standards issued but not yet effective (cont’d)

FRS 112 Disclosure of Interests in Other Entities

FRS 112 Disclosure of Interests in Other Entities is effective for financial periods beginning on or after 1 January 2014.

FRS 112 is a new and comprehensive standard on disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. FRS 112 requires an entity to disclose information that helps users of its financial statements to evaluate the nature and risks associated with its interests in other entities and the effects of those interests on its financial statements. As this is a disclosure standard, it will have no impact to the financial position and financial performance of the Group when implemented in 2014.

2.4 Basis of consolidation and business combinations

(a) Basis of consolidation

Business combinations from 1 January 2010

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the end of the reporting period. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances.

All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions and dividends are eliminated in full.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

Losses within a subsidiary are attributed to the non-controlling interest even if that results in a deficit balance.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:

- De-recognises the assets (including goodwill) and liabilities of the subsidiary at their carrying amounts at the date when control is lost;

- De-recognises the carrying amount of any non-controlling interest;

- De-recognises the cumulative translation differences recorded in equity;

- Recognises the fair value of the consideration received;

- Recognises the fair value of any investment retained;

- Recognises any surplus or deficit in profit or loss;

- Re-classifies the Group’s share of components previously recognised in other comprehensive income to profit or loss or retained earnings, as appropriate.

Basis of consolidation prior to 1 January 2010

Certain of the above-mentioned requirements were applied on a prospective basis. The following differences, however, are carried forward in certain instances from the previous basis of consolidation:

- Acquisition of non-controlling interests, prior to 1 January 2010, was accounted for using the parent entity extension method, whereby, the difference between the consideration and the book value of the share of the net assets acquired were recognised in goodwill.

- Losses incurred by the Group were attributed to the non-controlling interest until the balance was reduced to nil. Any further losses were attributed to the Group, unless the non-controlling interest had a binding obligation to cover these. Losses prior to 1 January 2010 were not reallocated between non-controlling interest and the owners of the Company.

- Upon loss of control, the Group accounted for the investment retained at its proportionate share of net asset value at the date control was lost. The carrying value of such investments as at 1 January 2010 has not been restated.


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2. SUMMary oF SIGnIFICant aCCoUntInG polICIeS (Cont’D)2.4 Basis of consolidation and business combinations (cont’d)

(b) Business combinations

Business combinations from 1 January 2010

Business combinations are accounted for by applying the acquisition method. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with FRS 39 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it is not remeasured until it is finally settled within equity.

In business combinations achieved in stages, previously held equity interests in the acquiree are remeasured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss.

The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any) is recognised on the acquisition date at fair value, or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets.

Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in the acquiree (if any), and the fair value of the Group’s previously held equity interest in the acquiree (if any), over the net fair value of the acquiree’s identifiable assets and liabilities is recorded as goodwill. The accounting policy for goodwill is set out in Note 2.8(a). In instances where the latter amount exceeds the former, the excess is recognised as gain on bargain purchase in profit or loss on the acquisition date.

Business combinations prior to 1 January 2010

In comparison to the above mentioned requirements, the following differences applied:

Business combinations are accounted for by applying the purchase method. Transaction costs directly attributable to the acquisition formed part of the acquisition costs. The non-controlling interest (formerly known as minority interest) was measured at the proportionate share of the acquiree’s identifiable net assets.

Business combinations achieved in stages were accounted for as separate steps. Adjustments to those fair values relating to previously held interests are treated as a revaluation and recognised in equity. Any additional acquired share of interest did not affect previously recognised goodwill.

When the Group acquired a business, embedded derivatives separated from the host contract by the acquiree were not reassessed on acquisition unless the business combination resulted in a change in the terms of the contract that significantly modified the cash flows that otherwise would have been required under the contract.

Contingent consideration was recognised if, and only if, the Group had a present obligation, the economic outflow was more likely than not and a reliable estimate was determinable. Subsequent adjustments to the contingent consideration were recognised as part of goodwill.



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2. SUMMary oF SIGnIFICant aCCoUntInG polICIeS (Cont’D)2.5 Transactions with non-controlling interests

Non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and are presented separately in the consolidated statement of comprehensive income and within equity in the consolidated balance sheet, separately from equity attributable to owners of the Company.

Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.

2.6 Foreign currency

The Group’s consolidated financial statements are presented in Singapore Dollars, which is also the Company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

(a) Transactions and balances

Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the end of the reporting period. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the end of the reporting period are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation.

(b) Consolidated financial statements

For consolidation purpose, the assets and liabilities of foreign operations are translated into SGD at the rate of exchange ruling at the end of the reporting period and their profit or loss are translated at the exchange rates prevailing at the date of the transactions. The exchange differences arising on the translation are recognised in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in the profit or loss.

In the case of a partial disposal without loss of control of a subsidiary that includes a foreign operation, the proportionate share of the cumulative amount of the exchange differences are re-attributed to non-controlling interest and are not recognised in profit or loss. For partial disposals of associates or jointly controlled entities that are foreign operations, the proportionate share of the accumulated exchange differences is reclassified to profit or loss.


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2. SUMMary oF SIGnIFICant aCCoUntInG polICIeS (Cont’D)2.7 Property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. The cost includes the cost of replacing part of the property, plant and equipment and borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying property, plant and equipment. The accounting policy for borrowing costs is set out in Note 2.20. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.

Freehold land has an unlimited useful life and therefore is not depreciated. Depreciation of property, plant and equipment begins when it is available for use and is computed on a straight-line basis over the estimated useful lives of the asset as follows:

Freehold buildings - 2% Machinery and exhibition equipment - 14% - 36% Office equipment, computers and software - 10% - 40% Motor vehicles, furniture and fittings, and renovations - 8% - 40%

Assets under construction included in property, plant and equipment are not depreciated as these assets are not available for use.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit or loss in the year the asset is derecognised.

2.8 Intangible assets

(a) Goodwill

Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less accumulated impairment losses.

For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

The cash-generating unit to which goodwill has been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each cash-generating unit (or group of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in profit or loss. Impairment losses recognised for goodwill are not reversed in subsequent periods.

Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative fair values of the operations disposed of and the portion of the cash-generating unit retained.

Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after 1 January 2005 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated in accordance with the accounting policy set out in Note 2.6.

Goodwill and fair value adjustments which arose on acquisitions of foreign operations before 1 January 2005 are deemed to be assets and liabilities of the Company and are recorded in SGD at the exchange rates prevailing at the date of acquisition.



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2. SUMMary oF SIGnIFICant aCCoUntInG polICIeS (Cont’D)2.8 Intangible assets (cont’d)

(b) Other intangible assets

Intangible assets acquired separately are measured initially at cost. The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following initial acquisition, intangible assets are measured at cost less any accumulated amortisation and accumulated impairment losses.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite useful lives is recognised in profit or loss in the expense category consistent with the function of the intangible asset.

Intangible assets with indefinite useful lives or not yet available for use are tested for impairment annually or more frequently if the events and circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit level. Such intangible assets are not amortised. The useful life of an intangible asset with an indefinite useful life is reviewed annually to determine whether the useful life assessment continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised.

Customer relationship

The customer relationship was acquired in business combinations and are amortised on a straight line basis over their finite useful life of 5 years.

2.9 Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment assessment for an asset is required, the Group makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. Where the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.

The Group bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Group’s cash-generating units to which the individual assets are allocated. These budgets and forecast calculations are generally covering a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year.

Impairment losses of continuing operations are recognised in profit or loss in those expense categories consistent with the function of the impaired asset, except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case, the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase.


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2. SUMMary oF SIGnIFICant aCCoUntInG polICIeS (Cont’D)2.10 Subsidiaries

A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities.

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

2.11 Associates

An associate is an entity, not being a subsidiary or a joint venture, in which the Group has significant influence. The associate is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associate.

The Group’s investments in associates are accounted for using the equity method. Under the equity method, the investment in associates is carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of net assets of the associates. Goodwill relating to associates is included in the carrying amount of the investment and is neither amortised nor tested individually for impairment. Any excess of the Group’s share of the net fair value of the associate’s identifiable asset, liabilities and contingent liabilities over the cost of the investment is included as income in the determination of the Group’s share of results of the associate in the period in which the investment is acquired.

The profit or loss reflects the share of the results of operations of the associates. Where there has been a change recognised in other comprehensive income by the associates, the Group recognises its share of such changes in other comprehensive income. Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associates.

The Group’s share of the profit or loss of its associates is the profit attributable to equity holders of the associate and, therefore is the profit or loss after tax and non-controlling interests in the subsidiaries of associates.

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Group’s investment in its associates. The Group determines at the end of each reporting period whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in profit or loss.

The financial statements of the associate are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

Upon loss of significant influence over the associate, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the aggregate of the retained investment and proceeds from disposal is recognised in profit or loss.



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2. SUMMary oF SIGnIFICant aCCoUntInG polICIeS (Cont’D)2.12 Financial assets

Initial recognition and measurement

Financial assets are recognised when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. The Group determines the classification of its financial assets at initial recognition.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

(a) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. This category includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by FRS 39. Derivatives, including separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

The Group has not designated any financial assets upon initial recognition at fair value through profit or loss.

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value of the financial assets are recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss include exchange differences, interest and dividend income.

Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value through profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognised in profit or loss. Reassessment only occurs if there is a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required.

(b) Loans and receivables

Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method less impairment. Gains and losses are recognised in the profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

(c) Available-for-sale financial assets

Available-for-sale financial assets comprise equity securities. Equity investments classified as available-for sale are those, which are neither classified as held for trading nor designated at fair value through profit or loss.

After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial asset are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in the profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to the profit or loss as a reclassification adjustment when the financial asset is derecognised.

Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.


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2. SUMMary oF SIGnIFICant aCCoUntInG polICIeS (Cont’D)2.12 Financial assets (cont’d)

(c) Available-for-sale financial assets (cont’d)

Derecognition

A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.

Regular way purchase or sale of a financial asset

All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned.

2.13 Impairment of financial assets

The Group and the Company assesses at the end of reporting period whether there is any objective evidence that a financial asset is impaired.

(a) Financial assets carried at amortised cost

For financial assets carried at amortised cost, the Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be recognised are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss on financial assets carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The impairment loss is recognised in profit or loss.

When the asset becomes uncollectible, the carrying amount of impaired financial assets is reduced directly or if an amount was charged to the allowance account, the amounts charged to the allowance account are written off against the carrying value of the financial asset.

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.

(b) Financial assets carried at cost

If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.



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2. SUMMary oF SIGnIFICant aCCoUntInG polICIeS (Cont’D)2.13 Impairment of financial assets (cont’d)

(c) Available-for-sale financial assets

In the case of equity investments classified as available-for-sale, objective evidence of impairment include (i) significant financial difficulty of the issuer or obligor, (ii) information about significant changes with an adverse effect that have taken place in the technological, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in equity instrument may not be recovered; and (iii) a significant or prolonged decline in the fair value of the investment below its costs. ‘Significant’ is to be evaluated against the original cost of the investment and ‘prolonged’ against the period in which the fair value has been below its original cost.

If an available-for-sale financial asset is impaired, an amount comprising the difference between its acquisition cost (net of any principal repayment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from other comprehensive income and recognised in profit or loss. Reversals of impairment losses in respect of equity instruments are not recognised in profit or loss; increase in their fair value after impairment are recognised directly in other comprehensive income.

2.14 Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits, and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. These also include bank overdrafts that form an integral part of the Group’s cash management.

2.15 Construction contracts

The Group principally operates fixed price contracts. Contract revenue and contract costs are recognised as revenue and expenses respectively by reference to the stage of completion of the contract activity at the end of the reporting period (the percentage of completion method), when the outcome of a construction contract can be estimated reliably.

The outcome of a construction contract can be estimated reliably when: (i) total contract revenue can be measured reliably; (ii) it is probable that the economic benefits associated with the contract will flow to the entity; (iii) the costs to complete the contract and the stage of completion can be measured reliably; and (iv) the contract costs attributable to the contract can be clearly identified and measured reliably so that actual contract costs incurred can be compared with prior estimates.

When the outcome of a construction contract cannot be estimated reliably (principally during early stages of a contract), contract revenue is recognised only to the extent of contract costs incurred that are likely to be recoverable and contract costs are recognised as expense in the period in which they are incurred.

An expected loss on the construction contract is recognised as an expense immediately when it is probable that total contract costs will exceed total contract revenue.

In applying the percentage of completion method, revenue recognised corresponds to the total contract revenue (as defined below) multiplied by the actual completion rate based on the proportion of total contract costs (as defined below) incurred to date and the estimated costs to complete.

Contract revenue – Contract revenue corresponds to the initial amount of revenue agreed in the contract and any variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue; and they are capable of being reliably measured.

Contract costs – Contract costs include costs that relate directly to the specific contract and costs that are attributable to contract activity in general and can be allocated to the contract. Costs that relate directly to a specific contract comprise: site labour costs (including site supervision); costs of materials used in construction; depreciation of equipment used on the contract; costs of design, and technical assistance that is directly related to the contract.


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2. SUMMary oF SIGnIFICant aCCoUntInG polICIeS (Cont’D)2.15 Construction contracts (cont’d)

The Group’s contracts are typically negotiated for the construction of a single asset or a group of assets which are closely interrelated or interdependent in terms of their design, technology and function. In certain circumstances, the percentage of completion method is applied to the separately identifiable components of a single contract or to a group of contracts together in order to reflect the substance of a contract or a group of contracts.

Assets covered by a single contract are treated separately when:

- Separate proposals have been submitted for each asset

- Each asset has been subject to separate negotiation and the contractor and customer have been able to accept or reject that part of the contract relating to each asset - The costs and revenues of each asset can be identified

A group of contracts are treated as a single construction contract when:

- The group of contracts are negotiated as a single package; the contracts are so closely interrelated that they are, in effect, part of a single project with an overall profit margin

- The contracts are performed concurrently or in a continuous sequence

2.16 Inventories

Inventories consist of finished goods and materials, comprising project materials. Inventories are stated at the lower of cost and net realisable value. Cost is determined on a weighted average basis and includes the cost of purchases and all incidental costs incurred in bringing the inventories to their present location and condition.

Where necessary, allowance is provided for damaged, obsolete and slow moving items to adjust the carrying value of inventories to the lower of cost and net realisable value.

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

2.17 Provisions

Provisions 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 obligation and the amount of the obligation can be estimated reliably.

Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.



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2. SUMMary oF SIGnIFICant aCCoUntInG polICIeS (Cont’D)2.18 Financial liabilities

Initial recognition and measurement

Financial liabilities are recognised when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. The Group determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value plus in the case of other financial liabilities not at fair value through profit or loss, directly attributable transaction costs.

Subsequent measurement

The measurement of financial liabilities depends on their classification as follows:

(a) Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss includes financial liabilities held for trading and financial liabilities designated upon initial recognition at fair value through profit or loss. Financial liabilities are classified as held for trading if they are acquired for the purpose of selling in the near term. This category includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

Subsequent to initial recognition, financial liabilities at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value of the financial liabilities are recognised in profit or loss.

The Group has not designated any financial liabilities upon initial recognition at fair value through profit or loss.

(b) Other financial liabilities

After initial recognition, other financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.

Derecognition

A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.


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2. SUMMary oF SIGnIFICant aCCoUntInG polICIeS (Cont’D)2.19 Financial guarantee

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument.

Financial guarantees are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequent to initial recognition, financial guarantees are recognised as income in profit or loss over the period of the guarantee. If it is probable that the liability will be higher than the amount initially recognised less amortisation, the liability is recorded at the higher amount with the difference charged to profit or loss.

2.20 Borrowing costs

Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

2.21 Employee benefits

(a) Defined contribution plans

The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. In particular, the Singapore companies in the Group make contributions to the Central Provident Fund scheme in Singapore, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed.

(b) Employee leave entitlements

Employee entitlements to annual leave are recognised as a liability 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 the end of the reporting period.

(c) Post employment benefits

The Group provides for employee service entitlements in order to meet the minimum benefits to be paid to qualified employees, as required under the Indonesian Labour Law No.13/2003 (the “Labour Law”).

(d) Employee share option scheme

The directors of the Company (including non-executive and independent directors) and employees of the Group may receive remuneration in the form of share options as consideration for services rendered.

The cost of these equity-settled transactions with employees is measured by reference to the fair value of the options at the date on which the options are granted. This cost is recognised in the profit or loss, with a corresponding increase in the employee share option reserve, over the vesting period. The cumulative expense recognised at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of options that will ultimately vest. The charge or credit to the profit or loss for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

No expense is recognised for options that do not ultimately vest, except for options where vesting is conditional upon a market condition, which are treated as vested irrespective of whether or not the market condition is satisfied, provided that all other performance and/or service conditions are satisfied. The employee share option reserve is transferred to retained earnings upon expiry of the share options. When the options are exercised, the employee share option reserve is transferred to share capital if new shares are issued, or to treasury shares if the options are satisfied by the reissuance of treasury shares.

(e) Employee Performance Share Scheme

The directors of the Company (including non-executive and independent directors) and employees of the Group may receive awards for good work performance or annual cash bonus payment in the form of shares.

The cost of these equity-settled transactions is measured by reference to the fair value of the awards or annual cash bonus payment at the date of the grant. The cost is recognised in the profit or loss over the expected vesting period.



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2. SUMMary oF SIGnIFICant aCCoUntInG polICIeS (Cont’D)2.22 Leases

The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date: whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset even, if that right is not explicity specified in an arrangement.

For arrangements entered into prior to 1 January 2005, the date of inception is deemed to be 1 January 2005 in accordance with the transitional requirements of INT FRS 104.

(a) As lessee

Finance leases

Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to the profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term.

Operating leases

Operating lease payments are recognised as an expense in the profit or loss 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.

(b) As lessor

Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. The accounting policy for rental income is set out in Note 2.23.

2.23 Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured regardless of when the payment is made. Revenue is measured at the fair value of consideration received or receivable. Revenue is measured at the fair value of consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. The Group assesses its revenue arrangements to determine if it is acting as principal or agent. The Group has concluded that it is acting as a principal in all of its revenue arrangements. The following specific recognition criteria must also be met before revenue is recognised:

(a) Contract revenue

When the contract outcome can be reliably measured:

• Revenueisrecognisedbyreferencetothepercentageofcompletionofthecontractactivityattheendofthereportingperiod where the outcome of a construction contract can be estimated reliably. 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 revenue and costs, and are recognised in the period in which the revisions are determined.

When the contract cannot be reliably measured:

• Revenueisrecognisedonlytotheextentoftheexpensesrecognised,whicharerecoverable.

• Whenitisprobablethattotalcontractcostswillexceedtotalcontractrevenue,theexpectedlossisrecognisedas 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.


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2. SUMMary oF SIGnIFICant aCCoUntInG polICIeS (Cont’D)2.23 Revenue (cont’d)

(b) Sale of goods

Revenue from sale of goods is recognised upon the transfer of significant risk and rewards of ownership of the goods to the customer, usually on delivery of goods. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

(c) Labour services income, administrative income and corporate fee income

Revenue is recognised when the services are rendered.

(d) Rental income

Rental income is accounted for on a straight-line basis over the lease terms. The aggregate costs of incentives provided to lessees are recognised as a reduction of rental income over the lease terms on a straight-line basis.

(e) Interest income

Interest income is recognised using the effective interest rate method.

(f) Dividend income

Dividend income is recognised when the Group’s right to receive payment is established.

2.24 Related parties

A related party is defined as follows:

(a) A person or a close member of that person’s family is related to the Group and Company if that person:

(i) Has control or joint control over the Company;

(ii) Has significant influence over the Company; or

(iii) Is a member of the key management personnel of the Group or Company or of a parent of the Company.

(b) An entity is related to the Group and the Company if any of the following conditions applies:

(i) The entity and the Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

(iii) Both entities are joint ventures of the same third party.

(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

(v) The entity is a post-employment benefit plan for the benefit of employees of either the Company or an entity related to the Company. If the Company is itself such a plan, the sponsoring employers are also related to the Company;

(vi) The entity is controlled or jointly controlled by a person identified in (a);

(vii) A person identified in (a) (i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).



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2. SUMMary oF SIGnIFICant aCCoUntInG polICIeS (Cont’D)2.25 Taxes

(a) Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the end of the reporting period, in the countries where the Group operates and generates taxable income.

Current income taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

(b) Deferred tax

Deferred tax is provided using the liability method on temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all temporary differences, except:

• Wherethedeferredtaxliabilityarisesfromtheinitialrecognitionofgoodwillorofanassetorliabilityinatransaction that is not a business combination and, at the time of the transaction affects neither accounting profit nor taxable profit or loss; and

• Inrespectoftemporarydifferencesassociatedwithinvestmentsinsubsidiariesandassociates,wherethetimingof the reversal of the temporary differences can be controlled by the Group and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:

• Wherethedeferredtaxassetrelatingtothedeductibletemporarydifferencearisesfromtheinitialrecognitionofan asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable profit or loss; and

• Inrespectofdeductibletemporarydifferencesassociatedwithinvestmentsinsubsidiaries,associatesandinterestsin joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax asset is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the end of each reporting period.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, would be recognised subsequently if new information about facts and circumstances changed. The adjustment would either be treated as a reduction to goodwill (as long as it does not exceed goodwill) if it is incurred during the measurement period or in profit or loss.


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2. SUMMary oF SIGnIFICant aCCoUntInG polICIeS (Cont’D)2.25 Taxes (cont’d)

(c) Sales tax

Revenues, expenses and assets are recognised net of the amount of sales tax except:

• Wherethesalestaxincurredonapurchaseofassetsorservicesisnotrecoverablefromthetaxationauthority,inwhich case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

• Receivablesandpayablesthatarestatedwiththeamountofsalestaxincluded.

The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.

2.26 Segment reporting

For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 32, including the factors used to identify the reportable segments and the measurement basis of segment information.

2.27 Share capital and share issue expenses

Proceeds from issuance of ordinary shares are recognised as share capital in equity. Incremental costs directly attributable to the issuance of ordinary shares are deducted against share capital.

2.28 Treasury shares

The Group’s own equity instruments, which are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments. Any difference between the carrying amount of treasury shares and the consideration received, if reissued, is recognised directly in equity. Voting rights related to treasury shares are nullified for the Group and no dividends are allocated to them.

2.29 Contingencies

A contingent liability is:

(a) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group; or

(b) a present obligation that arises from past events but is not recognised because:

(i) It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(ii) The amount of the obligation cannot be measured with sufficient reliability.

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group.

Contingent liabilities and assets are not recognised on the balance sheet of the Group, except for contingent liabilities assumed in a business combination that are present obligations and which the fair values can be reliably determined.



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3. SIGnIFICant aCCoUntInG jUDGeMentS anD eStIMateSThe preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future periods.

3.1 Judgements made in applying accounting policies

In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimations, which has the most significant effect on the amounts recognised in the consolidated financial statements:

Income taxes

The Group has exposure to income taxes in numerous jurisdictions. Significant judgement is involved in determining the Group-wide provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. The carrying amounts of the Group’s and the Company’s provision for taxation and the Group’s tax recoverable as at 31 December 2012 were $7,430,000 (2011: $5,979,000), $537,000 (2011: $Nil) and $223,000 ($138,000), respectively. The carrying amounts of the Group’s deferred tax assets and deferred tax liabilities as at 31 December 2012 were $535,000 (2011: $30,000) and $172,000 (2011: $800,000) respectively and the Company’s deferred tax liabilities as at 31 December 2012 were $27,000 (2011: $22,000).

3.2 Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of each reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(a) Useful lives of property, plant and equipment

The cost of property, plant and equipment is depreciated on a straight-line basis over their estimated useful lives. Management estimates the useful lives of these assets to be within 2.5 to 50 years. The carrying amounts of the Group and the Company’s property, plant and equipment at the end of each reporting period is disclosed in Note 12 to the financial statements. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. The carrying amount of the Group’s property, plant and equipment at the end of each reporting period is disclosed in Note 12 to the financial statements. A 10% difference in the expected useful lives of these assets from management’s estimates would result in approximately 2% (2011: 2%) variance in the Group’s profit before tax.

(b) Impairment of goodwill

Goodwill is tested for impairment annually and at other times when such indicators exist.

When value-in-use calculations are undertaken, management must estimate the expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows. If the estimated future cashflows decreases by 40% from management’s estimates, this will result in an allowance for impairment recognised by the Group of $2,257,000. Further details of the key assumptions applied in the impairment assessment of goodwill and intangible assets, are given in Note 13 to the financial statements.

(c) Impairment of loans and receivables

The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s trade receivables at the end of the reporting period is disclosed in Note 19 to the financial statements. If the present value of estimated future cash flows of receivables that are past due but not impaired varies by 5% from management’s estimates, the Group’s allowance for impairment will increase by $803,000 (2011: increase by $610,000).


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3. SIGnIFICant aCCoUntInG jUDGeMentS anD eStIMateS (Cont’D)3.2 Key sources of estimation uncertainty (cont’d)

(d) Construction contracts

The Group recognises contract revenue by reference to the stage of completion of the contract activity at the end of each reporting period, when the outcome of a construction contract can be estimated reliably. The stage of completion is measured by reference to the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs. Significant assumptions are required to estimate the total contract costs and the recoverable variation works that will affect the stage of completion. The estimates are made based on past experience and the work of specialists. The carrying amounts of assets and liabilities arising from construction contracts at the end of each reporting period are disclosed in Note 18 to the financial statements.

4. revenUeGroup

2012 2011

$’000 $’000

Contract revenue 287,100 257,194

Sale of goods 2,661 3,363

Rental of equipment 429 431

290,190 260,988

5. IntereSt InCoMeGroup

2012 2011

$’000 $’000

Interest income from loans and receivables:

- Short term deposits and bank balances 211 193

- Amounts due from associates 28 13

- Others 1 21

240 227

6. otHer InCoMeGroup

2012 2011

$’000 $’000

Administrative income – 71

Bad trade debt recovery – 72

Corporate fee income 436 454

Dividend income from available-for-sale investment 49 –

(Loss)/gain on disposal of property, plant and equipment (9) 24

Labour services income 1,805 1,638

Miscellaneous income 743 342

Rental income 1,381 1,316

Write-back of allowance for doubtful trade debts – 18

4,405 3,935


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7. StaFF SalarIeS anD relateD expenSeSGroup

2012 2011

$’000 $’000

Salaries and employee benefits (including directors):

Salaries, wages and bonuses 36,359 33,356

Contributions to defined contribution plans 3,096 2,785

Provision for unutilised leave 15 39

Directors’ fees 626 631

Other employee benefits 1,072 1,040

41,168 37,851

Kingsmen Performance Share Scheme

The Kingsmen Performance Share Scheme (the “KPSS”) was approved and adopted by the members of the Company at an EGM of the Company held on 29 April 2009. The implementation of the KPSS is to complement the existing ESOS and allows for participation by (a) Group employees, (b) Group Executive Directors (which refers to directors of the Company and/or any of its subsidiaries, as the case may be, who performs an executive function within the Group), (c) Non-Executive Directors (which refers to independent directors of the Company or directors of the Company and/or any of its subsidiaries, as the case may be, other than a Group Executive Director) and (d) associated company employees. Persons eligible to participate in the KPSS who are also controlling shareholders or associates of a controlling shareholder would be eligible to participate in the KPSS subject to the rules of the Listing Manual of the Singapore Exchange Securities Trading Limited (“Listing Manual”). Under the KPSS, an award of fully paid shares of the Company may only be vested and consequently any shares comprised in such awards shall only be delivered upon (i) the committee administering the KPSS (“KPSS Committee”) being satisfied that the participant has achieved the pre-determined performance targets and/or due recognition should be given for good work performance and/or significant contribution to the Company and/or (ii) the Company decides to pay a pre-determined percentage of a Group employee’s annual cash bonus payment in the form of shares. The pre-determined performance targets for each participant and the pre-determined percentage of a Group employee’s annual cash bonus payment in the form of shares shall be determined by the KPSS Committee in its absolute discretion.

Included in salaries, wages and bonuses is an amount of $567,000 (2011: $486,000) which pertains to bonus provisions which would be settled in subsequent years through performance shares.

During the financial year, an aggregate of 666,900 (2011: 777,650) performance shares were awarded to employees of the Company and its subsidiaries. This includes 121,100 (2011: 166,570) performance shares that were awarded to key management personnel.

The fair value of the shares awarded under KPSS is determined using the average of market prices up to the allotment date. The fair value of each share awarded under the KPSS during the financial year was $0.675 (2011: $0.560).

Kingsmen Share Option Scheme

The Kingsmen Share Option Scheme (the “Scheme”) was approved by the members of the Company at an Extraordinary General Meeting held on 11 August 2003 to enable all directors (including non-executive and independent directors) and employees of the Group to participate in the Scheme.

On 26 April 2004, the members of the Company approved the grant of incentive options at a maximum discount not exceeding 20% of the market price under the Scheme. All participants are allowed to exercise the options within the exercise period only if they remain under the employment of the Company. The exercise price for each share in respect of which an option is exercisable shall be determined and fixed by the Remuneration Committee. There are no cash settlement alternatives.

There are no outstanding share options as at 31 December 2012. As there were no options granted during the financial years ended 31 December 2012 and 2011, no share option expense was recorded.

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8. IntereSt expenSeGroup

2012 2011

$’000 $’000

Interest expense on:

- Obligations under finance leases 13 17

- Bank loans and trust receipts 234 237

- Bank overdrafts 5 4

252 258

Less: Interest expense capitalised in property, plant and equipment (Note 12) – (85)

Total interest expense 252 173

9. proFIt BeFore taxThe following items have been included in arriving at profit before tax:

Group

2012 2011

$’000 $’000

Inventories recognised as an expense in cost of sales (Note 17) 125 199

Directors’ remuneration (including fees) :

- Directors of the Company 3,113 3,162

- Directors of the subsidiaries (Note 31) 5,523 5,090

Included in other operating expenses are the following:

Audit fees paid to:

- Auditors of the Company 300 183

- Other auditors 150 84

Non-audit fees paid to:

- Auditors of the Company 259 –

- Other auditors 38 –

Amortisation of intangible assets (Note 13) 202 305

Bad trade debts written off (Note 19) 36 50

Bad trade debts recovered – (72)

Allowance for doubtful trade debts (Note 19) 742 154

Write-back of allowance for doubtful trade debts (Note 19) – (18)

Impairment loss on investment in associates (Note 15) 580 –

Property, plant and equipment written off 7 22

Operating lease expenses (Note 29(b)) 3,311 3,364

Net foreign exchange loss 375 119

Travelling and telecommunication expenses 2,442 2,369

Selling and distribution expenses 783 944

Upkeep and maintenance 588 549

Utilities 658 595


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10. InCoMe tax expenSe(a) Major components of income tax expense

The major components of income tax expense for the financial years ended 31 December 2012 and 2011 are:

Group

2012 2011

$’000 $’000

Current income tax

- Current income taxation 5,065 3,717

- Under/(over) provision in respect of previous years 177 (252)

5,242 3,465

Deferred income tax (Note 25)

- Origination and reversal of temporary differences (1,111) (415)

(1,111) (415)

Income tax expense recognised in the consolidated income statement 4,131 3,050

There is no deferred tax relating to other comprehensive income for the financial years ended 31 December 2012 and 2011.

(b) Relationship between tax expenses and profit before tax

The reconciliation between tax expense and the product of profit before tax multiplied by the applicable corporate tax rate for the financial years ended 31 December 2012 and 2011 are as follows:

Group

2012 2011

$’000 $’000

Profit before tax 21,554 19,807

Tax at the domestic income tax rate of 17% (2011: 17%) 3,664 3,367

Non-deductible expenses 417 107

Benefits from previously unrecognised tax losses (31) (48)

Partial tax exemption & tax relief (327) (305)

Under/(over) provision in respect of previous years 177 (252)

Differences in tax rates of overseas subsidiaries 361 206

Share of results of associates (218) (97)

Others 88 72

Income tax expense recognised in the consolidated income statement 4,131 3,050

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10. InCoMe tax expenSe (Cont’D)(b) Relationship between tax expenses and profit before tax (cont’d)

The corporate income tax rate applicable to Singapore companies of the Group is 17% (2011: 17%). The corporate income tax rates applicable to Hong Kong and the People’s Republic of China (“PRC”) companies of the Group are 16.5% (2011: 16.5%) and 25% (2011: 25%) respectively. The corporate income tax rate applicable to Malaysian companies of the Group is 25% (2011: 25%).

A loss-transfer system of group relief (group relief system) for companies was introduced in Singapore with effect from the year of assessment 2003. Under the group relief system, a company belonging to a group may transfer its current year unabsorbed capital allowances, current year unabsorbed trade losses and current year unabsorbed donations (loss items) to another company belonging to the same group, to be deducted against the assessable income of the latter company.

During the financial year, there were no tax losses (2011: $183,000) transferred within the Company and subsidiary companies under the group relief system. Current year tax expense of the Company is net of the tax effect of the unabsorbed capital allowances and trade losses transferred.

The above reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction.

11. earnInGS per SHareBasic earnings per share amounts are calculated by dividing profit for the financial year attributable to owners of the Company, net of tax, by the weighted average number of ordinary shares outstanding during the financial year.

Diluted earnings per share amounts is calculated by dividing profit for the financial year attributable to owners of the Company, net of tax, by the weighted average number of ordinary shares outstanding during the financial year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

The following tables reflect the profit and loss and share data used in the computation of basic and diluted earnings per share for the financial years ended 31 December:

Group

2012 2011

$’000 $’000

Profit net of tax attributable to owners of the Company used in the computation of basic and diluted earnings per share 16,914 16,327

No. of shares

No. of shares

’000 ’000

Weighted average number of ordinary shares for basic and diluted earnings per share computation * 191,434 190,699

* The weighted average numbers take into account the weighted average effect of changes in treasury share transactions during the year.

Diluted earnings per share is similar to basic earnings per share as there are no dilutive potential ordinary shares as at 31 December 2012 and 2011.


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12. property, plant anD eqUIpMent

GroupFreehold

landFreehold buildings

Machinery and

exhibition equipment

Office equipment, computers

and softwareMotor

vehicles

Furniture and

fittings RenovationsAssets under construction Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Cost:

At 1 January 2011 – – 15,712 2,615 997 362 1,549 4,163 25,398

Additions – – 371 709 383 93 1,059 253 2,868

Reclassification 2,151 2,265 – 28 – – (28) (4,416) –

Disposals/write-offs – – (5) (388) (179) (32)

(12) – (616)

Exchange differences (43) (39) (4) 2 2 2 32 – (48)

At 31 December 2011 and 1 January 2012

2,108 2,226 16,074 2,966 1,203 425 2,600 – 27,602

Additions – – 326 469 44 78 743 415 2,075

Reclassification – – – 4 – – (4) – –

Disposals/write-offs – – (35) (186) (104) (36) (596) – (957)

Exchange differences (49) (51) (32) (55) (43) (11) (107) – (348)

At 31 December 2012 2,059 2,175 16,333 3,198 1,100 456 2,636 415 28,372

Accumulated depreciation:

At 1 January 2011 – – 10,376 1,571 529 171 861 – 13,508

Reclassification – – – (9) – – 14 – –

Charge for the financial year – 22 2,411 461 181 53 288 – 3,416


Exchange differences – – 1 2 3 3 21 – 35

At 31 December 2011 and 1 January 2012

– 22 12,784 1,654 581 201 1,179 – 16,421

Reclassification – – – (2) – – 2 – –

Charge for the financial year – 44 2,357 434 172 67 431 – 3,505


Exchange differences – – (14) (20) (24) (5) (49) – (112)

At 31 December 2012 – 66 15,103 1,882 661 228 1,226 – 19,166

Net carrying amount:

At 31 December 2011 2,108 2,204 3,290 1,312 622 224 1,421 – 11,181

At 31 December 2012 2,059 2,109 1,226 1,316 439 228 1,414 415 9,206

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12. property, plant anD eqUIpMent (Cont’D)

CompanyOffice equipment

and computers Motor vehiclesFurniture and

fittings Renovations Total

$’000 $’000 $’000 $’000 $’000

Cost:

At 1 January 2011 352 6 13 163 534

Additions 23 7 – – 30

Disposals/write-offs (46) – (2) – (48)

At 31 December 2011 and

1 January 2012 329 13 11 163 516

Additions 23 – 32 44 99

Disposals/write-offs (30) (6) – – (36)

At 31 December 2012 322 7 43 207 579

Accumulated depreciation:

At 1 January 2011 187 6 11 77 281

Charge for the financial year 55 1 – 24 80

Disposals/write-offs (45) – (1) – (46)

At 31 December 2010 and

1 January 2011 197 7 10 101 315

Charge for the financial year 54 1 1 27 83

Disposals/write-offs (30) (6) – – (36)

At 31 December 2012 221 2 11 128 362


At 31 December 2011 132 6 1 62 201

At 31 December 2012 101 5 32 79 217


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12. property, plant anD eqUIpMent (Cont’D)(a) Depreciation charge for the year is analysed as follows:

Group

2012 2011

$’000 $’000

Charge to cost of sales 1,891 1,891

Charge to operating expenses 1,614 1,525

Total depreciation 3,505 3,416

(b) Assets held under finance leases

During the financial year, the Group acquired plant and equipment with an aggregate fair value of $Nil (2011: $111,000) by means of finance leases. The cash outflow on acquisition of property, plant and equipment amounted to $2,075,000 (2011: $2,778,000). The initial deposit paid on acquisition of assets under finance lease amounted to $Nil (2011: $21,000).

Leased assets are pledged as security for the related finance lease liabilities.

Net carrying amounts of assets under finance leases are as follows:

Group

2012 2011

$’000 $’000

Machinery and exhibition equipment 74 103

Office equipment and computers 16 26

Motor vehicles 113 162

203 291

(c) Capitalisation of borrowing costs

The Group’s property, plant and equipment include borrowing costs arising from bank loans borrowed specifically for the purpose of the construction of freehold buildings. During the financial year, no (2011: $85,000) borrowing costs was capitalised as cost of property, plant and equipment. The rate used to determine the amount of borrowing costs eligible for capitalisation in 2011 was 4.2% which is the effective interest rate of the specific borrowing in that year.

(d) Impairment of assets

The carrying values of property, plant and equipment are reviewed for impairment by management and it was concluded that no impairment loss is required to be recognised.

(e) Assets pledged as security

In addition to assets held under finance leases, the Group’s freehold land and building with a carrying amount of $4,168,000 (2011: $4,312,000) are mortgaged to secure the Group’s bank loans (Note 24).

(f) Title to asset

As at 31 December 2012, the title deed in respect of the above freehold land and building with a carrying amount of $4,168,000 has not been received. The Group is in the process of arranging for the title to be transferred from the seller. The purchase consideration for the freehold land and building has been fully paid for.

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13. IntanGIBle aSSetSGroup

GoodwillCustomer

relationship Total

$’000 $’000 $’000

Cost:

At 1 January 2011 6,025 1,563 7,588

Exchange differences 42 16 58

At 31 December 2011 and 1 January 2012 6,067 1,579 7,646

Exchange differences (244) (88) (332)

At 31 December 2012 5,823 1,491 7,314

Accumulated amortisation and impairment:

At 1 January 2011 1,000 1,042 2,042

Amortisation (Note 9) – 305 305

Exchange differences – 21 21

At 31 December 2011 and 1 January 2012 1,000 1,368 2,368

Amortisation (Note 9) – 202 202

Exchange differences – (79) (79)

At 31 December 2012 1,000 1,491 2,491


At 31 December 2011 5,067 211 5,278

At 31 December 2012 4,823 – 4,823

Goodwill

Goodwill arose from the acquisition of Kingsmen (North Asia) Limited (“KNA”) and Kingsmen Indochina Pte Ltd (“KIndo”) in 2007.

Customer relationship

The customer relationship was recognised upon the acquisition of Kingsmen (North Asia) Limited in Year 2007 and was amortised over a period of 5 years from the date of acquisition. As of 31 December 2012, the customer relationship was fully amortised.


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13. IntanGIBle aSSetS (Cont’D)Impairment testing of goodwill

The carrying values and recoverable amounts of goodwill allocated to the respective subsidiaries are as follows:

2012 2011

$’000 $’000

Carrying value of goodwill:

- KNA 4,134 4,378

- KIndo 689 689

4,823 5,067

Recoverable amount of goodwill:

- KNA 25,367 33,854

- KIndo 4,603 8,281

29,970 42,135

To assess impairment of the above goodwill, the Group estimated the value-in-use of the respective subsidiaries, being the lowest cash generating unit (“CGU”) to which the goodwill and intangible assets are allocated. Estimating the value-in-use requires the Group to make an estimate of the expected future cash flows from each subsidiary, based on the financial budgets approved by management covering a 3-year period. The calculations of value in use for the CGUs are most sensitive to the following assumptions:

- Budgeted gross margins – gross margins are based on average values achieved in the 5 years preceding the start of the budget period. These are increased over the budget period for anticipated improvements in performance.

- The pre-tax discount rate applied to the cash flow projections and the forecasted growth rates used to extrapolate cash flows beyond the three-year period was 12.0% (2011: 11.2%) per annum and 1% (2011: 1%) respectively. The discount rates reflect management’s estimate of the risks specific to the subsidiaries and approximates the weighted average cost of capital for the subsidiaries. The annual growth rates used are based on management’s best estimate of the long-term average growth rate relevant to the business activities of the CGUs.

During the financial year ended 31 December 2012, no impairment loss was recognised to write-down the carrying amount of goodwill attributable to the subsidiaries as the value in use was estimated to be higher than the carrying amounts.

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14. InveStMentS In SUBSIDIarIeSCompany

2012 2011

$’000 $’000

Unquoted equity shares, at cost 20,552 20,567

Impairment loss (550) (550)

Net carrying amount 20,002 20,017

Details of subsidiaries as at 31 December are as follows:

Name of Company (Country of incorporation and business) Principal activities

Effective equity interest held by the

Group Cost

2012 2011 2012 2011

% % $’000 $’000

Held by the Company:

Kingsmen Exhibits Pte Ltd (a) (Singapore)

Advertising contractors and agents; design and production of exhibitions, decorations and museums

100 100 1,562 1,562

Kingsmen Projects Pte Ltd (a) (Singapore)

Design and production of architectural interiors, decorations and museums

100 100 2,121 2,121

Kingsmen Design Pte Ltd (a) (Singapore)

Design consultancy, and planning management

100 100 839 839

Kingsmen Ooh-media Pte Ltd (a) (Singapore)

Advertising services, consultancy event management and marketing communications

65 70 188 203

Hi-Light Electrical Pte Ltd (a) (Singapore)

Electrical engineering 80 80 301 301

I-Promo Pte Ltd (a) (Singapore)

Design consultancy, project and events management, and provision of special design and construction facilities to exhibitors

100 100 353 353


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14. InveStMentS In SUBSIDIarIeS (Cont’D)Name of Company (Country of incorporation and business) Principal activities

Effective equity interest held by the Group Cost

2012 2011 2012 2011

% % $’000 $’000

Held by the Company:

Kingsmen Indochina Pte Ltd (a) (Singapore)


90 90 2,158 2,158

Kingsmen Sdn Bhd (b) (Malaysia)

Investment holding and advertising contractors

71 71 797 797

PT Kingsmen Indonesia (c) (Indonesia)

Design and production of interiors, exhibitions, decorations and museums

95 95 235 235

Kingsmen (North Asia) Limited (d) (Hong Kong)

Investment holding 92.2 92.2 11,998 11,998

20,552 20,567


Effective equity interest held by the Group

2012 2011

% %

Held through Kingsmen Exhibits Pte Ltd

Kingsmen Environmental Graphics Pte Ltd (a) (Singapore)

Graphic design and production 803 80

Held through Kingsmen Projects Pte Ltd

K-Fix Production Sdn Bhd (e) (Malaysia)

Manufacturer, wholesale and trader of interiors and exhibitions furniture, fixtures and displays

100 100

Held through Kingsmen Indochina Pte Ltd

Kingsmen Vietnam Co., Ltd (f) (Vietnam)


90 90

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14. InveStMentS In SUBSIDIarIeS (Cont’D)



2012 2011

% %

Held through Kingsmen Sdn Bhd

Kingsmen Designers & Producers Sdn Bhd (b) (Malaysia)


71 71

Kingsmen-Keb Systems Sdn Bhd (b) (Malaysia)


71 71

Kingsmen Environmental Graphics Sdn Bhd (b) (Malaysia)


56.8 56.8

Held through Kingsmen (North Asia) Limited

Kingsmen Hong Kong Limited (d) (Hong Kong)


88.5 88.5

Kingsmen Beijing Co., Limited (h)(g) (People’s Republic of China)


92.2 92.2

Kingsmen Shanghai Co., Limited (i)(g) (People’s Republic of China)


92.2 92.2

Kingsmen Taiwan International Co. Limited (j)(g) (Taiwan)


85.7 85.7

Kingsmen Macau Limited (k)(g) (Macau)


92.2 92.2

Held through Kingsmen Hong Kong Limited

Kingsmen (Shenzhen) Co Ltd. (l)(g) (People’s Republic of China)


88.5 88.5


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14. InveStMentS In SUBSIDIarIeS (Cont’D)(a) Audited by Ernst & Young LLP, Singapore.

(b) Audited by Ernst & Young, Malaysia.

(c) Audited by Eddy Prakarsa Permana & Siddharta, Indonesia.

(d) Audited by Ernst & Young, Hong Kong.

(e) Audited by ABD Halim & Co., Malaysia.

(f) Audited by Auditing and Consulting Joint Stock Company, Vietnam.

(g) For the purposes of the preparation of the Group’s financial statements to comply with Singapore Financial Reporting Standards, these subsidiaries are audited by Ernst & Young, Hong Kong.

(h) Audited by Beijing Dongshen Dingli International Certified Public Accountants Co. Ltd., People’s Republic of China.

(i) Audited by Shanghai Jiu Zhou Certified Public Accountants, People’s Republic of China.

(j) Audited by Sun Home CPF Firm, Taiwan.

(k) Not required to be audited by the laws in its country of incorporation.

(l) Audited by Shenzhen Tongde Certified Public Accountants, People’s Republic of China.

In accordance with Rule 716 of SGX-ST Listing Rules, the Audit Committee and Board of Directors of the Company confirmed that they are satisfied that the appointment of different auditors for its subsidiaries would not compromise the standard and effectiveness of the audit of the Company.

Disposal of non-controlling interests

During the financial year ended 31 December 2012, the Company disposed of a 5% equity interest in Kingsmen Ooh-Media Pte Ltd (“KOM”) to its non-controlling interests for a cash consideration of $35,000. This resulted in a decrease in the Company’s equity interest in KOM from 70% to 65%. The difference of $30,000 between the consideration and the carrying value of the additional interest disposed of has been recognised in “Premium paid on acquisition of non-controlling interests” within equity.

$’000

Consideration received for disposal of non-controlling interests 35

Increase in equity attributable to non-controlling interests (65)

Decrease in equity attributable to owners of the Company 30

Impairment testing of investments in subsidiaries

Management has assessed the recoverable amounts of investments in subsidiaries where impairment indicators existed. No impairment loss (2011: $Nil) was recognised for the year ended 31 December 2012 as the recoverable value was in excess of the carrying amounts.

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15. InveStMentS In aSSoCIateSGroup Company

2012 2011 2012 2011

$’000 $’000 $’000 $’000

Unquoted equity shares, at cost 5,680 5,680 5,680 5,680

Acquisition of unquoted preference shares, at cost

264 264 264 264

5,944 5,944 5,944 5,944

Impairment loss (580) – (580) –

Exchange differences (292) (273) – –

Share of post-acquisition reserves:

At beginning of year 2,077 1,434 – –

Share of post-acquisition profits (net of tax)

1,282 569 – –

Net gain on deemed acquisition – 175 – –

Dividend declared (160) (101) – –

At end of year 3,199 2,077 – –

Carrying amount of associates 8,271 7,748 5,364 5,944

Impairment of investment in associates

During the financial year, an impairment loss of $580,000 (2011: $Nil) was recognised to write-down the carrying value of the Group’s investment in Kingsmen Fairtech International Pvt. Ltd as the associated company has been loss-making and the recoverable amount was lower than the carrying amount. The allowance for impairment recognised in the “Exhibitions and Museums” and “Interiors” segment amounted to $290,000 and $290,000, respectively and was recorded in “Other expenses” line item of the profit or loss for the financial year ended 31 December 2012. The recoverable amount of the investment in associate was based on its value in use and the pre-tax discount rate used was 12%.


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15. InveStMentS In aSSoCIateS (Cont’D)Details of associates as at 31 December are as follows:


Effective equity interest held by the

Group Cost of investment

2012 2011 2012 2011

% % $’000 $’000

Ascend Com Pte. Ltd. (i) (Singapore)

Renting and selling audio-visual, computer and peripheral equipment

40 40 367 367

Kingsmen Korea Limited (ii) (Korea)


32.1 32.1 1,017 1,017

Kingsmen Nikko Limited (ii) (Japan)

Advertising contractors and agents; design and production of exhibitions, decorations and museums

30 30 563 563

Kingsmen Middle East LLC(iii) (UAE)


25 25 2,637 2,637

Enterprise Sports Group Pte Ltd (iv) (Singapore)

Sports event marketing, public relations and organising

30 30 780 780

Kingsmen Fairtech International Pvt. Ltd (v) (India)


35 35 580 580

5,944 5,944 CE

LEBR

ATIN

G PA

RTNE

RSHI

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15. InveStMentS In aSSoCIateS (Cont’D)Name of Company (Country of incorporation and business) Principal activities


2012 2011

% %

Held through Kingsmen Korea Ltd.

Kingsmen Busan Ltd (Korea)

Design and production of architectural interiors and decorations for museums & commercial interiors and alternative marketing

32.1 32.1

Held through Kingsmen Nikko Limited

Kingsmen Project Japan Limited (Japan)

Advertising contractors and agents, design and production of exhibitions, decorations and museums

24 24

Kingsmen Architects and Design Limited (Japan)

Design consultancy and planning management 21 21

(i) Audited by C Y Ng & Co, Singapore.

(ii) Not required to be audited by the laws in its country of incorporation.

(iii) Audited by Puthran Chartered Accountants, United Arab Emirates.

(iv) Audited by VC Assurance PAC, Singapore.

(v) Audited by Gupta Garg & Agrawal Chartered Accountants, India.

In accordance with Rule 716 of SGX-ST Listing Rules, the Audit Committee and Board of Directors of the Company confirmed that they are satisfied that the appointment of different auditors for its associates would not compromise the standard and effectiveness of the audit of the Company.


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15. InveStMentS In aSSoCIateS (Cont’D)The summarised financial information of the associates, not adjusted for the proportion of ownership interest held by the Group, is as follows:

Group

2012 2011

$’000 $’000

Assets and liabilities:

Current assets 31,934 30,789

Non-current assets 5,369 6,024

Total assets 37,303 36,813

Current liabilities 20,473 22,353

Non-current liabilities 2,269 3,290

Total liabilities 22,742 25,643

Results:

Revenue for the year 112,908 96,384

Profit for the year 4,541 2,248

16. otHer InveStMentSGroup Company

2012 2011 2012 2011

$’000 $’000 $’000 $’000

Available-for-sale financial assets:

Unquoted equity shares, at cost 543 543 543 543

Unquoted equity shares

The unquoted equity shares are measured at cost less impairment losses. At the end of the financial year, the Group and the Company assesses the potential impairment in unquoted equity shares by comparing the carrying amount and the present value of estimated future cash flows from the identified cash generating unit, based on the management financial budget covering a reasonable period of time using current market rate of return. No allowance for impairment on unquoted equity shares is necessary based on this assessment.

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17. InventorIeSGroup

2012 2011

$’000 $’000

Balance sheet:

Project materials, at cost 21 62

Consolidated income statement:

Inventories recognised as an expense in cost of sales (Note 9) 125 199

18. GroSS aMoUnt DUe FroM/(to) CUStoMerS For ContraCt WorK-In-proGreSS

Group

2012 2011

$’000 $’000

Aggregate amount of costs incurred and recognised profits (less recognised losses) to date 40,301 23,494

Less: Progress billings (23,783) (14,569)

16,518 8,925

Presented as:

Gross amount due from customers for contract work 17,698 11,346

Gross amount due to customers for contract work (1,180) (2,421)

16,518 8,925

Included in gross amount due from customers for contract work is an amount of $1,007,000 (2011: $Nil) which is related to a debtor who is a party to a legal dispute. No impairment was made on this amount as the Group has assessed that it does not affect the recoverability of this amount.


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19. traDe anD otHer reCeIvaBleSGroup Company

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011

$’000 $’000 (Restated)

$’000 (Restated)

$’000 $’000

Trade and other receivables (current):

Subsidiaries – – – 991 768

Related parties 513 419 140 51 70

Associates 1,787 1,611 2,927 835 731

External parties 72,516 87,384 66,650 – 27

Total trade receivables 74,816 89,414 69,717 1,877 1,596

Allowance for doubtful debts (1,223) (760) (829) – –

Carrying amounts of trade receivables

73,593 88,654 68,888 1,877 1,596

Other receivables 7,951 4,665 3,850 1,184 1,247

Staff advances and loans 633 502 306 3 6

Refundable deposits 1,087 788 690 1 1

83,264 94,609 73,734 3,065 2,850

Other receivables (non-current):

Other receivables 48 28 29 – –

Staff loans 20 28 8 – –

68 56 37 – –

Total trade and other receivables (current and non-current) 83,332 94,665 73,771 3,065 2,850

The above is stated after charging or crediting the following:

Group Company

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011

$’000 $’000 (Restated)

$’000 (Restated)

$’000 $’000

Bad trade debts written off (Note 9) 36 50 38 – –

Allowance for doubtful trade debts (Note 9)

742 154 – – –

Write-back of allowance for doubtful debts (Note 9)

– (18) – – –

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19. traDe anD otHer reCeIvaBleS (Cont’D)Trade receivables

Trade receivables are non-interest bearing and are generally on 60 to 90 days’ terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition. At 31 December 2012, included in trade receivables is an amount of $4,301,000 (2011: $4,718,000), which relates to retention sums and advance billings.

Included in trade receivables is an amount of $51,000 due from a debtor (2011: nil) who is a party to a legal dispute. No impairment was made on this amount as the Group has assessed that it does not affect the creditworthiness of the debtor.

The amounts due from subsidiaries, related parties and associates are unsecured, non-interest and repayable within normal trade terms. These amounts arose from normal business activities of the Group.

Trade receivables denominated in currencies other than the functional currencies of the respective entities within the Group at 31 December are as follows:

Group Company

2012 2011 2012 2011

$’000 $’000 $’000 $’000

United States Dollar 4,724 4,416 392 114

Malaysian Ringgit 12,245 9,884 259 220

Renminbi 8,443 12,313 – –

Receivables that are past due but not impaired

The Group has trade receivables amounting to $16,058,000 (2011: $12,195,000) that are past due at the end of the reporting period but not impaired. These receivables are unsecured and the analysis of their aging at the end of the reporting period is as follows:

Group

2012 2011

$’000 $’000

Trade receivables past due but not impaired:

Lesser than 30 days 4,244 2,261

30 to 60 days 1,089 3,124

61 to 90 days 1,187 849

More than 90 days 9,538 5,961

16,058 12,195


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19. traDe anD otHer reCeIvaBleS (Cont’D)Receivables that are impaired

The Group’s trade receivables that are impaired at the end of the reporting period and the movement of the allowance accounts used to record the impairment are as follows:

Group

2012 2011

$’000 $’000

Trade receivables – nominal amounts 1,223 760

Less: Allowance for impairment (1,223) (760)

– –

Movement in allowance account:

At 1 January 760 829

Charge for the year (Note 9) 742 154

Written back (Note 9) – (18)

Written off (263) (213)

Exchange differences (16) 8

At 31 December 1,223 760

Trade receivables that are individually determined to be impaired at the end of the reporting period relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.

Other receivables

Staff advances and loans are unsecured, non-interest bearing and are repayable in cash. The non-current portion of staff loans has an average maturity of 1.5 years (2011: 2.75 years).

Included in other receivables of the Company are amounts due from subsidiaries, associates and related parties amounting to $504,000 (2011: $823,000), $220,000 (2011: $137,000) and $23,000 (2011: $10,000) respectively. These amounts are unsecured, non-interest bearing and repayable on demand in cash.

Included in other receivables of the Group are amounts due from associates and related parties of $223,000 (2011: $148,000) and $23,000 (2011: $10,000) respectively. These amounts are unsecured, non-interest bearing and repayable on demand in cash.

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20. aMoUntS DUe FroM/(to) SUBSIDIarIeS/aSSoCIateSCompany

The amounts due from/(to) subsidiaries are non-trade in nature, unsecured, bear interest at 2.09% to 2.17% (2011: 2.06% to 2.16%) per annum and are repayable on demand in cash. These balances relate to advances made to/received from subsidiaries for working capital purposes.

Group and Company

The amounts due from/(to) associates relate to loans which are non-trade in nature, unsecured and are repayable on demand in cash. Included in amounts due from associates is an amount of $384,000 (2011: $184,000) which bears interest at 6% (2011: 6%) per annum.

21. CaSH anD CaSH eqUIvalentS

Group Company

2012 2011 2012 2011

$’000 $’000 $’000 $’000

Cash at banks and in hand 36,389 24,328 900 462

Short-term deposits 16,692 8,903 1,503 1,499

Cash and short-term deposits 53,081 33,231 2,403 1,961

Less: Amount pledged to banks for banking facilities

(1,503) (1,499) (1,503) (1,499)

Less: Bank overdrafts (Note 24) – (137) – –

Cash and cash equivalents 51,578 31,595 900 462

Cash at banks earn interest at rates based on daily bank deposit rates. Short-term deposits are placed for varying periods from one month to one year (2011: one month to one year) depending on the immediate cash requirements of the Group, and earn interests at the respective short-term deposit rates.

The short-term deposits bear interest of 0.25% to 1.38% (2011: 0.09% to 0.77%) per annum and 0.25% to 0.39% (2011: 0.09% to 0.45%) per annum respectively for the Group and the Company during the financial year.

As at 31 December 2012, short term deposits of $1,503,000 (2011:$1,499,000) of the Group and the Company have been pledged to banks for banking facilities granted to subsidiaries of the Group, including overdrafts and bank loans (Note 24).


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21. CaSH anD CaSH eqUIvalentS (Cont’D)Cash and short-term deposits denominated in currencies other than the functional currencies of the respective entities within the Group at 31 December are as follows:

Group Company

2012 2011 2012 2011

$’000 $’000 $’000 $’000

United States Dollar 3,153 4,155 – –

Euro Dollar 220 921 – –

22. traDe anD otHer payaBleSGroup Company

2012 2011 2012 2011

$’000 $’000 $’000 $’000

Trade and other payables (current):

Related parties 62 253 – –

Associates 2,629 1,326 – –

External parties 41,879 39,181 – –

Total trade payables 44,570 40,760 – –

Accrued project costs 22,008 20,857 – –

Accrued operating expenses 12,790 11,679 971 877

Deposits received 29 25 14 16

Other payables 3,604 3,633 495 370

Provision for Performance Share Scheme 494 584 – –

Provision for unutilised leave 531 507 56 63

84,026 78,045 1,536 1,326

Other payables (non-current):

Post employment benefits 116 107 – –

Total trade and other payables (current and non-current) 84,142 78,152 1,536 1,326

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22. traDe anD otHer payaBleS (Cont’D)Trade payables

Trade and other payables denominated in currencies other than the functional currencies of the respective entities within the Group at 31 December are as follows:

Group Company

2012 2011 2012 2011

$’000 $’000 $’000 $’000

United States Dollar 25,729 21,687 – –

Hong Kong Dollar 4,089 701 – –

Malaysian Ringgit 3,889 5,095 – –

Renminbi 7,694 7,423 – –

The amounts due to related parties and associates are trade in nature, unsecured, non-interest bearing and repayable within normal trade terms. These amounts arose from normal trading activities of the Group.

Other payables

Included in other payables and accruals of the Group are amounts due to associates of $975,000 (2011: $30,000) which are non-trade in nature, unsecured, non-interest bearing and repayable on demand.

Included in other payables of the Company are amounts due to subsidiaries of $120,000 (2011: $143,000). The amount is non-trade in nature, unsecured, non-interest bearing and repayable on demand.

23. DeFerreD InCoMe

Group Company

2012 2011 2012 2011

$’000 $’000 $’000 $’000

Deferred income comprising:

Advance billings receivable 3,299 3,166 – –

Advance billings received 1,932 1,911 – –

5,231 5,077 – –

This refers to advance billings to customers for projects that would commence within the next 12 months.


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24. loanS anD BorroWInGS

Maturity Group

2012 2011

$’000 $’000

Current:

Obligations under finance leases (Note 29) 2013 66 119

Trust receipts 2013 514 847

Bank overdrafts On demand – 137

Bank term loans

- MYR term loan at BLR - 2% p.a. On demand 1,903 1,998

- MYR term loan at BECOF + 1.5% p.a. 2013 61 51

- VND short term loan at BLR + 2% p.a. 2013 217 –

2,761 3,152

Non-current:

Obligations under finance leases (Note 29) 2014 - 2015 35 97

Bank term loan

- MYR term loan at BECOF + 1.5% p.a. 2014 - 2031 1,849 1,956

1,884 2,053

Total loans and borrowings 4,645 5,205

Bank overdrafts

Bank overdrafts are denominated in Malaysian Ringgit (“MYR”), bear interest at bank lending rate (“BLR”) + 1.5% p.a. (2011 : BLR + 1.5% p.a.) and are secured by short-term deposits (Note 21), a corporate guarantee of its subsidiary in Malaysia and personal guarantees given by certain directors of its subsidiaries.

VND short-term loan at BLR + 2% p.a.

This short-term loan is fully repayable on January 2013 and is secured by a corporate guarantee of the Company.

MYR term loan at BLR - 2% p.a.

This callable term loan is secured by a first mortgage over the Group’s freehold land and building (Note 12), corporate guarantee of its subsidiary in Malaysia and personal guarantees given by certain directors of its subsidiary.

MYR term loan at BECOF + 1.5% p.a.

This loan bears interest at the bank effective costs of funds (“BECOF”), is fully repayable in 2031 and is secured by a first mortgage over the Group’s freehold land and building (Note 12), a corporate guarantee of its subsidiary in Malaysia and personal guarantees given by certain directors of its subsidiary.

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25. DeFerreD taxDeferred tax assets and liabilities as at 31 December relate to the following:

Group Company

2012 2011 2012 2011

$’000 $’000 $’000 $’000

As at 1 January 770 1,175 22 30

Exchange differences (22) 10 – –

Credited during the financial year (Note 10(a))

(1,111) (415) 5 (8)

As at 31 December (363) 770 27 22

Represented by:

Deferred tax assets (535) (30) – –

Deferred tax liabilities 172 800 27 22

(363) 770 27 22

Deferred taxation assets as at 31 December comprise:

Group Company

2012 2011 2012 2011

$’000 $’000 $’000 $’000

Deferred tax liabilities:

Differences in depreciation for tax purposes

192 14 – –

Intangible assets – 62 – –

Gross deferred tax liabilities 192 76 – –

Deferred tax assets:

Provision for Kingsmen Performance Share Scheme

(60) (12) – –

Other provisions (632) (20) – –

Other items (35) (74) – –

Gross deferred tax assets (727) (106) – –

Net deferred tax assets (535) (30) – –


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25. DeFerreD tax (Cont’D)Deferred taxation liabilities as at 31 December comprise:

Group Company

2012 2011 2012 2011

$’000 $’000 $’000 $’000

Deferred tax liabilities:

Differences in depreciation for tax purposes

148 676 37 33

Undistributed earnings of subsidiaries 26 – – –

Others 243 260 – –

Gross deferred tax liabilities 417 936 37 33

Deferred tax assets:

Provision for Kingsmen Performance Share Scheme

– (62) – –

Other provisions (245) (74) (10) (11)

Gross deferred tax assets (245) (136) (10) (11)

Net deferred tax liabilities 172 800 27 22

Unrecognised tax losses

As at 31 December 2012, the Group has unabsorbed tax losses and unutilised capital allowances carried forward totalling approximately $781,000 (2011: $261,000), available for offset against future taxable income. The potential deferred tax assets arising from these unabsorbed tax losses and unutilised capital allowances have not been recognised as taxable profits from the subsidiary companies against which the deferred tax assets can be utilised, are uncertain.

Unrecognised temporary differences relating to investments in subsidiaries

At the end of the reporting period, no deferred tax liability (2011: Nil) has been recognised for taxes that would be payable on the undistributed earnings of certain of the Group’s subsidiaries as the Group has determined that undistributed earnings of its subsidiaries will not be distributed in the foreseeable future.

Such temporary differences for which no deferred tax liability has been recognised aggregate to $983,000 (2011: $869,000). The deferred tax liability is estimated to be $167,000 (2011: $148,000).

Tax consequences of proposed dividends

There are no income tax consequences (2011: $Nil) attached to the dividends to the shareholders proposed by the Company but not recognised as a liability in the financial statements.

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26. SHare CapItal anD treaSUry SHareS(a) Share capital

Group and Company

2012 2011

$’000 $’000

Issued and fully paid ordinary shares

At 1 January and 31 December 194,183,151 (2011: 194,183,151) ordinary shares

23,266 23,266

The holders of ordinary shares (except treasury shares) are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share. The ordinary shares have no par value.

The Company has an employee share option scheme under which options to subscribe for the Company’s ordinary shares have been granted to employees of the Group. Further, under the Employee Performance Share Scheme, shares are awarded to directors and employees of the Company as recognition for good work performance or as annual cash bonus payment.

There are no outstanding options to subscribe for the Company’s shares granted under the Kingsmen Share Option Scheme as disclosed in Note 7 to the financial statements.

(b) Treasury shares

Group and Company

2012 2011

No. of shares No. of shares

’000 $'000 ’000 $'000

At 1 January (3,204) (1,235) (4,071) (1,569)

Reissued pursuant to Performance Share Scheme

667 257 778 299

Reissued pursuant to grant of share awards

– – 89 35

At 31 December (2,537) (978) (3,204) (1,235)

Treasury shares relate to ordinary shares of the Company that are held by the Company.

The Company reissued 667,000 (2011: 778,000) treasury shares pursuant to its Performance Share Scheme at an average fair value per share of $0.675 (2011: $0.560).


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27. otHer reServeS Group Company

2012 2011 2012 2011

$’000 $’000 $’000 $’000

Asset revaluation reserve – – – –

Foreign currency translation reserve (2,811) (1,571) – –

Statutory reserve fund 707 195 – –

Gain or loss on reissuance of treasury shares

518 325 518 325

Premium paid on acquisition of non-controlling interests

(2,436) (2,406) – –

(4,022) (3,457) 518 325

(a) Asset revaluation reserve

The asset revaluation reserve represents increases in the fair value of freehold land and building, net of tax, in an associate.

Group Company

2012 2011 2012 2011

$’000 $’000 $’000 $’000

At 1 January – 148 – –

Realisation from disposal of freehold land and building of an associate, net

– (148) – –

At 31 December – – – –

(b) Foreign currency translation reserve

Foreign currency translation reserve represents exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency.

Group

2012 2011

$’000 $’000

At 1 January (1,571) (2,042)

Net effect of exchange differences arising from translation of financial statements of foreign operations

(1,240) 471

At 31 December (2,811) (1,571)

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27. otHer reServeS (Cont’D)(c) Statutory reserve fund

In accordance with the Foreign Enterprise Law applicable to a subsidiary in the People’s Republic of China (“PRC”), the subsidiary is required to make appropriation to a Statutory Reserve Fund (“SRF”). At least 10% of the statutory after tax profits as determined in accordance with the applicable PRC accounting standards and regulations must be allocated to the SRF until the cumulative total of the SRF reaches 50% of the subsidiary’s registered capital. Subject to approval from the relevant PRC authorities, the SRF may be used to offset any accumulated losses or increase the registered capital of the subsidiary. The SRF is not available for dividend distribution to shareholders.

Group Company

2012 2011 2012 2011

$’000 $’000 $’000 $’000

At 1 January 195 195 – –

Transferred from retained earnings

512 – – –

At 31 December 707 195 – –

(d) Gain or loss on reissuance of treasury shares

This represents the gain or loss arising from purchase, sale, issue or cancellation of treasury shares. No dividend may be paid, and no other distribution (whether in cash or otherwise) of the Company’s assets (including any distribution of assets to members on a winding up) may be made in respect of this reserve.

Group Company

2012 2011 2012 2011

$’000 $’000 $’000 $’000

At 1 January 325 173 325 173

Gain on reissuance of treasury shares during the year taken to equity pursuant to:

- Performance share scheme 193 137 193 137

- Grant of share award – 15 – 15

At 31 December 518 325 518 325

The Company reissued 667,000 (2011: 778,000) treasury shares pursuant to its performance share scheme at an average fair value per share of $0.675 (2011: $0.560). The excess of the average fair value per share over the weighted average cost per treasury share of $0.39 (2011: $0.38) was recognised in this reserve.


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27. otHer reServeS (Cont’D)(e) Premium paid on acquisition of non-controlling interests

Group Company

2012 2011 2012 2011

$’000 $’000 $’000 $’000

At 1 January (2,406) (2,406) – –

Disposal of non-controlling interests

(30) – – –

At 31 December (2,436) (2,406) – –

28. DIvIDenDSGroup and Company

2012 2011

$’000 $’000

Declared and paid during the financial year:

Dividends on ordinary shares

- Interim exempt (one-tier) dividend for 2012 : 1.50 cents (2011 : 1.50 cents) per share

2,875 2,867

- Final exempt (one-tier) dividend for 2011 : 2.50 cents (2010 : 2.50 cents) per share*

4,789 4,774

7,664 7,641

Proposed but not recognised as a liability as at 31 December:

Dividends on ordinary shares, subject to shareholders’ approval at the Annual General Meeting

- Final exempt (one-tier) dividend for 2012 : 2.50 cents (2011 : 2.50 cents) per share

4,791 4,774

* The difference between the proposed dividends but not recognised as a liability at 31 December 2011 and the final dividends paid for 2011 was attributed to the reissuance of treasury shares in 2012, resulting in an increase in number of ordinary shares which are entitled to the dividend payment.

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29. CoMMItMentS(a) Finance lease commitments – as lessee

The Group has finance leases for certain items of plant and equipment. There are no restrictions placed upon the Group by entering into these leases. Finance lease liabilities of the Group are secured by the rights to the leased plant and equipment (Note 12). The lease terms of such finance lease obligations range from 1 to 3 (2011: 1 to 4) years. The average effective interest rate implicit in the finance lease obligations is 3.19% (2011: 4.91%) per annum.

Future minimum lease payments under finance lease obligations, together with the present value of the net minimum lease payments are as follows:

Group

2012 2011

Minimum lease payments

Present value of payments

(Note 24)

Minimum lease payments

Present value of payments

(Note 24)

$’000 $'000 $’000 $'000

Not later than one year 71 66 131 119

Later than one year but not later than five years

37 35 105 97

Total minimum lease payments

108 101 236 216

Less: Amounts representing finance charges

(7) – (20) –

Present values of minimum lease payments

101 101 216 216

(b) Operating lease commitments – as lessee

The Group has entered into lease agreements for office premises. These leases have an average lease term of between 1 to 4 (2011: 1 to 5) years with no renewal option or contingent rent provision included in the contracts. There are no restrictions placed upon the Group by entering into these leases. Minimum lease payments recognised in the consolidated income statement for the financial year ended 31 December 2012 amounted to $3,311,000 (2011: $3,364,000).

Future minimum lease payments payable under non-cancellable operating leases at the end of the reporting period are as follows:

Group

2012 2011

$’000 $’000

Not later than one year 2,533 3,413

Later than one year but not later than five years 3,766 7,332

Later than five years – 643

6,299 11,388


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29. CoMMItMentS (Cont’D)(c) Operating lease commitments - as lessor

The Group and the Company have entered into lease agreements for office premises and machinery. These non-cancellable leases have remaining non-cancellable lease terms ranging from 1 to 2.3 (2011: 1 to 2.5) years with no renewal option or contingent rent provision included in the contracts. There are no restrictions on the Group and Company by entering into these leases.

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

Group Company

2012 2011 2012 2011

$’000 $’000 $’000 $’000

Not later than one year 734 821 – –

Later than one year but not later than five years 167 906 – –

901 1,727 – –

(d) Capital commitments

Group Company

2012 2011 2012 2011

$’000 $’000 $’000 $’000

Capital commitments in respect of property, plant and equipment 243 – – –

30. ContInGent lIaBIlItIeSArbitration proceedings

During the financial year ended 31 December 2011, arbitration proceedings commenced between a subsidiary of the Group and a subcontractor, in respect of claims relating to the structural steel works undertaken for a project at Universal Studios Singapore.

The proceedings involve both claims and cross claims between the parties, with the subcontractor claiming for work done, damages, interest and costs. The claims are disputed in full by the Group. The Group has in turn counterclaimed for back charges, overpayment and liquidated damages.

As at the date of this report, the Group is unable to determine the probable outcome as the claims and cross claims have not been established. However, the Group is able to advise that the subcontractor has dropped or significantly reduced a number of his claims in the course of the arbitration proceedings.

Guarantees

The Company has provided corporate guarantees to banks for performance guarantees of $11,160,000 (2011: $8,384,000) utilised by its subsidiaries.

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31. relateD party tranSaCtIonS(a) Sale and purchase of goods and services

In addition to the related party information disclosed elsewhere in the financial statements, the following significant transactions between the Group and related parties took place on terms agreed between the parties during the financial year:

Group

2012 2011

$’000 $’000

Associates :

Sales (2,313) (1,663)

Purchases 6,584 2,730

Corporate fee income (338) (356)

Interest income (28) (13)

Dividend income (160) (101)

Related party :

Sales (1,198) (1,907)

Purchases 495 596

Corporate fee income (98) (98)

Related party

Related party refers to the company classified as “Other investments” (Note 16). The Company’s effective shareholding in the “Other investments” is 19.98% and both share common directors on the Board.

Group

2012 2011

$’000 $’000

(b) Compensation of key management personnel

Short-term employee benefits (including directors’ fees) 8,912 8,536

Contributions to defined contribution plans 186 164

Total compensation paid to key management personnel * 9,098 8,700

* Comprises amounts paid to :

Directors and key management personnel of the Company 3,575 3,610

Directors of the subsidiaries (Note 9) 5,523 5,090

9,098 8,700

Included in short-term employee benefits above is an amount of $160,000 (2011:$190,000) which pertains to bonus provisions that would be settled in subsequent years through performance shares.

The remuneration of key management personnel are determined by the Remuneration Committee having regard to the performance of individuals and market trends.


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32. SeGMent InForMatIonFor management purposes, the Group is organised into business units based on their products and services, and has five reportable operating segments as follows:

Exhibitions and Museums

This segment relates to the production of exhibition displays for trade shows and promotional events, interiors and displays for museums and visitor centres, as well as the production of thematic and scenic displays for theme parks.

Interiors

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

Research and Design

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

Alternative Marketing

This segment relates to event management and branding consultancy services.

Corporate and Others

This relates to general corporate income and expense items.

Except as indicated above, no operating segments have been aggregated to form the above reportable operating segments.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which in certain respects, as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements. Group financing (including finance costs) and income taxes are managed on a group basis and are not allocated to operating segments.

Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.

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32. SeGMent InForMatIon (Cont’D)Exh

ibiti

ons

and

Mus

eum

sIn

terio

rsR

esea

rch

and

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ign

Alte

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Mar

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and

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hers

Elim

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ion

Con

solid

atio

n

20

12

20

11

20

12

2011

2012

2011

2012

2011

2012

20

11

20

12

20

11

20

12

20

11

$'0

00

$'0

00

$'0

00

$'0

00

$'0

00

$'0

00

$'0

00

$'0

00

$'0

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$'0

00

$'0

00

$'0

00

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00

$'0

00

Segm

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108,8

96

99,4

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72

14

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98

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,20

88

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––

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290,1

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260,9

88

Inte

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3,6

11

10,7

77

2,5

89

13

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––

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123,8

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103,0

13

169,2

49

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6,6

87

10

,22

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,58

91

2,6

99

9,6

92

––

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32. SeGMent InForMatIon (Cont’D)Notes Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements A Inter-segment revenues are eliminated on consolidation.

Geographical information

Revenue by geographical location are 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 recognised.

Group

2012 2011

$’000 $’000

Sales by geographical location are as follows:

Singapore 121,746 114,274

Greater China 63,125 54,245

Malaysia 28,444 22,584

Europe 17,103 22,119

Rest of Asia 14,994 17,502

United States and Canada 11,654 11,856

Indonesia 10,660 8,795

Vietnam 17,454 5,405

Middle East 3,333 2,326

Others 1,677 1,882

290,190 260,988

Carrying amounts of non-current assets based on geographical location of assets are as follows:

Group

2012 2011

$’000 $’000

Singapore 2,722 4,313

Greater China 4,833 5,813

Malaysia 5,015 5,081

Vietnam 1,018 746

Indonesia 441 506

14,029 16,459

Non-current assets information presented above consist of property, plant and equipment, and intangible assets as presented on the consolidated balance sheet.

Information about a major customer

Revenue from one major group of customers amounted to approximately $12,615,000 (2011: $13,310,000), arising from contract revenue both the exhibitions and museums segment and interiors segment.

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33. FInanCIal rISK ManaGeMent oBjeCtIveS anD polICIeSThe Group and the Company are exposed to financial risks arising from its operations and the use of financial instruments. The key financial risks include credit risk, foreign currency risk, interest rate risk and liquidity risk. The board of directors reviews and agrees policies and procedures for the management of these risks, which are executed by the Financial Controller. The audit committee provides independent oversight to the effectiveness of the risk management process. It is, and has been throughout the current and previous financial year, the Group’s policy that no derivatives shall be undertaken except for the use as hedging instruments where appropriate and cost-efficient. The Group and the Company do not apply hedge accounting.

The following sections provide details regarding the Group’s and Company’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.

There has been no change to the Group’s exposure to these financial risks or the manner in which it manages and measures the risks, except as disclosed in Note 33(a) Credit risk section.

(a) Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including cash and bank balances), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.

The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.

Exposure to credit risk

At the end of the reporting period, the Group’s and the Company’s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the balance sheets.

Credit risk concentration profile

The Group determines concentrations of credit risk by monitoring the industry sector profile of its trade receivables on an on-going basis. The credit risk concentration profile of the Group’s trade receivables at the end of the reporting period is as follows:

Group

2012 2011

$’000 % of total $’000 % of total

By industry sectors:

Exhibitions and museums 27,008 36.7 39,439 44.5

Interiors 41,658 56.6 44,779 50.1

Research and design 1,316 1.8 1,198 1.4

Alternative marketing 2,725 3.7 2,411 2.7

Corporate and others 886 1.2 827 1.3

Trade receivables 73,593 100.0 88,654 100.0

At the end of the reporting period, approximately:

- 19% (2011: 21%) of the Group’s trade receivables were due from 5 major customers who are located in Asia, Europe and the United States; and

- 3% (2011: 2%) of the Group’s trade and other receivables were due from related parties and associates while almost all of the Company’s receivables were balances with related parties, associates and subsidiaries.

Financial assets that are neither past due nor impaired

Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment record with the Group. Cash and short-term deposits, and other investments that are neither past due nor impaired are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default.

Financial assets that are either past due or impaired

Information regarding financial assets that are either past due or impaired is disclosed in Note 19 (Trade and other receivables).


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33. FInanCIal rISK ManaGeMent oBjeCtIveS anD polICIeS (Cont’D)(b) Foreign currency risk

The Group has transactional currency exposures arising from sales or purchases that are denominated in a currency other than the respective functional currencies of Group entities, primarily SGD, Malaysian Ringgit (MYR), Renminbi (RMB) and Hong Kong Dollar (HKD). The foreign currencies in which these transactions are denominated are mainly MYR and US Dollars (USD). Approximately 15% (2011: 15%) of the Group’s sales are denominated in foreign currencies whilst almost 96% (2011: 92%) of costs are denominated in the respective functional currencies of the Group entities. The Group’s trade receivables and trade payables at the end of the reporting period have similar exposures.

The Group and the Company also hold cash and cash equivalents denominated in foreign currencies for working capital purposes. At the end of the reporting period, such foreign currency balances (mainly in USD and HK) amounted to $3,373,000 (2011: $5,076,000) and $Nil (2011: $Nil) for the Group and the Company respectively.

It is the Group’s policy not to enter into forward currency contracts until a firm commitment is in place. At 31 December 2012, the Group did not have any outstanding forward currency contracts.

The Group is also exposed to currency translation risk arising from its net investments in foreign operations, including Malaysia, Indonesia, Hong Kong, Japan, Korea, UAE and Vietnam.

Sensitivity analysis for foreign currency risk

The following table demonstrates the sensitivity of the Group’s profit net of tax to a reasonably possible change in the USD, RMB and MYR exchange rates (against functional currency of SGD), with all other variables held constant.

Group

2012 2011

Effect on profit net of tax


$’000 $’000

USD - strengthened 3% (2011: 3%) +145 +88

- weakened 3% (2011: 3%) -145 -88

RMB - strengthened 3% (2011: 3%) +317 +231

- weakened 3% (2011: 3%) -317 -231

HKD - strengthened 3% (2011: 3%) +13 +103

- weakened 3% (2011: 3%) -13 -103

MYR - strengthened 3% (2011: 3%) +90 +11

- weakened 3% (2011: 3%) -90 -11

(c) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates. The Group’s and the Company’s exposure to interest rate risk arises primarily from their loans and borrowings. The Group’s policy is to obtain the most favourable interest rates available without increasing its interest rate exposure. All of the Group’s and the Company’s financial assets and liabilities at floating rates are continually re-priced at intervals of less than 6 months (2010: less than 6 months) from the end of the reporting period. Information relating to the Group’s interest rate exposure is disclosed in Notes 20, 21 and 24 to the financial statements.

Sensitivity analysis for interest rate risk

The below table demonstrates the sensitivity to a reasonably possible change in interest rates with all other variables held constant of the Group’s profit net of tax (through the impact on interest expense on floating rate loans and borrowings).

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33. FInanCIal rISK ManaGeMent oBjeCtIveS anD polICIeS (Cont’D)(c) Interest rate risk (cont’d)

Group

2012 2011

Increase/decrease in basis points Effect on profit net of tax


$’000 $’000

- MYR +75 -27 -31

-75 +27 +31

- Vietnam Dong +75 -1 –

-75 +1 –

(d) Liquidity risk

Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s and the Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities.

The Group’s and the Company’s liquidity risk management policy is to maintain sufficient liquid financial assets and stand-by credit facilities with different banks and to ensure sufficient funds to meet the repayment of loans and borrowings that will mature in the next one year period. At the end of the reporting period, approximately 59% (2011: 61%) of the Group’s loans and borrowings (Note 24) will mature in less than one year based on the carrying amount reflected in the financial statements. None (2011: none) of the Company’s loans and borrowings will mature in less than one year at the end of the reporting period.

Analysis of financial instruments by remaining contractual maturities

The table below summarises the maturity profile of the Group’s and the Company’s financial assets and liabilities at the end of the reporting period based on contractual undiscounted payment obligations:

2012 2011

1 yearor less

1 to 5years

Over5 years

Total 1 yearor less

1 to 5years

Over5 years

Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Group

Financial assets

Trade and other receivables 83,264 68 – 83,332 94,609 56 – 94,665

Amount due from associates 938 – – 938 926 – – 926

Cash and short-term deposits 53,081 – – 53,081 33,231 – – 33,231

Total undiscounted financial assets 137,283 68 – 137,351 128,766 56 – 128,822

Financial liabilities

Trade and other payables 83,495 116 – 83,611 77,538 107 – 77,645

Amount due to associates 11 – – 11 – – – –

Loans and borrowings 2,925 916 2,204 6,045 3,338 1,005 2,494 6,837

Total undiscounted financial liabilities 86,431 1,032 2,204 89,667 80,716 1,112 2,494 84,322

Total net undiscounted financial assets/(liabilities) 50,852 (964) (2,204) 47,684 48,050 (1,056) (2,494) 44,500


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33. FInanCIal rISK ManaGeMent oBjeCtIveS anD polICIeS (Cont’D)(d) Liquidity risk (cont’d)

2012 2011

1 yearor less

1 to 5years

Over5 years

Total 1 yearor less

1 to 5years

Over5 years

Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Company

Financial assets

Trade and other receivables 2,865 – – 2,865 2,850 – – 2,850

Amounts due from subsidiaries 3,090 – – 3,090 972 – – 972

Amount due from associates 938 – – 938 926 – – 926

Cash and short-term deposits 2,403 – – 2,403 1,961 – – 1,961

Total undiscounted financial assets 9,296 – – 9,296 6,709 – – 6,709

Financial liabilities

Trade and other payables 1,480 – – 1,480 1,263 – – 1,263

Amounts due to subsidiaries – – – – 1,995 – – 1,995

Total undiscounted financial liabilities 1,480 – – 1,480 3,258 – – 3,258

Total net undiscounted financial assets 7,816 – – 7,816 3,451 – – 3,451

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34. FaIr valUeS oF FInanCIal InStrUMentSFair value is defined as the amount at which the financial instrument could be exchanged in a current transaction between knowledgeable willing parties in an arm’s length transaction, other than in a forced or liquidation sale. Fair values are obtained from quoted market prices and discounted cash flow models as appropriate.

The following methods and assumptions are used to estimate the fair values of each class of financial instruments:

(i) Cash and short-term deposits, current trade and other receivables, current trade and other payables and accruals, amounts due from/(to) subsidiaries (non-trade), amounts due from associates and current bank term loan

The carrying amounts of these balances approximate their fair values due to their short-term nature.

(ii) Available-for-sale financial assets: Other investments

In the directors’ opinion, the fair values of the unquoted equity shares cannot be measured reliably. These long-term investments are carried at cost less allowance for impairment loss.

(iii) Financial liabilities at amortised cost: Finance lease obligations

Set out below is a comparison of the carrying amount and fair value of the Group’s finance lease obligations that are carried in the financial statements at other than fair values as at 31 December:

Group

Note Carrying amount Fair value

2012 2011 2012 2011

$’000 $’000 $’000 $’000

Finance lease obligations 29 101 216 92 176

Fair value has been determined using discounted estimated cash flows. The discount rates used are the current market incremental lending rates for similar types of borrowing and leasing arrangements.

(iv) Non-current bank term loan

The carrying amount of the non-current bank term loan is a reasonable approximation of fair value as it is a floating rate instrument that is repriced to market interest rates on or near the end of the reporting period.


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34. FaIr valUeS oF FInanCIal InStrUMentS (Cont’D)(v) Classification of financial instruments

Set out below is a comparison by category of carrying amounts of all the Group’s financial instruments that are carried in the financial statements:

Loans and receivables

Available for sale

Non-financial assets Total

$'000 $'000 $'000 $'000

Group

31.12.2012

Assets

Property, plant and equipment – – 9,206 9,206

Intangible assets – – 4,823 4,823

Investment in associates – – 8,271 8,271

Other investments – 543 – 543

Other receivables, non-current 68 – – 68

Deferred tax assets – – 535 535

Inventories – – 21 21

Gross amount due from customers for contract work-in-progress

– – 17,698 17,698

Income tax recoverable – – 223 223

Amount due from associates 915 – – 915

Prepaid operating expenses – – 991 991

Trade and other receivables, current 83,264 – – 83,264

Cash and short-term deposits 53,081 – – 53,081

137,328 543 41,768 179,639

Liabilities at amortised cost

Non-financial liabilities Total

$’000 $’000 $’000

Liabilities

Gross amount due to customers for contract work-in-progress – 1,180 1,180

Trade and other payables, current 83,495 531 84,026

Deferred income – 5,231 5,231

Amount due to associates 11 – 11

Loans and borrowings, current 2,761 – 2,761

Income tax payable – 7,430 7,430

Other payables, non-current 116 – 116

Loans and borrowings, non-current 1,884 – 1,884

Deferred tax liabilities – 172 172

88,267 14,544 102,811

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34. FaIr valUeS oF FInanCIal InStrUMentS (Cont’D)(v) Classification of financial instruments (cont’d)


Available for sale


$'000 $'000 $'000 $'000

Group

31.12.2011

Assets

Property, plant and equipment – – 11,181 11,181

Intangible assets – – 5,278 5,278



Other receivables, non-current 56 – – 56

Deferred tax assets – – 30 30

Inventories – – 62 62

Gross amount due from customers for contract work-in-progress

– – 11,346 11,346

Income tax recoverable – – 138 138



Trade and other receivables, current 94,609 – – 94,609


128,827 543 36,276 165,646



$’000 $’000 $’000

Liabilities

Gross amount due to customers for contract work-in-progress – 2,421 2,421

Trade and other payables, current 77,538 507 78,045


Loans and borrowings, current 3,152 – 3,152

Income tax payable – 5,979 5,979

Other payables, non-current 107 – 107

Loans and borrowings, non-current 2,053 – 2,053


82,850 14,784 97,634


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Available for sale


$'000 $'000 $'000 $'000

Company

31.12.2012

Assets

Property, plant and equipment – – 217 217

Investment in subsidiaries – – 20,002 20,002



Amount due from subsidiaries 3,029 – – 3,029



Trade and other receivables 3,065 – – 3,065


9,412 543 26,183 35,595



$’000 $’000 $’000

Liabilities

Trade and other payables 1,480 56 1,536

Income tax payable – 537 537


1,480 620 2,100

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Available for sale


$'000 $'000 $'000 $'000

Company

31.12.2011

Assets

Property, plant and equipment – – 201 201

Investment in subsidiaries – – 20,017 20,017



Amount due from subsidiaries 953 – – 953



Trade and other receivables 2,850 – – 2,850


6,678 543 26,179 33,400



$’000 $’000 $’000

Liabilities

Trade and other payables 1,263 63 1,326



1,263 2,080 3,343


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35. CapItal ManaGeMentThe primary objective of the Group’s capital management is to ensure that it maintains healthy capital ratios in order to support its business, maximise shareholder value and fulfil all borrowing covenants.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 December 2012 and 31 December 2011.

As disclosed in Note 27(c), a subsidiary of the Group is required by the Foreign Enterprise Law of the PRC to contribute to and maintain a non-distributable statutory reserve fund whose utilisation is subject to approval by the relevant PRC authorities. This externally imposed capital requirement has been complied with by the above-mentioned subsidiary for the financial years ended 31 December 2012 and 2011.

The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group includes within net debt, loans and borrowings, and trade and other payables. Capital includes equity attributable to the owners of the Company.

Group

31.12.2012 31.12.2011 1.1.2011

$’000 $’000 (Restated)

$’000 (Restated)

Loans and borrowings (Note 24) 4,645 5,205 5,290

Trade and other payables (Note 22) 84,142 78,152 68,073

Amounts due to associates (Note 20) 11 – –

Less: Cash and short-term deposits (Note 21) (53,081) (33,231) (29,903)

Net debt 35,717 50,126 43,460

Equity attributable to the owners of the Company 73,848 65,418 55,600

Capital and net debt 109,565 115,544 99,060

Gearing ratio 33% 43% 44%

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36. CoMparatIve FIGUreSA Settlement Agreement dated 20 December 2010 (“Settlement Agreement”) was executed between a subcontractor and its business affiliate and Kingsmen Exhibits Pte Ltd (“KE”) (a wholly owned subsidiary of the Company) which involved the subcontractor assuming the repayment of a prepaid amount of $2,756,000 made by KE to its business affiliate in respect of a project. It was subsequently discovered that two employees of KE had provided personal guarantees to the subcontractor for the project. When the personal guarantee was viewed together with the Settlement Agreement, it would appear that some of the costs of the previously completed projects were under-recognised.

On 10 January 2013, KE then entered into a subsequent Settlement Agreement (“2013 Settlement Agreement”) with the subcontractor for the resolution of certain disputes relating to the value of work done for the above project which was completed as of 31 December 2010.

Management has reassessed the value of the works done and acknowledged that services of value equivalent to a prepaid amount of $2,756,000 to be recovered, had in fact been rendered. In prior years, $1,300,000 of the prepaid amount of $2,756,000 had been written off to the consolidated income statement due to management being unsure of a full recovery of the prepaid amount. The prepaid amount as of 31 December 2011 amounting to $1,456,000 was included as other receivables on the balance sheet. Pursuant to the 2013 Settlement Agreement, KE paid a settlement sum of $765,000 to the subcontractor and also wrote-off a net sum of $691,000 which was sought to be recovered from the subcontractor.

In connection with the aforesaid matter, the Audit Committee of the Company has lodged a police report with the Commercial Affairs Department (“CAD”) on 18 January 2013. As at the date of this report, the Company has not been informed of the commencement of any investigation and whether any findings that may arise from such an investigation would result in any impact on the financial statements of the Company or its subsidiary.

As the project was completed as of 31 December 2010, the financial impact of $1,456,000 in relation to the aforesaid matter has been adjusted for as a prior year adjustment. The prior year adjustment resulted in a decrease in other receivable (non-current) and trade and other receivables of $887,000 and $569,000, respectively, and a decrease in retained earnings of $1,456,000 as of 31 December 2011. As required by FRS1, presentation of financial statements, the comparatives have been accordingly restated and the restated opening balance sheet as of 1 January 2011 has been presented. The details are as follows:

Group

As restated As previously reported

31.12.2011 1.1.2011 31.12.2011 1.1.2011

$’000 $’000 $’000 $’000

Other receivable - non-current 56 37 943 1,371

Trade and other receivable - current 94,609 73,734 95,178 73,856

Retained earnings 46,844 37,835 48,300 39,291

37. SUBSeqUent eventSThe following events have occurred subsequent to balance sheet date:

(a) A wholly owned subsidiary of the Group, Kingsmen Projects Pte Ltd (“KP”) and a 92.2% held subsidiary of the Group, Kingsmen North Asia Limited (“KNA”) incorporated a subsidiary, K-Fix (Kunshan) Co Ltd (“K-Fix”). KP and KNA hold 70% and 30% of K-Fix, respectively. The principal activity of the subsidiary is the manufacturing of interior and exhibition furniture, as well as fixtures and displays.

(b) The Company incorporated a 70% subsidiary, Thinkfarm Pte Ltd. The principal activities of the subsidiary are custom publishing, media sales and events marketing.

38. aUtHorISatIon oF FInanCIal StateMentS For ISSUeThe financial statements for the financial year ended 31 December 2012 were authorised for issue in accordance with a resolution of the directors on 9 April 2013.


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StatIStICS oF SHareHolDInGS

SHareHolDer’S InForMatIonNumber of shares issued (excluded Treasury Shares) : 191,646,101

Number/Percentage of Treasury Shares : 2,537,050 (1.32%)

Class of Shares : Ordinary Shares

Voting rights : one vote per shares

DIStrIBUtIon oF SHareHolDInGSSize of Shareholdings No. of Shareholders % No. of Shares %

1 – 999 38 3.50 18,010 0.01

1,000 – 10,000 499 45.99 2,843,390 1.48

10,001 – 1,000,000 525 48.39 30,713,780 16.03

1,000,001 and above 23 2.12 158,070,921 82.48

Total 1,085 100.00 191,646,101 100.00

tWenty larGeSt SHareHolDerSNo. Name No. of Shares %

1 Islanda Pte. Ltd. 37,993,060 19.82

2 O-Vest Pte. Ltd. 37,993,060 19.82

3 DBS Nominees Pte Ltd 15,438,229 8.06

4 HSBC (Singapore) Nominees Pte Ltd 10,830,794 5.65

5 Soh Siak Poh Benedict 7,734,439 4.04

6 Ong Chin Sim Simon 7,734,420 4.04

7 Chong Fook Seng Patrick 4,014,000 2.09

8 Ong Chin Kwan 3,648,750 1.90

9 Chong Siew Ling 3,634,761 1.90

10 Citibank Nominees Singapore Pte Ltd 3,521,000 1.84

11 United Overseas Bank Nominees Pte Ltd 3,352,706 1.75

12 Yee Chee Kong 2,963,229 1.55

13 Cheong Chai Keng 2,275,038 1.19

14 Tan Ai Lin 2,245,573 1.17

15 Jonathan Chadwick 2,165,000 1.13

16 DBSN Services Pte Ltd 2,000,000 1.04

17 Raffles Nominees (Pte) Ltd 1,922,000 1.00

18 Peok Chong Eng 1,680,749 0.88

19 Tay Kay Sock Gerald 1,677,319 0.88

20 Lim Hock Chye Stephen 1,385,535 0.72

Total 154,209,662 80.47

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StatIStICS oF SHareHolDInGS

SUBStantIal SHareHolDerS(as recorded in the Register of Substantial Shareholders as at 21 March 2013)

Name of Substantial Shareholders Direct Interest Deemed Interest

No. of Shares % No. of Shares %

Benedict Soh Siak Poh 7,734,439 4.04 37,993,060 19.82

Simon Ong Chin Sim 7,734,420 4.04 37,993,060 19.82

Islanda Pte Ltd 37,993,060 19.82 - -

O-Vest Pte Ltd 37,993,060 19.82 - -

Png Geok Choo Rose - - 37,993,060 19.82

Soh E-Ling Marianne - - 37,993,060 19.82

Soh Hsien Wern Gavin - - 37,993,060 19.82

Jillian Soh E-Ping - - 37,993,060 19.82

Vera Ong Lim Guek Noi - - 37,993,060 19.82

Ong Mei Lin Elita - - 37,993,060 19.82

Notes:

(1) Mr Benedict Soh Siak Poh’s deemed interests refer to the 37,993,060 shares held by Islanda Pte Ltd by virtue of Section 7 of the Companies Act, Cap. 50.

(2) Mr Simon Ong Chin Sim’s deemed interests refer to the 37,993,060 shares held by O-Vest Pte Ltd by virtue of Section 7 of the Companies Act, Cap. 50.

(3) Mdm Png Geok Choo Rose’s deemed interests refer to the 37,993,060 shares held by Islanda Pte Ltd by virtue of Section 7 of the Companies Act, Cap. 50.

(4) Ms Soh E-Ling Marianne’s deemed interests refer to the 37,993,060 shares held by Islanda Pte Ltd by virtue of Section 7 of the Companies Act, Cap. 50.

(5) Mr Soh Hsien Wern Gavin’s deemed interests refer to the 37,993,060 shares held by Islanda Pte Ltd by virtue of Section 7 of the Companies Act, Cap. 50.

(6) Ms Jillian Soh E-Ping’s deemed interests refer to the 37,993,060 shares held by Islanda Pte Ltd by virtue of Section 7 of the Companies Act, Cap. 50.

(7) Mdm Vera Ong Lim Guek Noi’s deemed interests refer to the 37,993,060 shares held by O-Vest Pte Ltd by virtue of Section 7 of the Companies Act, Cap. 50.

(8) Ms Ong Mei Lin Elita’s deemed interests refer to the 37,993,060 shares held by O-Vest Pte Ltd by virtue of Section 7 of the Companies Act, Cap. 50.

Free FloatAs at 21 March 2013, approximately 40.98 % of the shareholding in the Company was held in the hands of the public (on the basis of information available to the Company).

Accordingly, the Company has complied with Rule 723 of the Listing Manual of the Singapore Exchange Securities Trading Limited.


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NOTICE IS HEREBY GIVEN that the Annual General Meeting of KINGSMEN CREATIVES LTD. (the “Company”) will be held at 3 Changi South Lane Singapore 486118 on Tuesday, 30 April 2013 at 11.00 a.m. (the “Annual General Meeting”) for the following purposes:

AS ORDINARY BUSINESS

1. To receive and adopt the Directors’ Report and Audited Accounts of the Company for the year ended 31 December 2012 together with the Auditors’ Report thereon. (Resolution 1)

2. To declare a final one-tier tax exempt dividend of 2.50 cents per ordinary share for the year ended 31 December 2012 (Resolution 2)

3. To re-elect Mr. Simon Ong Chin Sim retiring pursuant to Article 107 of the Articles of Association of the Company. [See Explanatory Note (i)] (Resolution 3)

4. To approve the payment of Directors’ fees of S$260,000/- for the year ended 31 December 2012 (2011: S$260,000/-). (Resolution 4)

5. To re-appoint Ernst & Young LLP as the Company’s Auditors and to authorise the Directors to fix their remuneration. (Resolution 5)

6. To transact any other ordinary business which may properly be transacted at an annual general meeting.

AS SPECIAL BUSINESS

To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without any modifications:

7. That Mr. Sebastian Tan Cher Liang be and is hereby appointed as a Director of the Company. [See Explanatory Note (ii)] (Resolution 6)

8. Authority to allot and issue shares in the capital of the Company - Share Issue Mandate

“That, pursuant to Section 161 of the Companies Act, Cap. 50 (the “Companies Act”) and Rule 806 of the Listing Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST”), the Directors of the Company be authorised and empowered to:

(A) (i) issue shares in the Company (“Shares”) whether by way of rights, bonus or otherwise; and/or

(ii) make or grant offers, agreements or options (collectively, “Instruments”) that might or would require Shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) options, warrants, debentures or other instruments convertible into Shares,

at any time and upon such terms and conditions and for such purposes and to such persons as the Directors of the Company shall in their absolute discretion deem fit; and

(B) (notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue Shares in pursuance of any Instrument made or granted by the Directors while this Resolution was in force,

provided that:

(1) the aggregate number of Shares (including Shares to be issued in pursuance of the Instruments, made or granted pursuant to this Resolution) and convertible securities to be issued pursuant to this Resolution shall not exceed fifty per cent. (50%) of the total number of issued Shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of Shares and convertible securities to be issued other than on a pro-rata basis to the shareholders of the Company shall not exceed twenty per cent. (20%) of the total number of issued Shares (excluding treasury shares) in the capital of the Company (as at the time of passing this Resolution);

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(2) (subject to such calculation as may be prescribed by the SGX-ST) for the purpose of determining the aggregate number of Shares and convertible securities that may be issued under sub-paragraph (1) above on a pro-rata basis, the total number of issued Shares (excluding treasury shares) in the capital of the Company shall be based on the total number of issued Shares (excluding treasury shares) in the capital of the Company at the time of the passing of this Resolution, after adjusting for:

(a) new Shares arising from the conversion or exercise of convertible securities;

(b) new Shares arising from exercising share options or vesting of share awards outstanding or subsisting at the time of the passing of this Resolution, provided the options or awards were granted in compliance with the rules of the Listing Manual of the SGX-ST; and

(c) any subsequent bonus issue, consolidation or subdivision of Shares.

(3) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Listing Manual of the SGX-ST as amended from time to time (unless such compliance has been waived by the SGX-ST) and the Articles of Association of the Company; and

(4) unless revoked or varied by the Company in a general meeting, such authority shall continue in force until the conclusion of the next annual general meeting of the Company or the date by which the next annual general meeting is required by law to be held, whichever is the earlier.”

[See Explanatory Note (iii)] (Resolution 7)

9. Authority to allot and issue Shares under the Kingsmen Performance Share Scheme

“That pursuant to Section 161 of the Companies Act, the Directors be and are hereby authorised and empowered to grant awards in accordance with the Kingsmen Performance Share Scheme, and allot and issue from time to time such number of Shares in the capital of the Company to the holders of awards granted by the Company under the Kingsmen Performance Share Scheme upon the vesting of such share awards in accordance with the terms and conditions of the Kingsmen Performance Share Scheme, provided always that the aggregate number of Shares issued and issuable pursuant to the Kingsmen SOS, the Kingsmen Performance Share Scheme and any other share based incentive schemes of the Company shall not exceed fifteen per cent. (15%) of the total number of issued Shares (excluding treasury shares) in the capital of the Company from time to time.”

[See Explanatory Note (iv)] (Resolution 8)

10. Grant of share award under the Kingsmen Performance Share Scheme to Mr. Benedict Soh Siak Poh, a controlling shareholder of the Company

“That the Directors of the Company be and are hereby authorised to offer and grant an award to Mr. Benedict Soh Siak Poh in accordance with the rules of the Kingsmen Performance Share Scheme and on the following terms:

Proposed date of grant of award : within four (4) weeks from the date of the Company’s annual general meeting

Number of Shares : 200,000 Shares

Moratorium period : 12 months from the date of issue and allotment

Date of vesting of award : The date of grant of the award

[See Explanatory Note (v)] (Resolution 9)

11. Grant of share award under the Kingsmen Performance Share Scheme to Mr. Simon Ong Chin Sim, a controlling shareholder of the Company

“That the Directors of the Company be and are hereby authorised to offer and grant an award to Mr. Simon Ong Chin Sim in accordance with the rules of the Kingsmen Performance Share Scheme and on the following terms:




Date of vesting of award : The date of grant of the award


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12. Grant of share award under the Kingsmen Performance Share Scheme to Mr. Roy Ong Chin Kwan, an associate of a controlling shareholder of the Company

“That the Directors of the Company be and are hereby authorised to offer and grant an award to Mr. Roy Ong Chin Kwan in accordance with the rules of the Kingsmen Performance Share Scheme and on the following terms:




Date of vesting of award : The date of grant of the Award


13. Proposed renewal of the Share Purchase Mandate

That:

(a) for the purposes of Sections 76C and 76E of the Companies Act, the exercise by the Directors of the Company of all the powers of the Company to purchase or otherwise acquire ordinary Shares in the issued share capital of the Company not exceeding in aggregate the Prescribed Limit (as hereafter defined), at such price or prices as may be determined by the Directors of the Company from time to time up to the Maximum Price (as hereafter defined), whether by way of:

(i) market purchases (each a “Market Purchase”) on the SGX-ST transacted through the Central Limit Order Book (CLOB) trading system, through one or more duly licensed stockbrokers appointed by the Company for the purpose; and/or

(ii) off-market purchases (each an “Off-Market Purchase”) effected otherwise than on the SGX-ST in accordance with any equal access scheme as may be determined or formulated by the Directors of the Company as they consider fit, such scheme shall satisfy all the conditions prescribed by the Companies Act,

and otherwise in accordance with all other laws, regulations and rules of the SGX-ST as may for the time being be applicable, be and is hereby authorised and approved generally and unconditionally (the “Share Purchase Mandate”);

(b) the authority conferred on the Directors of the Company pursuant to the Share Purchase Mandate may be exercised by the Directors of the Company at any time and from time to time during the period commencing from the passing of this Resolution and expiring on the earliest of:

(i) the date on which the next annual general meeting of the Company is held or required by law to be held;

(ii) the date on which Share purchases have been carried out to the full extent of the Share Purchase Mandate; or

(iii) the date on which the authority contained in the Share Purchase Mandate is varied or revoked by an ordinary resolution of shareholders of the Company in general meeting;

(c) in this Resolution:

“Prescribed Limit” means ten per cent. (10%) of the issued ordinary Shares (excluding treasury shares) of the Company as at the date of the passing of this Resolution; and

“Maximum Price” in relation to a Share to be purchased, means an amount (excluding brokerage, commissions, stamp duties, applicable goods and services tax and other related expenses) not exceeding:

(i) in the case of a Market Purchase: 105 per cent. (105%) of the Average Closing Price; and

(ii) in the case of an Off-Market Purchase: 120 per cent. (120%) of the Highest Last Dealt Price,

where:

“Average Closing Price” is the average of the closing market prices of a Share over the last five (5) market days, on which transactions in the Shares were recorded, preceding the day of the Market Purchase, and deemed to be adjusted for any corporate action that occurs after such five-day market period;

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“Highest Last Dealt Price” means the highest price transacted for a Share as recorded on the market day on which there were trades in the Shares immediately preceding the date of the making of the offer for an Off-Market Purchase; and

“date of the making of the offer” means the date on which the Company announces its intention to make an offer for an Off-Market Purchase, stating the purchase price (which shall not be more than the Maximum Price for an Off-Market Purchase calculated on the foregoing basis) for each Share and the relevant terms of the equal access scheme for effecting the Off-Market Purchase; and

(d) the Directors of the Company be and are hereby authorised to complete and do all such acts and things (including executing such documents as may be required) as they may consider expedient or necessary to give effect to the transactions contemplated by this Resolution. [See Explanatory Note (vi)] (Resolution 12)

By Order of the Board

Judith Low Secretary

Singapore, 15 April 2013 KINGSMEN CREATIVES LTD ANNUAL REPORT 2012

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Explanatory Notes:

(i) With reference to item 3 above, Mr. Lee Hock Lye is retiring by rotation at the Annual General Meeting, and has decided not to offer himself for re-election to office.

(ii) The Ordinary Resolution 6 proposed in item 7 above, is to appoint Mr. Sebastian Tan Cher Liang as an additional Director of the Company. Personal particulars of Mr. Tan can be found on page 24 of the Annual Report.

(iii) The Ordinary Resolution 7 proposed in item 8 above, if passed, will empower the Directors of the Company to issue Shares, make or grant instruments convertible into Shares and to issue Shares pursuant to such instruments, up to a number not exceeding, in total, 50% of the total number of issued Shares (excluding treasury shares) in the capital of the Company, of which up to 20% may be issued other than on a pro-rata basis to shareholders.

For determining the aggregate number of Shares that may be issued on a pro-rata basis, the total number of issued Shares (excluding treasury shares) will be calculated based on the total number of issued Shares (excluding treasury shares) in the capital of the Company at the time this Ordinary Resolution is passed after adjusting for new Shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the time when this Ordinary Resolution is passed and any subsequent bonus issue, consolidation or subdivision of Shares. In determining the 20% which may be issued other than on a pro-rata basis, the total number of issued Shares (excluding treasury shares) will be calculated based on the total number of issued Shares (excluding treasury shares) in the capital of the Company at the time the Ordinary Resolution 7 is passed.

(iv) The Ordinary Resolution 8 proposed in item 9 above, if passed, will empower the Directors of the Company, to allot and issue such number of fully paid Shares from time to time as may be required to be issued to the holders of awards granted by the Company pursuant to the provisions of the Kingsmen Performance Share Scheme.

(v) The grant of awards under the Kingsmen Performance Share Scheme to controlling shareholders of the Company and/or their associates must be approved by the shareholders of the Company. Mr. Benedict Soh Siak Poh and Mr. Simon Ong Chin Sim are controlling shareholders of the Company. Mr. Roy Ong Chin Kwan is an immediate family member, and thus an associate of, Mr. Simon Ong.

Further details are set out in the Appendix to the Annual Report.

(vi) The Ordinary Resolution 12 in item 13 above, if passed, will empower the Directors of the Company to purchase or otherwise acquire Shares by way of Market Purchases or Off-Market Purchases, provided that the aggregate number of Shares to be purchased or acquired under the Share Purchase Mandate does not exceed the Prescribed Limit, and at such price or prices as may be determined by the Directors of the Company from time to time up to the Maximum Price. The information relating to this proposed Ordinary Resolution is set out in the Appendix to the Annual Report.

Notes:

1. A Member of the Company entitled to attend and vote at the Annual General Meeting may appoint not more than two proxies to attend and vote instead of him.

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

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

4. 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 forty-eight (48) hours before the time appointed for holding the Annual General Meeting.

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appenDIx to SHareHolDerSin relation to

THE PROPOSED RENEWAL OF THE SHARE PURCHASE MANDATE

(Incorporated in the Republic of Singapore) (Company Registration No. 200210790Z)

APPENDIX DATED 15 APRIL 2013

THIS APPENDIX IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

This Appendix is circulated to the shareholders (“Shareholders”) of Kingsmen Creatives Ltd. (the “Company”), together with the Company’s annual report for the year ended 31 December 2012 (the “Annual Report”). Its purpose is to explain to the Shareholders the rationale for, and provide Shareholders with information relating to, the proposed renewal of the Share Purchase Mandate (as defined in this Appendix) to be tabled at the annual general meeting of the Company to be held on Wednesday, 30 April 2013 at 11.00 a.m. at 3 Changi South Lane, Singapore 486118.

The Notice of the Company’s annual general meeting and a proxy form are enclosed with the Annual Report.

If you have sold all your Shares in the capital of the Company, you should immediately forward this Appendix, the Annual Report and proxy form to the purchaser or to the bank, stockbroker or agent through whom the sale was effected for onward transmission to the purchaser.

The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Appendix.

If you are in any doubt as to the contents herein or as to the course of action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or any other professional adviser immediately.

letter to SHareHolDerSKINGSM


ContentS125127127127141142142142142

Definitions ................................................................

Letter to Shareholders ................................................

1. Introduction ........................................................

2. Proposed Renewal of the Share Purchase Mandate ..

3. Directors’ and Substanial Shareholders’ Interest ......

4. Action to be taken by Shareholders ........................

5. Directors’ Recommendation ..................................

6. Directors’ Responsibility Statement ......................

7. Documents for Inspection .....................................

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DeFInItIonS

For the purpose of this Appendix, the following definitions have, where appropriate, been used:

“2013 AGM” : The annual general meeting of the Company to be held on 30 April 2013 at 11.00 a.m. at 3 Changi South Lane, Singapore 486118

“Board” : The board of directors of the Company

“CDP” : The Central Depository (Pte) Limited

“Company” : Kingsmen Creatives Ltd.

“Companies Act” : The Companies Act (Chapter 50) of Singapore, as amended, varied or supplemented from time to time

“Controlling Shareholder” : A person who:

(a) holds directly or indirectly 15% or more of the total number of issued shares (excluding treasury shares) in the Company; or

(b) in fact exercises control over the Company

“Directors” : Directors of the Company for the time being

“EPS” : Earnings per Share

“FY” : Financial year ended or ending (as the case may be) 31 December

“Group” : The Company and its subsidiaries

“Latest Practicable Date” : 5 April 2013, being the latest practicable date prior to the submission of this Appendix

“Listing Manual” : The Listing Manual of the SGX-ST, as amended, varied or supplemented from time to time

“Market Day” : A day on which the SGX-ST is open for trading in securities

“NA” : Net asset

“NTA” : Net tangible asset

“public” : Persons other than the directors, chief executive officer, substantial shareholders or controlling shareholders of the Group, and their associates (as defined in the Listing Manual)

“Securities Account” : Securities accounts maintained by a Depositor with CDP but not including securities sub-accounts maintained with a Depository Agent

“SGX-ST” : Singapore Exchange Securities Trading Limited

“Shareholders” : Persons who are registered as holders of the Shares except where the registered holder is CDP, in which case the term “Shareholders” shall in relation to such Shares mean the Depositors whose Securities Accounts with CDP are credited with the Shares

“Shares” : Ordinary shares in the capital of the Company



“Share Purchase Mandate” : The general mandate granted by the Shareholders on 26 April 2012 to authorise the Directors to purchase Shares in accordance with the rules and regulations set forth in the Companies Act and the Listing Manual, the renewal of which is subject to the approval of the Shareholders at the 2013 AGM

“Take-over Code” : The Singapore Code on Take-overs and Mergers, as amended, varied or supplemented from time to time

Currencies and others

“S$”, “$” and “cents” : Singapore dollars and cents respectively

“%” or “per cent” : Per centum or percentage

The terms “Depositor”, “Depository Register” and “Depository Agent” shall have the meanings ascribed to them respectively by Section 130A of the Companies Act. The term “treasury shares” shall have the meaning ascribed to it in Section 4 of the Companies Act.

Any reference in this Appendix to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defined under the Companies Act, the Listing Manual or any statutory modification thereof and used in this Appendix shall, where applicable, have the meaning ascribed to it under the Companies Act, the Listing Manual or any statutory modification thereof, as the case may be.

Words importing the singular shall, where applicable, include the plural and vice versa and words importing the masculine gender shall, where applicable, include the feminine and neuter genders. References to persons shall, where applicable, include corporations.

Any reference to a time of a day in this Appendix is a reference to Singapore time unless otherwise stated.

Any discrepancies in this Appendix between the sum of the figures stated and the total thereof are due to rounding. Accordingly, figures shown as totals in this Appendix may not be an arithmetic aggregation of the figures which precede them.

letter to SHareHolDerSCE

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KINGSMEN CREATIVES LTD. (Incorporated in the Republic of Singapore) (Company Registration No. 200210790Z)

letter to SHareHolDerS

Directors: Benedict Soh Siak Poh (Executive Chairman) Simon Ong Chin Sim (Group Managing Director and Chief Executive Officer) Anthony Chong Siew Ling (Managing Director, Exhibitions & Museums) Lee Hock Lye (Independent Director) Prabhakaran s/o Narayanan Nair (Independent Director) Wong Ah Long (Independent Director)

15 April 2013

To: The Shareholders of Kingsmen Creatives Ltd.

Dear Shareholder,

THE PROPOSED RENEWAL OF THE SHARE PURCHASE MANDATE

1. INTRODUCTION

The board is convening the 2013 AGM to seek Independent Shareholders’ approval for, inter alia, the proposed renewal of the Share Purchase Mandate.

At the extraordinary general meeting of the Company held on 28 April 2008, the Shareholders had approved the Share Purchase Mandate to enable the Company to purchase or otherwise acquire the Shares. The Share Purchase Mandate was last renewed at the annual general meeting of the Company held on 26 April 2012 (the “2012 Mandate”). The validity period of the 2012 Mandate will expire at the 2013 AGM. Accordingly, the Company is seeking approval from its Shareholders for, inter alia, the renewal of the Share Purchase Mandate at the 2013 AGM.

This Appendix is circulated to Shareholders together with the Company’s Annual Report. The purpose of this Appendix is to explain the rationale for, and provide Shareholders with information relating to, the proposed renewal of the Share Purchase Mandate to be tabled at the 2013 AGM.

2. PROPOSED RENEWAL OF THE SHARE PURCHASE MANDATE

2.1 Rationale for the Share Purchase Mandate

The Share Purchase Mandate would give the Company flexibility to undertake purchases or acquisitions of its Shares at any time, subject to market conditions, during the period when the Share Purchase Mandate is in force. Share purchases provide the Company with a mechanism to facilitate the return of surplus cash (if any) over and above its ordinary capital requirements to its Shareholders, in an expedient and cost-efficient manner. Share purchases will also allow the Directors greater flexibility over the Company’s share capital structure with a view to enhancing its NTA per share and/or EPS.

The purchase or acquisition of Shares will only be undertaken if the Directors believe that it can benefit the Company and Shareholders. Shareholders should note that purchases or acquisitions of Shares pursuant to the Share Purchase Mandate may not be carried out to the full 10% limit as authorised. No purchase or acquisition of Shares will be made in circumstances, which would have or may have a material adverse effect on the financial position, liquidity and capital of the Company or the Group.

Registered Office: 3 Changi South Lane Singapore 486118



2.2 Authority and Limits of the Share Purchase Mandate

The authority and limitations placed on purchases or acquisitions of Shares by the Company under the Share Purchase Mandate, if approved at the 2013 AGM, are summarised below:

2.2.1 Maximum Number of Shares

The Company may purchase only Shares, which are issued and fully paid-up. The total number of Shares that may be purchased is limited to that number of Shares representing not more than 10% of the issued Shares as at the date of the 2013 AGM on which the resolution authorising the proposed renewal of the Share Purchase Mandate is passed (the “Approval Date”). Shares which are held as treasury shares, will be disregarded for purposes of computing the 10% limit. The Company holds 2,094,750 treasury shares as at the Latest Practicable Date.

For illustrative purposes only, based on 192,088,401 issued Shares (excluding treasury shares) as at the Latest Practicable Date, and assuming that (i) no further Shares are issued; and (ii) no Shares are purchased or acquired on or prior to the 2013 AGM, not more than 19,208,840 Shares (representing 10% of the issued Shares (excluding treasury shares) as at the date of 2013 AGM) may be purchased or acquired by the Company pursuant to the Share Purchase Mandate.

2.2.2 Duration of Authority

Purchases of Shares may be made, at any time and from time to time, from the Approval Date up to the earliest of:

(a) the date on which the next annual general meeting of the Company is held or required by law to be held;

(b) the date on which Share purchases have been carried out to the full extent permitted under the Share Purchase Mandate; or

(c) the date on which the authority contained in the Share Purchase Mandate is varied or revoked by an ordinary resolution of Shareholders in a general meeting.

2.2.3 Manner of Purchase

Purchases or acquisitions of Shares may be made by way of:

(a) market purchase(s) (“Market Purchases”) transacted on the SGX-ST through the Central Limit Order Book (CLOB) trading system, through one or more duly licensed stockbrokers appointed by the Company for the purpose; and/or

(b) off-market purchase(s) (“Off-Market Purchases”) made under an equal access scheme in accordance with Section 76C of the Companies Act.

The Directors may impose such terms and conditions, which are not inconsistent with the Share Purchase Mandate and the Companies Act, as they consider fit in the interests of the Company in connection with or in relation to an equal access scheme or schemes. Under the Companies Act, an equal access scheme must satisfy all the following conditions:

(a) offers for the purchase or acquisition of issued shares shall be made to every person who holds issued shares to purchase or acquire the same percentage of their issued shares;

(b) all of those persons shall be given a reasonable opportunity to accept the offers made; and

(c) the terms of all the offers are the same, except that there shall be disregarded:

(i) differences in consideration attributable to the fact that offers may relate to shares with different accrued dividend entitlements;

(ii) differences in consideration attributable to the fact that offers relate to shares with different amounts remaining unpaid; and

(iii) differences in the offers introduced solely to ensure that each person is left with a whole number of shares.


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In addition, the Listing Manual provides that, in making an Off-Market Purchase, the Company must issue an offer document to all Shareholders, which must contain at least the following information:

(a) the terms and conditions of the offer;

(b) the period and procedures for acceptances;

(c) the reasons for the proposed share purchase;

(d) the consequences, if any, of share purchases by the Company that will arise under the Take-over Code or other applicable take-over rules;

(e) whether the share purchase, if made, could affect the listing of the Shares on the SGX-ST;

(f) details of any share purchases made by the Company in the previous 12 months (whether Market Purchases or Off-Market Purchases), giving the total number of Shares purchased, the purchase price per Share or the highest and lowest prices paid for the purchases, where relevant, and the total consideration paid for the purchases; and

(g) whether the Shares purchased by the Company will be cancelled or kept as treasury shares.

2.2.4 Maximum Purchase Price

The purchase price (excluding brokerage, stamp duties, commissions, applicable goods and services tax and other related expenses) to be paid for the Shares will be determined by the Directors.

However, the purchase price must not exceed:

(i) in the case of a Market Purchase, 105% of the Average Closing Price (as defined below); and

(ii) in the case of an Off-Market Purchase pursuant to an equal access scheme, 120% of the Highest Last Dealt Price (as defined below),

(the “Maximum Price”) in either case, excluding related expenses of the purchase.

For the above purposes:

“Average Closing Price” means the average of the closing market prices of a Share over the last five (5) Market Days on which transactions in Shares were recorded, preceding the date of the Market Purchase, and deemed to be adjusted for any corporate action that occurs after such five-day period;

“Highest Last Dealt Price” means the highest price transacted for a Share as recorded on the Market Day on which transactions in Shares were recorded, immediately preceding the date of the making of the offer for an Off-Market Purchase; and

“date of the making of the offer” means the date on which the Company announces its intention to make an offer for an Off-Market Purchase, stating the purchase price (which shall not be more than the Maximum Price for an Off-Market Purchase calculated on the foregoing basis) for each Share and the relevant terms of the equal access scheme for effecting the Off-Market Purchase.



2.3 Status of Purchased Shares

Any Share which is purchased by the Company is deemed cancelled immediately on purchase (and all rights and privileges attached to that Share will expire on cancellation), unless such Share is held by the Company as a treasury share. Accordingly, the total number of issued Shares will be diminished by the number of Shares purchased or acquired by the Company and which are not held as treasury shares. At the time of each purchase of Shares by the Company, the Directors will decide whether the Shares purchased will be cancelled or kept as treasury shares, or partly cancelled and partly kept as treasury shares, depending on the needs of the Company at that time.

Under the Companies Act, Shares purchased or acquired by the Company may be held or dealt with as treasury shares. Some of the key provisions on treasury shares under the Companies Act are summarised below:

(a) Maximum Holdings

The number of Shares held as treasury shares cannot at any time exceed 10% of the total number of issued Shares.

(b) Voting and other Rights

The Company will not have the right to attend or vote at meetings and/or to receive any dividends in respect of treasury shares. However, the allotment of treasury shares as fully paid bonus shares is allowed. Also, a subdivision or consolidation of any treasury share into treasury shares of a smaller amount is allowed so long as the total value of the treasury shares after the subdivision or consolidation is the same as before.

(c) Disposal and Cancellation

The Company may dispose of treasury shares at any time in the following ways:

(i) selling the treasury shares for cash;

(ii) transferring the treasury shares for the purposes of or pursuant to an employees’ share scheme;

(iii) transferring the treasury shares as consideration for the acquisition of shares in or assets of another company or assets of a person;

(iv) cancelling the treasury shares; or

(v) selling, transferring or otherwise using the treasury shares for such other purposes as may be prescribed by the Minister for Finance.

2.4 Source of Funds

The Companies Act permits the Company to purchase Shares out of its capital and/or distributable profits, provided that:

(a) the Company is able to pay its debts in full at the time it purchases the Shares and will be able to pay its debts as they fall due in the normal course of business in the 12 months immediately following the purchase; and

(b) the value of the Company’s assets is not less than the value of its liabilities (including contingent liabilities), and will not become less than the value of its liabilities (including contingent liabilities) after the purchase of Shares.

The Company intends to use internal sources of funds, or a combination of internal resources and external borrowings, to finance its purchase of Shares.


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2.5 Financial Effects

It is not possible for the Company to realistically calculate or quantify the impact of purchases that may be made pursuant to the Share Purchase Mandate on the NTA and EPS of the Group, as the resultant effect will depend on, inter alia, the aggregate number of Shares purchased, the purchase prices paid for such Shares, whether the purchase is made out of capital or profits, whether the Shares purchased are held in treasury or cancelled, how the Shares held in treasury are subsequently dealt with by the Company in accordance with Section 76K of the Companies Act, and the amounts (if any) borrowed by the Company to fund the purchases.

Where the purchase of Shares is made out of distributable profits, such purchase (including costs incidental to the purchase) will correspondingly reduce the amount available for the distribution of cash dividends by the Company. Where the purchase of Shares is made out of capital, the amount available for the distribution of cash dividends by the Company will not be reduced.

Where the purchase of Shares is financed by internal resources and/or external borrowings, there may be an increase in the Group’s gearing ratio, and a decline in the Group’s current ratio and Shareholders’ funds. The actual impact on the Group’s gearing and current ratios will depend on, inter alia, the number of Shares purchased and the prices at which the Shares are purchased.

The Directors do not propose to exercise the Share Purchase Mandate to such an extent that the Group’s working capital requirements and ability to service its debts would be adversely affected. The purchase or acquisition of Shares will be effected taking into account, inter alia, the working capital requirements, availability of financial resources, the Group’s expansion and investment plans and prevailing market conditions. The Company intends to exercise the Share Purchase Mandate with a view to enhancing its NTA per share and/or EPS.

For illustrative purposes only and on the basis of the following assumptions:

(a) the purchase or acquisition by the Company of the maximum of 19,208,840 Shares (representing 10% of the issued Shares (excluding treasury shares) as at the Latest Practicable Date) was made on 1 January 2012;

(b) in the case of Market Purchases, the Company purchased or acquired Shares at the Maximum Price of S$0.9303 for each Share (being 105% of the Average Closing Price as at the Latest Practicable Date), and in the case of Off-Market Purchases, the Company purchased or acquired Shares at the Maximum Price of S$1.056 for each Share (being 120.0% of the Highest Last Dealt Price as at the Latest Practicable Date);

(c) the purchase or acquisition of Shares by the Company, which required funds amounting to, in the case of Market Purchases, S$17,869,984, and in the case of Off-Market Purchases, S$20,284,535, was financed entirely using internal sources of funds, and the Company received dividends from its subsidiaries to finance the acquisition;

(d) the Singapore corporate tax rate applied was 17%; and

(e) the cash reserves applied by the Group to pay for the purchase or acquisition of Shares, would otherwise have earned negligible return,

the financial effects of Share purchases by the Company pursuant to the Share Purchase Mandate on the unaudited consolidated financial statements of the Group for FY2012 are set out below:




Scenario 1

Market Purchases of 19,208,840 Shares out of capital, and the maximum number of Shares permitted under the Companies Act to be held in treasury are held in treasury and the balance are cancelled

Group Company

Before After Before After

Share Purchase Share Purchase Share Purchase Share Purchase

S$’000 S$’000 S$’000 S$’000

As at 31 December 2012

Share capital 23,266 20,480 23,266 20,480

Revenue reserves (distributable) 55,583 55,583 10,689 28,559

Other reserves (4,022) (4,022) 518 518

Treasury shares (978) (16,062) (978) (16,062)

Shareholders’ funds 73,849 55,979 33,495 33,495

NA(1) 73,849 55,979 33,495 33,495

Current assets 156,193 138,323 9,469 9,469

Current liabilities 100,639 100,639 2,073 2,073

Working capital 55,554 37,684 7,396 7,396

Total liabilities 102,639 102,639 2,100 2,100


Number of Shares, excluding treasury shares (‘000) 192,088 172,437 192,088 172,437

Weighted Average Number of Shares (‘000) 191,434 172,225 191,434 172,225

Financial Ratios

NA per Share(1) (cents) 38.45 32.46 17.44 19.42

Earning per Share(2) (cents) 8.84 9.82 5.48 16.46

Gearing ratio(3) (times) 1.39 1.83 0.06 0.06

Current ratio(4) (times) 1.55 1.37 4.57 4.57

Notes:

(1) NA per Share equals shareholders’ funds divided by the total number of Shares, excluding treasury shares(2) Earnings per share equals net profit attributable to equity holders divided by the weighted average number of Shares(3) Gearing ratio equals total liabilities divided by shareholders’ funds(4) Current ratio equals current assets divided by current liabilities

Market Purchases

The financial effects set out below are for illustrative purposes only. The illustrations are based on historical numbers for FY2012 and are in no way indicative of the Company’s future financial performance or a forecast of the Company’s financial position.

Although the Share Purchase Mandate would authorise the Company to purchase or acquire up to 10% of the issued Shares (excluding treasury shares), the Company may not necessarily purchase or acquire part of or the entire 10% of the issued Shares (excluding treasury shares).

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Scenario 2

Market Purchases of 19,208,840 Shares out of capital and cancelled

Group Company



S$’000 S$’000 S$’000 S$’000


Share capital 23,266 5,396 23,266 5,396


Other reserves (4,022) (4,022) 518 518

Treasury shares (978) (978) (978) (978)


NA(1) 73,849 55,979 33,495 33,495

Current assets 156,193 138,323 9,469 9,469


Working capital 55,554 37,684 7,396 7,396





Financial Ratios





Notes:

(1) NA per Share equals shareholders’ funds divided by the total number of Shares, excluding treasury shares(2) Earnings per share equals net profit attributable to equity holders divided by the weighted average number of Shares (3) Gearing ratio equals total liabilities divided by shareholders’ funds (4) Current ratio equals current assets divided by current liabilities



Scenario 3

Market Purchases of 19,208,840 Shares out of profits, and the maximum number of Shares permitted under the Companies Act to be held in treasury are held in treasury and the balance are cancelled

Group Company



S$’000 S$’000 S$’000 S$’000


Share capital 23,266 23,266 23,266 23,266


Other reserves (4,022) (4,022) 518 518

Treasury shares (978) (16,062) (978) (16,062)


NA(1) 73,849 55,979 33,495 33,495

Current assets 156,193 138,323 9,469 9,469


Working capital 55,554 37,684 7,396 7,396





Financial Ratios





Notes:

(1) NA per Share equals shareholders’ funds divided by the total number of Shares, excluding treasury shares (2) Earnings per share equals net profit attributable to equity holders divided by the weighted average number of Shares (3) Gearing ratio equals total liabilities divided by shareholders’ funds (4) Current ratio equals current assets divided by current liabilities


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Off-Market Purchases

Scenario 1

Off-Market Purchases of 19,208,840 Shares out of capital, and the maximum number of Shares permitted under the Companies Act to be held in treasury are held in treasury and the balance are cancelled

Group Company



S$’000 S$’000 S$’000 S$’000


Share capital 23,266 20,104 23,266 20,104


Other reserves (4,022) (4,022) 518 518

Treasury shares (978) (18,100) (978) (18,100)


NA(1) 73,849 53,565 33,495 33,496

Current assets 156,193 135,908 9,469 9,469


Working capital 55,554 35,269 7,396 7,396





Financial Ratios





Notes:




Scenario 2

Off-Market Purchases of 19,208,840 Shares out of capital and cancelled

Group Company



S$’000 S$’000 S$’000 S$’000


Share capital 23,266 2,981 23,266 2,981


Other reserves (4,022) (4,022) 518 518

Treasury shares (978) (978) (978) (978)


NA(1) 73,849 53,564 33,495 33,495

Current assets 156,193 135,908 9,469 9,469


Working capital 55,554 35,269 7,396 7,396





Financial Ratios





Notes:



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Scenario 3

Off-Market Purchases of 19,208,840 Shares out of profits, and the maximum number of Shares permitted under the Companies Act to be held in treasury are held in treasury and the balance are cancelled

Group Company



S$’000 S$’000 S$’000 S$’000


Share capital 23,266 23,266 23,266 23,266


Other reserves (4,022) (4,022) 518 518

Treasury shares (978) (18,100) (978) (18,100)


NA(1) 73,849 53,565 33,495 33,496

Current assets 156,193 135,908 9,469 9,469


Working capital 55,554 35,269 7,396 7,396





Financial Ratios





Notes:

(1) NA per Share equals shareholders’ funds divided by the total number of Shares, excluding treasury shares(2) Earnings per share equals net profit attributable to equity holders divided by the weighted average number of Shares (3) Gearing ratio equals total liabilities divided by shareholders’ funds(4) Current ratio equals current assets divided by current liabilities



2.6 Rules of the Listing Manual

2.6.1 Maximum Price

Under the Listing Manual, a listed company may purchase shares by way of Market Purchases at a price per share which is not more than 5% above the average of the closing market prices of the shares over the last five (5) Market Days, on which transactions in the shares were recorded, before the day on which the purchases were made and deemed to be adjusted for any corporate action that occurs after the relevant five-day period. The Maximum Price for a Share in relation to Market Purchases by the Company, referred to in Section 2.2.4 of this Appendix, conforms to this restriction.

2.6.2 Reporting Requirements

The Listing Manual requires a listed company to notify the SGX-ST of any purchase or acquisition of its shares (i) in the case of a Market Purchase, by 9.00 a.m. on the Market Day following the day on which it purchased shares; and (ii) in the case of an Off-Market Purchase under an equal access scheme, by 9.00 a.m. on the second Market Day after the close of acceptances of the offer. Such notification shall be in such form and include such details as may be prescribed by the Listing Manual.

2.6.3 No Purchases after Occurrences of Price Sensitive Developments

While the Listing Manual does not expressly prohibit any purchase of shares by a listed company during any particular time or times, because the listed company would be regarded as an “insider” in relation to any proposed purchase or acquisition of its issued shares, the Company will not undertake any purchase or acquisition of Shares pursuant to the Share Purchase Mandate at any time after a price sensitive development has occurred or has been the subject of a decision until the price sensitive information has been publicly announced. In particular, the Company will not purchase or acquire any Shares during the period of two (2) weeks immediately preceding the announcement of the Company’s financial statements for each of the first three (3) quarters of its financial year, and during the period of one (1) month immediately preceding the announcement of the Company’s full-year financial statements.

2.7 Listing Status of the Shares

Under Rule 723 of the Listing Manual, the Company shall ensure that at least 10% of its issued Shares (excluding treasury shares) is at all times held by the public.

As at the Latest Practicable Date:

(a) approximately 78,979,242 Shares, representing 41.1% of the total number of issued Shares, are held by the public; and

(b) 2,094,750 Shares are held by the Company as treasury shares.

If the Company had purchased Shares from the public up to the full 10% limit pursuant to the Share Purchase Mandate on the Latest Practicable Date, the number of Shares held by the public would be approximately 59,770,402 Shares, representing 34.6% of the total number of issued Shares.

The Company is of the view that there is a sufficient number of Shares held by public Shareholders which would permit the Company to undertake purchases of its Shares up to the full 10% limit pursuant to the Share Purchase Mandate without affecting the listing status of the Shares on the SGX-ST, causing market illiquidity or affecting orderly trading of the Shares.


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2.8 Tax Implications

Where the Company uses its Distributable Profits for Share Purchases

Under Section 10J of the Income Tax Act, Chapter 134 (the “Income Tax Act”), a company which purchases its own shares using its distributable profits is deemed to have paid a dividend to the shareholders from whom the shares are acquired.

As the Company has already moved into the one-tier corporate tax system, the provisions under Section 44 of the Income Tax Act do not apply to the Company. That is, the Company does not need to provide for the franking of dividends for any Share purchase made.

The tax treatment of the receipt from a Share purchase in the hands of the Shareholders will depend on whether the disposal arises from a Market Purchase or an Off-Market Purchase. Proceeds received by Shareholders who sell their Shares to the Company in Market Purchases will be treated for income tax purposes like any other disposal of shares made on SGX-ST and not as dividends. Whether or not such proceeds are taxable in the hands of such Shareholders will depend on whether such proceeds are receipts of an income or capital nature. Proceeds received by Shareholders who sell their Shares to the Company in an Off-Market Purchase effected by way of an equal access scheme will be treated for income tax purposes as receipts of dividends.

Where the Company uses its Contributed Capital for the Share Purchase

Under Section 10J of the Income Tax Act, a company which purchases its own shares using its contributed capital is not deemed to have paid a dividend to its shareholders from whom the shares are acquired.

Proceeds received by Shareholders who sell their Shares to the Company for which the purchases were made out of contributed capital will be treated for income tax purposes like any other disposal of shares made on SGX-ST and not as dividends. Whether or not such proceeds are taxable in the hands of such Shareholders will depend on whether such proceeds are receipts of an income or capital nature.

Shareholders should note that the foregoing is not to be regarded as advice on the tax position of any Shareholder. Shareholders who are in doubt as to their respective tax positions or the tax implications of Share purchases by the Company, or who may be subject to tax whether in or outside Singapore, should consult their own professional advisers.



2.9 Obligations to Make a Take-over Offer

If, as a result of any purchase or acquisition of Shares by the Company, the percentage of voting rights in the Company of a Shareholder and persons acting in concert with him increases, such increase will be treated as an acquisition for the purposes of Rule 14 of the Take-over Code. Consequently, a Shareholder or a group of Shareholders acting in concert could obtain or consolidate effective control of the Company and become obliged to make an offer under Rule 14 of the Take-over Code.

The circumstances under which Shareholders, including Directors, and persons acting in concert with them will incur an obligation to make a take-over offer under Rule 14 after a purchase of Shares by the Company are set out in Appendix 2 of the Take-over Code.

In general terms, the effect of Rule 14 and Appendix 2 of the Take-over Code is that, if, as a result of the Company purchasing or acquiring Shares, the voting rights of Directors and their concert parties would increase to 30% or more, or in the event that such Directors and their concert parties hold between 30% and 50% of the Company’s voting rights, if the voting rights of such Directors and their concert parties would increase by more than 1% in any period of six (6) months, the Directors and their concert parties will be exempted from the requirement to make a Take-over Offer subject to certain conditions, including, inter alia, the submission by each of the Directors of an executed form prescribed by the Securities Industry Council within seven (7) days of the passing of the resolution to authorise renewal of the Share Purchase Mandate.

Under Appendix 2 of the Take-over Code, a Shareholder not acting in concert with the Directors will not be required to make a take-over offer under Rule 14 if, as a result of the Company purchasing its Shares, the voting rights of such Shareholder would increase to 30% or more, or if such Shareholder holds between 30% and 50% of the Company’s voting rights, the voting rights of such Shareholder would increase by more than 1% in any period of six (6) months. Such Shareholder need not abstain from voting on the resolution authorising renewal of the Share Purchase Mandate.

2.9.1 Persons Acting in Concert

Under the Take-over Code, persons acting in concert comprise individuals or companies who, pursuant to an agreement or understanding (whether formal or informal) co-operate, through the acquisition by any of them of shares in a company, to obtain or consolidate effective control of that company. Unless the contrary is established, the following persons, inter alia, will be presumed to be acting in concert: (i) a company with any of its directors (together with their immediate family members); and (ii) a company, its parent company, subsidiaries and fellow subsidiaries, and their associated companies, and companies whose associated companies include any of the foregoing. Under the Take-over Code, a company is an associated company of another company if the second company owns or controls at least 20% but not more than 50% of the voting rights of the first-mentioned company.

Based on substantial shareholding notifications received by the Company under Division 4, Part IV of the Companies Act as at the Latest Practicable Date, as set out in section 3 of this Appendix, none of the substantial Shareholders would become obliged to make a take-over offer under Rule 14 of the Take-over Code as a result of the purchase or acquisition of Shares by the Company up to the maximum limit of 10% of the Share Purchase Mandate.

The Directors are not aware of any facts or factors which suggest or imply that any particular person(s) and/or Shareholder(s) are, or may be regarded as, persons acting in concert such that their respective shareholding interests in the Company should or ought to be consolidated, and consequences under the Take-over Code would ensue as a result of a purchase of Shares by the Company pursuant to the Share Purchase Mandate.

The statements set out above do not purport to be a comprehensive or exhaustive description of all implications that may arise under the Take-over Code. Shareholders who are in doubt as to whether they would incur any obligation to make a take-over offer as a result of any purchase of Shares by the Company pursuant to the Share Purchase Mandate are advised to consult their professional advisers and/or the Securities Industry Council and/or other relevant authorities at the earliest opportunity.


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2.10 Reporting Requirements

Within 30 days of approval by Shareholders of the proposed renewal of the Share Purchase Mandate, the Company shall lodge a copy of the relevant Shareholders’ resolution with the Registrar of Companies (the “Registrar”).

The Company shall notify the Registrar within 30 days of a purchase of Shares by the Company. Such notification shall include the date of the purchases, the number of Shares purchased by the Company, the number of Shares cancelled, the number of Shares held as treasury shares, the Company’s issued share capital before and after the purchases, the amount of consideration paid by the Company for the purchases, whether the Shares were purchased out of the profits or capital of the Company, and such other particulars as may be required in the prescribed form.

Within 30 days of the cancellation or disposal of treasury shares in accordance with the provisions of the Companies Act, the Company shall lodge with the Registrar the notice of cancellation or disposal of treasury shares in the prescribed form.

2.11 Share Purchases in the Previous 12 months

No purchases of Shares have been made by the Company in the 12 months preceding the Latest Practicable Date.

3. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTEREST

As at the Latest Practicable Date, the interests of the Directors in the Shares, as extracted from the Company’s Register of Directors’ Shareholdings, and the interests of substantial Shareholders (being a Shareholder whose interest in the Company’s issued share capital is equal to or more than 5%), as extracted from the Company’s Register of Substantial Shareholders, are as follows:

Number of Shares

Name Direct Interest % Deemed Interest %

Directors

Benedict Soh Siak Poh 7,734,439 4.05 37,993,060(1) 19.89

Simon Ong Chin Sim 7,734,420 4.05 37,993,060(2) 19.89

Anthony Chong Siew Ling 3,634,761 1.90 - -

Prabhakaran Narayanan Nair - - - -

Wong Ah Long - - 36,000(3) 0.02

Lee Hock Lye - - - -

Substantial Shareholders

Islanda Pte Ltd 37,993,060 19.89 - -

O-Vest Pte Ltd 37,993,060 19.89 - -

Png Geok Choo Rose - - 37,993,060(4) 19.89

Soh E-Ling Marianne - - 37,993,060(5) 19.89

Soh Hsien Wern Gavin - - 37,993,060(6) 19.89

Jillian Soh E-Ping - - 37,993,060(7) 19.89

Vera Ong Lim Guek Noi - - 37,993,060(8) 19.89

Ong Mei Lin Elita - - 37,993,060(9) 19.89

Notes:

(1) Mr Benedict Soh Siak Poh’s deemed interest refers to the 37,993,060 Shares held by Islanda Pte Ltd by virtue of Section 7 of the Companies Act. (2) Mr Simon Ong Chin Sim’s deemed interest refers to the 37,993,060 Shares held by O-Vest Pte Ltd by virtue of Section 7 of the Companies Act. (3) Mr Wong Ah Long’s deemed interest refers to the 36,000 Shares held by his spouse. (4) Mdm Png Geok Choo Rose’s deemed interest refers to the 37,993,060 Shares held by Islanda Pte Ltd by virtue of Section 7 of the Companies Act. (5) Ms Soh E-Ling Marianne’s deemed interest refers to the 37,993,060 Shares held by Islanda Pte Ltd by virtue of Section 7 of the Companies Act. (6) Mr Soh Hsien Wern Gavin’s deemed interest refers to the 37,993,060 Shares held by Islanda Pte Ltd by virtue of Section 7 of the Companies Act. (7) Ms Jillian Soh E-Ping’s deemed interest refers to the 37,993,060 Shares held by Islanda Pte Ltd by virtue of Section 7 of the Companies Act. (8) Mdm Vera Ong Lim Guek Noi’s deemed interest refers to the 37,993,060 Shares held by O-Vest Pte Ltd by virtue of Section 7 of the Companies Act. (9) Ms Ong Mei Lin Elita’s deemed interest refers to the 37,993,060 Shares held by O-Vest Pte Ltd by virtue of Section 7 of the Companies Act.



4. ACTION TO BE TAKEN BY SHAREHOLDERS

Shareholders who are unable to attend the 2013 AGM and wish to appoint a proxy to attend and vote on their behalf should complete and sign the proxy form which is attached to the Notice of the 2013 AGM in accordance with the instructions printed thereon as soon as possible and, in any event, so as to arrive at the Company’s registered office at 3 Changi South Lane, Singapore 486118, not less than 48 hours before the time fixed for the holding of the 2013 AGM. The completion and return of the proxy form by a Shareholder will not preclude him from attending the 2013 AGM and voting in person if he so wishes.

A Depositor shall not be regarded as a member of the Company entitled to attend the 2013 AGM and to speak and vote thereat unless his name appears on the Depository Register, as certified by the CDP, at least 48 hours before the 2013 AGM.

5. DIRECTORS’ RECOMMENDATIONS

The Directors are of the opinion that the proposed renewal of the Share Purchase Mandate is in the best interests of the Company. Accordingly, they recommend that Shareholders vote in favour of Ordinary Resolution 12 relating to the proposed renewal of the Share Purchase Mandate to be tabled at the 2013 AGM.

6. DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors collectively and individually accept full responsibility for the accuracy of the information given in this Appendix and confirm after making all reasonable enquiries, that to the best of their knowledge and belief, this Appendix constitutes full and true disclosure of all material facts about the proposed renewal of the Share Purchase Mandate, the Company and its subsidiaries, and the Directors are not aware of any facts the omission of which would make any statement in this Appendix misleading. Where information in this Appendix has been extracted from published or otherwise publicly available sources or obtained from a named source, the sole responsibility of the Directors has been to ensure that such information has been accurately and correctly extracted from those and/or reproduced in the Appendix in its proper form and context.

7. DOCUMENTS FOR INSPECTION

A copy of the following documents may be inspected at the registered office of the Company at 3 Changi South Lane, Singapore 486118, during normal business hours from the date of this Appendix up to and including the date of the 2013 AGM:

(a) the Annual Report of the Company for the financial year ended 31 December 2012; and

(b) the memorandum and articles of association of the Company.

Yours faithfully

For and on behalf of the Board of Kingsmen Creatives Ltd.

Benedict Soh Siak Poh Executive Chairman


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appenDIx to SHareHolDerSin relation to

THE PROPOSED GRANT OF AWARDS TO:

(I) MR. BENEDICT SOH SIAK POH, A CONTROLLING SHAREHOLDER OF THE COMPANY; (II) MR. SIMON ONG CHIN SIM, A CONTROLLING SHAREHOLDER OF THE COMPANY; AND (III) MR. ROY ONG CHIN KWAN, AN ASSOCIATE OF A CONTROLLING SHAREHOLDER OF THE COMPANY,

UNDER THE KINGSMEN PERFORMANCE SHARE SCHEME


(Incorporated in the Republic of Singapore) (Company Registration No. 200210790Z)

APPENDIX DATED 15 APRIL 2013

THIS APPENDIX IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

This Appendix is circulated to the shareholders (“Shareholders”) of Kingsmen Creatives Ltd. (the “Company”), together with the Company’s annual report for the year ended 31 December 2012 (the “Annual Report”). Its purpose is to provide Shareholders with information relating to, and explain the rationale for, the proposed grant of awards to controlling shareholders and an associate of a controlling shareholder under the Kingsmen Performance Share Scheme, to be tabled at the annual general meeting of the Company to be held on 30 April 2013 at 11.00 a.m. at 3 Changi South Lane, Singapore 486118.

The notice of the Company’s annual general meeting and a proxy form are enclosed with the Annual Report.

If you have sold all your shares in the capital of the Company, you should immediately forward this Appendix, the Annual Report and proxy form to the purchaser or to the bank, stockbroker or agent through whom the sale was effected for onward transmission to the purchaser.

The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Appendix.

If you are in any doubt as to the contents herein or as to the course of action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser immediately.


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Definitions ................................................................

Letter to Shareholders ................................................

1. Introduction ........................................................

2. The Kingsmen Performance Share Scheme .............

3. Proposed Awards .................................................

4. Directors’ and Substantial Shareholders’ Interest .....

5. Directors’ Recommendation ..................................

6. Shareholders who will abstain from Voting ..............

7. Action to be taken by Shareholders ........................

8. Directors’ Responsibility Statement ........................

9. Documents for Inspection .....................................

Rules of the Kingsmen Performance Share Scheme .......

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DeFInItIonS

For the purpose of this Appendix, the following definitions have, where appropriate, been used:

“2011 Award” : Has the meaning ascribed to it in Section 3.4(b)(ii)

“2013 AGM” : The annual general meeting of the Company to be held on 30 April 2013 at 11.00 a.m. at 3 Changi South Lane, Singapore 486118

“Associates” : Shall bear the meaning assigned to it by the Listing Manual

“Available Shares” : Has the meaning ascribed to it in Section 3.4(b)(i)

“Award” : A contingent award of Shares granted under the Scheme

“Board” : The board of directors of the Company

“CDP” : The Central Depository (Pte) Limited

“Committee” : A committee comprising Directors duly authorised and appointed by the Board to administer the Scheme

“Company” : Kingsmen Creatives Ltd.

“Companies Act” : The Companies Act (Chapter 50) of Singapore, as amended, varied or supplemented from time to time

“Controlling Shareholder” : A person who:

(a) holds directly or indirectly 15% or more of the total number of issued shares (excluding treasury shares) in the Company; or

(b) in fact exercises control over the Company

“Directors” : Directors of the Company for the time being

“Executive Directors” : The executive directors of the Company

“FRS” : Singapore Financial Reporting Standards

“FY” : The financial year ended or ending (as the case may be) 31 December

“Group” : The Company and its subsidiaries

“Independent Director” The independent directors of the Company

“Independent Shareholders” : Shareholders other than Shareholders who are Participants or Associates of Participants

“Latest Practicable Date” : 5 April 2013, being the latest practicable date prior to the submission of this Appendix



“Listing Manual” : The Listing Manual of the SGX-ST, as amended, varied or supplemented from time to time

“Participant” : A person who has been granted an Award

“Performance Shares” The Shares which may be allotted, issued or transferred from time to time pursuant to an Award under the Scheme

“Performance Target(s)” : The performance target(s) prescribed by the Committee to be fulfilled by a Participant for any particular period under the Scheme

“Proposed Awards” : Has the meaning ascribed to it in Section 1

“Scheme” : The Kingsmen Performance Share Scheme, as may be amended, varied or supplemented from time to time

“Scheme Shares” : Has the meaning ascribed to it in Section 2.1

“SGX-ST” : Singapore Exchange Securities Trading Limited

“Shares” : Ordinary shares in the capital of the Company

“Shareholders” : Persons who are registered as holders of the Shares except where the registered holder is CDP, in which case the term “Shareholders” shall in relation to such Shares mean the Depositors whose securities accounts with CDP are credited with the Shares

Currencies and others

“S$” : Singapore dollars

“%” or “per cent” : Per centum or percentage

The terms “Depositor”, “Depository Agent” and “Depository Register” shall have the same meanings ascribed to them respectively in Section 130A of the Companies Act. The term “treasury shares” shall have the meaning ascribed to it in Section 4 of the Companies Act.

Any reference in this Appendix to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defined under the Companies Act, the Listing Manual or any statutory modification thereof and used in this Appendix shall, where applicable, have the meaning ascribed to it under the Companies Act, the Listing Manual or any statutory modification thereof, as the case may be.

Words importing the singular shall, where applicable, include the plural and vice versa and words importing the masculine gender shall, where applicable, include the feminine and neuter genders. References to persons shall, where applicable, include corporations.

Any reference to a time of a day in this Appendix is a reference to Singapore time unless otherwise stated.

Any discrepancies in this Appendix between the sum of the figures stated and the total thereof are due to rounding. Accordingly, figures shown as totals in this Appendix may not be an arithmetic aggregation of the figures which precede them.


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KINGSMEN CREATIVES LTD. (Incorporated in the Republic of Singapore) (Company Registration No. 200210790Z)


Directors: Benedict Soh Siak Poh (Executive Chairman) Simon Ong Chin Sim (Group Managing Director and Chief Executive Officer) Anthony Chong Siew Ling (Managing Director, Exhibitions & Museums) Lee Hock Lye (Independent Director) Prabhakaran s/o Narayanan Nair (Independent Director) Wong Ah Long (Independent Director)

15 April 2013

To: The Shareholders of Kingsmen Creatives Ltd.

Dear Shareholder,

THE PROPOSED GRANT OF AWARDS TO:

(I) MR. BENEDICT SOH SIAK POH, A CONTROLLING SHAREHOLDER OF THE COMPANY; (II) MR. SIMON ONG CHIN SIM, A CONTROLLING SHAREHOLDER OF THE COMPANY; AND (III) MR. ROY ONG CHIN KWAN, AN ASSOCIATE OF A CONTROLLING SHAREHOLDER OF THE COMPANY,

UNDER THE KINGSMEN PERFORMANCE SHARE SCHEME

1. INTRODUCTION

The Board is convening the 2013 AGM to seek Independent Shareholders’ approval for, inter alia, the proposed grant of Awards under the Scheme to Controlling Shareholders of the Group, Mr. Benedict Soh Siak Poh and Mr. Simon Ong Chin Sim, and Mr. Roy Ong Chin Kwan, an Associate of a Controlling Shareholder (“Proposed Awards”). Mr. Roy Ong is the brother, and thus an Associate, of Mr. Simon Ong, a Controlling Shareholder.

At the extraordinary general meeting of the Company held on 29 April 2009, the Shareholders approved, inter alia, the Scheme, and the participation by the following Controlling Shareholders and Associates in the Scheme:

(i) Mr. Benedict Soh Siak Poh;

(ii) Mr. Simon Ong Chin Sim; and

(iii) Mr. Roy Ong Chin Kwan.

The Scheme is administered by the Committee, comprising the Executive Directors and the Independent Directors. The detailed rules of the Scheme are set out in Schedule A of this Appendix.

This Appendix is circulated to Shareholders together with the Company’s Annual Report. The purpose of this Appendix is to provide Shareholders with information relating to, and explain the rationale for, the Proposed Awards to be tabled at the 2013 AGM.

2. THE KINGSMEN PERFORMANCE SHARE SCHEME

2.1 Size of the Scheme

The aggregate number of Shares available under the Scheme (“Scheme Shares”) shall not exceed 15% of the total number of issued Shares (excluding treasury shares) from time to time, in accordance with Rule 845(1) of the Listing Manual. As at the Latest Practicable Date, the aggregate Awards granted comprise 3.07% of the Company’s issued share capital.

2.2 Delivery of Performance Shares

The Company will deliver Shares to Participants upon vesting of Awards by way of issue of new Shares and/or purchase of existing Shares. In determining whether to issue new Shares or purchase existing Shares, the Company will take into account, inter alia, the number of Performance Shares to be delivered, the prevailing market price of the Shares and the potential cost to the Company.

Registered Office: 3 Changi South Lane Singapore 486118



2.3 Rationale for Participation by Controlling Shareholders and their Associates

Directors and employees of the Group who are also Controlling Shareholders or Associates thereof should be remunerated for their contribution to the Group on the same basis as other Directors and employees who are not Controlling Shareholders or Associates of Controlling Shareholders. Although Controlling Shareholders and their Associates already have shareholding interests in the Company, the extension of the Scheme to encompass them will ensure that they are equally entitled to take part and benefit from the same. The Scheme is intended to be part of the remuneration package for selected Directors and employees of the Group, and the Controlling Shareholders and their Associates should not be unduly discriminated against by virtue only of the Controlling Shareholders’ shareholdings in the Company. The extension of the Scheme will enhance the long-term commitment of such Controlling Shareholders and Associates as they will continue to have a stake in the Company even if they sell down their existing Shares in the Company.

Eligible Controlling Shareholders and their Associates shall be treated equally for the purposes of the Scheme. Accordingly, the Scheme does not unduly favour such Controlling Shareholders or their Associates. The terms and conditions of the Scheme do not differentiate between eligible Controlling Shareholders and their Associates from other Participants. In this manner, the Scheme would not unduly favour such Controlling Shareholders or Associates over other Participants.

Participation by Controlling Shareholders and/or their Associates allows the Company to propose a more balanced and flexible remuneration package which would link an employee’s total remuneration to the results of the Company, and this would in turn increase Shareholders’ value. The grant of Awards to eligible Controlling Shareholders and/or their Associates will act as an incentive for such persons to better their performance as the delivery of Shares pursuant to the Scheme is contingent upon prescribed Performance Targets and conditions being met and/or good work performance.

3. PROPOSED AWARDS

3.1 Proposed Award to Mr. Benedict Soh Siak Poh, a Controlling Shareholder

As set out in Resolution 9 of the notice of the 2013 AGM, it is proposed that Mr. Benedict Soh be granted an Award in accordance with the rules of the Scheme and on the following terms:

Proposed date of grant of Award : within four (4) weeks from the date of the 2013 AGM

Number of Performance Shares : 200,000 Shares


Date of vesting of Awards : the date of grant of the Award

Rationale

Mr. Benedict Soh is the Group’s Executive Chairman, managing and developing the Group’s overseas operations and exploring strategic business opportunities. As one of the founders of the Group, Mr. Benedict Soh has been instrumental in spearheading the growth of our business operations.

The Company seeks to reward Mr. Benedict Soh, via the Proposed Award, for his significant contributions to the Group’s success and growth. The Proposed Award will form a part of Mr. Benedict Soh’s remuneration. Under the leadership of Mr. Benedict Soh and the senior management team, the Group achieved a compounded annual growth rate of 11.26% in revenue from S$189.4 million in FY2008 to S$290.2 million in FY2012 and a compounded annual growth rate of 4.51% in net profit after tax from S$14.2 million in FY2008 to S$16.9 million in FY2012.

The Directors are of the view that granting the Award to Mr. Benedict Soh will motivate him to continue to achieve superior performance, and create greater Shareholders’ value in order to realise the benefits of the Award in due course. This will enhance Mr. Benedict Soh’s long-term commitment to the Company, and promote the long-term growth and development of the Group.

The Committee is of the view that granting the Award to Mr. Benedict Soh will provide him with an increased sense of ownership in, and encourage greater dedication to, the Company, which would align Mr. Benedict Soh’s interests with the interests of Shareholders. In arriving at the value of the Proposed Award to Mr. Benedict Soh and the number of Performance Shares proposed to be granted, the Committee took into consideration, inter alia, Mr. Benedict Soh’s scope of responsibilities, his performance and contributions to the Group, the Company’s financial performance and comparable industry benchmarks for executive remuneration.

Mr. Benedict Soh has abstained from the decision-making process of the Board and the Committee in relation to the Proposed Award.


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3.2 Proposed Award to Mr. Simon Ong Chin Sim, a Controlling Shareholder

As set out in Resolution 10 of the notice of the 2013 AGM, it is proposed that Mr. Simon Ong be granted an Award in accordance with the rules of the Scheme and on the following terms:

Proposed date of grant of Awards : within four (4) weeks from the date of the 2013 AGM




Rationale

Mr. Simon Ong is the Group’s Managing Director and Chief Executive Officer, overseeing the Group’s strategic development, and setting the policies on the Group’s creative standards. As one of the founders of the Group, Mr. Simon Ong has been instrumental in formulating the Group’s business strategy and creative direction.

The Company seeks to reward Mr. Simon Ong, via the Proposed Award, for his significant contributions to the Group’s success and growth. The Proposed Award will form a part of Mr. Simon Ong’s remuneration. Under the leadership of Mr. Simon Ong and the senior management team, the Group achieved a compounded annual growth rate 11.26% in revenue from S$189.4 million in FY2008 to S$290.2 million in FY2012 and a compounded annual growth rate of 4.51% in net profit after tax from S$14.2 million in FY2008 to S$16.9 million in FY2012.

The Directors are of the view that granting the Award to Mr. Simon Ong will motivate him to continue to achieve superior performance, and create greater Shareholders’ value in order to realise the benefits of the Award in due course. This will enhance Mr. Simon Ong’s long-term commitment to the Company, and promote the long-term growth and development of the Group.

The Committee is of the view that granting the Award to Mr. Simon Ong will provide him with an increased sense of ownership in, and encourage greater dedication to, the Company, which would align Mr. Simon Ong’s interests with the interests of Shareholders. In arriving at the value of the Proposed Award to Mr. Simon Ong and the number of Performance Shares proposed to be granted, the Committee took into consideration, inter alia, Mr. Simon Ong’s scope of responsibilities, his performance and contributions to the Group, the Company’s financial performance and comparable industry benchmarks for executive remuneration.

Mr. Simon Ong has abstained from the decision-making process of the Board and the Committee in relation to the Proposed Award.

3.3 Proposed Award to Mr. Roy Ong Chin Kwan, an Associate of a Controlling Shareholder

As set out in Resolution 11 of the notice of the 2013 AGM, it is proposed that Mr. Roy Ong be granted an Award in accordance with the rules of the Scheme and on the following terms:

Proposed date of grant of Awards : within four (4) weeks from the date of the 2013 AGM




Rationale

Mr. Roy Ong is the Group’s Creative Director, managing a team of over 80 designers to ensure that the Group’s designs meet the aesthetic, functional and budgetary requirements of the Group’s clients.

The Company seeks to reward Mr. Roy Ong, via the Proposed Award, for his good performance and valuable contributions to the Group over the years. The Proposed Award will form a part of Mr. Roy Ong’s remuneration. The Company recognises that Mr. Roy Ong has made significant contributions to the growth of the Group. From FY2008 to FY2012, the Group’s research and design business segment achieved a compounded annual growth rate of 14.76% in segment revenue from S$5.9 million to S$10.2 million and a compounded annual growth rate of 18.03% in segment profits from S$1.7 million to S$3.2 million.

The Directors are of the view that granting the Award to Mr. Roy Ong will motivate him to continue to achieve superior performance, and create greater Shareholders’ value in order to realise the benefits of the Award in due course. This will enhance Mr. Roy Ong’s long-term commitment to the Company, and promote the long-term growth and development of the Group.



The Committee is of the view that granting the Award to Mr. Roy Ong will provide him with a sense of ownership in, and encourage greater dedication to, the Company, which would align Mr. Roy Ong’s interests with the interests of Shareholders. In arriving at the value of the Proposed Award to Mr. Roy Ong and the number of Performance Shares proposed to be granted, the Committee took into consideration, inter alia, Mr. Roy Ong’s scope of responsibilities and potential for future development, his performance and contributions to the Group, the Company’s financial performance and comparable industry benchmarks for executive remuneration.

Mr. Simon Ong has abstained from the decision-making process of the Board and the Committee in relation to the Proposed Award to Mr. Roy Ong.

3.4 Applicable Rules of the Listing Manual

(a) Independent Shareholders’ Approval

Pursuant to Rule 853 of the Listing Manual, the Company is required to seek Independent Shareholders’ approval for the grant of Awards to Mr. Benedict Soh, Mr. Simon Ong and Mr. Roy Ong in accordance with the terms set out in Sections 3.1, 3.2 and 3.3 of this Appendix.

(b) Maximum entitlement for Controlling Shareholders and their Associates

As stated in Rules 845(2) and 845(3) of the Listing Manual:

(i) the aggregate number of Shares available (“Available Shares”) to Controlling Shareholders and their Associates must not exceed 25% of the total number of Scheme Shares; and

(ii) the number of Available Shares to each Controlling Shareholder or his Associate must not exceed 10% of the total number of Scheme Shares.

As at the Latest Practicable Date:

(i) there is a total of 25,771,915 Scheme Shares.

(ii) the aggregate award of Available Shares to Controlling Shareholders and their Associates (excluding the Proposed Awards) comprise solely of the award of 36,830 Performance Shares, representing 0.14% of the total number of Scheme Shares, to Mr. Roy Ong in FY2011 (“2011 Award”). Upon vesting of the Proposed Awards, the aggregate awards of Available Shares to Controlling Shareholders and their Associates (including the Proposed Awards) will comprise 1.93% of the total number of Scheme Shares.

(iii) the aggregate award of Available Shares to Mr. Benedict Soh (including the Proposed Award) comprise 0.78% of the total number of Scheme Shares. The aggregate award of Available Shares to Mr. Simon Ong (including the Proposed Award) comprise 0.78% of the total number of Scheme Shares. The aggregate award of Available Shares to Mr. Roy Ong (including the 2011 Award and the Proposed Award) comprise 0.38% of the total number of Scheme Shares.

(c) Announcement relating to the Proposed Awards

The Company will make an announcement in relation to the Proposed Awards, if approved by Independent Shareholders, on the date of grant of Awards and provide details, including (i) the date of grant; (ii) the number of Performance Shares granted; (iii) the market price of its Shares on the date of grant; and (iv) the number of Performance Shares granted to each Director and Controlling Shareholder (and each of their Associates), in accordance with Rule 704(29) of the Listing Manual.

3.5 Potential cost

The Scheme is considered a share-based payment that falls under the scope of FRS102, Share-based payment. For the grant of Awards with a vesting period, the fair value of employee services received in exchange for the grant of such Awards would be recognised as an expense in the Group’s income statement with a corresponding increase in a reserve account over the vesting period. The total expense to be recognised over the vesting period is determined by reference to the fair value of each Award granted on the date of the grant. As such, the fair value of the Proposed Awards to Mr. Benedict Soh, Mr. Simon Ong and Mr. Roy Ong is expected to be the prevailing market price per Share on the date of grant multiplied by the number of Shares under each Award.


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4. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTEREST

As at the Latest Practicable Date, the interests of the Directors in the Shares, as extracted from the Company’s Register of Directors’ Shareholdings, and the interests of substantial Shareholders (being a Shareholder whose interest in the Company’s issued share capital is equal to or more than 5%), as extracted from the Company’s Register of Substantial Shareholders, are as follows:

Number of Shares

Name Direct Interest % Deemed Interest %

Directors

Benedict Soh Siak Poh 7,734,439 4.05 37,993,060(1) 19.89

Simon Ong Chin Sim 7,734,420 4.05 37,993,060(2) 19.89

Anthony Chong Siew Ling 3,634,761 1.90 - -

Wong Ah Long - - 36,000(3) 0.02

Prabhakaran Narayanan Nair - - - -

Lee Hock Lye - - - -

Substantial Shareholders

Islanda Pte Ltd 37,993,060 19.89 - -

O-Vest Pte Ltd 37,993,060 19.89 - -

Png Geok Choo Rose - - 37,993,060(4) 19.89

Soh E-Ling Marianne - - 37,993,060(5) 19.89

Soh Hsien Wern Gavin - - 37,993,060(6) 19.89

Jillian Soh E-Ping - - 37,993,060(7) 19.89

Vera Ong Lim Guek Noi - - 37,993,060(8) 19.89

Ong Mei Lin Elita - - 37,993,060(9) 19.89

Notes:

(1) Mr Benedict Soh Siak Poh’s deemed interest refers to the 37,993,060 Shares held by Islanda Pte Ltd by virtue of Section 7 of the Companies Act. (2) Mr Simon Ong Chin Sim’s deemed interest refers to the 37,993,060 Shares held by O-Vest Pte Ltd by virtue of Section 7 of the Companies Act. (3) Mr Wong Ah Long’s deemed interest refers to the 36,000 Shares held by his spouse. (4) Mdm Png Geok Choo Rose’s deemed interest refers to the 37,993,060 Shares held by Islanda Pte Ltd by virtue of Section 7 of the Companies Act. (5) Ms Soh E-Ling Marianne’s deemed interest refers to the 37,993,060 Shares held by Islanda Pte Ltd by virtue of Section 7 of the Companies Act. (6) Mr Soh Hsien Wern Gavin’s deemed interest refers to the 37,993,060 Shares held by Islanda Pte Ltd by virtue of Section 7 of the Companies Act. (7) Ms Jillian Soh E-Ping’s deemed interest refers to the 37,993,060 Shares held by Islanda Pte Ltd by virtue of Section 7 of the Companies Act. (8) Mdm Vera Ong Lim Guek Noi’s deemed interest refers to the 37,993,060 Shares held by O-Vest Pte Ltd by virtue of Section 7 of the Companies Act. (9) Ms Ong Mei Lin Elita’s deemed interest refers to the 37,993,060 Shares held by O-Vest Pte Ltd by virtue of Section 7 of the Companies Act.



5. DIRECTORS’ RECOMMENDATION

The Directors are eligible to participate in, and are therefore interested in, the Scheme. Accordingly, the Directors have abstained from making any recommendation on the Proposed Awards to Mr. Benedict Soh, Mr. Simon Ong and Mr. Roy Ong.

6. SHAREHOLDERS WHO WILL ABSTAIN FROM VOTING

All Shareholders who are eligible to participate in the Scheme (including Mr. Benedict Soh, Mr. Simon Ong and Mr. Roy Ong) shall abstain, and ensure that their respective Associates abstain, from voting on the resolution pertaining to the Proposed Awards at the 2013 AGM, and will not accept nominations to act as proxy unless the Shareholder concerned has provided specific instructions as to voting.

7. ACTION TO BE TAKEN BY SHAREHOLDERS

Shareholders who are unable to attend the 2013 AGM and wish to appoint a proxy to attend and vote on their behalf should complete and sign the proxy form which is attached to the Notice of the 2013 AGM in accordance with the instructions printed thereon as soon as possible and, in any event, so as to arrive at the Company’s registered office at 3 Changi South Lane, Singapore 486118, not less than 48 hours before the time fixed for the holding of the 2013 AGM. The completion and return of the proxy form by a Shareholder will not preclude him from attending the 2013 AGM and voting in person if he so wishes.

A Depositor shall not be regarded as a member of the Company entitled to attend the 2013 AGM and to speak and vote thereat unless his name appears on the Depository Register, as certified by the CDP, at least 48 hours before the 2013 AGM.

8. DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors collectively and individually accept full responsibility for the accuracy of the information given in this Appendix and confirm after making all reasonable enquiries that, to the best of their knowledge and belief, this Appendix constitutes full and true disclosure of all material facts about the Proposed Awards, the Company and its subsidiaries, and the Directors are not aware of any facts the omission of which would make any statement in this Appendix misleading. Where information in the Appendix has been extracted from published or otherwise publicly available sources or obtained from a named source, the sole responsibility of the Directors has been to ensure that such information has been accurately and correctly extracted from those sources and/or reproduced in the Appendix in its proper form and context.

9. DOCUMENTS FOR INSPECTION

A copy of the following documents may be inspected at the registered office of the Company at 3 Changi South Lane, Singapore 486118, during normal business hours from the date of this Appendix up to and including the date of the 2013 AGM:

(a) the Annual Report of the Company for the financial year ended 31 December 2012; and

(b) the memorandum and articles of association of the Company.

Yours faithfully

For and on behalf of the Board of Kingsmen Creatives Ltd.

Benedict Soh Siak Poh Executive Chairman


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SCHeDUle a rUleS oF tHe KInGSMen perForManCe SHare SCHeMe

1. Name of the Scheme

The Scheme shall be called the “Kingsmen Performance Share Scheme”.

2. Definitions

2.1 In the Scheme, unless the context otherwise requires, the following words and expressions shall have the following meanings:

“Act” The Companies Act, Chapter 50 of Singapore, as amended, modified or supplemented from time to time

“Adoption Date” The date on which the Scheme is adopted by the Company in general meeting

“Associated Company” A company in which at least 20% but not more than 50% of its shares are held by the Company or the Group and over which the Company has control

“Associated Company Employee” An executive or non-executive director of an Associated Company or a full time employee of an Associated Company selected by the Committee to participate in the Scheme in accordance with Rule 4

“Auditors” The auditors for the time being of the Company

“Awards” The contingent award of Shares under the Scheme

“Board” The board of directors of the Company for the time being

“CDP” The Central Depository (Pte) Limited

“Commencement Date” The date for the commencement of the Scheme

“Committee” A committee comprising directors of the Company, duly authorised, appointed and nominated by the Board pursuant to the Rules to administer the Scheme

“Company” Kingsmen Creatives Ltd., a company incorporated in Singapore

“Controlling Shareholder” A shareholder who, in relation to the Company, has control, or as such term may be defined in the Listing Manual

“CPF” The Central Provident Fund

“Group” The Company together with its subsidiaries

“Group Employee” Any employee of the Group (including any Group Executive Directors) who meet the relevant age and rank criteria and whose services had been seconded to a company within the Group) selected by the Committee to participate in the Scheme in accordance with Rule 4

“Group Executive Director” A director of the Company and/or its subsidiaries, as the case may be, who performs an executive function within the Group

“Listing Manual” The Listing Manual of the SGX-ST, as amended, modified or supplemented from time to time

“Market Day” A day on which the SGX-ST is open for trading in securities

“Non-Executive Director” A Person who is: (a) an independent director of the Company; or (b) a director of the Company and/or any of its subsidiaries, as the case may be, other than a Group Executive Director



“Participant” A person who is selected by the Committee to participate in the Scheme in accordance with these provisions

“Performance Period” The performance period during which the Performance Targets shall be satisfied

“Performance Targets” The performance targets prescribed by the Committee to be fulfilled by a Participant for any particular period under the Scheme

“Rules” The rules of the Scheme, as amended, modified or supplemented from time to time

“Scheme” The Kingsmen Performance Share Scheme, as amended, modified or supplemented from time to time

“SGX-ST” The Singapore Exchange Securities Trading Limited

“Shareholders” The registered holders of the Shares or in the case of Depositors, Depositors who have Shares entered against their names in the Depository Register

“Shares” Ordinary shares in the capital of the Company

“%” or “per cent” Percentage or per centum

“$” or “S$” Singapore dollars

2.2 For the purposes of the Scheme:

(a) in relation to a Shareholder (including, where the context requires, the Company), “control” means the capacity to dominate decision-making, directly or indirectly, in relation to the financial and operating policies of that company;

(b) unless rebutted, a person who holds directly or indirectly, a shareholding of 15% or more of the Company’s issued share capital shall be presumed to be a Controlling Shareholder; and

(c) in relation to a Controlling Shareholder, his “associate” shall have the meaning ascribed to it by the Listing Manual or any other publication prescribing rules or regulations for corporations admitted to the Official List of the SGX-ST (as modified, supplemented or amended from time to time).

2.3 The terms “Depositor” and “Depository Agent” shall have the meanings ascribed to them respectively by Section 130A of the Companies Act.

2.4 Any reference in the Scheme or the Rules to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defined under the Act or any statutory modification thereof and used in the Scheme and the Rules shall have the meaning assigned to it under the Act.

2.5 Words importing the singular number shall include the plural number where the context admits and vice versa. Words importing the masculine gender shall include the feminine gender where the context admits.

2.6 Any reference to a time of day shall be a reference to Singapore time.

3. Objectives

The purpose of the Scheme is to provide an opportunity for Group Employees, Group Executive Directors and Associated Company Employees, who have met the Performance Targets to be enumerated through an equity stake in the Company and/or when due recognition should be given to any good work performance and/or significant contribution to the Company as well as for Group Employees to receive part of their annual cash bonus payment in the form of Shares. The Scheme is also extended to Non-Executive Directors.

The Company believes that the retention of outstanding employees within the Group is paramount to the Group’s long-term objectives of pursuing continuous growth and expansion in its future business and operations. Furthermore, the Group acknowledges that the importance of preserving financial resources for future business development and to withstand difficult times. In light of this, the Group’s strategy is to contain the remuneration of its employees and executives which constitutes a major component of the Group’s operating costs.

The Scheme is formulated with those objectives in mind. Through the Scheme, the Company hopes to be able to remain an attractive and competitive employer, and to be better.


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4. Eligibility

4.1 The following persons (provided that such persons are not undischarged bankrupts at the relevant time and have attained the age of 21 years on or before the date of grant of the Award) shall be eligible to participate in the Scheme at the absolute discretion of the Committee:

(a) Group Employees (including Group Executive Directors);

(b) Non-Executive Directors;

(c) subject to Rule 4.3 below, Associated Company Employees; and

(d) subject to Rule 4.2 below, Controlling Shareholders and their associates.

4.2 Controlling Shareholders and their associates shall be eligible to participate in the Scheme. However, the aggregate number of Shares available to Controlling Shareholders and their associates must not exceed 25% of the Shares available under the Scheme. The number of Shares available to each Controlling Shareholder or his associate must also not exceed 10% of the Shares available under the Scheme.

4.3 Only Associated Company Employees from Associated Companies which the Company has control will be eligible to participate in the Scheme.

4.4 For the purposes of determining eligibility to participate in the Scheme, the secondment of a Group Executive to another company within the Group shall not be regarded as a break in his employment or his having ceased by reason only of such secondment to be a full-time employee of the Group.

4.5 There shall be no restriction on the eligibility of any Participant to participate in any other share option or share incentive schemes implemented by the Company or any other company within the Group.

4.6 Subject to the Act and any requirement of the SGX-ST, the terms of eligibility for participation in the Scheme may be amended from time to time at the absolute discretion of the Committee.

5. Limitations under the Scheme

5.1 The Company may deliver Shares pursuant to the Awards granted under the Scheme in the form of existing Shares held as treasury shares and/or an issue of new Shares.

5.2 Awards may only be vested and consequently any Shares comprised in such Awards shall only be delivered upon (i) the Committee being satisfied that the Participant has achieved the Performance Targets and/or due recognition should be given for good work performance and/or significant contribution to the Company and/or (ii) the Company decides to pay part of a Group Employee’s annual cash bonus payment in the form of Shares.

5.3 The aggregate number of Shares over which the Committee may grant Awards on any date, when added to the number of Shares issued and issuable in respect of all Awards granted under the Scheme and all other awards granted under any other share option, share incentive, performance share or restricted share scheme implemented by the Company and for the time being in force, shall not exceed fifteen percent. (15%) of the issued Shares of the Company (excluding treasury shares) on the date preceding the grant of an Award.

6. Date of grant

The Committee may grant Awards at any time in the course of a financial year, provided that in the event that an announcement on any matter of an exceptional nature involving unpublished price sensitive information is imminent, Awards may only be granted and hence any Shares comprised in such Awards may only be delivered on or after the second Market Day from the date on which the aforesaid announcement is made.



7. Awards

7.1 Awards, which will comprise of fully paid Shares, are personal to the Participant to whom it is given and shall not be transferred (other than to a Participant’s personal representative on the death of that Participant), charged, assigned, pledged or otherwise disposed of, in whole or in part, unless with the prior approval of the Committee.

7.2 Once an Award is finalised by the Committee, the Committee shall send an Award letter to the Participant confirming the said Award. The said Award letter shall specify, inter alia, the following:

(a) in relation to a performance-related Award:

(i) the Performance Target(s) for the Participant;

(ii) the Performance Period for the Participant;

(b) the number of Shares to be vested on the Participant; and

(c) the date by which the Award shall be vested.

7.3 The Committee shall take into account various factors when determining the method to arrive at the exact number of Shares comprised in an Award. Such factors include, but are not limited to, the current price of the Shares, the total issued share capital of the Company and the predetermined dollar amount which the Committee decides that a Participant deserves for meeting his Performance Targets. For example, Shares may be awarded based on predetermined dollar amounts such that the quantum of Shares comprised in Awards is dependent on the closing price of Shares transacted on the Market Day the Award is vested. Alternatively the Committee may decide absolute numbers of Shares to be awarded to Participants irrespective of the price of the Shares. The Committee shall monitor the grant of Awards carefully to ensure that the size of the Scheme will comply with the relevant rules of the SGX-ST.

8. Performance Targets

8.1 The Committee shall, in its absolute discretion, determine the relevant Performance Target(s) for each Participant, and such Performance Target(s) shall be specified in the Award letter as set out in Rule 7.2.

8.2 The Committee has the right to amend the Performance Target(s) if the Committee decides that it would be a fairer measure of the performance of a Participant or for the Scheme as a whole. The Committee shall have the sole discretion to determine whether Performance Target(s) have been satisfied (whether fully or partially) or exceeded and/or whether the Participant’s performance and/or contribution to the Company and/or any of its subsidiaries justifies the vesting of an Award. In making any such determination, the Committee shall have the right to take into account such factors as the Committee may in its sole discretion determine to be relevant, and further, the right to amend the service conditions and/or Performance Target(s), if any, if the Committee decides that it would be more equitable to do so.

8.3 For the avoidance of doubt, the Performance Target(s) is measured with reference to the quarterly, semi-annual and/or annual financial results of the Company (the “Accounts”) and any pre-determined performance condition(s) to be achieved by each specific Participant.

9. Vesting of the Awards

9.1 Notwithstanding that a Participant may have met his Performance Targets, no Awards shall be vested:

(a) upon the bankruptcy of the Participant or the happening of any other event which results in his being deprived of the legal or beneficial ownership of such Award; or

(b) in the event of any misconduct on the part of the Participant as determined by the Committee in its discretion;

(c) in the event that the Committee shall, at its discretion, deem it appropriate that such Award to be given to a Participant shall so lapse on the grounds that any of the objectives of the Scheme (as set out in Rule 3) have not been met;

(d) in the event that the Participant ceases to be employed by the Group or Associated Company before vesting of the Award to him; or

(e) in the event that the Participant who is a Group Executive Director or Non-Executive Director ceases to be a director of the Group.


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10. Take-over and winding up of the Company

10.1 Subject to Rule 9 and Rule 10.5, in the event of a take-over being made for the Shares, a Participant shall be entitled to the Shares under the Awards if he has met the Performance Targets for the corresponding Performance Period. For the avoidance of doubt, the vesting of such Awards will not be affected by the take-over offer.

10.2 If under any applicable laws, the court sanctions a compromise or arrangement proposed for the purposes of, or in connection with, a scheme for the reconstruction of the Company or its amalgamation with another company or companies, each Participant who has fulfilled his Performance Target shall be entitled, but subject to Rule 10.5, to any Shares under the Awards so determined by the Committee to be released to him during the period commencing on the date upon which the compromise or arrangement is sanctioned by the court and ending either on the expiry of sixty (60) days thereafter or the date upon which the compromise or arrangement becomes effective, whichever is later.

10.3 If an order is made for the winding-up of the Company on the basis of its insolvency, all Awards, notwithstanding that Shares may have not been released to the Participants shall be deemed or become null and void.

10.4 In the event of a members’ voluntary winding-up (other than for amalgamation or reconstruction), the Shares under the Awards shall be released to the Participant for so long as, in the absolute determination by the Committee, the Participant has met the Performance Targets prior to the date that the members’ voluntary winding-up shall be deemed to have been commenced or effective in law.

10.5 If in connection with the making of a general offer referred to in Rule 10.1 or the scheme referred to in Rule 10.2 or the winding-up referred to in Rule 10.4, arrangements are made (which are confirmed in writing by the Auditors, acting only as experts and not as arbitrators, to be fair and reasonable) for the compensation of Participants, whether by the payment of cash or by any other form of benefit, no release of Shares under the Award shall be made in such circumstances.

11. Shares

11.1 Subject to such consents or other required action of any competent authority under any regulations or enactments for the time being in force as may be necessary and subject to the compliance with the terms of the Scheme and the Memorandum and Articles of Association of the Company, the Company shall within one (1) month after the vesting of an Award, transfer and/or allot the relevant Shares and despatch to CDP the relevant share certificates by ordinary post or such other mode as the Committee may deem fit.

11.2 Shares which are the subject of an Award shall be issued in the name of CDP to the credit of the securities account of that Participant maintained with CDP, the securities sub-account maintained with a Depository Agent or the CPF investment account maintained with a CPF agent bank.

11.3 Shares delivered upon the vesting of an Award shall be subject to all the provisions of the Memorandum and Articles of Association of the Company, and shall rank in full for all entitlements, excluding dividends or other distributions declared or recommended in respect of the then existing Shares, the Record Date for which falls on or before the relevant vesting date of the Award, and shall in all other respects rank pari passu with other existing Shares then in issue. “Record Date” means the date fixed by the Company for the purposes of determining entitlements to dividends or other distributions to or rights of holders of Shares.

11.4 The Company shall keep available sufficient treasury shares and/or issue sufficient new Shares to satisfy the delivery of the Shares pursuant to vesting of the Awards.



12. Variation of Capital

12.1 If a variation in the issued ordinary share capital of the Company (whether by way of a capitalisation of profits or reserves or rights issue, distribution or otherwise) shall take place, then:

(a) the class and/or number of Shares which are the subject of an Award to the extent not yet vested; and/or

(b) the class and/or number of Shares over which future Awards may be granted under the Scheme,

shall be adjusted by the Committee to give each Participant the same proportion of the equity capital of the Company as that to which he was previously entitled and, in doing so, the Committee shall determine at its own discretion the manner in which such adjustment shall be made.

12.2 Unless the Committee considers an adjustment to be appropriate:

(a) the issue of securities as consideration for an acquisition or a private placement of securities; or

(b) the cancellation of issued Shares purchased or acquired by the Company by way of a market purchase of such Shares undertaken by the Company on the SGX-ST during the period when a share purchase mandate granted by Shareholders of the Company (including any renewal of such mandate) is in force,

shall not normally be regarded as a circumstance requiring adjustment.

12.3 Notwithstanding the provisions of Rule 12.1:

(a) no such adjustment shall be made if as a result, the Participant receives a benefit that a Shareholder does not receive; and

(b) any determination by the Committee as to whether to make any adjustment and if so, the manner in which such adjustment should be made, must (except in relation to a capitalisation issue) be confirmed in writing by the Auditors (acting only as experts and not as arbitrators) to be in their opinion, fair and reasonable.

12.4 Any increase in the issued share capital of the Company as a consequence of the delivery of Shares pursuant to the vesting of Awards from time to time by the Company or through any other share-based incentive schemes implemented by the Company will also not be regarded as a circumstance requiring adjustment.

12.5 Upon any adjustment required to be made pursuant to this Rule 12, the Company shall notify the Participant (or his duly appointed personal representatives where applicable) in writing and deliver to him (or his duly appointed personal representatives where applicable) a statement setting forth the class and/or number of Shares thereafter to be issued pursuant to the grant of an Award. Any adjustment shall take effect upon such written notification being given.


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13. Administration of the Scheme

13.1 The Scheme shall be administered by the Committee in its absolute discretion with such powers and duties as are conferred on it by the Board, provided that no member of the Committee shall participate in any deliberation or decision in respect of Awards granted or to be granted to him. The quorum for any Committee meeting shall be three (3) directors, of which two (2) of the directors shall be independent directors.

13.2 The Committee shall have the power, from time to time, to make and vary such rules (not being inconsistent with the Scheme) for the implementation and administration of the Scheme as they think fit including, but not limited to:

(a) imposing restrictions on the number of Awards that may be vested within each financial year;

(b) amending Performance Targets in accordance with Rule 8.2, if by so doing, it would be a fairer measure of performance for a Participant or for the Scheme as a whole.

13.3 Any decision of the Committee made pursuant to any provision of the Scheme (other than a matter to be certified by the Auditors) shall be final and binding (including any decisions pertaining to the number of Shares to be vested) or to disputes as to the interpretation of the Scheme or any rule, regulation, procedure thereunder or as to any rights under the Scheme.

14. Notices and Annual Report

14.1 Any notice required to be given by a Participant to the Company shall be sent or made to the registered office of the Company or such other addresses as may be notified by the Company to him in writing.

14.2 Any notices or documents required to be given to a Participant or any correspondence to be made between the Company and the Participant shall be given or made by the Committee (or such person(s) as it may from time to time direct) on behalf of the Company and shall be delivered to him by hand or sent to him at his home address according to the records of the Company or at the last known address of the Participant and if sent by post, shall be deemed to have been given on the day following the date of posting.

14.3 The Company shall disclose the following in its annual report:

(a) the names of the members of the Committee administering the Scheme;

(b) the information required in the table below for the following participants:

(i) Directors of the Company;

(ii) Controlling Shareholders and their Associates;

(iii) Participants other than those in (i) and (ii) above, who received Shares pursuant to the vesting of the Awards granted under the Scheme which, in aggregate, represent five per cent. (5%) or more of the aggregate of the total number of Shares available under the Scheme;

Name of Participant

Number of Shares comprised in Awards during financial review (including terms)

Aggregate number of Shares comprised in Awards from commencement of Scheme to the end of financial year under review

Number of Shares comprised in Awards which have been issued and/or transferred during the financial year under review

Number of Shares comprised in Awards not released during financial year under review

Proportion of Shares comprised in Awards which have vested during financial year under review

(c) such other information as may be required by the Listing Manual or the Act.

If any of the information in sub-paragraphs (a) to (c) above is not applicable, an appropriate negative statement shall be included.



15. Modifications to the Scheme

15.1 Any or all the provisions of the Scheme may be modified and/or altered at any time and from time to time by resolution of the Committee, except that:

(a) any modification or alteration which would be to the advantage of Participants under the Scheme shall be subject to the prior approval of Shareholders in a general meeting;

(b) the modification or alteration must be made in such a way that a Participant will not receive a benefit that a Shareholder does not receive; and

(c) no modification or alteration shall be made without due compliance with the Listing Manual and such other regulatory authorities as may be necessary.

15.2 The Committee may at any time by resolution (and without other formality, save for the prior approval of the SGX-ST) amend or alter the rules or provisions of the Scheme in any way to the extent necessary to cause the Scheme to comply with any statutory provision or the provision or the regulations of any regulatory or other relevant authority or body (including the SGX-ST).

15.3 Written notice of any modification or alteration made in accordance with this Rule 15 shall be given to all Participants.

16. Terms of employment unaffected

The terms of employment of a Participant (who is a Group Employee) shall not be affected by his participation in the Scheme, which shall neither form part of such terms nor entitle him to take into account such participation in calculating any compensation or damages on the termination of his employment for any reason.

17. Duration

17.1 The Scheme shall continue to be in force at the discretion of the Committee, subject to a maximum period of ten (10) years commencing on the Adoption Date, provided always that the Scheme may continue beyond the above stipulated period with the approval of the Company’s shareholders by ordinary resolution in general meeting and of any relevant authorities which may then be required.

17.2 The Scheme may be terminated at any time by the Committee or by resolution of the Company in general meeting subject to all relevant approvals which may be required and if the Scheme is so terminated, no further Awards shall be vested by the Company thereunder.

17.3 The termination of the Scheme shall not affect Awards which have been vested, whether such Shares have been delivered or not.


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18. Taxes

All taxes (including income tax) arising from the grant and/or disposal of Shares pursuant to the Awards granted to any Participant under the Scheme shall be borne by that Participant.

19. Costs and expenses

19.1 Each Participant shall be responsible for all fees of CDP relating to or in connection with the issue and allotment or transfer of any Shares pursuant to the Awards in CDP’s name, the deposit of share certificate(s) with CDP, the Participant’s securities account with CDP, or the Participant’s securities sub-account with a CDP Depository Agent or CPF investment account with a CPF agent bank (collectively, the “CDP Charges”).

19.2 Save for the taxes referred to in Rule 18 and such other costs and expenses expressly provided in the Scheme to be payable by the Participants, all fees, costs and expenses incurred by the Company in relation to the Scheme including but not limited to the fees, costs and expenses relating to the allotment, issue and/or delivery of Shares pursuant to the Awards shall be borne by the Company.

20. Disclaimer of liability

Notwithstanding any provisions herein contained, the Board, the Committee and the Company shall not under any circumstances be held liable for any costs, losses, expenses and damages whatsoever and howsoever arising in any event, including but not limited to the Company’s delay in issuing or transferring the Shares or applying for or procuring the listing of the Shares on the SGX-ST.

21. Disputes

Any disputes or differences of any nature arising hereunder shall be referred to the Committee and its decision shall be final and binding in all respects.

22. Condition of Awards

Every Award shall be subject to the condition that no Shares would be issued or transferred pursuant to the vesting of any Award if such issue or transfer would be contrary to any law or enactment, or any rules or regulations of any legislative or non-legislative governing body for the time being in force in Singapore or any other relevant country having jurisdiction in relation to the issue or transfer of Shares hereto.

23. Governing Law

The Scheme shall be governed by, and construed in accordance with, the laws of the Republic of Singapore. The Participants, by accepting Awards in accordance with the Scheme, and the Company irrevocably submit to the exclusive jurisdiction of the courts of the Republic of Singapore.


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IMPORTANT1. For investors who have used their CPF monies to buy shares in the capital

of Kingsmen Creatives Ltd., this Annual Report is forwarded to them at the request of their CPF Approved Nominees and is sent FOR INFORMATION ONLY.

2. This proxy form is not valid for use by CPF investors and shall be ineffective for all intent and purposes if used or purported to be used by them.

KInGSMen CreatIveS ltD.(Company Registration Number: 200210790Z) (Incorporated in Singapore)

proxy ForM(Please see notes overleaf before completing this Form)

I/We, (name) of

(address)

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

Name Address NRIC / Passport No.

Proportion of Shareholdings

%

and/or (delete as appropriate)

or failing him/her, the Chairman of the Meeting as my/our proxy/proxies to vote for me/us on my/our behalf at the Annual General Meeting (“Meeting”) of the Company to be held on Tuesday, 30 April 2013, at 11.00 a.m. and at any adjournment thereof. I/We direct my/our proxy/proxies to vote on the business before the Meeting as indicated below. If no specific direction as to voting is given, the proxy/proxies will vote or abstain from voting at his/her discretion, as he/she will on any other matter arising at the Meeting:

No. Resolutions relating to: For Against

1. Directors’ Report and Audited Accounts for the year ended 31 December 2012

2. Approval of payment of the final one-tier tax exempt dividend

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

4. Approval of Directors’ fees amounting to S$260,000 for the year ended 31 December 2012

5. Re-appointment of Ernst & Young LLP as Auditors

6. Appointment of Sebastian Tan Cher Liang as a Director

7. Authority to allot and issue shares in the capital of the Company - Share Issue Mandate

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

9. Grant of Share award to Mr. Benedict Soh Siak Poh under the Kingsmen Performance Share Scheme

10. Grant of Share award to Mr. Simon Ong Chin Sim under the Kingsmen Performance Share Scheme

11. Grant of Share award to Mr. Roy Ong Chin Kwan under the Kingsmen Performance Share Scheme

12. Renewal of the Share Purchase Mandate

(Please indicate with a cross [X] in the space provided whether you wish your vote to be cast for or against the Resolutions as set out in the Notice of the Meeting).

Dated this day of

Signatures of Shareholder(s) or, Common Seal

Total number of Shares in: No. of Shares Held

(a) CDP Register

(b) Register of Members

IMPORTANT: PLEASE READ NOTES OVERLEAF

Notes:1. A member of the Company 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 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 from 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 not ascertainable from the instructions of the appointor specified on the Proxy Form. In addition, in the case of shares entered in the Depository Register, the Company may reject a Proxy Form if the member, being the appointor, is not shown to have shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.

The SecretaryKingsmen Creatives Ltd.Kingsmen Creative Centre3 Changi South LaneSingapore 486118

First Fold

Second Fold

Affix Postage

Here

KINGSMEN CREATIVES LTDCo. Reg. No. 200210790Z

kINgSmEN CrEATIVE CENTrE3 Changi South LaneSingapore 486118Tel (65) 688 000 88Fax (65) 688 000 38

[email protected]


A. Testoni / Abercrombie & Fitch / Adidas / AIA / Aigner / Aldo / Alfa Romeo / Anya Hindmarch / ANZ / Apple / Art Stage Singapore / Asahi / Ascott

International / Asia Pacific Breweries / Aspial / Au Chocolat / Audi / Aussino / Balenciaga / Bally / Banana Republic / Bang & Olufsen / Bank of America

/ Barclays / Bausch & Lomb / Bebe / Bell & Ross / Bershka / Billabong / Binny & Smith / Blackberry / Bloomberg / BMW / Boeing / Bonia / Bottega

Veneta / Boucheron / Braun Buffel / Bridgestone / British Dispensary / British India / Broadridge / Brooks Brothers / Bruno Magli / Bvlgari / Burberry

/ Calvin Klein / Camel Active / Camus / Canali / Canon / Caran d’Ache / Carl F. Bucherer / Cartier / Celine / Cemax Asia / Chanel / Changi Airport Group

/ Charles & Keith / Charles Jourdan / Chaumet / Chevignon / Chevrolet / Christian Dior / Christian Louboutin / Citibank / Clarins / Clubmarc / Coach /

CoCo ICHIBANYA / Coffee Bean & Tea Leaf / Cold Wear / Cortina Watch / Cotton On / Credit Suisse / CVSTOS / Daimler Chrysler / DBS / Debenhams

/ Desigual / Deutsche Telekom / DFS / Diane von Furstenberg / Dickson Group / DKNY / Doosan Heavy Industries / Dubai Aerospace Enterprise /

Dunhill / Economic Development Board / Elecom / Eli Lilly / Elle / Embassy of Ireland / Emporio Armani / Ericsson / Ermenegildo Zegna / Escada /

EQ:IQ / Esprit / Etro / Eu Yan Sang / Football Association of Singapore / Fendi / Ferrari World Abu Dhabi / FJ Benjamin / Ford / Forever 21 / Forever

Jewels / Francesco Biasia / Frey Wille / G2000 / G-Star Raw / Gant / GAP / General Dynamics / Georg Jensen / Giuseppe Zanotti / GlaxoSmithKline

/ Goodyear / Gucci / Guess / Gulfstream / H&M / Hard Rock Café / Harry Winston / Harvey Norman / Havaianas / Heineken / Hermès /

Hewlett–Packard / Hilton International / Hollister / Hong Kong Disneyland / HSBC / HTC / Hublot / Hugo Boss / Hush Puppies / Hyundai / Imagine

Exhibitions Inc. / ING / Invensys / iRoo / IWC / Jack Rouse Associates / JCDecaux / Jim Thompson / Joan & David / John Little / Johnnie Walker / JP

Morgan / JTC Corporation / Korea Aerospace Industries / Kallman Worldwide Inc. / Kate Spade / Kenneth Cole / Kohler / KU DÉ TA / Lacoste / Land

Rover / La Perla / La Senza / Lancôme / LeSportsac / Levi’s / LG / Lockheed Martin / Longchamp / Longines / L’Oreal / Lotte / Louis Quatorze / Louis

Vuitton / Mango / Marina Bay Sands / Marks & Spencer / Maybank / Mayridge / Mazda / MCI / Mercedes-Benz / Merrill Lynch / Michelin / Microsoft

/ Mimco / Miss Sixty / Mitsubishi Motors / Miu Miu / Montblanc / Morgan Stanley / Motorola / MTV Asia / Murex / National Heritage Board / National

Parks Board / Nespresso / Nike / Nine West / Nissan / Nokia / Nu Skin Enterprise / Nuance Watson / OCBC / Omega / OSIM / P&G / Pal Zileri / Pedder

Red / Peugeot / Piaget / Porsche Design / POSB / PricewaterhouseCoopers / Rado / Rabeanco / Raoul / Ralph Lauren / Ray Ban / RBS / Reed

Exhibitions / Renault / Resorts World Sentosa / Richard Mille / River Island / Robinsons / Sacoor Brothers / Salvatore Ferragamo / Samsonite /

Samsung / Sembonia / Sentosa Development Corporation / Sephora / SDD Exhibitions / Shinsegae / Shiseido / Shu Uemura / Siemens / Silvian Imberg

/ Singapore GP / Singapore Sports Council / Singapore Technologies / Singapore Tourism Board / SingTel / SK-II / Sony / Sotheby’s / ST Dupont / Stage

/ Standard Chartered Bank / StarHub / Starwood Asia Pacific Hotels / Stefano Ricci / Steve Madden / Swarovski / Suzuki / Swensen’s / TAG Heuer /

Tax Free World Association / The Body Shop / The Hour Glass / The Soup Spoon / Tiffany & Co. / Timberland / Titan Industries / TNT / Tommy Hilfiger

/ Topshop / Topman / Tory Burch / TOTO / Toyota / True Religion / Twinings / Unilever / Uniqlo / United Overseas Bank / Universal Studios Singapore

/ Uomo / Valentino / Valiram Group / Van Cleef & Arpels / Versace / Victoria’s Secret / Vizona GmbH / Volkswagen / William E. Connor / Wing Tai Asia

/ Witchery / World Sport Group / Yahoo! / Yamaha / Yves Saint Laurent / A. Testoni / Abercrombie & Fitch / Adidas / AIA / Aigner / Aldo / Alfa Romeo

/ Anya Hindmarch / ANZ / Apple / Art Stage Singapore / Asahi / Ascott International / Asia Pacific Breweries / Aspial / Au Chocolat / Audi / Aussino /

Balenciaga / Bally / Banana Republic / Bang & Olufsen / Bank of America / Barclays / Bausch & Lomb / Bebe / Bell & Ross / Bershka / Billabong /

Binny & Smith / Blackberry / Bloomberg / BMW / Boeing / Bonia / Bottega Veneta / Boucheron / Braun Buffel / Bridgestone / British Dispensary /

British India / Broadridge / Brooks Brothers / Bruno Magli / Bvlgari / Burberry / Calvin Klein / Camel Active / Camus / Canali / Canon / Caran d’Ache

/ Carl F. Bucherer / Cartier / Celine / Cemax Asia / Chanel / Changi Airport Group / Charles & Keith / Charles Jourdan / Chaumet / Chevignon / Chevrolet

/ Christian Dior / Christian Louboutin / Citibank / Clarins / Clubmarc / Coach / CoCo ICHIBANYA / Coffee Bean & Tea Leaf / Cold Wear / Cortina Watch

/ Cotton On / Credit Suisse / CVSTOS / Daimler Chrysler / DBS / Debenhams / Desigual / Deutsche Telekom / DFS / Diane von Furstenberg / Dickson

Group / DKNY / Doosan Heavy Industries / Dubai Aerospace Enterprise / Dunhill / Economic Development Board / Elecom / Eli Lilly / Elle / Embassy

of Ireland / Emporio Armani / Ericsson / Ermenegildo Zegna / Escada / EQ:IQ / Esprit / Etro / Eu Yan Sang / Football Association of Singapore / Fendi

/ Ferrari World Abu Dhabi / FJ Benjamin / Ford / Forever 21 / Forever Jewels / Francesco Biasia / Frey Wille / G2000 / G-Star Raw / Gant / GAP /

General Dynamics / Georg Jensen / Giuseppe Zanotti / GlaxoSmithKline / Goodyear / Gucci / Guess / Gulfstream / H&M / Hard Rock Café / Harry

Winston / Harvey Norman / Havaianas / Heineken / Hermès / Hewlett–Packard / Hilton International / Hollister / Hong Kong Disneyland / HSBC / HTC

/ Hublot / Hugo Boss / Hush Puppies / Hyundai / Imagine Exhibitions Inc. / ING / Invensys / iRoo / IWC / Jack Rouse Associates / JCDecaux / Jim

Thompson / Joan & David / John Little / Johnnie Walker / JP Morgan / JTC Corporation / Korea Aerospace Industries / Kallman Worldwide Inc. / Kate

Spade / Kenneth Cole / Kohler / KU DÉ TA / Lacoste / Land Rover / La Perla / La Senza / Lancôme / LeSportsac / Levi’s / LG / Lockheed Martin /

Longchamp / Longines / L’Oreal / Lotte / Louis Quatorze / Louis Vuitton / Mango / Marina Bay Sands / Marks & Spencer / Maybank / Mayridge / Mazda

/ MCI / Mercedes-Benz / Merrill Lynch / Michelin / Microsoft / Mimco / Miss Sixty / Mitsubishi Motors / Miu Miu / Montblanc / Morgan Stanley /

Motorola / MTV Asia / Murex / National Heritage Board / National Parks Board / Nespresso / Nike / Nine West / Nissan / Nokia / Nu Skin Enterprise

/ Nuance Watson / OCBC / Omega / OSIM / P&G / Pal Zileri / Pedder Red / Peugeot / Piaget / Porsche Design / POSB / PricewaterhouseCoopers / Rado

/ Rabeanco / Raoul / Ralph Lauren / Ray Ban / RBS / Reed Exhibitions / Renault / Resorts World Sentosa / Richard Mille / River Island / Robinsons /

Sacoor Brothers / Salvatore Ferragamo / Samsonite / Samsung / Sembonia / Sentosa Development Corporation / Sephora / SDD Exhibitions /

Shinsegae / Shiseido / Shu Uemura / Siemens / Silvian Imberg / Singapore GP / Singapore Sports Council / Singapore Technologies / Singapore

Tourism Board / SingTel / SK-II / Sony / Sotheby’s / ST Dupont / Stage / Standard Chartered Bank / StarHub / Starwood Asia Pacific Hotels / Stefano

Ricci / Steve Madden / Swarovski / Suzuki / Swensen’s / TAG Heuer / Tax Free World Association / The Body Shop / The Hour Glass / The Soup Spoon

/ Tiffany & Co. / Timberland / Titan Industries / TNT / Tommy Hilfiger / Topshop / Topman / Tory Burch / TOTO / Toyota / True Religion / Twinings /

Unilever / Uniqlo / United Overseas Bank / Universal Studios Singapore / Uomo / Valentino / Valiram Group / Van Cleef & Arpels / Versace / Victoria’s

Secret / Vizona GmbH / Volkswagen / William E. Connor / Wing Tai Asia / Witchery / World Sport Group / Yahoo! / Yamaha / Yves Saint Laurent