HONG LEONG ASIA LTD. ANNUAL REPORT - · PDF fileHONG LEONG ASIA LTD.2008 ANNUAL REPORT Consumer Products ... 105 Analysis of Shareholdings ... industry in China and Southeast Asia

2008HONG LEONG ASIA LTD.ANNUAL REPORT

Consumer Products

Diesel Engines

Industrial Packaging

Green Packaging

Building Materials

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L REPORT 2008

Contents

01 Mission Statement

02 Corporate Profile

03 Corporate Structure

04 Our Businesses

05 Corporate Directory

06 Financial Highlights

07 Chairman’s Statement

13 Board of Directors

15 Corporate Governance Report

23 Financial Report

105 Analysis of Shareholdings

107 Notice of Annual General Meeting

113 Proxy Form

MISSIONStatement

Hong Leong Asia Group strives on strengthening its businesses in China and in the Southeast Asia region.

It will assume a wider focus in manufacturing and distribution activities, particularly in China.

It will grow both organically and through acquisitions to ensure a premier position in Asia, so as to achieve superior returns for its shareholders.

丰隆亚洲将着重加强其在中国及东南亚区域的业务力度。

它将重点关注并扩大在制造和经销等领域的活动，尤其是中国地区的业务。

通过自身的发展及并购，它将确保在亚洲的主导地位，并为股东们取得最大的效益回馈。

ANNUAL REPORT 2008

1

HONG LEONG ASIA LTD.

F rom being Singapore’s leading integrated building

materials supplier to its current standing as one of

the region’s major manufacturing and distribution

players, Hong Leong Asia’s success is intricately linked to

its diversification into the manufacturing and distribution

industry in China and Southeast Asia. With over 80 per

cent of its market beyond the shores of Singapore, Hong

Leong Asia is well placed to leverage on its current

position to scale greater heights.

Hong Leong Asia has under its Consumer Products, Diesel

Engines and Industrial Packaging arms, three leading

China-based manufacturing businesses, namely Henan

Xinfei (one of China’s top three largest manufacturers of

refrigerators and freezers), China Yuchai Group (China’s

largest independent diesel engines manufacturer), and

Rex Industrial Packaging Division (manufacturer of

industrial packaging containers). GPac Technology, a

green packaging company wholly-owned by the Group,

is an innovative manufacturer of pallets, which are used

for industrial storage and transportation.

The Group, under its Building Materials arm, owns Island

Concrete (Private) Limited, one of the largest ready-

mixed concrete suppliers in Singapore. In addition, the

Group recently increased its stake to become a majority

shareholder in one of Malaysia’s leading integrated

cement producers, Tasek Corporation Berhad. As a leading

integrated building materials supplier, the Group also has

a quarry operation in Senai, Malaysia.

As part of the Group’s business expansion and diversification

plans, Hong Leong Asia, through its New York Stock

Exchange listed subsidiary, China Yuchai International

Limited, has acquired stakeholdings in HL Global Enterprises

Limited (formerly known as HLG Enterprise Limited)

(“HLGE”) and Thakral Corporation Ltd (“TCL”), both of

which are Singapore listed companies. HLGE is primarily

engaged in the business of investment holding, property

development and hospitality, while TCL is a China-focused

electronics distribution company.

ANNUAL REPORT 2008

2


CORPORATEProfile

Structure

CONSUMER PRODUCTS

CHINA

• HenanXinfeiElectricCo.,Ltd.

• HenanXinfeiHouseholdApplianceCo.,Ltd.

• HenanXinfeiRefrigerationAppliancesCo.,Ltd.

DIESEL ENGINES

BERMUDA

• ChinaYuchaiInternationalLimited

CHINA

• GuangxiYuchaiMachineryCompanyLimited

INDUSTRIAL PACKAGING

CHINA

• ShanghaiRexPackagingCo.,Ltd

• TianjinRexPackagingCo.,Ltd.

• DongguanRexPackagingCompany Limited

HONG KONG

• RexPackaging(HongKong)Limited

MALAYSIA

• RexPlastics(Malaysia)Sdn.Bhd.

• RexpakSdn.Bhd.

SINGAPORE

• HongLeong(China)Limited

• RexHoldingsPteLtd

• RexPlasticsPte.Ltd.

INDONESIA

• PTRexplast

GREEN PACKAGING

SINGAPORE

• GPacTechnology(S)Pte.Ltd.

MALAYSIA

• GPacTechnology(M)Sdn.Bhd.

BUILDING MATERIALS

CEMENT & GRANITE DIVISION

• HLBuildingMaterialsPte.Ltd.-Singapore

• TasekCorporationBerhad-Malaysia

• SingaporeCementManufacturingCompany(Private) Limited - Singapore

• SingaporeCementIndustrialCompany(Private) Limited - Singapore

READY-MIX CONCRETE DIVISION

• IslandConcrete(Private)Limited-Singapore

PRE-CAST CONCRETE DIVISION

• HLBuildingMaterialsPte.Ltd.-Pre-castdivision- Singapore

• HL-ManufacturingIndustriesSdn.Bhd.-Malaysia

STEEL DIVISION

• AngkasaHongLeongPteLtd-Singapore

QUARRY DIVISION

• PT.KarimunGranite-Indonesia

• KarimunGranite(Singapore)PteLtd-Singapore

OTHERS

CONSUMER ELECTRONICS

• ThakralCorporationLtd

HOSPITALITY & PROPERTIES DEVELOPMENT

• HLGlobalEnterprisesLimited

ANNUAL REPORT 2008

3


CORPORATE

Consumer ProductsHenan Xinfei, China’s second largest manufacturer of refrigerators and freezers, produces more

than 200 models of direct-cooled and frost-free refrigerators, 100 models of freezers and 40

models of air-conditioners. Xinfei is known for producing durable products backed by reliable

after-sales service. Xinfei exports its products to more than 50 countries including countries in

Europe, Middle East and Africa, and the USA.

Industrial PackagingRex Industrial Packaging Group has manufacturing operations in various cities in China, Malaysia

and Indonesia. Highly diversified, it manufactures and markets a wide range of rigid plastic

packaging products for the industrial and consumer markets.

Green PackagingWholly-owned by Hong Leong Asia, GPac Technology (S) Pte. Ltd. and GPac Technology (M)

Sdn. Bhd. are “green” organisations with operations in Singapore and Malaysia. They specialise

in the development and manufacture of eco-friendly, biodegradable products for a vast range

of industries and applications. Among GPac’s most notable products is the pallets made from

recycled wood fibres that comply with the ISPM 15 guidelines as stipulated in the International

Plant Protection Convention.

Diesel EnginesThe New York-listed China Yuchai International, with its principal subsidiary, Guangxi Yuchai, is

China’s largest independent diesel engines manufacturer. It produces, assembles and sells diesel

engines for light-duty, medium-duty and heavy-duty trucks, buses and construction equipment

in China.

Building MaterialsManufacturing and distributing an extensive range of building materials and construction-related

products, Hong Leong Asia’s Building Materials Unit is one of the largest suppliers of integrated

building materials in Singapore. Its product range includes cement, ready-mix concrete,

pre-cast concrete, steel bars and quarry products.

OthersIt includes Hong Leong Asia’s indirect investments in Thakral Corporation Ltd (“TCL”)

and HL Global Enterprises Limited (“HLGE”). The principal activities of TCL are those relating to

trading and distribution of consumer electronic goods and accessories in China and Hong Kong.

HLGE is primarily engaged in investment holding and hospitality and properties development

businesses.

ANNUAL REPORT 2008

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BusinessesOUR

BOARD OF DIRECTORS

• KwekLengBeng-Chairman,non-executive

EXECUTIVE

• KwekLengPeck

• TeoTongKooi-ChiefExecutiveOfficer

NON-EXECUTIVE

• ErnestColinLee-Independent

• GohKianHwee-Independent

• QuekShiKui-Independent

AUDIT COMMITTEE

• QuekShiKui-Chairman

• ErnestColinLee

• GohKianHwee

NOMINATING COMMITTEE

• ErnestColinLee-Chairman

• KwekLengBeng

•QuekShiKui

REMUNERATION COMMITTEE


• QuekShiKui

• GohKianHwee

HONG LEONG ASIA SHARE OPTION

SCHEME 2000 COMMITTEE


• KwekLengPeck

• QuekShiKui

• GohKianHwee

SECRETARIES

• YeoSweeGim,Joanne

• NgSiewPing,Jaslin

REGISTERED OFFICE

• 16RafflesQuay

#26-00 Hong Leong Building

Singapore 048581

Tel : (65) 6220 8411

Fax : (65) 6222 0087 / 6226 0502

Website : www.hlasia.com.sg

REGISTRARS & TRANSFER OFFICE

• M&CServicesPrivateLimited

138 Robinson Road

#17-00 The Corporate Office

Singapore 068906

Tel : (65) 6227 6660

Fax : (65) 6225 1452

AUDITORS

• KPMGLLP

Certified Public Accountants

16RafflesQuay

#22-00 Hong Leong Building

Singapore 048581

(Partner-in-charge: Lucas Tran,

appointed from commencement of the

financial year ended 31 December 2006)

PRINCIPAL BANKERS

• BankofAmerica,N.A.

• Citibank,N.A.

• DBSBankLtd

• StandardCharteredBank

• SumitomoMitsuiBankingCorporation

• TheBankofTokyo-MitsubishiUFJ,Ltd.

ANNUAL REPORT 2008

5


DirectoryCORPORATE

REVENUEin $ million

20052004

2,059.62,269.2

2,481.03,233.2

3,616.8

2006 2007 2008

ATTRIBUTABLE PROFITin $ million

PROFIT BEFORE TAXin $ million

2008

198.9201.6

229.6207.1

39.2

2004 2005 2006 2007

X,XXX

EARNINGS PER SHAREin cents

20052004

41.6

23.3

61.1

95.4

42.0

2006 2007 2008

11.3

16.1

25.1

11.06.2

2004 2005 2006 2007

X,XXX

2008

ANNUAL REPORT 2008

6


HighlightsFINANCIAL

The effects of the financial crisis are being felt deeply

in the Asian region, particularly in the last quarter of

2008. The economic growth of several large Asian

economies has slowed considerably. The Chinese economy,

in particular, slowed sharply in the second half of 2008

because of weaker demand for Chinese goods abroad and

a slower investment growth in the domestic property sector.

GDP growth of China has declined to just 6.8% in the last

quarter of 2008 compared to 9% in the 3rd quarter of 2008

and 13% in 2007. This dragged down the annual growth

rate for 2008 to a seven-year low of 9%. The business

climate in Malaysia, Indonesia and Singapore, the other

countries that the Group has operations, remains difficult.

Amid this extraordinarily challenging business environment,

the performance of the Group, particularly in the last quarter

of 2008, has been affected.

Despite this extraordinarily challenging business

environment, I am pleased to report that the Group’s

consolidated revenue again reached another record peak

of $3.6 billion, nearly 12 percent above that of 2007.

However, margins were eroded by sharply higher raw

material prices, particularly in the first half of 2008.

Operating expenses in 2008 were affected by higher staff

costs due to a change in labour insurance laws in China,

research and development expenditures incurred in the

development of consumer and industrial products to

improve product features and to increase product range,

higher selling expenses and professional fees incurred on

various corporate exercises undertaken by the Group, which

included, inter alia, a general offer to acquire shares in Tasek

Corporation Berhad. These were partly compensated by a

write-back of loan provision by one of the companies in

China, as well as lower performance bonus.

As a result of deteriorating business conditions, the Group

made further impairments amounting to $9 million to the

carrying value of its fixed assets and intangibles.

Net profit attributable to shareholders declined from $95.4

million a year ago to $42.0 million in 2008. Excluding non-

operating income in 2008 and 2007, the comparable net

profit attributable to shareholders would have been $35.0

million and $88.1 million for 2008 and 2007 respectively.

I shall now present key highlights of the five business units

of the Group:

Consumer Products Unit (“Xinfei”)

Despite weak consumer sentiments, rising unemployment in

urban areas, depressed real estate sector and a tighter rein

on credit control by management, the latter being necessary

in the light of the current economic environment, sales grew

from 2,939,943 units in 2007 to a record high of 3,111,281

units in 2008, up 6% year-on-year. Xinfei was selected

as one of the suppliers to participate in the government-

initiated program to boost ownership of electrical appliances

in rural areas, which was implemented in 3 provinces in

2008. This had a positive impact of cushioning Xinfei from a

general slowdown in consumer demand. This program has

since been expanded to the whole of China early this year.

ANNUAL REPORT 2008

7


StatementCHAIRMAN’S

Diesel Engines Unit (“Yuchai”)

Auto sales in China grew 6.7% last year, the first time

growth has fallen below 10% since 1999 and in sharp

contrast to the 21.8% expansion achieved in 2007. Weak

business sentiments, fuelled by the effect of the financial

crisis, had a dampening effect on demand in the second

half of the year. The introduction of Euro III engines, with

stricter emission standard and higher selling prices also

had a deterring effect on engine purchases. These factors

caused unit sales of Yuchai to decline from 383,677 engines

in 2007 to 372,280 engines in 2008.

The Chinese government has announced plans to

consolidate and upgrade the automobile industry. Early this

year, it announced plans to spend 5 billion yuan on one-

time subsidies to farmers opting to replace three-wheeled

vehicles or outdated trucks with not more than 1.3-litre

engines. Plans to expand the infrastructure networks

throughout China will also augur well for the diesel engines

industry. Nonetheless the demand for automobile has been

hard hit by the global economic slowdown, and the outlook

for 2009 remains challenging.

Industrial Packaging Unit (“Rex”)

Rex continues to operate under extremely challenging

environment in an industry which is fragmented with a

mix of both large and family-owned players, particularly in

China. Supply chain management, including raw material

procurement and logistics, remains the key factor to

improved profitability. To this end, the Group has been

actively engaged and focused on this area.

Green Packaging Products (“GPac”)

With environmentally friendly pallets slow to take off and

due to long lead time required by customers for testing

and accepting such products, GPac has yet to achieve

profitability. Efforts are continuing to expand the market

reach of GPac through the use of distributors and through

joint ventures with overseas investors, when appropriate.

The move of the production facility from Singapore to

Malaysia in 2009 should lower cost and allow for more

competitive pricing.

Building Materials Unit (“BMU”)

While the Singapore building industry did not grow as fast

in 2008 as it did in 2007, demand for building materials

remained fairly resilient, albeit with competition much more

intense than in 2007. Revenue grew 15.0% year-on-year.

Although the Singapore economy is now in a recession, we

are optimistic that the ongoing activities and stimulus plans

already put in place by the Singapore government on the

building of infrastructure and public housing projects should

continue to yield positive results for BMU. The acquisition of

additional shares in Tasek Corporation Berhad, which itself

is a major player in the construction industry in Malaysia and

a major producer of cement, has further strengthened BMU

as a major player of integrated building materials.

Cash Flow and Liquidity

As at 31 December 2008, the Group had cash and cash

equivalents balance of $238.0 million compared to $186.7

million as at 31 December 2007. Cash generated from

operations increased from $50.8 million in 2007 to $234.2

million in 2008. This was due mainly to a higher net

reduction in working capital (inventories, trade receivables

and payables) in 2008 as compared to 2007 as the Group

increased its focus on working capital management in the

light of increasingly challenging business environment.

Cash outflows from investing activities for the year were

$161.8 million compared to $61.5 million in 2007. Additional

investments in Tasek Corporation Berhad towards the end of

2008 and higher capital expenditures incurred for capacity

expansion of the China operations were the primary drivers

fortheincreasedcashoutflows.

Shareholders’ Returns

Arising from lower earnings, return on equity declined from

16% in 2007 to 10% in 2008. This same factor also caused

a decline in earnings per share from 25.1 cents in 2007 to

11.0 cents in 2008.

ANNUAL REPORT 2008

8



Business Direction

As part of its efforts to grow the Group’s businesses and

increase shareholder value, the Group will continue to

explore investment and divestment opportunities. As

and when these opportunities materialise, appropriate

announcements will be made.

Outlook

While the Chinese economy is expected to continue to

witness a slowdown, the Group is hopeful that various

stimulus measures undertaken by the Chinese government

will yield positive results to boost the demand for consumer

and industrial goods. For example, the government-initiated

programme to encourage rural folks to own electrical

appliances has seen the programme extended to the whole

of China early this year. Other programmes to support,

inter alia, the real estate and automobile sectors, should

also provide impetus to the performance of our China

operations in 2009. Prices, and thus margins, are however

expected to be under pressure.

Although the pace of construction activities has slowed

considerably in Singapore, ongoing activities and plans

already put in place by the Singapore government on the

building of infrastructure and public housing projects should

continue to yield positive results for the Group’s BMU, albeit

in an increasingly challenging environment. The acquisition

of additional shares in Tasek, which itself is a major player in

the construction industry in Malaysia and a major producer

of cement, has further strengthened the Group’s position

as a major player of integrated building materials and is

expected to contribute positively to the cashflow of the

Group.

Despite the adverse business conditions and barring

unforeseen circumstances and a sharp deterioration in the

business climate, which may affect the carrying value of

assets, the Group is cautiously optimistic that it will operate

profitably in 2009.

Dividend

In the light of the current economic climate where there is

much uncertainty, the Board of Directors considers it prudent

to conserve cash to meet any unforeseen circumstances.

Consequently, the Board of Directors has recommended

a final dividend of 2 cents per share, bringing the total

dividend for 2008 to 5 cents per share, including the interim

dividend of 3 cents per share paid during the year.

Accolades

Hong Leong Asia Ltd. has again been featured among the

top 100 Singapore companies in overseas revenue. Started

in 2005 by International Enterprise Singapore, the Singapore

International 100 Ranking recognises the achievements of

Singapore companies which dare to venture to overseas

markets. Hong Leong Asia Ltd. is ranked 3rd in terms of total

revenue derived from China and 18th overall in overseas

revenue among the top 100 Singapore companies.

The Yuchai brand of diesel engines, which are manufactured

by Guangxi Yuchai Machinery Company Limited, was

awarded “The Chinese Brand of the Year 2008” in the

diesel engine category from the World Brand Laboratory at

the 2008 World Entrepreneur Annual Meeting.

Appreciation

On behalf of the Board of Directors, I would like to thank our

shareholders, customers, business associates, management

and employees for their contribution and look forward to

their continuing support.

Kwek Leng Beng

Chairman

23 March 2009


ANNUAL REPORT 2008

9


报告主席

金融危机的影响已严重打击了亚洲区域，尤其

是在2008年的第四季度。多个亚洲大型经济

体的经济增长因此出现了大幅度的减缓。特

别是中国的经济，由于国外对中国产品的需求有所减少，

再加上国内房地产投资的放缓，在2008年的下半年也出

现了大幅度的下滑。中国国内生产总值在2008年第四季

度只取得6.8%的增长，低于2008年第三季度的9% 和

2007年全年的13%。2008年的全年增长因此被拉低到9%

，这是7年来的最低增长。而其他集团有业务的国家如马

来西亚、印尼和新加坡的商业环境仍然困难。在这非常具

有挑战性的商业环境，集团的业绩，特别是在2008年第

四季度，也受到了一定的冲击。

尽管面对如此具有挑战性的商业环境，我欣然向各位股东

报告，集团在2008年的营业收入达到了36.2亿元的历史

新高，比2007年增加了12%。但是，集团的毛利润却因

为2008年上半年原材料的价格高涨而有所降低。

2008年的营运成本有所增加，主要原因是：由于中国劳

动保险法改革导致劳工成本增加、为了增加产品种类和改

善消费产品和工业产品的功能而支出的研发费用、较高的

销售费用、和集团总部在行使各项职能时所发生的专业

费用（其中包括集团对大石股份有限公司提出的全面收购

案）。报表上反映的费用比实际费用低主要是因为：冲

减了集团在中国的一家公司的贷款所提的坏账准备、以及

发放了较低的奖金。

有鉴于当前日趋恶劣的商业环境，集团也对一部分固定资

产和无形资产的账面值计提了9百万元的减值准备。

2008年集团可分发给股东的净利由去年的9,543万元下

跌至4,198万元。如果不把非营业性收入计算在内，则

调整后2008年和2007年的净利润将分别为3,501万元和

8,809万元。

以下是我对集团五个业务单元的报告摘要：

家电产品单位（“新飞”）

虽然面对消费者信心疲弱、城市地区失业率攀升、房地产

市场萎靡不振、以及管理层因目前经济状况而实施的较严

谨的信贷监管，新飞的家电销量由2007年的294万台增加

到2008年的311万台的历史新高，增长了6%。为了提高

农村地区家电用户的占有率，中国政府在2008年在三个

特定省份试行了家电下乡计划，新飞是被选中参与该项目

的厂家之一。这一计划的实施有效地抵消了由于消费者需

求的普遍减少而给新飞带来的冲击。此家电下乡计划已于

今年年初被推广到整个中国。

ANNUAL REPORT 2008

10


报告主席

柴油机单元（“玉柴”）

去年中国的汽车销量增加了6.7%，这是自1999年来第

一次出现低于10%的增长率，这与2007年的21.8%相

比落差更大。疲软的商业信心，加上金融海啸带来的冲

击，大大地抑制了2008年下半年的需求。此外，由于实

施较严格的排放标准而推出的价位较高的欧III引擎，也

造成一些商家在购买引擎时采取观望的态度。这些因素

使玉柴的引擎销量从2007年的38.4万台减少到2008年的

37.2万台。

中国政府公布了一系列计划要整合和提升汽车产业。今年

较早时，政府宣布一个50亿元的援助配套计划，提供一

次性的津贴给需要购买新车以更换三轮卡车或过时卡车的

农户（引擎容量不得超过1.3公升）。此外，中国进一步扩

建全国基础设施的政策也将对柴油引擎行业带来利好消

息。尽管如此，全球经济的放缓已严重的打击了市场对汽

车的需求，2009年的展望依然充满挑战性。

工业包装单元（“利士”）

由于同时面对大型企业和家族企业的激烈竞争，利士（特

别是在中国）继续在非常具有挑战性的经营环境下运作。

良好的供应链管理流程，包括原材料采购和物流的安排，

依然是提高盈利能力的关键。在这方面的管理，集团一直

给于很积极的关注。

绿色包装单元（“GPac”）

由于绿色托板业务起步较慢，再加上客户需要较长的时间

对产品进行测试以便接受该产品，GPac在2008年尚未能

取得利润。我们一直在努力，视具体情况，或通过分销

商渠道、或通过与海外投资者成立合资公司进一步开拓

GPac的市场。

GPac将在2009年把位于新加坡的生产设施搬迁到马来西

亚，这将降低成本和提高价格的竞争力。

建筑材料单元（“BMU”）

虽然新加坡的建筑业在2008年的增长不比2007年的快，

建筑材料的需求却相当稳定，行业的竞争也比2007 年

更加激烈。 BMU在2008年的营业收入比2007年增长了

15.0%。

虽然新加坡的经济目前陷入衰退，我们相信新加坡政府目

前已在基础设施建设和公共住屋项目方面所实施的一些

计划和刺激经济的配套，将会继续给BMU带来正面的效

益。通过收购大石股份有限公司-----一家主要生产洋灰

和活跃于马来西亚建筑业的公司，将能进一步巩固BMU

作为一家重要的综合建筑材料供应商的地位。

现金流量和流动资金

截止2008年12月31日，集团持有2.38亿元的现金和其他

可替代现金，去年同期的余额为1.87亿元。由经营活动

所产生的现金流量从2007年的0.51亿元增加至2008年的

2.34亿元。这是集团为了应对日益严峻的经济环境，优化

营运资金的管理所带来的成效，使2008年的净营运资本

（包括存货、应收和应付账款）比2007年来得低。

2008年投资活动的现金支出为1.62亿元，而2007年为

0.61亿元。投资活动现金支出的增加主要是因为集团在

2008 年底在大石股份有限公司所增加的投资以及为了扩

充中国业务的产能所做的资本性开支。

股东回报

由于盈利较低，股本回报从2007 年的16%降低至2008年的

10%。此同样的原因也使每股盈利从2007年的25.1分减少

至2008年的15.1分。

业务方向

为了进一步壮大集团业务和增加股东价值，集团将不断努力

的探索投资和撤资机会，并且将在时机成熟时对外作出宣布。

ANNUAL REPORT 2008

11


展望

虽然中国的经济增长预计将继续放缓，集团希望中国政府所

制定的经济刺激配套能够产生效益带动消费产品和工业产品

的需求。比如，一项由政府所发动的鼓励农村居民购买家电

的家电下乡计划，已经于2009年初被推广到整个中国。其他

振兴房地产和汽车工业的计划预计也可以推动集团2009年

在中国的业绩。但是，集团产品的售价和毛利润估计将会面

临下降的压力。

虽然新加坡建筑领域前进的脚步放缓了许多，新加坡政府对

基础设施建设和公共住屋计划的投入和刺激经济的配套将

继续给集团的BMU带来正面的利益，尽管同业间的竞争也会

日益激烈。通过收购大石股份有限公司-----一家主要生产

洋灰和活跃于马来西亚建筑领域的公司，集团将能进一步巩

固BMU作为一家综合建筑材料供应商的重要地位，同时也将

对增加集团的现金流量作出贡献。

尽管商业环境非常恶劣，排除任何不可预见的状况以及因为

商业环境急转直下而给资产价值带来负面影响的可能性，集

团对继续在2009年保持盈利抱着乐观谨慎的态度。

股息

考虑到眼前的经济状况充满着太多变数，董事会认为应该

采取谨慎的态度，节约现金以应对任何不可预知的状况。

有鉴于此，董事会建议派发每股2分的末期股息，连同本

年度已派发的每股3分的中期股息，2008年派息总额为每

股5分。

报告主席

荣誉事件

丰隆亚洲有限公司再一次入选新加坡企业中海外收入最高

的前100佳排名。始于2005年，由新加坡国际企业发展局

颁布的新加坡国际企业100佳排名，是对勇于开拓海外市

场的新加坡公司所给予的一种认可。在源自于中国的收入

最高与源自于海外的收入最高的前一百名新加坡企业中，

丰隆亚洲有限公司分别排行第三和第十八位。

由广西玉柴机器有限公司所生产的玉柴品牌柴油机，在

2008年世界企业家年会上，在柴油引擎类别中被世界品

牌实验室颁予“2008中国品牌年度大奖”。

我们诚挚的谢意

我谨代表董事会向所有的股东、客户、商业伙伴、管理层

和职员们为他们所作出的贡献表示谢意，并且期望他们会

继续给予支持。

郭令明

主席

2009年3月23日

ANNUAL REPORT 2008

12


Appointed Chairman since 3 January 1995 and Director since 25 November 1981, Mr Kwek also sits on the Nominating Committee of Hong Leong Asia Ltd. (“HLA”). He was last re-elected as a Director of HLA on 27 April 2007. He is the Executive Chairman of City Developments Limited (“CDL”), Chairman and Managing Director of Hong Leong Finance Limited (“HLF”) and Hong Kong listed City e-Solutions Limited (“CES”), and Chairman of London listed Millennium & Copthorne Hotels plc (“M&C”).

Mr Kwek holds a law degree, LL.B. (London) and is also a fellow of The Institute of Chartered Secretaries and Administrators. He has extensive experience in the finance business, having grown from day one with the original Hong Leong Finance Limited which has since merged its finance business with Singapore Finance Limited (now known as HLF). He also has vast experience in the real estate business, the hotel industry as well as the trading and manufacturing business.

Mr Kwek’s other appointments include being a member of the East Asia Council of INSEAD and Action Community of Entrepreneurship (ACE) Singapore since its inception in 2003. He was also conferred Honorary Doctorate of Business Administration in HospitalityfromJohnson&WalesUniversity(RhodeIsland,US),andHonoraryDoctoratefrom Oxford Brookes University (UK).

KWEK LENG BENG, Age 68

Appointed to the Board since 1 September 1982 and is now an Executive Director, Mr Kwek also sits on the Hong Leong Asia Share Option Scheme 2000 (“Share Option Scheme”) Committee. He was last re-elected as a Director on 29 April 2006. He is also an Executive Director of CES and a Director of CDL, HLF, M&C, New York listed China Yuchai International Limited (“CYI”) and Malaysia listed Tasek Corporation Berhad (“TCB”).

Mr Kwek holds a Diploma in Accountancy and has over 28 years of experience in trading, manufacturing, property investment and development, hotel operations, corporate finance and management.

KWEK LENG PECK, Age 52

Appointed Director and Chief Executive Officer since 1 October 2004, Mr Teo was last re-elected on 29 April 2008. He is the President and Director of CYI, Executive Director of TCB and a Director of HL Global Enterprises Limited, Thakral Corporation Ltd and Malaysia listed Isyoda Corporation Berhad. During the past 3 years, he was a Director of Malaysia listed Bintai Kinden Corporation Berhad.

Mr Teo holds a Bachelor of Science degree in Marketing Management and a Master of Business Administration (both from Golden Gate University, San Francisco, California, USA). He has also completed the Executive Management Programme at the Stanford University Graduate School of Business. He has a wealth of corporate and commercial banking experience with many years in senior management positions where he was Head of Corporate Banking of Deutsche Bank, Malaysia and Chief Operating Officer of Hong Leong Bank Berhad, Malaysia.

TEO TONG KOOI, Age 51

DirectorsBOARD of

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Appointed a Director since 3 April 2000 and last re-elected on 27 April 2007, Mr Lee is the Chairman of the Nominating, Remuneration and Share Option Scheme Committees as well as a member of the Audit Committee of HLA.

Mr Lee holds a Bachelor of Civil Engineering (Honours) degree (University of Queensland, Australia). He is a professional project consultant and has extensive experience in management, engineering and business development in Singapore and Australia.

ERNEST COLIN LEE, Age 68

Appointed a Director since 15 March 2004, Mr Goh was last re-elected on 29 April 2008. He also sits on the Audit, Remuneration and Share Option Scheme Committees of HLA. He is also a Director of Achieva Limited and Hwa Hong Corporation Limited. During the past3years,hewasaDirectorofJapanLandLimitedandHotelNegaraLimited.

Mr Goh is a Partner of Rajah & Tann LLP, a legal firm, and has over 29 years’ experience in corporate and capital markets law. He holds a LL.B. (Honours) degree (University of Singapore) and has been a practising lawyer since 1980.

GOH KIAN HWEE, Age 54

Appointed a Director since 28 April 2005, Mr Quek was last re-appointed on 29 April 2008. He is the Chairman of the Audit Committee and a member of the Nominating, Remuneration and Share Option Scheme Committees of HLA. He also sits on the board of Thomson Medical Centre Limited. During the past 3 years, he was a Director of IDT Holdings (Singapore) Ltd and Wah Shing International Holdings Ltd.

A Certified Public Accountant, Mr Quek has extensive auditing, accounting and financial experience in Singapore and overseas. He was previously a managing partner of an international accounting firm.

Mr Quek’s other appointments include being a council member of the Institute of Certified Public Accountants of Singapore and a member of the ACCA United Kingdom, the Malaysia Institute of Accountants and the Singapore Institute of Directors. He also serves as Chairman of the Board of Trustees, ACCA Singapore.

QUEK SHI KUI, Age 72

DirectorsBOARD of

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Hong Leong Asia Ltd. (“HLA” or the “Company”) is committed to maintaining good corporate governance in accordance with the principles and guidelines set out in the Code of Corporate Governance released by the Council on Corporate Disclosure and Governance in 2005 (“CCDG Code”). HLA has adopted a set of internal guidelines on corporate governance (“Internal CG Guidelines”) which took into consideration the principles and guidelines set out in the CCDG Code.

The following describes the Company’s corporate governance policies and practices which include, inter alia, specific reference to the principles and guidelines as set out in the CCDG Code.

BOARD MATTERS

CCDG Code Principle 1: The Board’s Conduct of Affairs

The Board oversees the Company’s business. Its primary functions are to set corporate policy, provide guidance and approval of strategic plans and direction for the Company, review management performance, establish and oversee the framework for internal controls and risk management, and assume responsibility for good corporate governance. These functions are either carried out directly by the Board or through committees established by the Board, namely, the Audit Committee (“AC”), the Nominating Committee (“NC”), the Remuneration Committee (“RC”), and the Hong Leong Asia Share Option Scheme 2000 (“Share Option Scheme”) Committee, all collectively referred to hereafter as the Board Committees. The composition of each Board Committee can be found under the corporate directory section of this Annual Report 2008.

The delegation of authority by the Board to the Board Committees enables the Board to achieve operational efficiency by empowering these Board Committees to decide on matters within their respective written terms of reference and/or limits of delegated authority and yet maintain control over major policies and decisions.

The Company conducts regular scheduled Board meetings on a quarterly basis. Additional meetings are convened as and when circumstances warrant. The Company’s Articles of Association allow for the meetings of its Board and Board Committees to be held via teleconferencing.

The attendance of the Directors at meetings of the Board and Board Committees as well as the frequency of such meetings, are disclosed on page 16 of this Annual Report 2008. Notwithstanding such disclosure, the Board is of the view that the contribution of each Director should not be focused only on his attendance at meetings of the Board and/or Board Committees. A Director’s contribution may also extend beyond the confines of the formal environment of such meetings, through the sharing of views, advice, experience and strategic networking relationships which would further the interests of the Company.

The Board has also adopted an internal guide wherein certain key matters are specifically reserved for approval by the Board such as the setting of strategic plans and direction or policies or financial objectives which are, or may be significant, in terms of future profitability or performance of the Group and decisions to commence, discontinue or modify significantly any business activity or to enter or withdraw from a particular market sector.

Every newly appointed Director receives a formal letter, setting out his general duties and obligations as a Director pursuant to the relevant legislations and regulations. Newly appointed Directors are also welcome to meet with the management and be briefed by them on the Company’s business and governance practices. The Company encourages the Directors to keep updated with the latest changes to the relevant laws and regulations affecting the Company and to receive further relevant training of their choice in connection with the discharge of their duties. Appropriate courses include programmes conducted by the Singapore Institute of Directors and Singapore Exchange Securities Trading Limited (“SGX-ST”). Each Director also receives a manual containing information on a director’s duties and responsibilities, corporate information of the Group, and Company and Board policies including the Internal CG Guidelines which also cover the internal code of business and ethical conduct, internal code on securities trading, whistle-blowing procedure and a schedule of matters specifically reserved for the Board’s approval. Directors are also provided regular updates and briefings from time to time by professional advisers, auditors, management and the Company Secretaries on new laws, rules, regulations, listing requirements, governance practices, changes in accounting standards and business and risk management issues applicable or relevant to the performance of their duties and obligations as Directors.

Governance ReportCORPORATE

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The Company has adopted an internal code of business and ethical conduct crystallising the Company’s business principles and practices with respect to matters which may have ethical implications. The Code provides a communicable and understandable framework for staff to observe the Company’s principles such as honesty, integrity, responsibility and accountability at all levels of the organization and in the conduct of the Company’s business in their relationships with customers, suppliers and amongst employees,includingsituationswheretherearepotentialconflictsofinterests.

Directors’ Attendance at Board and Board Committee Meetings in 2008

Name of Directors Board AC NC RC

Number of Meetings held: 5




Meetings attended

Meetings attended

Meetings attended

Meetings attended

Kwek Leng Beng 5 NA 1 NA

Kwek Leng Peck 5 NA NA NA

Teo Tong Kooi 5 NA NA NA

Ernest Colin Lee 5 5 1 2

Goh Kian Hwee 5 5 NA 2

Quek Shi Kui 5 5 1 2

No meeting of the Share Option Scheme Committee was held during FY 2008.

CCDG Code Principle 2: Board Composition and Guidance

The Board currently comprises 6 members, 2 of whom are executive Directors, while the other members of the Board are non-executive Directors. Of the 4 non-executive Directors, the Board considers 3 of them, being half of the Board, to be independent, thus providing for a strong and independent element on the Board capable of exercising objective judgment on corporate affairs of the Group. No individual or small group of individuals dominates the Board’s decision making.

The independent non-executive Directors are Messrs Ernest Colin Lee, Goh Kian Hwee and Quek Shi Kui. Mr Goh Kian Hwee is a partner of a legal firm which renders professional legal services to the Group from time to time. Nevertheless, the Board (excluding Mr Goh in respect of the deliberation of his own independence) has considered Mr Goh to be independent as he is capable of maintaining his objectivity and independence at all times in the carrying out of his duties and responsibilities as an independent Director.

The Board comprises business leaders and professionals with financial, legal and business management backgrounds. The Board has reviewed its composition, taking into account the scope and nature of the operations of the Group, and is satisfied that the current size of the Board is appropriate and allows for effective decision making. The standing of the members of the Board in the business and professional communities, and their combined business, management and professional experience, knowledge and expertise provide the necessary core competencies to meet the Group’s needs and to allow for diverse and objective perspectives on the Group’s strategic direction and growth. Non-executive Directors of the Company are encouraged to participate actively in Board meetings in the development of the Company’s strategic plans and direction, and in the review and monitoring of management’s performance against set targets.

CCDG Code Principle 3: Chairman and Chief Executive Officer

The Board recognises that best practices of corporate governance advocate that the chairman of the board and the chief executive officer should in principle be separate persons to ensure an appropriate balance of power, increased accountability and greater capacity of the board for independent decision making.


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The Chairman of the Board is Mr Kwek Leng Beng who is a non-executive Director while the Chief Executive Officer (“CEO”) is Mr Teo Tong Kooi. There is a clear division of responsibilities between the Chairman and the CEO. As Chairman of the Board, Mr Kwek bears primary responsibility for the workings of the Board, by ensuring effectiveness in all aspects of its role, exercising controlover thequality,quantityand timelinessof informationflowbetween theBoardandmanagement,ensuringeffectivecommunication with shareholders, facilitating the effective contribution of non-executive Directors, and overseeing the Group’s corporate governance and conduct. Whereas the CEO, Mr Teo who is a key management staff, bears executive responsibility for the Group’s business, the management of the day-to-day operations of the Group and the achievement of the corporate goals set for the Group. The CEO is not related to the Chairman.

With the establishment of various Board Committees with power and authority to perform key functions beyond the authority of,orwithoutundueinfluencefrom,theChairmanortheCEO,andtheputtinginplaceofvariousinternalcontrolstoallowforeffective Board oversight, the Board is of the view that there are adequate accountability safeguards to enable the Board to exercise independent decision making and to ensure an appropriate balance of power and authority within the spirit of good corporate governance.

CCDG Code Principle 4: Board Membership

The NC’s main role as set out in its written terms of reference is to recommend all Board and Board Committee appointments and re-appointments, determine independence of each Director, and identify new Directors who have the appropriate knowledge, experience and skills to contribute effectively to the Board. 2 out of the 3 members of the NC, including the NC chairman, are independent. The NC conducts an annual review of the independence of Directors.

When considering the re-nomination and re-election of Directors, the NC takes into account their contribution to the effectiveness of the Board and the competing time commitments faced by Directors with multiple board representations. Notwithstanding that some of the Directors have multiple board representations, the NC is satisfied that each Director is able to carry and has been adequately carrying out his duties as a Director of the Company. The Directors submit themselves for re-nomination or re-election at regular intervals and the Articles of Association of the Company provide that at least one-third of the Directors for the time being shall retire as Directors at each Annual General Meeting of the Company.

In reviewing and recommending to the Board any new Director appointments, the NC takes into consideration the current Board size and its mix, the additional skills and experience that will bolster the core competencies of the Board, the search process for the identification of suitable candidates and once identified, the appropriate knowledge, experience and skills of the candidates who in its opinion, are fit and proper and qualified for office.

Key information regarding the Directors is set out on pages 13 and 14 of this Annual Report 2008.

CCDG Code Principle 5: Board Performance

The Company has in place a formal process for assessment of the effectiveness of the Board as a whole and the contribution by each Director to the effectiveness of the Board. The NC assesses each Director’s performance and evaluates the Board’s performance as a whole annually using objective and appropriate quantitative and qualitative criteria which were recommended by the NC and approved by the Board. Quarterly performance indicators which include a comparison of the Company’s performance for the financial period under review against the Company’s budgeted forecasts and performance for the corresponding period in the previous year and the longer term indicators such as the Company’s share price performance over a 5-year period and vis-à-vis the Singapore Straits Times Index, are furnished to the Board. In reviewing the overall Board performance, the NC also took into consideration the Board’s ability to monitor management’s achievement of the strategic directions/objectives set and approved by the Board.

Assessment parameters for Directors’ performance include their level of participation at Board and Board Committee meetings and the quality of their contribution to Board processes and the business strategies and performance of the Group. The NC’s evaluation of the individual Directors for the financial year ended 31 December 2008 (“FY 2008”) was facilitated this year with feedback from individual Directors on areas relating to the Board’s competencies and effectiveness. The results of the evaluation process would be used by the NC, in its consultation with the Chairman of the Board, to effect continuing improvements on Board processes.


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CCDG Code Principle 6: Access to Information

Prior to each meeting, the respective members of the Board and the Board Committees are provided with the meeting agenda and the relevant papers submitted by the management, containing complete, adequate and timely information to enable full deliberation on the issues to be considered at the respective meetings. Management staff and the Company’s auditors, who can provide additional insight into the matters for discussion, are also invited from time to time to attend such meetings. The Company Secretaries attend all Board meetings and ensure that all Board procedures are followed. The Company Secretaries, together with other management staff of the Company, also ensure that the Company complies with all applicable statutory and regulatory rules.

On an ongoing basis, the Directors have separate and independent access to the Company’s senior management and the Company Secretaries. The Directors, whether as a group or individually, are entitled to take independent professional advice at the expense of the Company, in furtherance of their duties and in the event that circumstances warrant the same.

REMUNERATION MATTERS

CCDG Code Principle 7: Procedures for Developing Remuneration Policies

The RC comprises 3 non-executive Directors, all of whom including the chairman of the RC are independent. The RC’s principal responsibilities as set out in its written terms of reference are to review and recommend for the endorsement of the Board, a framework of remuneration and the specific remuneration packages for each Board member and the CEO (or executive of equivalent rank). All the members of the RC also sit on the Share Option Scheme Committee and the chairman of the RC is also the chairman of the Share Option Scheme Committee. In reviewing remuneration packages, the RC also ensures that the remuneration policies are in line with the strategic objectives and corporate values of the Company.

CCDG Code Principle 8: Level and Mix of Remuneration

In reviewing the remuneration packages, the RC, with the assistance of the Company’s Human Resource Manager, considers the level of remuneration based on the Company’s remuneration policy which comprises the following 3 distinct objectives:

• Toensurethattheremunerationpackagesarecompetitive inattractingandretainingemployeescapableofmeetingtheCompany’s needs.

• Torewardemployeesforachievingcorporateandindividualperformancetargetsinafairandequitableway.• Toensurethattheremunerationreflectsemployees’dutiesandresponsibilities.

The remuneration of the non-executive Directors is set at a level appropriate to their degree of contribution, taking into account attendance and time spent, and their respective responsibilities. No Director is involved in deciding his own remuneration.

Longer term incentive schemes which include the grant of options under the Share Option Scheme subject to a vesting schedule, are encouraged.

CCDG Code Principle 9: Disclosure of Remuneration

The total compensation packages for employees including the CEO comprise a fixed component (in the form of a base salary and fixed allowances) and a variable component (which includes year-end and variable bonuses, share option grants for eligible employees and benefits-in-kind, where applicable), taking into account amongst other factors, the individual’s performance, the performance of the Group and industry practices. The breakdown (in percentage terms) of the Directors’ remuneration for FY 2008 is set out below.


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Directors’ Remuneration for FY 2008

Base Salary(1)

Variable Bonuses/

Allowances(1)

Board/ Board

Committee Fees(2)

Share Option Grants(5)

Other Benefits

Total

% % % % % %

Above $2,000,000 up to $2,250,000

Teo Tong Kooi 43(3) 45(3) 3(4) 7 2 100

Above $750,000 up to $1,000,000

Kwek Leng Peck 43 35 5(4) 17 - 100

$250,000 and below

Kwek Leng Beng - - 100 - - 100

Ernest Colin Lee - - 100 - - 100

Goh Kian Hwee - - 100 - - 100

Quek Shi Kui - - 100 - - 100

Notes:

(1) The salary and variable bonuses/allowances are inclusive of employer’s central provident fund contributions.

(2) These fees comprise Board and Board Committee fees for FY 2008, which are subject to approval by shareholders as a lump sum at the 2009 Annual General Meeting, and Audit Committee fees for FY 2008 that have already been approved by shareholders at the 2007 and 2008 Annual General Meetings.

(3) Include salary and variable bonuses/allowances paid by subsidiary(ies) of the Company.

(4) Include Directors’ fees paid or payable by subsidiaries of the Company.

(5) These relate to options granted during FY 2008. The fair value of the options as at the date of grant ranges from $0.53 to $0.66 for each share under option taking into account the vesting schedule using the Trinomial Tree method.

The remuneration of the top 5 key executives (who are not Directors) is not disclosed in this Annual Report 2008 as such disclosure does not appear to be standard industry practice currently, given the highly competitive industry conditions. The RC will continue to review the practice of the industry in this regard, weighing the advantages and disadvantages of such disclosure.

During FY 2008, none of the Directors had immediate family members not disclosed above who were employees of the Company and whose personal annual remuneration exceeded $150,000.

Information on the Share Option Scheme is set out in the Directors’ Report on pages 27 to 30 and the Financial Statements on pages 80 to 82 of this Annual Report 2008.

ACCOUNTABILITY AND AUDIT

CCDG Code Principle 10: Accountability

The Board provides shareholders with quarterly and annual financial results. Results for the first 3 quarters are released to shareholders within 45 days of the end of each quarter whilst the annual results are released within 60 days from the financial year end. In presenting the Company’s annual and quarterly results, the Board aims to provide shareholders with a balanced and understandable assessment of the Company’s performance and financial position with a commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which it operates.

The management provides all Directors with monthly financial summary of the Group’s performance.


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The Directors recognise that they have overall responsibility to ensure accurate financial reporting for the Group and for the Group’s system of internal controls. The Board confirms that, with the assistance of the AC, it reviews the effectiveness of the Group’s financial reporting and internal controls system, which are monitored through a programme of internal and external audits, and is generally satisfied with the adequacy of such internal controls system though further improvements have to be made to the China operations.

CCDG Code Principle 11: Audit Committee

The AC comprises 3 non-executive Directors, all of whom including the chairman of the AC are independent. The AC has sufficient financial management expertise and experience amongst its members to discharge its functions within its written terms of reference. The AC is authorised by the Board to investigate any matters it deems appropriate within its terms of reference and has full access to and co-operation of management. It may invite any Director, executive officer or employee of the Company to attend its meetings and is also authorised to seek external professional advice to enable it to discharge its functions.

The principal responsibility of the AC is to assist the Board in maintaining a high standard of corporate governance, particularly by providing an independent review of the effectiveness of the Group’s financial reporting process and material internal controls, including financial, operational, compliance and risk management controls. Other duties within its written terms of reference include:

- to review with management and, where appropriate, with the external auditors on the quarterly and full year financial statements to be issued by the Group before their submission to the Board to ensure their completeness, accuracy and fairness;

- to review, on an annual basis, the scope and results of the audit and its cost-effectiveness and the independence and objectivity of the external auditors;

- to review the effectiveness of the internal audit function;

- to make recommendations to the Board on the appointment, re-appointment and removal of external auditors, and to approve the remuneration and terms of engagement of the external auditors; and

- to review interested person transactions.

The AC held 5 meetings during the year and carried out its duties as set out within its terms of reference. It also met with the internal and external auditors, each separately without the presence of management. Having reviewed the nature and extent of the non-audit services provided to the Group by the external auditors for FY 2008, the AC is of the opinion that the provision of such non-audit services would not affect the independence and objectivity of the external auditors. The AC has recommended to the Board the nomination of Messrs KPMG LLP for re-appointment as external auditors.

HLA has in place a whistle-blowing procedure where staff of the Group can raise in confidence concerns on possible improprieties relating to accounting, financial reporting, internal controls and auditing matters. Under these procedures, arrangements are in place for independent investigation of such matters raised and for appropriate follow up action to be taken.

Interested Person Transactions

On 30 May 2003, the Company obtained shareholders’ approval for the Company, its subsidiaries and its associated companies not listed on the SGX-ST or an approved exchange, over which the Company, its subsidiaries and/or interested persons have control, to enter into transactions within the categories of Interested Person Transactions set out in the Company’s circular to shareholders dated 5 May 2003, with such persons within the class or classes of Interested Persons as described in the said circular, provided that such transactions are entered into in accordance with the review procedures set out in the said circular (the “IPT Mandate”). The IPT Mandate was last renewed at the Annual General Meeting of the Company held on 29 April 2008. As such Interested Person Transactions may occur at any time, and to allow the Group to undertake such transactions in an expeditious manner, shareholders’ approval will be sought at the coming Annual General Meeting of the Company for the renewal of the IPT Mandate.

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The AC has confirmed that an independent financial adviser’s opinion is not required for the renewal of the IPT Mandate as the methods and procedures for determining the transaction prices of the Interested Person Transactions conducted under the IPT Mandate have not changed since the IPT Mandate was obtained on 30 May 2003, and such methods and procedures continue to be sufficient to ensure that these Interested Person Transactions will be carried out on normal commercial terms and will not be prejudicial to the interests of the Company and its minority shareholders.

Particulars of Interested Person Transactions required to be disclosed under Rule 907 of the Listing Manual of the SGX-ST are as follows:

Name of Interested Person Aggregate value of all Interested Person Transactions in FY 2008 (excluding transactions less than $100,000 and transactions conducted under the IPT Mandate pursuant to Rule 920)

Aggregate value of all Interested Person Transactions conducted in FY 2008 under the IPT Mandate pursuant to Rule 920 (excluding transactions less than $100,000)

Hong Leong Investment Holdings Pte. Ltd. group of companies

Provision ofmanagement servicesby Interested Persons to the Group : $591,807

General Transaction : $327,636*(renewal of lease)

* Renewal of lease of office premises by the Company for a lease tenure of three years.

The above Interested Person Transactions were carried out on normal commercial terms and were not prejudicial to the interests of the Company and its minority shareholders.

CCDG Code Principle 12: Internal Controls

The Directors recognise that they have overall responsibility to ensure accurate financial reporting for the Group and for the Group’s system of internal controls. Internal and external auditors conduct regular reviews of the system of internal controls, and material internal control weaknesses are brought to the attention of the AC and to management for remedial action. While no system can provide absolute assurance against material loss or financial misstatement, the Group’s internal financial controls are designed to provide reasonable assurance that assets are safeguarded, that proper accounting records are maintained, and that financial information used within the business and for publication is reliable. In reviewing these controls, the Directors have had regard to the risks to which the business is exposed, the likelihood of such risks occurring and the costs of protecting against them.

The Board confirms that, with the assistance of the AC, it reviews the effectiveness of the Group’s financial, operational and compliance controls and risk management systems which are monitored through a programme of internal and external audits together with regular reviews by the management of the Company’s risk management processes and procedures. The management continues to focus on improving the standard of internal controls and Corporate Governance, and fully implementing the risk management processes in the Group’s China operations.

CCDG Code Principle 13: Internal Audit

The Internal Audit (“IA”) function is independent of the activities it audits. The Head of IA’s primary reporting line is to the chairman of the AC with an administrative line of reporting to the CEO of the Company. IA has adopted the International Standards for the Professional Practice of Internal Auditing set by the Institute of Internal Auditors and has incorporated these standards into IA’s audit practices. IA operates within the framework stated in its Internal Audit Charter which is approved by the AC. IA’s responsibilities include evaluating the reliability, adequacy and effectiveness of the internal controls and risk management processes of the Company. The Company has a well-established IA function with formal procedures for internal auditors to report their audit findings to the AC and to management. The AC reviews the adequacy of the internal audit function through a review of the internal auditors’ activities on a quarterly basis and is satisfied that the internal audit function has adequate resources and appropriate standing within the Group to perform its functions properly.

ANNUAL REPORT 2008

21



COMMUNICATION WITH SHAREHOLDERS

CCDG Code Principle 14: Communication with Shareholders

The Company announces its quarterly and full year results within the mandatory period. Material and price-sensitive information is publicly released via SGXNET on a timely basis. All shareholders of the Company receive the annual report of the Company and the notice of the Annual General Meeting, which notice is also advertised in the press and released via SGXNET. Shareholders and investors can access information on the Company at its website at www.hlasia.com.sg which provides, inter alia, corporate announcements, press releases and the latest financial results as disclosed by the Company on SGXNET. From time to time, the Company’s senior management holds briefings with analysts and the media to coincide with the release of the Group’s results.

CCDG Code Principle 15: Greater Shareholder Participation

At general meetings of the Company, shareholders are given the opportunity to communicate their views and ask the Directors and the management questions regarding matters affecting the Company. The chairman of the AC, NC, RC and Share Option Scheme Committee, and the external auditors were present at the last Annual General Meeting, and will endeavour to be present at the coming Annual General Meeting to address, and to assist the Directors in addressing, queries raised by the shareholders.

In accordance with the Articles of Association of the Company, shareholders may appoint one or two proxies to attend and vote in their absence. CPF investors of the Company’s securities may attend shareholders’ meetings as observers provided they have submitted their requests to do so with their agent banks within a specified timeframe.

RISK MANAGEMENT

An organisational risk management framework has been established by management to formalise and document the internal processes, many of which are already currently in place, to enable significant business risks within the Group to be identified, assessed, monitored, managed and evaluated, save for the Group’s China operations where the risk management processes have yet to be fully implemented.

In light of the current global financial crisis, the Group has made more effort to manage credit and liquidity risks.

As part of the ongoing risk management process, management will conduct a risk assessment and evaluation annually, and provide for significant risks to be managed through regular reviews by management and the Board and Board Committees, and adoption of adequate and cost-effective system of internal controls. The AC reviews the Group’s risk management process established by management to ensure that there are adequate internal controls in place to manage the significant risks identified. It notes that steps are being taken to fully implement risk management for its China operations.

INTERNAL CODE ON DEALINGS IN SECURITIES

The Company has adopted an internal code on securities trading which provides guidance and internal regulation with regard to dealings in the Company’s securities by its Directors and officers. These guidelines prohibit dealing in the Company’s securities while in possession of unpublished material price-sensitive information in relation to such securities and during the “closed period”, which is defined as 2 weeks before the date of announcement of results for each of the first 3 quarters of the Company’s financial year and one month before the date of announcement of the full year financial results.

23 March 2009

ANNUAL REPORT 2008

22



Financial Report

24 Directors’ Report

32 Statement By Directors

33 Independent Auditors’ Report

35 Balance Sheets

37 Consolidated Income Statement

38 Consolidated Statement of Changes in Equity

40 Statement of Changes in Equity

41 Consolidated Cash Flow Statement

44 Notes to the Financial Statements

We are pleased to submit this report to the members of the Company together with the audited financial statements for the financial year ended 31 December 2008.

Directors

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

Kwek Leng BengKwek Leng PeckTeo Tong KooiErnest Colin LeeGoh Kian HweeQuek Shi Kui

Arrangements to enable directors to acquire shares and debentures

Except as disclosed under the section on “Share Options” in this report, neither at the end of nor at any time during the financial year was the Company a party to any arrangements whose objects are, or one of whose objects is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

Directors’ interests in shares or debentures

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

According to the register kept by the Company for the purposes of Section 164 of the Companies Act, Chapter 50 (the “Act”), particulars of interests of directors who held office at the end of the financial year (including those of their spouses and infant children) in share and/or share options in the Company and related corporations are as follows:

ANNUAL REPORT 2008

24


DIRECTORS’ REPORT

Directors’ interests in shares or debentures (cont’d)

Holdings in which the director, his spouse and infant children

have a direct interest

At beginningof the year

At end ofthe year

The Company

Ordinary Shares

Kwek Leng Beng 600,000 600,000 Kwek Leng Peck 1,000,000 1,000,000 Teo Tong Kooi 65,000 65,000 Ernest Colin Lee 33,000 50,000

Options to subscribe for the following number of ordinary shares under the Hong Leong Asia Share Option Scheme 2000

Kwek Leng Beng 60,000 60,000 Kwek Leng Peck 350,000 850,000 Teo Tong Kooi 250,000 750,000 Ernest Colin Lee 17,000 -

Ultimate Holding Company

Hong Leong Investment Holdings Pte. Ltd. Ordinary Shares

Kwek Leng Beng 2,320 2,320 Kwek Leng Peck 304 10,921

Related Corporations

Hong Leong Finance Limited Ordinary Shares

Kwek Leng Beng 4,603,567 4,603,567 Kwek Leng Peck 517,359 517,359

Options to subscribe for the following number of ordinary shares under the Hong Leong Finance Share Option Scheme 2001

Kwek Leng Beng 2,422,000 2,800,000

ANNUAL REPORT 2008

25


DIRECTORS’ REPORT


Holdings in which the director, his spouse and infant children

have a direct interest


At end ofthe year

Related Corporations (cont’d)

Hong Leong Holdings Limited Ordinary Shares

Kwek Leng Beng 259,000 259,000 Kwek Leng Peck 381,428 381,428

Hong Realty (Private) Limited Ordinary Shares

Kwek Leng Beng 1,110 1,110 Kwek Leng Peck 150 150

City Developments Limited Ordinary Shares

Kwek Leng Beng 397,226 397,226 Kwek Leng Peck 43,758 43,758

Preference Shares

Kwek Leng Beng 144,445 144,445

City e-Solutions Limited Ordinary Shares of HK$1 each

Kwek Leng Beng 3,286,980 3,286,980 Kwek Leng Peck 2,082,200 2,082,200

Millennium & Copthorne Hotels New Zealand Limited Ordinary Shares

Kwek Leng Beng 3,000,000 3,000,000

Sun Yuan Holdings Pte. Ltd. Ordinary Shares

Kwek Leng Beng 15,000,000 15,000,000

ANNUAL REPORT 2008

26


DIRECTORS’ REPORT


Other holdings in which the director is deemed to

have an interest


At end ofthe year

Ultimate Holding Company

Hong Leong Investment Holdings Pte. Ltd. Ordinary Shares

Kwek Leng Beng 68,596 40,744

The Directors’ interests as at 31 December 2008 disclosed above remained unchanged as at 21 January 2009.

Directors’ interests in contracts

During the financial year, the Company and/or its related corporations have in the normal course of business entered into transactions with directors and/or their affiliated parties, being related parties and parties in which some of the directors are deemed to have an interest, with the directors having disclosed their interests in such transactions pursuant to Section 156 of the Act. Such transactions may comprise loans, deposits, provision of nominee and corporate advisory services, foreign exchange transactions, insurance transactions, property-related transactions, construction-related transactions, industrial-related transactions, consumer-related transactions, investing in real estate used for hospitality and/or hospitality-related purposes, purchase/sale of investments or investment products, property, industrial and consumer biodegradable and non-biodegradable products, goods including vehicles, parts and accessories and provision and receipt of after-sales services, hotel-related transactions, procurement services, information technology services, e-commerce-related transactions, management and consultancy services and/or other transactions carried out on normal commercial terms and in the normal course of business of the Company and/or its related corporations.

However, the directors have neither received nor become entitled to receive any benefit arising out of these transactions other than those to which they may be entitled as customers, suppliers, directors and members of these corporations.

Except as disclosed above and except for remuneration and professional fees received from the related corporations, since the end of the last financial year, no director has received or become entitled to receive a benefit by reason of a contract made by the Company and/or its related corporations with the director, or with a firm of which he is a member or with a company in which he has a substantial financial interest.

Share options

(a) Hong Leong Asia Share Option Scheme 2000 (the “Share Option Scheme”)

The Share Option Scheme was approved by the shareholders at the extraordinary general meeting of the Company held on 30 December 2000. It is administered by a committee comprising the following members:

Ernest Colin Lee – ChairmanKwek Leng PeckQuek Shi KuiGoh Kian Hwee

ANNUAL REPORT 2008

27


DIRECTORS’ REPORT

Share options (cont’d)

(a) Hong Leong Asia Share Option Scheme 2000 (the “Share Option Scheme”) (cont’d)

The Share Option Scheme provides the Company with the flexibility of granting options to participants at Market Price (as defined in the Share Option Scheme) and/or with a discount (either up-front or a deferred discount) to the Market Price. All options granted to date under the Share Option Scheme are at Market Price.

Under the Share Option Scheme, Market Price Options (as defined in the Share Option Scheme) granted to:

(i) Group Employees and Parent Group Employees (both as defined in the Share Option Scheme) may be exercised one year after the date of the grant and will have a term of ten years from the date of the grant; and

(ii) Group Non-Executive Directors, Parent Group Non-Executive Directors and Associated Company Employees (all three as defined in the Share Option Scheme) may be exercised one year after the date of the grant and will have a term of five years from the date of the grant.

The aggregate number of ordinary shares in the capital of the Company (“Shares”) over which options may be granted under the Share Option Scheme on any date, when added to the number of Shares issued and issuable in respect of all options granted under the Share Option Scheme shall not exceed 15% of the total number of issued Shares excluding treasury shares, if any, on the day preceding the relevant date of grant. The aggregate number of Shares which may be offered by way of grant of options to Parent Group Employees and Parent Group Non-Executive Directors collectively under the Share Option Scheme shall not exceed 20% of the total number of Shares available under the Share Option Scheme.

(b) Options granted under the Share Option Scheme

During the financial year under review, the following options were granted to Group Employees under the Share Option Scheme:

Date of grantExercise price

per shareNumber of Shares

under options Exercise period

15/5/2008 $2.36 1,350,000 15/5/2009 to 14/5/2018

(i) Included in the above are options granted to the Directors of the Company, details of which are as follows:

Name of Director

Shares under options granted

during financial year under review

Aggregate Shares under options granted since

commencement of Share Option

Scheme to end of financial year under

review

Aggregate Shares under options exercised since commencement of Share Option

Scheme to end of financial year under

review

Aggregate Shares under options

outstanding as at end of financial year

under review

Kwek Leng Beng - 660,000 600,000 60,000

Kwek Leng Peck 500,000 1,850,000 1,000,000 850,000

Teo Tong Kooi 500,000 1,250,000 500,000 750,000

Ernest Colin Lee - 150,000 150,000 -

ANNUAL REPORT 2008

28


DIRECTORS’ REPORT


(b) Options granted under the Share Option Scheme (cont’d)

(ii) None of the participants were regarded by the Directors as controlling shareholders of the Company. None of the participants were granted options representing 5% or more of the total number of Shares under options available under the Share Option Scheme.

(iii) A total of 1,080,000 Shares under option were granted to Parent Group Employees since the commencement of the Share Option Scheme to the end of the financial year under review.

(iv) None of the Parent Group Employees were granted options representing 5% or more of the total number of Shares under options available under the Share Option Scheme to all Parent Group Employees and Parent Group Non-Executive Directors.

(v) Except for options granted to persons in their capacity as Group Employees or Group Non-Executive Directors or Parent Group Employees, no other options have been granted by the Company to any other categories of persons since the commencement of the Share Option Scheme.

(vi) All options granted under the Share Option Scheme are subject to a vesting schedule as follows:

(1) One year after the date of grant for up to 33% of the Shares over which the options are exercisable;

(2) Two years after the date of grant for up to 66% (including (1) above) of the Shares over which the options are exercisable; and

(3) Three years after the date of grant for up to 100% (including (1) and (2) above) of the Shares over which the options are exercisable.

(vii) The persons to whom these options have been granted do not have the right to participate by virtue of the options in any share issue of any other company.

ANNUAL REPORT 2008

29


DIRECTORS’ REPORT


(c) Unissued shares under options

There were a total of 2,483,200 unissued Shares under the options granted pursuant to the Share Option Scheme at the end of the financial year. Details of the options to subscribe for Shares including those granted to the Directors of the Company are as follows:

Date of grant

Exercise price per

share

Options outstanding at 1 January

2008Options granted

Options exercised

Options cancelled/

lapsed

Options outstanding

at 31 December

2008

Number of option holders

at 31 December

2008Exercise period

6/7/2001 $0.41 40,000 - (40,000) - - - 6/7/2002 to 5/7/2011

1/10/2004 $1.51 100,000 - - - 100,000 1 1/10/2005 to 30/9/2014

1/10/2004 $1.51 77,000 - (17,000) - 60,000 1 1/10/2005 to 30/9/2009 *

26/9/2005 $1.28 62,200 - - (27,200) 35,000 3 26/9/2006 to 25/9/2015

10/1/2007 $1.88 1,220,000 - (110,200) (171,600) 938,200 11 10/1/2008 to 9/1/2017

15/5/2008 $2.36 - 1,350,000 - - 1,350,000 5 15/5/2009 to 14/5/2018

Total 1,499,200 1,350,000 (167,200) (198,800) 2,483,200

* Relates to options granted to the Group Non-Executive Directors

Save as disclosed above, during the financial year, there were:

(i) no options granted by the Company or its subsidiaries to any person to take up unissued shares of the Company or its subsidiaries; and

(ii) no shares issued by virtue of any exercise of option to take up unissued shares of the Company or its subsidiaries.

ANNUAL REPORT 2008

30


DIRECTORS’ REPORT

Audit committee

The Audit Committee comprises three members who are independent. The members of the Audit Committee at the date of this report are:

Quek Shi Kui – Chairman Ernest Colin Lee Goh Kian Hwee

The Audit Committee has held five meetings since the date of the last directors’ report and carried out the functions of an audit committee as specified in the Act. In carrying out its functions, the Audit Committee reviewed the overall scope of both internal and external audits and the assistance given by the Company’s officers to the auditors. It met with the Company’s internal and external auditors to discuss the results of their respective examinations and their evaluation of the Group’s system of internal controls. The Audit Committee also reviewed the consolidated financial statements of the Group and the balance sheet and the statement of changes in equity of the Company for the year ended 31 December 2008 as well as the auditors’ report thereon.

The Audit Committee has recommended to the Board of Directors that the auditors, Messrs KPMG LLP, be nominated for re-appointment as auditors at the forthcoming Annual General Meeting of the Company.

Auditors

The auditors, Messrs KPMG LLP, have expressed their willingness to accept re-appointment.

On behalf of the Board of Directors

Kwek Leng PeckDirector

Teo Tong KooiDirector

23 March 2009

ANNUAL REPORT 2008

31


DIRECTORS’ REPORT

In our opinion:

(a) the financial statements set out on pages 35 to 94 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 2008 and the results, changes in equity and cash flows of the Group and changes in equity of the Company for the year ended on that date in accordance with the provisions of the Companies Act, Chapter 50 and Singapore Financial Reporting Standards; and

(b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.

The Board of Directors has, on the date of this statement, authorised these financial statements for issue.

On behalf of the Board of Directors

Kwek Leng PeckDirector

Teo Tong KooiDirector

23 March 2009

ANNUAL REPORT 2008

32


STATEMENT By DIRECTORS

Members of the CompanyHong Leong Asia Ltd.

We have audited the accompanying financial statements of Hong Leong Asia Ltd. (the Company) and its subsidiaries (the Group), which comprise the balance sheets of the Group and of the Company as at 31 December 2008, the income statement, statement of changes in equity and cash flow statement of the Group and the statement of changes in equity of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 35 to 94.

Management’s responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act, Chapter 50 (the Act) and Singapore Financial Reporting Standards. This responsibility includes:

(a) 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;

(b) selecting and applying appropriate accounting policies; and

(c) making accounting estimates that are reasonable in the circumstances.

Auditors’ 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 whether the financial statements are free from material misstatement.

ANNUAL REPORT 2008

33


INDEPENDENT AUDITORS’ REPORT

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 judgement, 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 and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by 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.

Opinion

In our opinion:

(a) 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 to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2008 and the results, changes in equity and cash flows of the Group and changes in equity of the Company for the year ended on that date; and

(b) the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

KPMG LLPPublic Accountants andCertified Public Accountants

Singapore23 March 2009

ANNUAL REPORT 2008

34


INDEPENDENT AUDITORS’ REPORT

ANNUAL REPORT 2008

35


Group CompanyNote 2008 2007 2008 2007

$’000 $’000 $’000 $’000Non-current assetsProperty, plant and equipment 3 868,708 772,318 723 3,731

Prepaid operating leases 4 52,838 48,971 - -

Intangibles 5 66,786 66,691 1,099 -

Investments in subsidiaries 7 - - 239,628 219,980

Interests in associates 8 253,350 258,674 52,295 55,452

Interest in jointly-controlled entity 9 - - 15,000 15,000

Investment properties 10 7,222 8,130 - -

Other investments 11 2,145 2,845 - 167

Non-current receivables 12 5,827 7,852 - -

Amounts due from subsidiaries 13 - - 55,674 59,462

Deferred tax assets 14 38,299 64,776 - -

1,295,175 1,230,257 364,419 353,792

Current assetsInventories 15 724,781 608,184 - 9,816

Development properties 16 20,366 23,291 - -

Other investments 11 633 1,418 - -

Trade and other receivables 17 975,126 935,445 136,883 97,540

Cash and cash equivalents 18 271,178 247,742 10,495 14,912

1,992,084 1,816,080 147,378 122,268

Total assets 3,287,259 3,046,337 511,797 476,060

BALANCE SHEETSAs at 31 December 2008

The accompanying notes form an integral part of these financial statements.

ANNUAL REPORT 2008

36


As at 31 December 2008


$’000 $’000 $’000 $’000Equity attributable to equity holders of the CompanyShare capital 19 278,664 278,415 278,664 278,415

Reserves 20 302,221 314,888 37,588 41,328

580,885 593,303 316,252 319,743

Minority interests 895,322 737,860 - -

Total equity 1,476,207 1,331,163 316,252 319,743

Non-current liabilitiesAmount due to a subsidiary 13 - - 10,400 11,000

Financial liabilities 21 56,838 70,578 - -

Deferred tax liabilities 14 2,111 2,087 457 457

Deferred grants 276 272 - -

Retirement benefits 308 290 - -

59,533 73,227 10,857 11,457

Current liabilitiesTrade and other payables 22 1,135,023 1,074,845 17,350 34,180

Provisions 23 59,697 59,165 - 640

Financial liabilities 21 531,032 459,397 167,338 110,040

Current tax payable 25,767 48,540 - -

1,751,519 1,641,947 184,688 144,860

Total liabilities 1,811,052 1,715,174 195,545 156,317

Total equity and liabilities 3,287,259 3,046,337 511,797 476,060

BALANCE SHEETS


ANNUAL REPORT 2008

37


Group Note 2008 2007

$’000 $’000

Revenue 24 3,616,784 3,233,178

Cost of sales (2,861,761) (2,480,711)

Gross profit 755,023 752,467

Other income/(expenses) 25 (a) 1,684 (3,393)

Selling and distribution expenses (279,976) (255,304)

Research and development expenses (57,198) (38,521)

General and administrative expenses (220,108) (224,567)

Profit from operations 199,425 230,682

Other non-operating income 25 (b) 42,935 11,981

Finance costs 25 (c) (50,751) (38,476)

Share of profit of associates, net of tax 15,470 25,423

Profit before income tax 25 207,079 229,610

Income tax expense 26 (33,618) (40,359)

Profit for the year 173,461 189,251

Attributable to:Equity holders of the Company 41,977 95,428

Minority interests 131,484 93,823

173,461 189,251

Earnings per share (cents) 27

- Basic 11.01 25.05

- Diluted 11.01 25.00

CONSOLIDATED INCOME STATEMENTyear ended 31 December 2008


ANNUAL REPORT 2008

38


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year ended 31 December 2008 CONSOLIDATED STATEMENT OF CHANGES IN EQUITy

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ANNUAL REPORT 2008

39


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any

Min

ori

ty

inte

rest

sTo

tal

equ

ity

Gro

up

$’00

0$’

000

$’00

0$’

000

$’00

0$’

000

$’00

0$’

000

$’00

0$’

000

At

1 Ja

nuar

y 20

0827

8,41

5(3

4,68

4)19

,956

60,5

1895

8(2

9,82

1)29

7,96

159

3,30

373

7,86

01,

331,

163

Exch

ange

diff

eren

ces

on

tran

slat

ion

of

fina

ncia

l sta

tem

ents

of

fore

ign

subs

idia

ries

and

ass

ocia

tes

--

--

-16

,686

-16

,686

46,4

2663

,112

Net

fai

r va

lue

chan

ges

--

-(3

7,85

4)-

--

(37,

854)

(13,

012)

(50,

866)

Cos

t of

sha

re-b

ased

pay

men

ts-

--

-84

7-

-84

72

849

Net

gai

ns r

ecog

nise

d d

irect

ly in

equ

ity-

--

(37,

854)

847

16,6

86-

(20,

321)

33,4

1613

,095

Profi

t fo

r th

e ye

ar-

--

--

-41

,977

41,9

7713

1,48

417

3,46

1To

tal r

ecog

nise

d i

ncom

e an

d ex

pens

e f

or t

he y

ear

--

-(3

7,85

4)84

716

,686

41,9

7721

,656

164,

900

186,

556

Tran

sfer

to

stat

utor

y r

eser

ves

--

2,31

1-

--

(2,3

11)

--

-Sh

ares

issu

ed d

urin

g t

he y

ear

1924

9-

--

--

-24

9-

249

Purc

hase

of

addi

tiona

l s

hare

hold

ing

in a

sub

sidi

ary

--

--

--

--

(761

)(7

61)

Shar

es is

sued

to

min

ority

sha

reho

lder

s o

f su

bsid

iarie

s-

--

--

--

-10

,103

10,1

03D

ivid

ends

pai

d to

sha

reho

lder

s28

--

--

--

(34,

323)

(34,

323)

-(3

4,32

3)D

ivid

ends

pai

d to

min

ority

sha

reho

lder

s o

f su

bsid

iarie

s-

--

--

--

-(1

6,78

0)(1

6,78

0)

At

31 D

ecem

ber

2008

278,

664

(34,

684)

22,2

6722

,664

1,80

5(1

3,13

5)30

3,30

458

0,88

589

5,32

21,

476,

207

CONSOLIDATED STATEMENT OF CHANGES IN EQUITyyear ended 31 December 2008

The

acco

mpa

nyin

g no

tes

form

an

inte

gral

par

t of

the

se fi

nanc

ial s

tate

men

ts.

ANNUAL REPORT 2008

40


No

teSh

are

cap

ital

Cap

ital

rese

rve

Fair

val

ue

rese

rve

Equ

ity

com

pen

sati

on

re

serv

eA

ccu

mu

late

d

pro

fits

Tota

lC

om

pan

y$’

000

$’00

0$’

000

$’00

0$’

000

$’00

0

At

1 Ja

nuar

y 20

0727

7,12

49,

199

118

478

28,7

8631

5,70

5

Cos

t of

sha

re-b

ased

pay

men

ts-

--

360

-36

0

Net

fai

r va

lue

chan

ges

--

4-

-4

Net

gai

ns r

ecog

nise

d di

rect

ly in

equ

ity-

-4

360

-36

4

Profi

t fo

r th

e ye

ar-

--

-32

,981

32,9

81

Tota

l rec

ogni

sed

inco

me

and

expe

nse

for

the

year

--

436

032

,981

33,3

45

Shar

es is

sued

dur

ing

the

year

191,

291

--

--

1,29

1Re

alis

atio

n of

rev

alua

tion

rese

rve

on d

ispo

sal o

f a

vaila

ble-

for-

sale

inve

stm

ents

--

(122

)-

-(1

22)

Div

iden

ds28

--

--

(30,

476)

(30,

476)

At

31 D

ecem

ber

2007

278,

415

9,19

9-

838

31,2

9131

9,74

3

At

1 Ja

nuar

y 20

0827

8,41

59,

199

-83

831

,291

319,

743

Cos

t of

sha

re-b

ased

pay

men

ts-

--

451

-45

1

Net

fai

r va

lue

chan

ges

--

12-

-12

Net

gai

ns r

ecog

nise

d di

rect

ly in

equ

ity-

-12

451

-46

3

Profi

t fo

r th

e ye

ar-

--

-30

,132

30,1

32

Tota

l rec

ogni

sed

inco

me

and

expe

nse

for

the

year

--

1245

130

,132

30,5

95

Shar

es is

sued

dur

ing

the

year

1924

9-

--

-24

9Re

alis

atio

n of

rev

alua

tion

rese

rve

on d

ispo

sal o

f a

vaila

ble-

for-

sale

inve

stm

ents

--

(12)

--

(12)

Div

iden

ds28

--

--

(34,

323)

(34,

323)

At

31 D

ecem

ber

2008

278,

664

9,19

9-

1,28

927

,100

316,

252

year ended 31 December 2008 STATEMENT OF CHANGES IN EQUITy

The

acco

mpa

nyin

g no

tes

form

an

inte

gral

par

t of

the

se fi

nanc

ial s

tate

men

ts.

ANNUAL REPORT 2008

41


GroupNote 2008 2007

$’000 $’000Operating activities

Profit before income tax 207,079 229,610

Adjustments for:

Share of profit of associates (15,470) (25,423)

Accretion of deferred grants 25(a) (11) (6)

Cost of share-based payments 25(d) 847 360

Depreciation and amortisation 25 59,694 55,458

Impairment losses on property, plant and equipment and intangibles 25(a) 8,349 10,122

Gain on disposal/redemption of shares in subsidiaries and related businesses – (5,141)

Finance costs 25(c) 50,751 38,476

Dividend income 25(a) (76) (265)

Interest income 25(a) (3,530) (4,254)

(Gain)/loss on disposal of:

- other investments 25(b) - (6,840)

- property, plant and equipment 25 1,786 2,082

Provisions for warranties and other costs, net 25 64,132 62,419

373,551 356,598

Changes in working capital:

Inventories and work-in-progress (77,033) (109,369)

Trade and other receivables 37,566 (303,551)

Trade and other payables 9,073 185,858

Provisions utilised 23 (66,666) (50,192)

Cash generated from operations 276,491 79,344

Income taxes paid (42,271) (28,499)

Cash flows from operating activities 234,220 50,845

CONSOLIDATED CASH FLOW STATEMENTyear ended 31 December 2008


ANNUAL REPORT 2008

42


GroupNote 2008 2007

$’000 $’000

Investing activities

Additional investments in associates (40,405) -

Acquisition of subsidiaries and businesses, net of cash acquired - (165)

Acquisition of additional interest in a subsidiary (1,138) (201)

Repayment by related corporations - 865

Dividends received from:

- associates 5,835 5,340

- others 76 217

Interest received 3,276 6,482

Purchase of:

- intangible assets 5 (1,709) (397)

- property, plant and equipment 3 (134,060) (115,053)

- other investments - (272)

Payment for prepaid operating leases (2,881) 596

Proceeds from disposal of:

- subsidiaries, net of cash disposed of (Note A) - 2,189

- property, plant and equipment 9,190 9,019

- other investments - 11,828

- assets held for sale - 18,089

Cash flows from investing activities (161,816) (61,463)

Note A:

The effect of disposal of the subsidiary’s net assets was as follows:

2007$’000

Net current liabilities (87)

Realisation of translation difference (2,812)

Profit on disposal 5,141

Total cash consideration 2,242

Less: (Cash and cash equivalents)/overdraft of subsidiary disposed (53)

Disposal of subsidiary, net of cash and cash equivalents disposed 2,189

year ended 31 December 2008 CONSOLIDATED CASH FLOW STATEMENT


ANNUAL REPORT 2008

43


GroupNote 2008 2007

$’000 $’000Financing activities

Dividends paid to:

- minority shareholders of subsidiaries (16,780) (11,698)

- shareholders of the Company 28 (34,323) (30,476)

Interest paid (56,494) (31,877)

Proceeds from borrowings 966,113 325,122

Fixed deposits pledged with a bank for banking facilities 30,920 (7,895)

Proceeds from share issues 249 1,291

Capital contribution by minority shareholders of subsidiaries 10,103 -

Repayments in respect of borrowings (930,872) (295,548)

Cash flows from financing activities (31,084) (51,081)

Net increase/(decrease) in cash and cash equivalents 41,320 (61,699)

Cash and cash equivalents at beginning of the year 186,681 246,863

Effect of exchange rate changes on balances held in foreign currency 10,016 1,517

Cash and cash equivalents at end of the year 18 238,017 186,681

Notes:

(i) Cash and bank balances totalling $184,916,000 (2007: $214,117,000) are held in countries which operate foreign exchange controls.

(ii) In 2007, the Group refinanced and rolled over $50,000,000 of medium term notes.

CONSOLIDATED CASH FLOW STATEMENTyear ended 31 December 2008


ANNUAL REPORT 2008

44


NOTES TO THE FINANCIAL STATEMENTS

These notes form an integral part of the financial statements.

The financial statements were authorised for issue by the Board of Directors on 23 March 2009.

1 Domicile and activities

Hong Leong Asia Ltd. (the Company) is incorporated in the Republic of Singapore and has its registered office at 16 Raffles Quay, #26-00 Hong Leong Building, Singapore 048581.

The principal activities of the Group and the Company have been those relating to the manufacturing and distribution of consumer products, diesel engines and related products, industrial packaging products, biodegradable products and building materials, and of investment holding and dealing.

The consolidated financial statements relate to the Company and its subsidiaries (referred to as the Group) and the Group’s interests in associates and a jointly-controlled entity.

The immediate and ultimate holding companies during the financial year are Hong Leong Corporation Holdings Pte Ltd and Hong Leong Investment Holdings Pte. Ltd., respectively. These companies are incorporated in the Republic of Singapore.

2 Summary of significant accounting policies

2.1 Basis of preparation

The financial statements have been prepared in accordance with Singapore Financial Reporting Standards (FRS).

The financial statements have been prepared on the historical cost basis, except for certain property, plant and equipment, financial assets and financial liabilities which are stated at fair value.

The financial statements are presented in Singapore dollars which is the Company’s functional currency. All financial information presented in Singapore dollars has been rounded to the nearest thousand, unless otherwise stated.

The preparation of financial statements in conformity with FRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements is described in the following notes:

• Note6-assumptionsofrecoverableamountsrelatingtoproperty,plantandequipmentandtrademarks• Note23andnote33-measurementofprovisionsandcontingentliabilities• Note32-valuationoffinancialinstruments

The accounting policies set out below have been applied consistently by the Group. The accounting policies used by the Group have been applied consistently to all periods presented in these financial statements.

ANNUAL REPORT 2008

45


2 Summary of significant accounting policies (cont’d)

2.2 Consolidation

Business Combinations

Business combinations carried out in group restructuring transactions involving related parties under common control are accounted for under the historical cost method in a manner similar to the pooling of interests method.

All other business combinations are accounted for under the purchase method. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition.

The excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition is credited to the income statement in the period of the acquisition.

Subsidiaries

Subsidiaries are those companies controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of a company so as to obtain benefits from its activities. In assessing control, potential voting rights that are presently exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed where necessary to align them with the policies adopted by the Group.

Associates

Associates are those companies in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power of another entity.

The consolidated financial statements include the Group’s share of the total recognised gains and losses of associates on an equity accounted basis, from the date that significant influence commences until the date that significant influence ceases. The Group’s investments in associates include goodwill on acquisition. When the Group’s share of losses exceeds the carrying amount of the associate, the carrying amount is eliminated and recognition of further losses is discontinued except to the extent that the Group has incurred obligations in respect of the associate.

Jointly-controlled entities

Jointly-controlled entities are those enterprises over which activities the Group has joint control, established by contractual agreement.

The consolidated financial statements include the Group’s proportionate share of the enterprises’ assets, liabilities, revenue and expenses with items of a similar nature on a line by line basis, from the date that joint control commences until the date that joint control ceases.

Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

Accounting for subsidiaries, associates and joint ventures by the Company

Investments in subsidiaries, associates and joint ventures are stated in the Company’s balance sheet at cost less accumulated impairment losses.


ANNUAL REPORT 2008

46



2.3 Foreign currencies

Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date on which the fair value was determined.

Foreign currency differences arising on retranslation are recognised in the income statement, except for differences arising on the retranslation of monetary items that in substance form part of the Group’s net investment in a foreign operation (see below) and available-for-sale equity instruments.

Foreign operations

The assets and liabilities of foreign operations are translated to Singapore dollars at exchange rates prevailing at the reporting date. The income and expenses of foreign operations are translated to Singapore dollars at exchange rates prevailing at the dates of the transactions. Goodwill and fair value adjustments arising on the acquisition of a foreign operation on or after 1 January 2005 are treated as assets and liabilities of the foreign operation and translated at the closing rate. For acquisitions prior to 1 January 2005, the exchange rates at the date of acquisition were used.

Foreign currency differences are recognised in the foreign currency translation reserve. When a foreign operation is disposed of, in part or in full, the relevant amount in the foreign exchange translation reserve is transferred to the income statement.

Net investment in a foreign operation

Exchange differences arising from monetary items that in substance form part of the Company’s net investment in a foreign operation are recognised in the Company’s income statement. Such exchange differences are reclassified to equity in the consolidated financial statements. When the foreign operation is disposed of, the cumulative amount in equity is transferred to the income statement as an adjustment to the profit or loss arising on disposal.

2.4 Property, plant and equipment

Owned assets

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the cost of dismantling and removing the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

Subsequent expenditure

Subsequent expenditure relating to property, plant and equipment that has already been recognised is added to the carrying amount of the asset when it is probable that future economic benefits, in excess of the originally assessed standard of performance of the existing asset, will flow to the enterprise. All other subsequent expenditure is recognised as an expense in the period in which it is incurred.


ANNUAL REPORT 2008

47



2.4 Property, plant and equipment (cont’d)

Depreciation

No depreciation is provided on freehold land. Construction-in-progress is not depreciated until it is ready for its intended use. Depreciation is provided on a straight-line basis so as to write off the cost of other property, plant and equipment over their estimated useful lives (or lease term, if shorter) as follows:

Buildings - over the period of the lease ranging from 3 to a maximum of 50 yearsLeasehold improvements - 5 yearsPlant and machinery - 3 to 15 yearsOffice furniture, fittings and equipment - 5 to 10 yearsMotor and transport vehicles - 3 to 8 yearsQuarry site preparation costs - 2.5 to 8 years

Depreciation method, useful lives and residual values are reviewed, and adjusted as appropriate, at each reporting date.

2.5 Investment properties

Investment property is property held either to earn rental income or capital appreciation or both. It does not include properties for sale in the ordinary course of business, used in the production or supply of goods or services, or for administrative purposes.

Investment properties are initially recognised at cost and subsequently carried at cost less accumulated depreciation and impairment losses. Depreciation is recognised in the income statement on a straight-line basis over the estimated useful lives of the investment properties. The estimated useful lives are 36 years. Depreciation methods, useful lives and residual values of investment properties are reassessed at each reporting date.

On disposal of an investment property, the difference between the net disposal proceeds and the carrying amount is taken to the income statement.

2.6 Intangible assets

Goodwill

Goodwill represents the excess of the cost of acquisition over the Group’s interest in the net fair value of identifiable net assets, liabilities and contingent liabilities of the acquiree. Goodwill arising from the acquisition of subsidiaries is presented as intangible assets. Goodwill arising from the acquisition of associates is presented together with interests in associates.

Goodwill is measured at cost less accumulated impairment losses. Goodwill is tested for impairment as described in note 2.10. Negative goodwill is recognised immediately in the income statement. Goodwill/negative goodwill previously written off against reserves

Goodwill that has previously been taken to reserves is not taken to the income statement when

(a) the business is disposed of; or

(b) when the goodwill is impaired.

Similarly, negative goodwill that has previously been taken to reserves is not taken to the income statement when the business is disposed of.


ANNUAL REPORT 2008

48



2.6 Intangible assets (cont’d)

Acquisition of minority interest

Goodwill represents the excess of the additional investment over the Group’s additional interest in the net fair value of the identifiable net assets, liabilities and contingent liabilities at the date of exchange. The excess of the net assets, liabilities and contingent liabilities over the carrying value in respect of the Group’s existing interest is recorded as a fair value adjustment and taken to equity.

Research and development expenses

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in the income statement as an expense when incurred.

Development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditure is capitalised only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Group intends to and has sufficient resources to complete development and to use or sell the asset. The expenditure capitalised includes the cost of materials, direct labour and overhead cost directly attributable to prepare the assets for its intended use. Other development expenditure is recognised in the income statement as an expense when incurred. Capitalised development expenditure is stated at cost less accumulated amortisation and impairment losses.

Capitalised development expenditure is stated at cost less accumulated amortisation and impairment losses. Amortisation is charged to the income statement using the straight-line method over the estimated useful lives of not more than 20 years, commencing from the date the asset is available for use.

Trademarks

Trademarks acquired are treated as having indefinite useful lives and are not amortised until their useful lives are determined to be finite.

Subsequent expenditure

Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed when incurred.

2.7 Financial instruments

Non-derivative financial instruments

Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, financial liabilities, and trade and other payables.

Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition, non-derivative financial instruments are measured as described below.

A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Group’s contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial asset to another party without retaining control or transfers substantially all the risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade date, i.e. the date that the Group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Group’s obligations specified in the contract expire or are discharged or cancelled.


ANNUAL REPORT 2008

49



2.7 Financial instruments (cont’d)

Non-derivative financial instruments (cont’d)

Cash and cash equivalents comprise cash balances and bank deposits. Bank overdrafts that are repayable on demand and that form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the cash flow statement.

Available-for-sale financial assets

The Group’s investments in equity securities are classified as available-for-sale financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein, other than for impairment losses, and foreign exchange gains and losses on available-for-sale monetary items, are recognised directly in equity. When an investment is derecognised, the cumulative gain or loss in equity is transferred to the income statement.

Other

Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses.

Impairment of financial assets

A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its current fair value, and is recognised when there has been a significant or prolonged decline of its fair value below its carrying amount.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.

All impairment losses are recognised in the income statement. Any cumulative loss in respect of an available-for-sale financial asset recognised previously in equity is transferred to the income statement.

Impairment losses in respect of financial assets measured at amortised cost and available-for-sale debt securities are reversed if the subsequent increase in fair value can be related objectively to an event occurring after the impairment loss was recognised.

Impairment losses once recognised in the income statement in respect of available-for-sale equity securities are not reversed through the income statement. Any subsequent increase in fair value of such assets is recognised directly in equity.

Intra-group financial guarantees

Financial guarantees are financial instruments issued by the Group that requires the issuer to make specified payments to reimburse the holder for the loss it incurs because a specified debtor fails to meet payment when due in accordance with the original or modified terms of a debt instrument.

Financial guarantees are recognised initially at fair value and are classified as financial liabilities. Subsequent to initial measurement, the financial guarantees are stated at the higher of the initial fair value less cumulative amortisation and the amount that would be recognised if they were accounted for as contingent liabilities. When financial guarantees are terminated before their original expiry date, the carrying amount of the financial guarantees is transferred to the income statement.

Share capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects.


ANNUAL REPORT 2008

50



2.8 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is calculated using the weighted average cost formula and comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. In the case of manufactured inventories and work-in-progress, cost includes an appropriate share of production overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

2.9 Development properties

Development properties are those properties which are held with the intention of development and sale in the ordinary course of business. They are stated at the lower of cost plus, where appropriate, a portion of attributable profit, and estimated net realisable value, net of progress billings. Net realisable value represents the estimated selling price less costs to be incurred in selling the properties.

The cost of properties under development comprise specifically identified costs, including acquisition costs, development expenditure, borrowing costs and other related expenditure. Borrowing costs payable on loans funding a development property are also capitalised, on a specific identification basis, as part of the costs of the development property until the completion of development.

2.10 Impairment - non-financial assets

The carrying amounts of the Group’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated. For goodwill, recoverable amount is estimated at each reporting date, and as and when indicators of impairment are identified.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. Impairment losses are recognised in the income statement unless it reverses a previous revaluation, credited to equity, in which case it is charged to equity. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows 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 or cash-generating unit.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.


ANNUAL REPORT 2008

51



2.11 Employee benefits

Defined contribution plans

Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement as incurred. Short-term benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.

A provision is recognised for the amount expected to be paid under short-term cash bonuses if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

Share-based payments

The share option programme allows Group employees to acquire shares of the Company. The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options.

At each balance sheet date, the Group revises its estimates of the number of options that are expected to become exercisable. It recognises the impact of the revision of original estimates in employee expense with a corresponding adjustment to equity over the remaining vesting period.

2.12 Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

Claims

A provision for claims is recognised when delays arise or complaints from customers are received as the contract progresses. The provision is made based on management estimates from prior experience on similar projects with customers.

Warranties

A provision for warranties is recognised when the underlying products or services are sold. The provision is based on historical warranty data and a weighting of all possible outcomes against their associated probabilities.

Costs incurred are charged against the provision and any over or under provision is recognised in the income statement.

Onerous contracts

A provision for onerous contracts is recognised when the unavoidable costs of meeting the obligations under a contract exceed the economic benefits expected to be received under it.


ANNUAL REPORT 2008

52



2.13 Income recognition

Sale of goods

Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods and the amount of revenue can be measured reliably.

Transfers of risks and rewards vary depending on the individual terms of the contract of sale. For the sale of goods, transfer usually occurs when the product is received at the customer’s premises.

Rendering of services

Revenue from rendering of services relates to construction and project management contracts, commercial/home repair works and maintenance, hotel room and restaurant operations, and IT and computer operations.

Revenue is recognised over the period in which the services are rendered, by reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be performed.

Development properties for sale

The Group recognises income on property development projects when the risks and rewards of ownership have been transferred to the buyer. In cases where the Group is obliged to perform any significant acts after the transfer of legal title or an equitable interest, revenue is recognised as the acts are performed based on the percentage of completion method under Recommended Accounting Practice (RAP) 11 Pre-completion Contracts for the Sale of Development Property issued by the Institute of Certified Public Accountants of Singapore in October 2005. Under RAP 11, when (a) construction is beyond a preliminary stage, (b) minimum down payment criteria are met, (c) sales prices are collectible, and (d) aggregate sales proceeds and costs can be reasonably estimated, the percentage of completion method is an allowed alternative. If any of the above criteria are not met, pre-completion proceeds received are accounted for as deposits until such criteria are met.

Under the percentage of completion method, the percentage of completion is measured by reference to the work performed, based on the ratio of costs incurred to date to the estimated total costs for each contract. Profits are recognised only in respect of finalised sales agreements to the extent that such profits relate to the progress of the construction work.

Rental income

Rental income receivable under operating leases is recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income to be received. Contingent rentals are recognised as income in the accounting period in which they are earned.

Dividends

Dividend income from unquoted investments is recognised when the shareholder’s right to receive payment is established. Dividend income from quoted investments is recognised when dividends are received.

Interest income

Interest income is recognised as it accrues, using the effective interest method.


ANNUAL REPORT 2008

53



2.14 Operating leases

Prepaid operating leases

The Group leases land under operating leases and the leases run for a period of 15 to 60 years. The upfront payments made under the leases are amortised to the income statement on a straight-line basis over the term of the leases. The amortisation amount is included in operating lease expenses.

Other operating leases

Where the Group has the use of assets under operating leases, payments made under the leases are charged to the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the aggregate net lease payments made. Contingent rentals are charged to the income statement in the accounting period in which they are incurred.

2.15 Finance costs

Finance costs comprise interest expense and bank charges.

All interest expense are recognised in the income statement using the effective interest method, except to the extent that they are capitalised as being directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to get ready for its intended use or sale. Bank charges are recognised in the income statement in the period in which they are incurred.

2.16 Deferred grants

Grants received for investment in machinery and equipment used for the manufacture of non-chlorofluorocarbon (non-CFC) refrigerators are recorded as deferred income and taken to income over the same period over which the machinery and equipment are being depreciated.

2.17 Income tax expense

Income tax expense comprises current and deferred tax. Income tax expense is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries and joint ventures to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.


ANNUAL REPORT 2008

54


3 Pr

op

erty

, pla

nt

and

eq

uip

men

t

Free

ho

ld

lan

dB

uild

ing

sLe

aseh

old

im

pro

vem

ents

Plan

t an

d

mac

hin

ery

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ce

furn

itu

re,

fitt

ing

s an

d

equ

ipm

ent

Mo

tor

and

tr

ansp

ort

ve

hic

les

Co

n-

stru

ctio

n-i

n-

pro

gre

ss

Qu

arry

sit

e p

rep

arat

ion

co

sts

Tota

lG

rou

p$’

000

$’00

0$’

000

$’00

0$’

000

$’00

0$’

000

$’00

0$’

000

Co

st

At

1 Ja

nuar

y 20

0712

,328

336,

420

1,72

732

0,88

318

,756

28,4

5965

,823

10,3

0079

4,69

6

Tran

slat

ion

diff

eren

ces

-2,

604

-2,

919

207

4057

4(6

21)

5,72

3

Add

ition

s-

3,46

010

40,4

295,

228

5,95

455

,663

2,23

511

2,97

9

Tran

sfer

s-

27,9

1976

47,9

8631

9-

(76,

300)

--

Dis

posa

ls-

(11,

343)

-(1

7,12

9)(1

60)

(1,7

06)

--

(30,

338)

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e-of

f-

--

(607

)(3

,043

)(1

01)

(408

)-

(4,1

59)

At

31 D

ecem

ber

2007

12,3

2835

9,06

01,

813

394,

481

21,3

0732

,646

45,3

5211

,914

878,

901

Tran

slat

ion

diff

eren

ces

-25

,900

-24

,050

1,88

996

13,

243

(92)

55,9

51

Add

ition

s-

7,99

9-

37,8

004,

993

4,89

577

,804

569

134,

060

Tran

sfer

s-

29,4

45-

28,3

56-

50(5

7,85

1)-

-

Dis

posa

ls-

(2,9

05)

-(1

4,39

5)(5

72)

(2,2

94)

(983

)-

(21,

149)

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e-of

f-

(575

)(3

3)(3

,101

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,664

)(8

46)

(384

)-

(9,6

03)

At

31 D

ecem

ber

2008

12,3

2841

8,92

41,

780

467,

191

22,9

5335

,412

67,1

8112

,391

1,03

8,16

0


ANNUAL REPORT 2008

55


3 Pr

op

erty

, pla

nt

and

eq

uip

men

t (c

on

t’d

)

Free

ho

ld

lan

dB

uild

ing

sLe

aseh

old

im

pro

vem

ents

Plan

t an

d

mac

hin

ery

Offi

ce

furn

itu

re,

fitt

ing

s an

d

equ

ipm

ent

Mo

tor

and

tr

ansp

ort

ve

hic

les

Co

n-

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ctio

n-i

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pro

gre

ss

Qu

arry

sit

e p

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ion

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sts

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000

$’00

0$’

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0$’

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0$’

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um

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ted

dep

reci

atio

n a

nd

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t lo

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At

1 Ja

nuar

y 20

071,

166

20,2

5522

615

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1,78

815

,640

-6,

352

60,5

86

Tran

slat

ion

diff

eren

ces

-53

4-

(157

)15

3(2

7)-

(524

)(2

1)

Cha

rge

for

the

year

-14

,568

4623

,586

2,33

210

,572

-2,

729

53,8

33

Impa

irmen

t lo

sses

--

-10

,103

712

--

10,1

22

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posa

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(3,1

46)

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(834

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e-of

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(66)

--

(2,9

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(104

)-

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)

At

31 D

ecem

ber

2007

1,16

632

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272

37,9

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282

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8,55

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3

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slat

ion

diff

eren

ces

-5,

790

-10

,294

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680

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(72)

18,0

38

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rge

for

the

year

-16

,392

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3,34

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057

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sses

--

-5,

620

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At

31 D

ecem

ber

2008

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2

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ryin

g a

mo

un

tA

t 1

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ary

2007

11,1

6231

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501

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724

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6812

,819

65,8

233,

948

734,

110

At

31 D

ecem

ber

2007

11,1

6232

6,91

51,

541

356,

579

20,0

257,

387

45,3

523,

357

772,

318

At

31 D

ecem

ber

2008

11,1

6236

5,42

51,

479

392,

351

21,8

307,

907

65,3

283,

226

868,

708


ANNUAL REPORT 2008

56


3 Property, plant and equipment (cont’d)

Buildings

Leasehold improve-

ments

Plant and

machinery

Office furniture, fittings

and equipment

Motor and transport vehicles Total

Company $’000 $’000 $’000 $’000 $’000 $’000

CostAt 1 January 2007 8,060 163 9,446 2,014 1,374 21,057

Additions 46 - 50 248 6 350

Disposals (66) (3) (646) (382) (90) (1,187)

At 31 December 2007 8,040 160 8,850 1,880 1,290 20,220

Additions 10 - - 322 154 486

Disposals (8,050) (27) (8,850) (1,312) (981) (19,220)

At 31 December 2008 - 133 - 890 463 1,486

Accumulated depreciationAt 1 January 2007 6,567 59 7,522 1,623 904 16,675

Charge for the year 280 36 374 147 137 974

Disposals (56) - (645) (382) (77) (1,160)

At 31 December 2007 6,791 95 7,251 1,388 964 16,489

Charge for the year 173 33 177 196 115 694

Disposals (6,964) (27) (7,428) (1,168) (833) (16,420)

At 31 December 2008 - 101 - 416 246 763

Carrying amountAt 1 January 2007 1,493 104 1,924 391 470 4,382

At 31 December 2007 1,249 65 1,599 492 326 3,731

At 31 December 2008 - 32 - 474 217 723

Certain property, plant and equipment of the Group have been pledged as security for banking facilities as set out in note 21.

During the year, interest expense of approximately $2,357,000 (2007: $2,218,000) was capitalised by the Group as cost of construction-in-progress. The capitalisation rate was based on the cost of borrowings of 5.95% (2007: 4.41%) per annum.

4 Prepaid operating leases

Long-term prepaid operating leases comprises upfront lumpsum payments made for long-term land leases.


ANNUAL REPORT 2008

57



5 Intangibles

Patents and development Trade expenditure marks Goodwill Total $’000 $’000 $’000 $’000

Group Cost At 1 January 2007 2,653 62,697 1,338 66,688Translation differences 13 - - 13Additions 397 - - 397

At 31 December 2007 3,063 62,697 1,338 67,098Translation differences 85 - - 85Additions 1,709 - 377 2,086

At 31 December 2008 4,857 62,697 1,715 69,269

Accumulated amortisation and impairment lossesAt 1 January 2007 (223) - - (223)Translation differences 22 - - 22Amortisation charge for the year (206) - - (206)

At 31 December 2007 (407) - - (407)Translation differences (20) - - (20)Amortisation charge for the year (529) - - (529)Impairment losses (1,527) - - (1,527)

At 31 December 2008 (2,483) - - (2,483)

Carrying amountAt 1 January 2007 2,430 62,697 1,338 66,465

At 31 December 2007 2,656 62,697 1,338 66,691

At 31 December 2008 2,374 62,697 1,715 66,786

Computer software and related costs $’000

Company CostAt 1 January 2007 and 31 December 2007 -Additions 225Transfer 1,149

At 31 December 2008 1,374

Accumulated amortisation and impairment losses At 1 January 2007 and 31 December 2007 -Amortisation charge for the year (275)

At 31 December 2008 (275)

ANNUAL REPORT 2008

58


5 Intangibles (cont’d)

Computer software and related costs $’000

Company (cont’d) Carrying amount At 1 January 2007 -

At 31 December 2007 -

At 31 December 2008 1,099

6 Impairment assessment on intangibles and property, plant and equipment

Industrial products segment

The industrial products segment has 2 main cash-generating units (CGUs), one of which has been incurring losses. An impairment test has been performed on the carrying value of the patent and development expenditure, and property, plant and equipment of this CGU of $9,300,000 as at 31 December 2008.

The recoverable amount of the CGU was estimated based on the value in use using management’s estimates of cash flows for a period of 10 years. Cash flows were projected based on historical growth, past experience and future prospects. The annual revenue over the next 10 years is estimated to be the same as revenue achieved in 2008. A discount rate of 14% (2007: 14%) per annum was used.

The impairment loss of $9,000,000 (2007: $4,995,000) was charged to the “other income/(expense)” in the income statement.

Consumer products segment

Trademarks relate to the Group’s consumer product segment which has been identified as a separate CGU for impairment testing purposes. The attributable property, plant and equipment to this CGU was $212 million as at 31 December 2008. The recoverable amount of trademarks and property, plant and equipment was determined based on their value in use using 10-year cash flow projections.

Cash flows are projected based on historical growth and past experience and does not exceed the currently estimated long-term average growth rate for the business in China market. The Group uses a 10-year forecast annual growth rate of revenue ranging from 2% to 3%, giving an average growth rate of 2.5% and a terminal value to estimate the recoverable amount of the carrying value of the trademarks and attributable property, plant and equipment. The terminal value is derived by discounting the forecast cashflow in the 10-year to perpetuity. A discount rate of 13% (2007: 13%) was used. The estimated recoverable amount exceeds the carrying value of the trademarks and attributable property, plant and equipment by approximately $14 million.

The Group believes that any reasonably possible change in the above key assumptions applied is not likely to materially cause the recoverable amount to be lower than its carrying amount.

Building materials segment

In 2007, due to the disruptions of operations in a CGU of the building material segment, the Group recognised an impairment loss of $5,253,000 based on the value in use of the plant and machinery.


ANNUAL REPORT 2008

59


7 Investments in subsidiaries

Company2008 2007$’000 $’000

Unquoted equity shares, at cost 239,628 222,732

Impairment losses - (2,752)

239,628 219,980

Details of significant subsidiaries of the Group are as follows:

Name of significant subsidiariesCountry of

incorporation

Effectiveequity

interest2008 2007

% %

China yuchai International Limited (“CyI”) (1) Bermuda 21.23 21.23

Dongguan Rex Packaging Company Limited The People’s Republic of China

100 100

GPac Technology (S) Pte. Ltd. Singapore 100 100

GPac Technology (M) Sdn. Bhd. Malaysia 100 -

Guangxi yuchai Machinery Company Limited (1) The People’s Republic of China

16.22 16.22

Guangxi yulin yuchai Accessories Manufacturing Company Limited (formerly known as Guangxi yulin yuchai Machinery Spare Parts Manufacturing Company Limited) (1)

The People’s Republic of China

15.76 15.76

Hartwell Pte. Ltd. Singapore 100 -

Hayford Holdings Sdn. Bhd. Malaysia 100 100

Henan Xinfei Electric Co., Ltd. The People’s Republic of China

90 90

Henan Xinfei Household Appliance Co., Ltd. The People’s Republic of China

90 90

Henan Xinfei Refrigeration Appliances Co., Ltd. The People’s Republic of China

90 90

HL Building Materials Pte. Ltd. (formerly known as Hong Leong Plastics Pte Ltd) (2)

Singapore 100 100

HL Karimun Granite Pte Ltd Singapore 100 100

HL Technology Systems Pte Ltd Singapore 100 100

HL Global Enterprises Limited (formerly known as HLG Enterprise Limited) (“HLGE”) (3)

Singapore 9.64 9.64


ANNUAL REPORT 2008

60


7 Investments in subsidiaries (cont’d)

Name of significant subsidiariesCountry of

incorporation

Effective equity

interest2008 2007

% %

HL-Manufacturing Industries Sdn. Bhd. Malaysia 100 100

Hong Leong (China) Limited Singapore 100 100

Hong Leong Electric Pte Ltd Singapore 100 100

Island Concrete (Private) Limited Singapore 82.38 82.38

Jining yuchai Engine Company Limited (1) The People’s Republic of China

8.43 -

Qian Hong Packaging Company Limited Hong Kong 100 100

Rex Holdings Pte Ltd Singapore 100 100

Rex Plastics (Malaysia) Sdn. Bhd. Malaysia 100 70

Rexpak Sdn. Bhd. Malaysia 100 100

Shanghai Rex Packaging Co., Ltd. The People’s Republic of China

55 55

Tianjin Rex Packaging Co., Ltd. The People’s Republic of China

55 55

Xiamen yuchai Diesel Engines Co., Ltd. (1) The People’s Republic of China

16.22 16.22

yuchai Express Guarantee Co., Ltd. (1) The People’s Republic of China

12.48 12.48

yuchai Machinery Monopoly Company Limited (1) The People’s Republic of China

11.65 11.65

Zhejiang yuchai Sanli Engine Company Limited (1) The People’s Republic of China

8.43 -

KPMG LLP, Singapore is the auditor of all significant Singapore-incorporated subsidiaries. Other member firms of KPMG International are auditors of significant foreign-incorporated subsidiaries.

(1) The Group considers CyI group as subsidiaries as it is able to govern the financial and operating policies of the company through its ability to control the company’s board of directors.

(2) In 2008, the Company re-assessed the recoverable amount of its investment in a subsidiary. Based on the assessment,

reversal of impairment losses of $2,752,000 were recognised in the Company’s income statement under “other income/(expenses)”.

The recoverable amount of the investment in the subsidiary was estimated based on the estimated net selling price of the subsidiary.

(3) Having regard to the potential voting rights attributable to the preference shares in HLGE, the Group considers HLGE a subsidiary as it is able to govern the financial and operating policies of HLGE.


ANNUAL REPORT 2008

61


8 Interests in associates

Group Company2008 2007 2008 2007$’000 $’000 $’000 $’000

Investments in associates

- quoted 227,855 199,240 21,405 21,405

- unquoted 25,495 59,434 32,275 37,964

253,350 258,674 53,680 59,369

Impairment losses - - (1,385) (3,917)

253,350 258,674 52,295 55,452

Market value of quoted equity shares 181,520 190,935 26,931 29,544

Reversal of impairment losses

The Company re-assessed the recoverable amount of its investment in the associate. Based on the assessment, reversal of impairment losses of $2,532,000 (2007: $2,626,000) were recognised in the Company’s income statement under “other income/(expenses)”. The recoverable amount was estimated based on the estimated net selling price of the associate.

Details of significant associates are as follows:

Name of significant associatesPrincipalactivities

Country of incorporation/

business

Effective equity

interest2008 2007

% %Held by the Company

Singapore Cement Manufacturing Company (Private) Limited

Storage, packaging and distribution of cement

Singapore 50 50

Singapore Cement Industrial Company (Private) Limited

Investment holding Singapore 50 50

Held by the Group

Tasek Corporation Berhad Manufacture and sale of cement and related products

Malaysia 45.58 31.88

Thakral Corporation Ltd (1) Investment holding Singapore 7.31 7.31

(1) The Group considers Thakral Corporation Ltd an associate as investment in the company was held through a subsidiary which has significant influence over the operating and financial policies of the company.


ANNUAL REPORT 2008

62


8 Interests in associates (cont’d)

KPMG LLP, Singapore is the auditor of all significant Singapore-incorporated associates. Other member firms of KPMG International are auditors of significant foreign-incorporated associates except for Thakral Corporation Ltd and its subsidiaries which are audited by Deloitte & Touche Singapore.

Summarised financial information of the associates, which is not adjusted for the percentage of ownership held by the Group, is as follows:

2008 2007$’000 $’000

Assets and liabilities

Total assets 765,992 858,258

Total liabilities (107,391) (36,101)

Results

Revenue 755,721 533,626

Profit after income tax 25,701 81,546

Group’s share of the associates’ contingent liabilities (47) (44)

9 Interest in jointly-controlled entity

Company2008 2007$’000 $’000

Unquoted equity shares, at cost 15,000 15,000

Particulars of the jointly-controlled entity are as follows:

Name of jointly-controlled entityPrincipalactivities

Country of incorporation/

Business

Effective equity

interest2008 2007

% %Held by the Company

Angkasa Hong Leong Pte. Ltd. * Steel traders, steel fabricators and dealers in building materials

Singapore 50 50

* Audited by Ernst & young Singapore.


ANNUAL REPORT 2008

63


9 Interest in jointly-controlled entity (cont’d)

The Group’s share of the jointly-controlled entity’s results, assets and liabilities are as follows:

Group 2008 2007$’000 $’000

Results

Revenue 103,536 50,651

Expenses (99,623) (51,328)

Profit/(loss) before taxation 3,913 (677)

Income tax expense (426) (223)

Profit/(loss) after taxation 3,487 (900)

Assets and Liabilities

Non-current assets 5,793 5,392

Current assets 51,756 37,910

Current liabilities (38,870) (28,109)

Non-current liabilities (423) (423)

Net assets 18,256 14,770

The Group’s share of operating lease commitments and forward foreign exchange contract commitments is $3,579,000 (2007: $5,260,000) and $1,185,000 (2007: $7,344,000) respectively.

10 Investment properties

Movements in investment properties (non-current) during the financial year are as follows:

Group2008 2007$’000 $’000

CostAt 1 January 8,277 8,584

Translation differences (743) (307)

At 31 December 7,534 8,277

Accumulated depreciationAt 1 January 147 -

Charge for the year 151 147

Translation differences 14 -

At 31 December 312 147

Carrying amountAt 1 January 8,130 8,584

At 31 December 7,222 8,130

Fair value 8,114 8,483

The commercial property is leased to external customers. Each of the leases is for periods of one to three years. Subsequent renewals are negotiated with the lessee.

The fair values are determined by Henry Butcher Malaysia, a firm of independent professional valuers that has appropriate recognised professional qualifications and recent experience in the location and category of the properties being valued. The fair values are based on market value, being the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.


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11 Other investments

Group Company2008 2007 2008 2007$’000 $’000 $’000 $’000

Non-currentQuoted equity securities available-for-sale

- related corporations 566 1,075 - -

- other companies 159 185 - 167

725 1,260 - 167

Unquoted equity securities

- other companies 1,420 1,585 - -

2,145 2,845 - 167

CurrentQuoted equity securities available-for-sale

- related corporations 633 1,418 - -

12 Non-current receivables

The non-trade amounts due from joint venture partners are unsecured and not expected to be repaid within the next 12 months. The effective interest rate as at balance sheet date is 4.20% (2007: 7.15%) per annum. At the balance sheet date, the fair values of the non-current receivables approximate their carrying amounts.

13 Non-trade balances with subsidiaries

Company2008 2007$’000 $’000

Amounts due from subsidiaries 55,674 59,462

Amount due to a subsidiary (10,400) (11,000)

45,274 48,462

The amounts due from subsidiaries are non-trade in nature and unsecured. The settlement of these amounts are neither planned nor likely to occur in the foreseeable future. As these amounts are, in substance, a part of the Company’s net investments in the subsidiaries, they are stated at cost less accumulated impairment. Included in these amounts is $40,674,000 (2007: $44,266,000) which bears interest at rates ranging from 2.0% to 4.75% (2007: 2.0% to 5.96%) per annum.

The amount due to a subsidiary is non-trade, unsecured and bears interest at 3.12% (2007: 3.05%) per annum.


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14 Deferred tax

Movements in deferred tax assets and liabilities (prior to offsetting of balances) during the year are as follows:

At 1 January 2007

Recognised in income statement

Translation differences

At 31 December 2007

Group $’000 $’000 $’000 $’000

Deferred tax liabilitiesProperty, plant and equipment (1,021) 51 5 (965)

Other items (290) 26 (858) (1,122)

Total (1,311) 77 (853) (2,087)

Deferred tax assetsProperty, plant and equipment 16,559 (6,265) (82) 10,212

Inventories 4,209 (2,285) 32 1,956

Intangibles 107 (73) 1 35

Trade and other receivables 9,475 3,804 76 13,355

Provisions 4,371 (107) 31 4,295

Accruals 17,843 12,912 158 30,913

Tax value of loss carried forward 3,072 (167) 12 2,917

Other items 657 (279) 715 1,093

Total 56,293 7,540 943 64,776

At 1 January 2008

$’000

Recognised in income statement

$’000

Translation differences

$’000

At 31 December 2008

$’000Deferred tax liabilitiesProperty, plant and equipment (965) (7) 9 (963)

Other items (1,122) 14 (40) (1,148)

Total (2,087) 7 (31) (2,111)

Deferred tax assetsProperty, plant and equipment 10,212 (1,846) 327 8,693

Inventories 1,956 4,002 235 6,193

Intangibles 35 34 3 72

Trade and other receivables 13,355 (10,374) 402 3,383

Provisions 4,295 (1,816) 178 2,657

Accruals 30,913 (17,977) 1,283 14,219

Tax value of loss carried forward 2,917 (625) 40 2,332

Other items 1,093 (285) (58) 750

Total 64,776 (28,887) 2,410 38,299


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14 Deferred tax (cont’d)

Deferred tax assets and liabilities of the Company (prior to offsetting of balances) are attributable to the following:

Company2008 2007$’000 $’000

Deferred tax liabilities

Property, plant and equipment (601) (601)

Deferred tax assets

Other receivables 41 41

Provisions 103 103

144 144

Deferred tax liabilities and assets are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same taxation authority. The amounts determined after appropriate offsetting included in the balance sheet are as follows:

Group Company2008 2007 2008 2007$’000 $’000 $’000 $’000

Deferred tax assets 38,299 64,776 - -

Deferred tax liabilities (2,111) (2,087) (457) (457)

36,188 62,689 (457) (457)

Deferred tax assets have not been recognised in respect of the following items:

Group 2008 2007$’000 $’000

Unutilised tax losses 115,435 100,216

Deductible temporary differences 6,340 10,819

Unabsorbed capital allowances 7,648 9,857

129,423 120,892

Unutilised tax losses and unabsorbed capital allowances for the Group are subject to agreement with the tax authorities and compliance with tax regulations in the respective countries in which the Group operates. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the Group can utilise the benefits.


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15 Inventories

Group Company2008 2007 2008 2007$’000 $’000 $’000 $’000

Inventories held for resale 1,821 557 - 3,696

Allowance for obsolescence - (28) - -

1,821 529 - 3,696

Raw materials and consumables 405,576 254,286 - 1,274

Allowance for obsolescence (18,167) (9,244) - -

387,409 245,042 - 1,274

Manufacturing work-in-progress 19,353 16,864 - 989

Allowance for obsolescence (18) (110) - -

19,335 16,754 - 989

Finished goods 317,860 352,342 - 3,857

Allowance for obsolescence (1,658) (6,492) - -

316,202 345,850 - 3,857

Goods-in-transit 14 9 - -

Total 724,781 608,184 - 9,816

16 Development properties

Group 2008 2007$’000 $’000

Properties held for sale, at cost 20,366 23,291


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17 Trade and other receivables

Group Company2008 2007 2008 2007$’000 $’000 $’000 $’000

Trade receivables 813,869 851,028 9,531 11,050

Impairment losses (trade) (17,552) (16,633) - (60)

Net trade receivables 796,317 834,395 9,531 10,990

Amounts receivable from:

- minority shareholders of subsidiaries (non-trade) 42,935 40,898 - -

- impairment losses (non-trade) - (40,898) - -

42,935 - - -

- immediate holding company (non-trade) 25 110 25 109

- subsidiaries

- trade - - - 3,111

- non-trade - - 124,153 75,886

- associates

- trade 12,094 - - -

- non-trade - 13 9 9

- other related corporations (non-trade) 63 29 - 29

Advances paid to suppliers 42,495 32,337 - -

Prepaid expenses 4,377 16,209 42 1,549

Refundable deposits 1,244 1,181 50 180

Tax recoverables 48,774 21,490 2,558 3,734

Other receivables 30,664 36,634 515 1,943

Impairment losses - other receivables (3,862) (6,953) - -

178,809 101,050 127,352 86,550

975,126 935,445 136,883 97,540

Group

The non-trade balances due from the minority shareholders of subsidiaries and other related corporations are unsecured, interest-free and repayable on demand.

Company

The non-trade balances due from subsidiaries include loans and advances of $15,383,000 (2007: $15,390,000) which bear interest at rates ranging from 2% to 3.12% (2007: 3.05% to 4%) per annum. The weighted average effective interest rate per annum at the balance sheet date in respect of the interest-bearing balances is 3.12% (2007: 3.05%) per annum. Interest rates will be repriced within 12 months. These balances are repayable on demand.

The remaining non-trade balances are unsecured, interest-free and repayable on demand.


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17 Trade and other receivables (cont’d)

The maximum exposure to credit risk for trade and other receivables (excluding advances paid to suppliers, prepaid expenses, refundable deposits and tax recoverables), non-current receivables (see note 12) and amounts due from subsidiaries at the reporting date (by business activities) is as follows:

Group Company2008 2007 2008 2007$’000 $’000 $’000 $’000

Industrial products 616,418 663,469 169 102

Consumer products 178,368 129,458 - -

Building materials 89,277 79,153 69,715 71,375

Others - - 120,023 80,062

884,063 872,080 189,907 151,539

Impairment losses

The ageing of trade and other receivables (excluding advances paid to suppliers, prepaid expenses, refundable deposits and tax recoverables), non-current receivables and amounts due from subsidiaries at reporting date is as follows:

2008 2007

GrossImpairment

losses GrossImpairment

lossesGroup $’000 $’000 $’000 $’000

Non past due 709,465 - 743,306 -

Past due 0 - 30 days 61,553 (1,346) 78,662 (2,543)

Past due 31 - 120 days 51,786 (1,204) 38,741 (2,231)

Past due 121 days - one year 20,946 (4,052) 17,514 (6,529)

More than one year 61,727 (14,812) 58,341 (53,181)

905,477 (21,414) 936,564 (64,484)

Company

Non past due 20,509 - 68,225 -

Past due 0 - 30 days 2,007 - 2,843 -

Past due 31 - 120 days 7,051 - 24,937 -

Past due 121 days - one year 1,072 - 3,155 -

More than one year 159,268 - 52,439 (60)

189,907 - 151,599 (60)


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17 Trade and other receivables (cont’d)

The change in impairment losses in respect of trade and other receivables and non-current receivables during the year is as follows:


$’000 $’000 $’000 $’000

At 1 January 64,484 55,166 60 1,194

Impairment losses (reversed)/recognised25,25(b) (46,161) 10,819 (60) (359)

Impairment losses utilised (216) (1,926) - (775)

Translation differences 3,307 425 - -

At 31 December 21,414 64,484 - 60

The Group’s historical experience in the collection of trade and other receivables falls within the recorded allowances. Due to this factor, management believes that no additional credit risks beyond amount provided for collection losses is inherent in the Group’s trade and other receivables.

Based on historical default rates, the Group believes that no impairment allowance is necessary in respect of trade receivables not past due. These receivables are mainly from customers that have a good record with the Group.

18 Cash and cash equivalents


$’000 $’000 $’000 $’000

Fixed deposits 67,589 118,064 7,001 13,309

Cash at banks and in hand 203,589 129,678 3,494 1,603

271,178 247,742 10,495 14,912

Bank overdrafts (unsecured) 21 (32,868) (30,726)

Deposits pledged (293) (30,335)

Cash and cash equivalents in the cash flow statement 238,017 186,681

Deposits pledged represents bank balances of certain subsidiaries pledged as security to obtain credit facilities.

The weighted average effective interest rates per annum of the fixed deposits and bank overdrafts at the balance sheet date are as follows:

Group Company2008 2007 2008 2007

% % % %

Fixed deposits 1.70 2.68 0.21 1.30

Bank overdrafts 5.13 6.51 - -

Interest rates will be repriced within 12 months.


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19 Share capital

Company2008 2007

No. of shares No. of shares’000 ’000

Fully paid ordinary shares, with no par value:At 1 January 381,225 380,311

Shares issued under share option scheme 167 914

At 31 December 381,392 381,225

The Company has issued share options under its Hong Leong Asia Share Option Scheme 2000 (the “Share Option Scheme”) (see note 29).

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the Company’s residual assets.

Capital management

The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Group monitors the return on capital which the Group defines as net operating income divided by total shareholders’ equity excluding minority interests. The Group also monitors the level of dividends to ordinary shareholders.

The Group seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position.

From time to time, the Group may undertake share purchases or acquisitions under its approved Share Purchase Mandate if and when circumstances permit, as part of the Group’s management mechanism to facilitate the return of surplus cash over and above its ordinary capital requirements. The shares purchased may be held as treasury shares, which could be transferred for the purposes of or pursuant to the Group’s employees’ share schemes.

There were no changes in the Group’s approach to capital management during the year.

20 Reserves

Group Company2008 2007 2008 2007$’000 $’000 $’000 $’000

Capital reserve (34,684) (34,684) 9,199 9,199

Statutory reserve 22,267 19,956 - -

Translation reserve (13,135) (29,821) - -

Fair value reserve 22,664 60,518 - -

Equity compensation reserve 1,805 958 1,289 838

Accumulated profits 303,304 297,961 27,100 31,291

302,221 314,888 37,588 41,328


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20 Reserves (cont’d)

(a) Capital reserve comprises:

Group Company2008 2007 2008 2007$’000 $’000 $’000 $’000

Merger reserve 392 392 - -

Business participation fee and realised capital gain on disposals of investments 3,046 3,046 9,199 9,199

Adjustment relating to shares of the Company issued to an associate for assets transferred to the Company (11,380) (11,380) - -

Goodwill on consolidation written off (26,742) (26,742) - -

(34,684) (34,684) 9,199 9,199

The merger reserve relates to reserve arising from certain acquisitions accounted for under the pooling of interests method.

(b) Statutory reserve comprises the Group’s share of general reserves of its subsidiaries in China which are not available for dividends or other payments. The transfers are required to be made at the rate of 10% to 15% (2007: 10% to 15%) of profit after tax of subsidiaries arrived at under generally accepted accounting principles applicable in the People’s Republic of China.

(c) The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign subsidiaries and associates.

(d) The fair value reserve includes the cumulative net change in the fair value of available-for-sale investments until the investment is derecognised and the Group’s share of the post-acquisition fair value adjustments arising from the allocation of purchase price to the identifiable net assets and contingent liabilities of subsidiaries.

(e) The equity compensation reserve comprises the cumulative value of employee services received for the issue of share options. The amount in the reserve is retained when the option is exercised or expired.

21 Financial liabilities


$’000 $’000 $’000 $’000Current liabilitiesUnsecured bank overdrafts 18 32,868 30,726 - -

Unsecured bank loans 492,766 193,075 167,338 10,040

Secured bank loans 5,398 6,088 - -

Medium Term Notes - 100,000 - 100,000

Corporate bond - 129,508 - -

531,032 459,397 167,338 110,040

Non-current liabilitiesUnsecured bank loans 37,939 53,585 - -

Secured bank loans 18,899 16,993 - -

56,838 70,578 - -

Total borrowings 587,870 529,975 167,338 110,040


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21 Financial liabilities (cont’d)

The secured bank loans are secured on assets with the following carrying values:

Group Company2008 2007 2008 2007$’000 $’000 $’000 $’000

Freehold land and building 23,889 30,322 - -

Medium Term Notes

In 2008, the Company redeemed the $50 million (in principal amount) of 2.86056% Unsecured Fixed Rate Notes Due 2008 under the Programme (the “Series No. 005 Notes”) and the $50 million (in principal amount) of 2.935% Unsecured Fixed Rate Notes Due 2008 (the “Series No. 002 Notes”).

During the year, the Company had issued and redeemed $50 million (in principal amount) of 2.60862% Unsecured Fixed Rate Notes Due 2008 (the “Series No. 006 Notes”).

The principal and interests of the notes were redeemed by using short-term loans of the same amount. There were no notes outstanding under the programme as at 31 December 2008.

Terms and conditions of outstanding loans and borrowings are as follows:

2008 2007Weighted average interest

rateYear of

maturityFace value

Carrying amount

Weighted average interest

rateFace value

Carrying amount

Group % $’000 $’000 % $’000 $’000Secured bank loans:

- RMB floating rate loans 6.8 2010 13,103 13,103 6.4 3,191 3,191

- USD floating rate loans - - - - 6.3 7,771 7,771

- MyR fixed rate loans 5.7 2015 7,033 7,033 5.5 1,732 1,732

- MyR fixed rate loans - - - - 5.5 6,031 6,031

- MyR floating rate loans 4.9 2009 4,161 4,161 4.8 4,356 4,356

Unsecured bank loans

- RMB fixed rate loans 6.0 2009 64,677 64,677 6.1 54,663 54,663

- RMB fixed rate loans - - - - 5.9 16,958 16,958

- RMB floating rate loans 6.0 2009 161,373 161,373 6.0 1,098 1,098

- HKD floating rate loans 3.6 2009 935 935 5.1 938 938

- MyR floating rate loans 4.8 2009 1,456 1,456 - - -

- SGD fixed rate notes - - - - 2.9 50,000 50,000


- SGD floating rate loans 2.3 2009 264,325 264,325 3.3 136,376 136,376


- bank overdrafts 5.1 2009 32,868 32,868 6.5 30,726 30,726

- corporate bond - - - - 3.2 129,675 129,508

587,870 587,870 530,142 529,975

CompanyUnsecured bank loans




167,338 167,338 110,040 110,040


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21 Financial liabilities (cont’d)

The followings are the expected contractual undiscounted cash inflows (outflows) of financial liabilities, including interest payments and excluding the impact of netting agreements:

Carrying amount Cash flows

Contractual cash flows

Within 1 year

Within 2 to 5 years

More than 5 years

$’000 $’000 $’000 $’000 $’000Group2008

Floating interest rate loans 483,292 497,503 443,409 53,340 754

Fixed interest rate loans 71,710 77,376 66,848 7,322 3,206

Bank overdrafts 32,868 34,467 34,467 - -

Trade and other payables* 917,694 917,694 917,694 - -

1,505,564 1,527,040 1,462,418 60,662 3,960

2007

Floating interest rate loans 190,357 202,571 143,137 56,377 3,057

Fixed interest rate loans 79,384 85,804 57,467 23,666 4,671

Fixed interest rate notes 100,000 101,433 101,433 - -

Bank overdrafts 30,726 30,726 30,726 - -

Corporate bond 129,508 129,675 129,675 - -


1,372,798 1,393,032 1,305,261 80,043 7,728

Company2008

Floating interest rate loans 167,338 168,020 168,020 - -


181,786 182,468 182,468 - -

2007

Floating interest rate loans 10,040 10,092 10,092 - -

Fixed interest rate notes 100,000 101,433 101,433 - -


142,051 143,536 143,536 - -

* Excludes accrued expenses and advances from customers.


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22 Trade and other payables

Group Company2008 2007 2008 2007$’000 $’000 $’000 $’000

Trade payables 837,512 770,810 553 9,326

Accrued expenses 160,940 181,970 2,170 2,169

Other payables 50,816 43,936 950 2,425

Advances from customers 56,389 50,052 732 -

Trust receipts 20,212 18,691 - -

Amounts due to:

- immediate holding company (non-trade) 140 85 20 -

- subsidiaries

- trade - - - 8,614

- non-trade - - 12,717 11,628

- associates

- trade 8,802 8,296 - 18

- other related corporations (non-trade) 212 1,005 208 -

1,135,023 1,074,845 17,350 34,180

The non-trade balances with the immediate holding company, associates and other related corporations are unsecured, interest-free and repayable on demand.

The weighted average effective annual interest rates at the balance sheet date in respect of interest-bearing balances are as follows:

Group Company2008 2007 2008 2007

% % % %

Trust receipts 4.20 4.67 - -

Amounts due to subsidiaries - - 3.12 3.05

Interest rates will be repriced within 12 months.


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76


23 Provisions

Onerous contracts Closure costs Claims Warranties Total

Group $’000 $’000 $’000 $’000 $’000

At 1 January 2007 - 80 710 45,799 46,589

Provision made 3,308 - 7,383 59,966 70,657

Provision utilised - (34) (1,144) (49,014) (50,192)

Provision reversed (79) (46) (2,867) (5,246) (8,238)

Translation differences - - - 349 349

At 31 December 2007 3,229 - 4,082 51,854 59,165

Provision made - - 5,534 60,627 66,161

Provision utilised - - (4,698) (61,968) (66,666)

Provision reversed - - (2,029) - (2,029)

Translation differences - - (10) 3,076 3,066

At 31 December 2008 3,229 - 2,879 53,589 59,697

ClaimsCompany $’000

At 1 January 2007 567

Provision made 318

Provision utilised (167)

Provision reversed (78)

At 31 December 2007 640

Provision reversed (640)

At 31 December 2008 -

Onerous contracts

The provision for onerous contracts relates to the expected losses arising from existing customers’ contracts, whereby the unavoidable costs of meeting the obligations under the contracts exceed the economic benefits expected to be received.

Closure costs

The provision for closure costs related to the sale of assets classified as held for sale.

Claims

The provision for claims relates to costs arising from delays in the completion of contracts or complaints from customers. The provision is made based on estimates from prior experience on similar projects with customers. The Group expects to incur the liability over two years.

Warranties

The provision for warranties relates to products sold during the year. The provision is made based on estimates from historical warranty data. The Group expects to incur the liability over three years.


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24 Revenue

Revenue of the Group comprises sales of goods delivered less trade discounts. Intra-group sales are eliminated in arriving at the turnover of the Group.

25 Profit before income tax

Profit before income tax includes the following:


$’000 $’000

Bad debts recovered (5,465) (3,044)

Impairment losses (written back)/made for trade and other receivables 17 (3,226) 10,819

Amortisation of intangibles 5 529 206

Depreciation of property, plant and equipment and investment properties 3, 10 57,696 53,980

Amortisation of prepaid operating leases 1,469 1,272

Negative goodwill arising from the acquisition of shares in an associate included in share of profits of associates (8,268) -

Non-audit fees paid/payable to:

- auditors of the Company 70 88

- other auditors of subsidiaries 74 73

Exchange loss 2,522 3,001

Operating lease expense 6,853 6,138

Loss on disposal of property, plant and equipment 1,786 2,082

Provisions made, net 23 64,132 62,419

(a) Other income/(expenses)

Accretion of deferred grants 11 6

Dividend income from available-for-sale financial assets 76 265

Interest income

- associates - 11

- cash and cash equivalents 3,530 4,243

Impairment losses on property, plant and equipment 3 (7,473) (10,122)

Reversal of impairment losses on property, plant and equipment 3 651 -

Impairment losses on intangibles 5 (1,527) -

(b) Other non-operating income

Write back of impairment losses on amounts receivable from minority shareholders of subsidiaries (non-trade) 17 42,935 -

Gain on disposal of quoted equity investments - 6,840

Gain on disposal/redemption of shares in subsidiaries and related businesses - 5,141

42,935 11,981


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25 Profit before income tax (cont’d)

Profit before income tax includes the following:


$’000 $’000

(c) Finance costs

Interest expense

- Bank term loans 47,239 34,301

- Medium Term Notes 1,792 2,371

- Bank overdrafts 120 36

- Trust receipts 1,046 842

- Bank charges 550 916

- Finance lease 4 10

50,751 38,476

(d) Staff costs

Wages and salaries 198,273 193,500

Cost of share-based payments 847 360

Contributions to defined contribution plans 34,801 29,446

Retrenchment costs 16 54

233,937 223,360

26 Income tax expense

Group2008 2007$’000 $’000

Current tax charge- Current year 14,191 47,598

- (Over)/under provision in respect of prior years (9,453) 378

4,738 47,976

Deferred tax expense/(credit)- Movements in temporary differences 19,363 (9,987)

- Under provision in respect of prior years 9,517 2,370

28,880 (7,617)

33,618 40,359


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26 Income tax expense (cont’d)

Reconciliation of effective tax rate

Group2008 2007$’000 $’000

Profit before income tax 207,079 229,610

Income tax using China tax rate of 25% (2007: 33%) comprising central and local government tax 51,770 75,771

Effect of different tax rates in other countries (2,822) (17,074)

Effect of tax concessions (17,002) (20,581)

Non-deductible expenses 9,430 13,786

Tax-exempt income (14,393) (13,152)

Utilisation of deferred tax benefits previously not recognised (804) (3,664)

Deferred tax benefits not recognised 633 -

Changes in tax rates 4,880 725

Others 1,862 1,800

(Over)/under provision in respect of prior years

- current (9,453) 378

- deferred 9,517 2,370

33,618 40,359

Certain of the Group’s subsidiaries in the People’s Republic of China (“PRC”) have been granted concessionary rate of tax under the Corporate Income Tax Law of the PRC. Income from these entities is subject to tax at the concessionary rate of 15%, instead of the national standard income tax rate of 25% (2007: 33%). This concession is available subject to certain conditions including these entities remain engaged in advance and new technology.

Another group of entities in the PRC have been granted tax concession where its income for the first 2 years is tax exempt and income for the following 3 years is subject to a reduced tax rate of 12.5% (2007: 16.5%) being 50% of the PRC national standard income tax rate.

27 Earnings per share

Basic earnings per share

The calculation of basic earnings per share is based on:

Group

2008 2007$’000 $’000

(i) Net profit attributable to equity holders of the Company 41,977 95,428

2008 2007No. of shares No. of shares

(ii) Issued ordinary shares at beginning of the year 381,224,818 380,311,018

Weighted average number of shares issued during the year 134,066 646,380

Weighted average number of shares at the end of the year 381,358,884 380,957,398


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27 Earnings per share (cont’d)

Diluted earnings per share

The weighted average number of ordinary shares adjusted for the effect of unissued ordinary shares under the Share Option Scheme is determined as follows:

2008 2007No. of shares No. of shares

Weighted average number of shares issued, used in the calculation of basic earnings per share 381,358,884 380,957,398

Dilutive effect of share options 46,467 714,392

Weighted average number of ordinary shares (diluted) 381,405,351 381,671,790

28 Dividends

Company2008 2007$’000 $’000

Interim dividend paid of 3 cents (2007: 4 cents) per share tax exempt in respect of year 2008 and year 2007 11,442 15,239

Final dividend paid of 6 cents (2007: 4 cents) per share tax exempt in respect of year 2007 and year 2006 22,881 15,237

34,323 30,476

After the balance sheet date, the Directors proposed a tax exempt final dividend of 2 cents (2007: 6 cents) per ordinary share in respect of year 2008 amounting to approximately $7,628,000 (2007: $22,881,000) on the basis that the number of shares in issue at the time of payment remains the same as that as at 26 February 2009 (381,392,018 shares). The dividends have not been provided for.

29 Share options

The Hong Leong Asia Share Option Scheme 2000 (the “Share Option Scheme”) was approved by the shareholders of the Company on 30 December 2000. The Share Option Scheme is administered by the Share Option Scheme Committee comprising:

Ernest Colin Lee – Chairman Kwek Leng Peck Quek Shi Kui Goh Kian Hwee

All options granted under the Share Option Scheme are subject to a vesting schedule as follows:

(i) one year after the date of grant for up to 33% of the Shares over which the options are exercisable;

(ii) two years after the date of grant for up to 66% (including the first 33%) of the Shares over which the options are exercisable; and

(iii) three years after the date of grant for up to 100% (including the 66% as mentioned above) of the Shares over which the options are exercisable.


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81


29

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ANNUAL REPORT 2008

82


29 Share options (cont’d)

The fair value of services received in return for share options granted are measured by reference to the fair value of share options granted. The estimate of the fair value of the services received is measured based on the Black-Scholes model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non transferability, exercise restrictions and behavioural considerations.

Fair value of share options and assumptions

Date of grant of options

On 1 October

2004

On 26 September

2005

On 10 January

2007

On 15 May

2008

Fair value at measurement date 0.27 - 0.37 0.23 - 0.29 0.34 - 0.43 0.53 - 0.66

Share price ($) 1.51 1.28 1.88 2.36

Exercise price ($) 1.51 1.28 1.88 2.36

Expected volatility (%) 29.8 29.8 29.8 43.9 – 45.2

Expected option life (years) 3 - 6 3 - 6 3 - 6 2 - 4

Expected dividends (%) 2.7 3.1 3.2 2.5

Risk-free interest rate (%) 1.9 - 2.7 2.4 - 2.7 2.9 - 3.0 1.1 - 1.4

The expected volatility is based on the historic volatility (calculated based on the weighted average expected life of the share options), adjusted for any expected changes to future volatility.

There are no market conditions associated with the share option grants. Service conditions and non-market performance conditions are not taken into account in the measurement of the fair value of the services to be received at the grant date.

30 Commitments

Capital commitments

Capital expenditure approved by the directors but not provided for in the financial statements as at 31 December 2008 is as follows:

Group Company2008 2007 2008 2007$’000 $’000 $’000 $’000

Contracted for 120,306 65,255 - 572


ANNUAL REPORT 2008

83


30 Commitments (cont’d)

Lease commitments

At 31 December 2008, commitments for future minimum lease payments under non-cancellable operating leases are as follows:

Group Company2008 2007 2008 2007$’000 $’000 $’000 $’000

Within 1 year 7,178 5,901 242 1,244

After 1 year but within 5 years 13,654 9,153 186 3,957

After 5 years 20,745 18,615 - 4,908

41,577 33,669 428 10,109

Annual rentals payable for the leases of land by the Group and the Company under non-cancellable operating leases are subject to revision at fixed intervals ranging from one to five years. Any increase will not exceed 8.5% on an annualised basis, provided that any rent after such increase shall not exceed the prevailing market rent. The leases expire between 2008 and 2011. None of these leases includes contingent rentals.

31 Significant related party transactions

Key management personnel compensation

Key management personnel compensation are as follows:

Group2008 2007$’000 $’000

Short-term employee benefits 4,120 4,038

Equity compensation benefits 397 218

4,517 4,256

Directors’ remuneration included in key management personnel compensation amounted to $3,053,000 (2007: $2,735,000).

Key management personnel of the Group participate in the Hong Leong Asia Share Option Scheme 2000 (the “Share Option Scheme”) as described in note 29. During the year, 1,330,000 (2007: 930,000) shares under options were granted to key management personnel pursuant to the Share Option Scheme (the “Options”) of which 1,000,000 (2007: 500,000) Options were granted to the Executive Directors of the Company. These Options are subject to a vesting schedule.

As at the end of the year, 1,647,000 (2007: 967,400) Options granted to key management personnel were outstanding, of which 1,600,000 (2007: 600,000) were Options granted to the Executive Directors of the Company.

Other related party transactions

During the year, the Group made payments to a firm, for which a director has an interest, in respect of professional services rendered. This amounted to $578,000 (2007: $374,000). $227,000 (2007: Nil) was outstanding at the balance sheet date.


ANNUAL REPORT 2008

84


31 Significant related party transactions (cont’d)

Other related party transactions (cont’d)

Significant transactions with related parties, other than those as disclosed elsewhere in the financial statements, are as follows:

Group 2008 2007$’000 $’000

Purchase of raw materials- associates 64,795 39,894

- jointly-controlled entity 727 1,506

Management services paid and payable - related corporations 606 392

Rental paid and payable- immediate holding company 206 223

32 Financial instruments

Risk management is integral to the whole business of the Group. The Group has a system of controls in place to create an acceptable balance between the cost of risks occurring and the cost of managing the risks. The management continually monitors the Group’s risk management process to ensure that an appropriate balance between risk and control is achieved. The Group’s policies and financial authority limits are documented and reviewed periodically. The financial authority limits seek to limit and mitigate operational risk by setting threshold of approvals required for the entry into contractual obligations and investments.

Credit risk

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed for all customers requiring credit over a certain amount. The Group requires collateral in respect of financial assets in certain circumstances.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets.

The allowance account in respect of trade and other receivables is used to record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible. At that point, the financial asset is considered irrecoverable and the amount charged to the allowance account is written off against the carrying amount of the impaired financial asset.

Cash and fixed deposits are placed with banks and financial institutions which are regulated.

At the balance sheet date, a subsidiary of the Group has trade receivables due from a major Chinese customer, amounting to $127 million (2007: $86 million), representing 12% (2007: 8%) of total gross trade receivables of the Group as at 31 December 2008. Of this balance, $101 million (2007: $64 million), or 80% (2007: 74%), is supported by bills receivable from Chinese banks.


ANNUAL REPORT 2008

85


32 Financial instruments (cont’d)

Market risk

Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.

Interest rate risk

The Group’s policy is to maintain an efficient and optimal interest cost structure using a mix of fixed and variable rate debts. The Group’s debt obligations are mainly denominated in Singapore dollars, Chinese Renminbi and Ringgit Malaysia, and at fixed and floating rates of interest. For variable rate financial instruments, a change of 100bp in interest rate at the reporting date would increase/(decrease) profit and loss by the amounts shown below.

Profit before income tax100bp 100bp

Group Increase Decrease

31 December 2008

Floating rate instruments (4,486) 4,486

31 December 2007


Company

31 December 2008


31 December 2007

Floating rate instruments 33 (33)

Liquidity risk

The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows, and having adequate amounts of committed credit facilities.

Foreign currency risk

The Group is exposed to foreign currency risk on sales, purchases and borrowings that are denominated in currencies other than the respective functional currencies of entities within the Group. The currencies giving rise to this risk are primarily the Singapore dollar, Ringgit Malaysia, Chinese Renminbi and United States dollar.

Foreign currency translation exposure is managed by incurring debt in the operating currency so that where possible operating cash flows can be primarily used to repay obligations in the local currency. This also has the effect of minimising the exchange differences recorded against income, as the exchange differences on the net investment are recorded directly against equity.


ANNUAL REPORT 2008

86



The Group’s and Company’s exposures to foreign currency are as follows:

31 December 2008 31 December 2007

Singapore

dollar

Ringgit

Malaysia

Chinese

Renminbi

United

States

dollar

Singapore

dollar

Ringgit

Malaysia

Chinese

Renminbi

United

States

dollar

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

Other investments 87,967 - - - 112,045 - - -

Non-current receivables - - - - 51,293 - - -

Trade and other receivables 615 253 3,741 13,295 7,091 7,359 17,233 15,733

Cash and cash equivalents 470 - 7 2,087 3,968 479 7,702 10,931

Financial liabilities (104,000) - - - (159,221) (7,102) (1,098) (7,596)

Trade and other payables (6,572) (3,857) (82) (21,326) (49,880) (6,255) (7,329) (14,663)

(21,520) (3,604) 3,666 (5,944) (34,704) (5,519) 16,508 4,405

Company

Trade and other receivables - - - - - - - 2,792

Cash and cash equivalents - - - 25 - - - 139

Trade and other payables - (4) - (598) - (4,997) - (82)

- (4) - (573) - (4,997) - 2,849

Sensitivity analysis

A 10% strengthening of the following major currencies against the functional currency of each of the Group’s entities at the reporting date would increase/(decrease) profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.

Group CompanyProfit before income tax

Profit before income tax

$’000 $’00031 December 2008Singapore dollar (2,152) -

Ringgit Malaysia (360) -

Chinese Renminbi 367 -

United States dollar (594) (57)

31 December 2007Singapore dollar (3,470) -

Ringgit Malaysia (552) (500)

Chinese Renminbi 1,651 -

United States dollar 441 285

A 10% weakening of the above would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.


ANNUAL REPORT 2008

87



Equity price risk

The Group and Company have available-for-sale equity securities which are quoted.

Sensitivity analysis-equity price risk

A 10% increase/(decrease) in the underlying equity prices at the reporting date would increase/(decrease) equity by the following amount:

Group Company2008 2007 2008 2007$’000 $’000 $’000 $’000

Equity 73 126 - 17

This analysis assumes that all other variables remain constant.

Estimation of fair values

The following summarises the significant methods and assumptions used in estimating the fair values of financial instruments of the Group and Company.

Investments in equity and debt securities

The fair value of available-for-sale financial assets is determined by reference to their quoted bid prices at the reporting date.

Non-derivative financial liabilities

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date.

Other financial assets and liabilities

The carrying amounts of financial assets and liabilities with a maturity of less than one year (including trade and other receivables, cash and cash equivalents, and trade and other payables) are assumed to approximate their fair values because of the short period to maturity. All other financial assets and liabilities are discounted to determine their fair values.

The aggregate net fair values of recognised financial assets and liabilities which are not carried at fair values in the balance sheet at 31 December are represented in the following table:

Carrying amount

Fairvalue

Carrying amount

Fairvalue

2008 2008 2007 2007Group $’000 $’000 $’000 $’000

Financial liabilities

Medium Term Notes - - 100,000 100,004

Unrecognised gain - 4

The fair value has been determined by discounting the relevant cash flows with current interest rates for similar instruments at the balance sheet date.

In 2007, the interest rate used in determining fair value was 2.89%.


ANNUAL REPORT 2008

88


33 Contingent liabilities (unsecured)

As part of Group’s cash management policy, the Group may receive bills receivable from customers in settlement of outstanding trade debts. These bills receivable are issued by banks in China. In the event that the Group uses the bills receivable to pay suppliers or discount them with its bankers, the recipients of bills have a recourse to the Group if the issuing bank defaults on the settlement on the maturity dates of the bills. In such a circumstance, the Group will also have recourse to the customer who has settled the outstanding trade debts through bills receivable.

Group 2008 2007$’000 $’000

Outstanding bills endorsed to suppliers with recourse obligations 302,477 297,821

Outstanding bills discounted with banks with recourse obligations 394,727 336,443

The Company has a contingent liability in respect of banking facilities of $20,000,000 (2007: $20,000,000) jointly held with its subsidiaries whereby the Company and the subsidiaries are jointly and severally liable for the outstanding obligations under these facilities. The amount drawn down as at 31 December 2008 on the banking facilities amounted to $15,000,000 (2007: $8,500,000).

34 Segment reporting

Segment information is presented in respect of the Group’s business and geographical segments. The primary format, business segments, is based on the Group’s management and internal reporting structure.

Inter-segments pricing is determined on mutually agreed terms.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise non-income-earning assets and non-operating revenue, interest-bearing loans, borrowings and non-operating expenses, and corporate assets and expenses.

Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one period.

Business Segments

The Group comprises the following main business segments:

(i) Consumer products: refrigerators, freezers and air conditioners.

(ii) Industrial products: diesel engines, plastic packaging related products and container components, and eco-friendly biodegradable pallets.

(iii) Building materials: pre-cast concrete products, ready-mixed concrete, cement and quarry products.

(iv) Corporate: relates primarily to results from corporate activities.

(v) Others: relate to electronics, hospitality and property development operations.


ANNUAL REPORT 2008

89


34 Segment reporting (cont’d)

Geographical Segments

The Group operations were primarily in China (including Hong Kong), Singapore and Malaysia.

In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers. Segment assets are based on the geographical location of assets.

Business Segments

Consumer products

Industrial products

Building materials Corporate Others * Consolidated

$’000 $’000 $’000 $’000 $’000 $’000Revenue and Expenses

2008

Total external revenue 952,957 2,238,842 392,961 - 32,024 3,616,784

Segment results 41,212 155,240 11,716 31,093 3,099 242,360

Share of profit of associates - 276 21,411 - (6,217) 15,470

Finance costs (50,751)

Income tax expense (33,618)

Minority interests (131,484)

Net profit for the year 41,977

2007

Total external revenue 884,913 1,972,128 341,722 - 34,415 3,233,178

Segment results 78,816 118,338 39,410 (5,698) 11,797 242,663

Share of profit of associates - 582 23,263 - 1,578 25,423

Finance costs (38,476)

Income tax expense (40,359)

Minority interests (93,823)

Net profit for the year 95,428

* Others relate to electronics, hospitality and property development operations.


ANNUAL REPORT 2008

90



Consumer products

Industrial products


$’000 $’000 $’000 $’000 $’000 $’000Assets and Liabilities

2008

Segment assets 707,890 1,916,191 237,002 - 128,910 2,989,993

Interests in associates - 6,105 168,255 - 78,990 253,350

Unallocated assets

- deferred tax assets 38,299

- others 5,617

Total assets 3,287,259

Segment liabilities 327,767 752,897 102,355 - 42,475 1,225,494

Unallocated liabilities

- borrowings 555,002

- deferred tax liabilities 2,111

- current tax payable 25,767

- others 2,678

Total liabilities 1,811,052

2007

Segment assets 715,334 1,633,401 192,346 7,318 170,436 2,718,835

Interests in associates - 6,930 150,896 - 100,848 258,674

Unallocated assets

- deferred tax assets 64,776

- others 4,052

Total assets 3,046,337

Segment liabilities 326,089 722,649 93,815 3,333 18,929 1,164,815

Unallocated liabilities

- borrowings 499,249

- deferred tax liabilities 2,087

- current tax payable 48,540

- others 483

Total liabilities 1,715,174



ANNUAL REPORT 2008

91



Consumer products

Industrial products


$’000 $’000 $’000 $’000 $’000 $’000

Other disclosures

2008

Capital expenditure 40,935 85,100 7,226 - 2,885 136,146

Depreciation 5,117 37,579 8,705 - 6,295 57,696

Amortisation of intangibles - 529 - - - 529

Provision made/ (reversed), net

- claims - 1,400 2,105 - - 3,505

- warranties 12,454 48,173 - - - 60,627

Impairment losses on property, plant and equipment and intangibles, net - 8,349 - - - 8,349

2007

Capital expenditure 37,186 60,914 11,822 - 3,454 113,376

Depreciation 3,085 36,417 8,314 - 6,164 53,980

Amortisation of intangibles - 206 - - - 206

Provision made/(reversed), net

- claims - - 4,516 - - 4,516

- warranties 4,682 50,038 - - - 54,720

- closure costs - (46) - - - (46)

- onerous contracts - - 3,229 - - 3,229

Impairment losses on property, plant and equipment - 4,869 5,253 - - 10,122



ANNUAL REPORT 2008

92



Geographical Segments

China (including Hong Kong) Singapore Malaysia Others Consolidated

$’000 $’000 $’000 $’000 $’0002008

Total revenue from external customers 3,148,615 396,067 26,231 45,871 3,616,784

Segment assets 2,577,197 330,305 65,026 17,465 2,989,993

Capital expenditure 128,227 5,599 2,201 119 136,146

2007

Total revenue from external customers 2,805,556 347,152 26,262 54,208 3,233,178

Segment assets 2,347,129 280,156 61,614 29,936 2,718,835

Capital expenditure 98,117 7,592 855 6,812 113,376

35 Subsequent event

In January 2009, the Group, through its subsidiary, Hartwell Pte. Ltd., acquired an additional 27.01% equity interest in Tasek Corporation Berhad for approximately $79,000,000 thereby increasing its effective equity interest from 45.58% to 72.59%. The acquisition was completed on 20 January 2009 and Tasek Corporation Berhad became a subsidiary of the Group.

36 Comparative information

Certain changes have been made to the comparatives to more appropriately reflect the balances of the Group. The significant changes are as follows:

As restatedAs previously

stated2007 2007$’000 $’000

Wages and salaries 193,500 224,481

Contribution to defined contribution plans 29,446 32,061

Trade receivables 851,028 1,062,312

Trade payables 770,810 982,094


ANNUAL REPORT 2008

93


37 New accounting standards and interpretations not yet adopted

The Group has not applied the following accounting standards (including its consequential amendments) and interpretations that have been issued as of the balance sheet date but are not yet effective:

• FRS 1 (revised 2008) Presentation of Financial Statements

• FRS 23 (revised 2007) Borrowing Costs

• Amendments to FRS 32 Financial Instruments: Presentation and FRS 1 Presentation of Financial Statements – Puttable Financial Instruments and Obligations Arising on Liquidation

• Amendments to FRS 39 Financial Instrument: Recognition and Measurement – Eligible Hedged Items

• Amendment to FRS 101 First-time Adoption of FRSs and FRS 27 Consolidated and Separate Financial Statements – Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate

• Amendment to FRS 102 Share-based Payment – Vesting Conditions and Cancellations

• FRS 108 Operating Segments

• Improvements to FRSs 2008

• INT FRS 113 Customer Loyalty Programmes

• INT FRS 116 Hedges of a Net Investment in a Foreign Operation

FRS 1 (revised 2008) will become effective for the Group’s financial statements for the year ending 31 December 2009. The revised standard requires an entity to present, in a statement of changes in equity, all owner changes in equity. All non-owner changes in equity (i.e. comprehensive income) are required to be presented in one statement of comprehensive income or in two statements (a separate income statement and a statement of comprehensive income). Components of comprehensive income are not permitted to be presented in the statement of changes in equity. In addition, a statement of financial position is required at the beginning of the earliest comparative period following a change in accounting policy, the correction of an error or the reclassification of items in the financial statements. FRS 1 (revised 2008) does not have any impact on the Group’s financial position or results.

FRS 23 (revised 2007) will become effective for the Group’s financial statements for the year ending 31 December 2009. FRS 23 (revised 2007) removes the option to expense borrowing costs and requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. The Group’s current policy to capitalise borrowing costs is consistent with the requirement in the revised FRS 23.

The amendments to FRS 32 and FRS 1 on puttable financial instruments will become effective for the Group’s financial statements for the year ending 31 December 2009. The amendments allow certain instruments that would normally be classified as liabilities to be classified as equity if and only if they meet certain conditions. The Group does not issue such puttable financial instruments and thus the application of these amendments is not expected to have any significant impact on the Group’s financial statements.

The amendments to FRS 39 on eligible hedged items will become effective for the Group’s financial statements for the year ending 31 December 2010. The amendments clarify how the principles that determine whether a hedged risk or portion of cash flows is eligible for designation should be applied in two particular situations: (i) the designation of a one-sided risk in a hedged item; and (ii) the designation of inflation in particular situations. The application of these amendments is not expected to have any significant impact on the Group’s financial statements.


ANNUAL REPORT 2008

94


37 New accounting standards and interpretations not yet adopted (cont’d)

The amendments to FRS 101 and FRS 27 on the cost of an investment in a subsidiary, jointly controlled entity or associate will become effective for the Company’s financial statements for the year ending 31 December 2009. The amendments remove the definition of “cost method” currently set out in FRS 27, and instead require an entity to recognise all dividend from a subsidiary, jointly controlled entity or associate as income in its separate financial statements when its right to receive the dividend is established. The application of these amendments is not expected to have any significant impact on the Company’s financial statements.

The amendments to FRS 102 on vesting conditions and cancellations will become effective for the Group’s financial statements for the year ending 31 December 2009. The amendments clarify the definition of vesting conditions and provide the accounting treatment for non-vesting conditions and cancellations. The application of these amendments is not expected to have any significant impact on the Group’s financial statements.

FRS 108 will become effective for the Group’s financial statements for the year ending 31 December 2009. FRS 108, which replaces FRS 14 Segment Reporting, requires identification and reporting of operating segments based on internal reports that are regularly reviewed by the entity’s chief operating decision maker in order to allocate resources to the segment and to assess its performance. Currently, the Group presents segment information in respect of its business and geographical segments (see note 34). Under FRS 108, the Group will present segment information in respect of its operating segments: consumer products, industrial products, building materials, corporate and others which relate to electronic, hospitality and property development operations.

Improvements to FRSs 2008 will become effective for the Group’s financial statements for the year ending 31 December 2009, except for the amendment to FRS 105 Non-current Assets Held for Sale and Discontinued Operations which will become effective for the year ending 31 December 2010. Improvements to FRSs 2008 contain amendments to numerous accounting standards that result in accounting changes for presentation, recognition or measurement purposes and terminology or editorial amendments. The Group is in the process of assessing the impact of these amendments.

The Group has not considered the impact of accounting standards issued after the balance sheet date.


ANNUAL REPORT 2008

95


重点财务报表

资产负债表 96

合并利润表 98

合并所有者权益变动表 99

母公司所有者权益变动表 101

合并现金流量表 102

ANNUAL REPORT 2008

96


资产负债表2008年12月31日

集团母公司

附注 2008 2007 2008 2007$’000 $’000 $’000 $’000

非流动资产

产业，厂房和设备 3 868,708 772,318 723 3,731

预付经营租赁 4 52,838 48,971 - -

无形资产 5 66,786 66,691 1,099 -

子公司投资 7 - - 239,628 219,980

联营公司投资 8 253,350 258,674 52,295 55,452

合股经营企业投资 9 - - 15,000 15,000

投资物业 10 7,222 8,130 - -

其它金融资产 11 2,145 2,845 - 167

非流动应收款 12 5,827 7,852 - -应收子公司款项 13 - - 55,674 59,462递延税务资产 14 38,299 64,776 - -

1,295,175 1,230,257 364,419 353,792

流动资产

存货 15 724,781 608,184 - 9,816发展物业 16 20,366 23,291 - -

其它金融资产 11 633 1,418 - -

应收货款和其他应收款 17 975,126 935,445 136,883 97,540

现金及现金等价物 18 271,178 247,742 10,495 14,912

1,992,084 1,816,080 147,378 122,268

总资产合计 3,287,259 3,046,337 511,797 476,060

此报告中的附注是组成这些财务报表不可或缺的内容

ANNUAL REPORT 2008

97


资产负债表2008年12月31日


集团母公司

附注 2008 2007 2008 2007$’000 $’000 $’000 $’000

股本与公积

发行股本 19 278,664 278,415 278,664 278,415各项公积 20 302,221 314,888 37,588 41,328

580,885 593,303 316,252 319,743少数股东权益 895,322 737,860 - -所有者权益总计 1,476,207 1,331,163 316,252 319,743

非流动负债

应付子公司款项 13 - - 10,400 11,000

金融负债 21 56,838 70,578 - -

递延税务负债 14 2,111 2,087 457 457递延补助 276 272 - -退休津贴 308 290 - -

59,533 73,227 10,857 11,457

流动负债

应付货款和其它应付款 22 1,135,023 1,074,845 17,350 34,180

各项准备 23 59,697 59,165 - 640

金融负债 21 531,032 459,397 167,338 110,040

应付税费 25,767 48,540 - -

1,751,519 1,641,947 184,688 144,860

总负债合计 1,811,052 1,715,174 195,545 156,317

负债及所有者权益总计 3,287,259 3,046,337 511,797 476,060

ANNUAL REPORT 2008

98


集团

附注 2008 2007$’000 $’000

营业收入 24 3,616,784 3,233,178营业成本 (2,861,761) (2,480,711)毛利润 755,023 752,467

其它收入/（费用） 25(a) 1,684 (3,393)销售和分销费用 (279,976) (255,304)研究和开发费用 (57,198) (38,521)管理和其它经营费用 (220,108) (224,567)营业利润 199,425 230,682其它非经营性收入 25(b) 42,935 11,981财务费用 25(c) (50,751) (38,476)应占联营公司盈利 15,470 25,423税前利润 25 207,079 229,610所得税支出 26 (33,618) (40,359)

税后利润 173,461 189,251

归属于:

母公司所有者的净利润 41,977 95,428少数股东损益 131,484 93,823

173,461 189,251

每股收益 (分) 27

- 基本 11.01 25.05

- 稀释 11.01 25.00

合并利润表截至2008年12月31日


ANNUAL REPORT 2008

99



附注

发行

股本

资本

公积

法定

公积

公允价值

公积

权益报酬

公积

外币报表

折算差额

未分

配

利润

归属于母公

司所有者权

益合计

少数股东

权益

所有者权益

合计

集团

$’00

0$’

000

$’00

0$’

000

$’00

0$’

000

$’00

0$’

000

$’00

0$’

000

2007

年1月

1日余额

277,

124

(34,

684)

16,9

4443

,673

629

(30,

848)

236,

021

508,

859

661,

282

1,17

0,14

1

国外子公司和联营公司的

外

币报表折算差额

--

--

-1,

027

-1,

027

(7,5

70)

(6,5

43)

净公

允价值变动

--

-24

,374

--

-24

,374

2,19

926

,573

股份

支付计入所有者权益

的

金额

--

--

329

--

329

2535

4

直接

计入所有者权益的

利

得/（损失）

--

-24

,374

329

1,02

7-

25,7

30(5

,346

)20

,384

本年

净利润

--

--

--

95,4

2895

,428

93,8

2318

9,25

1

本年

确认的收入与费用总计

--

-24

,374

329

1,02

795

,428

121,

158

88,4

7720

9,63

5

转入

法定公积

--

3,01

2-

--

(3,0

12)

--

-

本年

股本发行

191,

291

--

--

--

1,29

1-

1,29

1

增购

子公司权益

--

--

--

--

(201

)(2

01)

处置

可供出售资产所实现的

重

估增值

--

-(7

,529

)-

--

(7,5

29)

-(7

,529

)

已付股利予公司股东

28-

--

--

-(3

0,47

6)(3

0,47

6)-

(30,

476)

已付股利予子公司少数股东

--

--

--

--

(11,

698)

(11,

698)

2007

年12

月31

日余额

278,

415

(34,

684)

19,9

5660

,518

958

(29,

821)

297,

961

593,

303

737,

860

1,33

1,16

3

合并所有者权益变动表截至2007年12月31日

ANNUAL REPORT 2008

100


合并所有者权益变动表截至2008年12月31日

附注

发行

股本

资本

公积

法定

公积

公允价值

公积

权益报酬

公积

外币报表

折算差额

未分配

利润

归属于母公

司所有者权

益合计

少数股东

权益

所有者权益

合计

集团

$’00

0$’

000

$’00

0$’

000

$’00

0$’

000

$’00

0$’

000

$’00

0$’

000

2008

年1月

1日余额

278,

415

(34,

684)

19,9

5660

,518

958

(29,

821)

297,

961

593,

303

737,

860

1,33

1,16

3

国外子

公司和联营公司的

外

币报表折算差额

--

--

-16

,686

-16

,686

46,4

2663

,112

净公允

价值变动

--

-(3

7,85

4)-

--

(37,

854)

(13,

012)

(50,

866)

股份支

付计入所有者权益

的

金额

--

--

847

--

847

284

9

直接计

入所有者权益的

利

得/（损失）

--

-(3

7,85

4)84

716

,686

-(2

0,32

1)33

,416

13,0

95

本年

净利润

--

--

--

41,9

7741

,977

131,

484

173,

461

本年

确认的收入与费用总计

--

-(3

7,85

4)84

716

,686

41,9

7721

,656

164,

900

186,

556

转入法

定公积

--

2,31

1-

--

(2,3

11)

--

-

本年

股本发行

1924

9-

--

--

-24

9-

249

增购子

公司权益

--

--

--

--

(761

)(7

61)

股本发

行予子公司少数股东

--

--

--

--

10,1

0310

,103

已付股

利予公司股东

28-

--

--

-(3

4,32

3)(3

4,32

3)-

(34,

323)

已付

股利予子公司少数股东

--

--

--

--

(16,

780)

(16,

780)

2008

年12

月31

日余

额27

8,66

4(3

4,68

4)22

,267

22,6

641,

805

(13,

135)

303,

304

580,

885

895,

322

1,47

6,20

7


ANNUAL REPORT 2008

101


附注

发行

股本

资本

公积

公允价值

公积

权益报酬

公积

未分配

利润合计

母公司 $’000 $’000 $’000 $’000 $’000 $’000

2007年1月1日余额 277,124 9,199 118 478 28,786 315,705股份支付计入所有者权益的金额 - - - 360 - 360净公允价值变动 - - 4 - - 4直接计入所有者权益的利得 - - 4 360 - 364本年净利润 - - - - 32,981 32,981本年确认的收入与费用总计 - - 4 360 32,981 33,345本年股本发行 19 1,291 - - - - 1,291

处置其它金融资产所实现的重估增值 - - (122) - - (122)股利 28 - - - - (30,476) (30,476)

2007年12月31日余额 278,415 9,199 - 838 31,291 319,743

2008年1月1日余额 278,415 9,199 - 838 31,291 319,743股份支付计入所有者权益的金额 - - - 451 - 451净公允价值变动 - - 12 - - 12直接计入所有者权益的利得 - - 12 451 - 463本年净利润 - - - - 30,132 30,132本年确认的收入与费用总计 - - 12 451 30,132 30,595本年股本发行 19 249 - - - - 249

处置其它金融资产所实现的重估增值 - - (12) - - (12)股利 28 - - - - (34,323) (34,323)

2008年12月31日余额 278,664 9,199 - 1,289 27,100 316,252

母公司所有者权益变动表截至2008年12月31日


ANNUAL REPORT 2008

102


合并现金流量表截至2008年12月31日

集团

附注 2008 2007$’000 $’000

经营活动产生的现金流量

税前利润 207,079 229,610

调整项目：

应占联营公司盈利 (15,470) (25,423)

确认递延补助 25(a) (11) (6)股本支付产生的费用 25d) 847 360折旧与摊销 25 59,694 55,458

固定资产和无形资产减值准备 25(a) 8,349 10,122

处置子公司股权和相关业务产生的盈利 - (5,141)

财务费用 25(c) 50,751 38,476股利收入 25(a) (76) (265)利息收入 25(a) (3,530) (4,254)处置以下资产（收益）/损失：

- 其它投资 25(b) - (6,840)

- 产业,厂房与设备 25 1,786 2,082

所提准备净额 25 64,132 62,419

373,551 356,598

营运资金的增/减变动：

存货与在造品 (77,033) (109,369)

应收货款和其它应收款 37,566 (303,551)

应付货款和其它应付款 9,073 185,858

已提准备冲销 23 (66,666) (50,192)

经营活动产生产生的现金流量 276,491 79,344

已付所得税 (42,271) (28,499)

经营活动产生的现金流量净额 234,220 50,845


ANNUAL REPORT 2008

103




集团

附注 2008 2007$’000 $’000

投资活动产生的现金流量

增购联营公司权益 (40,405) -

购入子公司权益和其他业务，净现金支出 - (165)

增购子公司权益 (1,138) (201)

关联公司偿还款项 - 865股利所得:

- 联营公司 5,835 5,340- 其他 76 217

已收利息 3,276 6,482购置资产：

- 无形资产 5 (1,709) (397)- 产业,厂房与设备 3 (134,060) (115,053)

- 其他投资 - (272)

支付预付经营租赁 (2,881) 596处置资产所得:

- 子公司，净现金收入（附注A） - 2,189

- 产业,厂房与设备 9,190 9,019- 其他投资 - 11,828

- 可供出售资产 - 18,089投资活动产生的现金流量净额 (161,816) (61,463)

附注A：

处置子公司净资产所得如下：

2007$’000

净流动负债 (87)外币折算差额转入损益 (2,812)处置子公司产生的盈利 5,141现金收入小计 2,242

减：被处置子公司持有的（现金）/银行透支 (53)处置子公司，净现金收入 2,189

ANNUAL REPORT 2008

104



集团

附注 2008 2007$’000 $’000

筹资活动产生的现金流量

股利支出:

- 少数股东 (16,780) (11,698)- 股东 28 (34,323) (30,476)已付利息 (56,494) (31,877)银行借贷所得 966,113 325,122

定期存款用于质押贷款 30,920 (7,895)

股票发行所得 249 1,291

股本发行予子公司少数股东 10,103 –

偿还银行贷款 (930,872) (295,548)

筹资活动产生的现金流量净额 (31,084) (51,081)

净现金及现金等价物净增加/（减少）额 41,320 (61,699)

期初现金及现金等价物余额 186,681 246,863

汇率变动对现金的影响 10,016 1,517

期末现金及现金等价物余额 18 238,017 186,681

附注:(i) 现金及银行存款合计$184,916,000 (2007: $214,117,000)存放在实行货币兑换管制条例的国家。

(ii) 集团于2007年重新融资了$50,000,000的中期债券。


ANNUAL REPORT 2008

105


Class of Shares : Ordinary sharesNumber of Ordinary Shares in issue : 381,392,018Number of Ordinary Shareholders : 5,285Voting Rights : 1 vote for 1 share

There are no treasury shares held in the issued share capital of the Company.

No. of No. ofRange of Shareholdings Shareholders % Shares Held %

1 - 999 21 0.40 6,214 0.002 1,000 - 10,000 4,052 76.67 17,813,249 4.670 10,001 - 1,000,000 1,195 22.61 52,247,420 13.699 1,000,001 and above 17 0.32 311,325,135 81.629

5,285 100.00 381,392,018 100.000

Based on information available to the Company as at 16 March 2009, approximately 31.85% of the total number of issued shares of the Company is held by the public and therefore Rule 723 of the Listing Manual issued by the Singapore Exchange Securities Trading Limited is complied with.

Major Shareholders List - Top 20 as at 16 March 2009(as shown in the Register of Members)

No. of No. Name of Shareholder Shares Held % 1. Hong Leong Corporation Holdings Pte Ltd 233,000,000 61.092. Singapore Cement Industrial Company (Private) Limited 18,159,318 4.763. DBS Nominees Pte Ltd 10,268,715 2.694. DBSN Services Pte Ltd 8,988,000 2.365. Citibank Nominees Singapore Pte Ltd 8,875,480 2.336. HSBC (Singapore) Nominees Pte Ltd 6,762,900 1.777. Starich Investments Pte. Ltd. 6,664,000 1.758. Raffles Nominees Pte Ltd 3,460,722 0.919. DBS Vickers Securities (S) Pte Ltd 3,126,000 0.8210. OCBC Securities Private Ltd 2,424,000 0.6411. United Overseas Bank Nominees Pte Ltd 1,811,000 0.4712. Paramount Assets Investments Pte Ltd 1,750,000 0.4613. Ling Kung Eng 1,434,000 0.3814. UOB Kay Hian Pte Ltd 1,264,000 0.3315. Soon Lee Heng Trading & Transportation Pte Ltd 1,174,000 0.3116. ABN Amro Nominees Singapore Pte Ltd 1,129,000 0.3017. Phillip Securities Pte Ltd 1,034,000 0.2718. Tan Guat Poh 1,000,000 0.2619. HL Bank Nominees (S) Pte Ltd 947,000 0.2520. Chng Gim Huat 819,000 0.21

314,091,135 82.36

ANALySIS OF SHAREHOLDINGSAs at 16 March 2009

ANNUAL REPORT 2008

106


ANALySIS OF SHAREHOLDINGSAs at 16 March 2009

Substantial Shareholders (as shown in the Register of Substantial Shareholders) No. of SharesName of Substantial Shareholders Direct Interest Deemed Interest Total Interest %

Hong Leong Corporation Holdings Pte Ltd 233,000,000 24,823,318(1) 257,823,318 67.60Hong Leong Enterprises Pte. Ltd. - 257,823,318(2) 257,823,318 67.60Hong Leong Investment Holdings Pte. Ltd. - 258,091,318(3) 258,091,318 67.67Davos Investment Holdings Private Limited - 258,091,318(4) 258,091,318 67.67Kwek Holdings Pte Ltd - 258,091,318(4) 258,091,318 67.67

Notes:

(1) Hong Leong Corporation Holdings Pte Ltd (“HLCH”) is deemed under Section 7 of the Companies Act, Chapter 50 (the “Act”) to have an interest in the Shares held directly by its wholly-owned subsidiary, Starich Investments Pte. Ltd. (“Starich”).

HLCH is also deemed under Section 7 of the Act to have an interest in the Shares held directly by Singapore Cement Industrial Company (Private) Limited (“SCIC”), in which it is entitled to exercise or control the exercise of not less than 20% of the voting shares in SCIC.

(2) Hong Leong Enterprises Pte. Ltd. is deemed under Section 7 of the Act to have an interest in the Shares held directly by HLCH, Starich and SCIC, in which it is entitled to exercise or control the exercise of not less than 20% of the voting shares in the latter companies.

(3) Hong Leong Investment Holdings Pte. Ltd. (“HLIH”) is deemed under Section 7 of the Act to have an interest in the Shares held directly by its subsidiaries, HLCH, Starich, Millennium Securities Pte Ltd and Welkin Investments Pte Ltd.

HLIH is also deemed under Section 7 of the Act to have an interest in the Shares held directly by SCIC, in which it is entitled to exercise or control the exercise of not less than 20% of the voting shares in SCIC.

(4) Davos Investment Holdings Private Limited and Kwek Holdings Pte Ltd are deemed under Section 7 of the Act to have interests in the Shares referred to in Note 3 above held indirectly by HLIH, in which each of them is entitled to exercise or control the exercise of not less than 20% of the voting shares in HLIH.

ANNUAL REPORT 2008

107


NOTICE IS HEREBy GIVEN that the Forty-Eighth Annual General Meeting (the “Meeting”) of HONG LEONG ASIA LTD. will be held at Grand Copthorne Waterfront Hotel, Riverfront 1 & 2, Level 2, 392 Havelock Road, Singapore 169663 on Thursday, 30 April 2009 at 3.00 p.m. for the following purposes:

A. ORDINARY BUSINESS:

1. To receive and adopt the Audited Accounts and Reports of the Directors and Auditors for the year ended 31 December 2008.

2. To declare a tax exempt (1-tier) final dividend of 2 cents per ordinary share for the year ended 31 December 2008 as recommended by the Directors.

3. To approve Directors’ fees of $190,000 (excluding the Audit Committee fees) for the year ended 31 December 2008 (year 2007: $190,000) and Audit Committee fees of $20,000 per quarter for the period commencing from 1 July 2009 to 30 June 2010, with payment of the Audit Committee fees to be made in arrears at the end of each calendar quarter.

4. To re-elect the following Directors retiring by rotation in accordance with the Articles of Association of the Company and who, being eligible, offer themselves for re-election:

(i) Mr Kwek Leng Peck(ii) Mr Ernest Colin Lee

5. To re-appoint Mr Quek Shi Kui as a Director of the Company pursuant to Section 153(6) of the Companies Act, Chapter 50, to hold office from the date of this Meeting until the next Annual General Meeting.

6. To re-appoint Messrs KPMG LLP as Auditors and to authorise the Directors to fix their remuneration.

B. SPECIAL BUSINESS:

To consider and, if thought fit, to pass, with or without any modifications, the following resolutions as Ordinary Resolutions:

7. That authority be and is hereby given to the Directors to:

(a) (i) issue shares in the capital of 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) 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 may in their absolute discretion deem fit; and

(b) (notwithstanding the authority conferred by this Ordinary Resolution may have ceased to be in force) issue shares in pursuance of any Instrument made or granted by the Directors while this Ordinary Resolution was in force,

provided that:

(1) the aggregate number of shares to be issued pursuant to this Ordinary Resolution (including shares to be issued in pursuance of Instruments made or granted pursuant to this Ordinary Resolution but excluding shares which may be issued pursuant to any adjustments effected under any relevant Instrument):

(A) by way of renounceable rights issues on a pro rata basis to shareholders of the Company (“Renounceable Rights Issues”) does not exceed 100% of the total number of issued shares, excluding treasury shares, in the capital of the Company (as calculated in accordance with sub-paragraph (3) below); and

(B) otherwise than by way of Renounceable Rights Issues (“Other Share Issues”) does not exceed 50% of the total number of issued shares, excluding treasury shares, in the capital of the Company (as calculated in accordance with sub-paragraph (3) below), of which the aggregate number of shares to be issued other than on a pro rata basis to shareholders of the Company does not exceed 20% of the total number of issued shares, excluding treasury shares, in the capital of the Company (as calculated in accordance with sub-paragraph (3) below);

NOTICE OF ANNUAL GENERAL MEETING

ANNUAL REPORT 2008

108



(2) the Renounceable Rights Issues and Other Share Issues shall not, in aggregate, exceed 100% of the total number of issued shares, excluding treasury shares, in the capital of the Company (as calculated in accordance with sub-paragraph (3) below);

(3) (subject to such manner of calculation as may be prescribed by the Singapore Exchange Securities Trading Limited (“SGX-ST”)) for the purpose of determining the aggregate number of shares that may be issued under sub-paragraphs (1)(A) and (1)(B) above, the total number of issued shares, excluding treasury shares, shall be 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:

(i) new shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding and subsisting at the time this Ordinary Resolution is passed; and

(ii) any subsequent bonus issue, consolidation or subdivision of shares;

(4) in exercising the authority conferred by this Ordinary Resolution, the Company shall comply with the provisions of the Listing Manual of the SGX-ST for the time being in force (unless such compliance has been waived by the SGX-ST) and the Articles of Association for the time being of the Company; and

(5) (unless revoked or varied by the Company in General Meeting) the authority conferred by this Ordinary Resolution shall continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier.

8. That, contingent on the passing of the Ordinary Resolution in 7 above, authority be and is hereby given to the Directors to fix the issue price for shares in the capital of the Company that may be issued by way of placement pursuant to the 20% sub-limit for Other Share Issues on a non pro rata basis referred to in Resolution 7 above, at a discount exceeding 10% but not more than 20% of the price as determined in accordance with the Listing Manual of the SGX-ST.

9. That approval be and is hereby given to the Directors to offer and grant options in accordance with the provisions of the Hong Leong Asia Share Option Scheme 2000 (the “Share Option Scheme”) and to allot and issue from time to time such number of shares in the capital of the Company as may be required to be issued pursuant to the exercise of the options granted under the Share Option Scheme provided that the aggregate number of shares to be issued pursuant to the Share Option Scheme shall not exceed 15% of the total number of issued shares excluding treasury shares, if any, in the capital of the Company from time to time, and provided further that the aggregate number of shares to be issued during the entire operation of the Share Option Scheme (subject to adjustments, if any, made under the Share Option Scheme) shall not exceed such limits or (as the case may be) sub-limits as may be prescribed in the Share Option Scheme.

10. That:

(a) for the purposes of Sections 76C and 76E of the Companies Act, Chapter 50 (the “Companies Act”), the exercise by the Directors of the Company of all the powers of the Company to purchase or otherwise acquire issued ordinary shares in the capital of the Company (the “Shares”) not exceeding in aggregate the Maximum Limit (as hereafter defined), at such price or prices as may be determined by the Directors from time to time up to the Maximum Price (as hereafter defined), whether by way of:

(i) market purchase(s) on the SGX-ST and/or any other stock exchange on which the Shares may for the time being be listed and quoted (“Other Exchange”); and/or

(ii) off-market purchase(s) (if effected otherwise than on the SGX-ST or, as the case may be, Other Exchange) in accordance with any equal access scheme(s) as may be determined or formulated by the Directors as they consider fit, which scheme(s) shall satisfy all the conditions prescribed by the Companies Act,

and otherwise in accordance with all other laws and regulations and rules of the SGX-ST or, as the case may be, Other Exchange as may for the time being be applicable, be and is hereby authorised and approved generally and unconditionally (the “Share Purchase Mandate”);

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(b) unless varied or revoked by the Company in general meeting, the authority conferred on the Directors of the Company pursuant to the Share Purchase Mandate may be exercised by the Directors at any time and from time to time during the period commencing from the date of the passing of this Resolution and expiring on the earlier of:

(i) the date on which the next Annual General Meeting of the Company is held; and

(ii) the date by which the next Annual General Meeting of the Company is required by law to be held;

(c) in this Resolution:

“Average Closing Price” means the average of the closing market prices of a Share for the five consecutive market days on which the Shares are transacted on the SGX-ST or, as the case may be, Other Exchange immediately preceding the date of market purchase by the Company or, as the case may be, the date of the making of the offer pursuant to the off-market purchase, and deemed to be adjusted in accordance with the listing rules of the SGX-ST for any corporate action which occurs after the relevant five-day period;

“date of the making of the offer” means the date on which the Company makes an offer for the purchase or acquisition of Shares from holders of Shares, stating therein the purchase price (which shall not be more than the Maximum Price) for each Share and the relevant terms of the equal access scheme for effecting the off-market purchase;

“Maximum Limit” means that number of issued Shares representing 10% of the total number of issued Shares of the Company (excluding any Shares which are held as treasury shares) as at the date of the passing of this Resolution; and

“Maximum Price” in relation to a Share to be purchased or acquired, means the purchase price (excluding brokerage, commission, applicable goods and services tax and other related expenses) which shall not exceed:

(i) in the case of a market purchase of a Share, 105% of the Average Closing Price of the Shares; and

(ii) in the case of an off-market purchase of a Share pursuant to an equal access scheme, 110% of the Average Closing Price of the Shares; and

(d) the Directors of the Company and/or any of them be and are hereby authorised to complete and do all such acts and things (including executing such documents as may be required) as they and/or he may consider expedient or necessary to give effect to the transactions contemplated and/or authorised by this Resolution.


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11. That approval be and is hereby given for the purposes of Chapter 9 of the Listing Manual of SGX-ST, for the Company, its subsidiaries and its associated companies that are not listed on the SGX-ST or an approved exchange, over which the Company, its subsidiaries and/or its interested person(s), have control, or any of them to enter into any of the transactions falling within the types of Interested Person Transactions, particulars of which are set out in the Appendix to this Notice of Annual General Meeting (the “Appendix”) with any party who is of the class of Interested Persons described in the Appendix; provided that such transactions are entered in accordance with the review procedures set out in the Appendix, and that such approval (the “IPT Mandate”) shall, unless revoked or varied by the Company in General Meeting, continue in force until the conclusion of the next Annual General Meeting of the Company, and the Directors of the Company be and are hereby authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary or in the interests of the Company to give effect to the IPT Mandate and/or this Resolution.

C. TO TRANSACT ANY OTHER ORDINARY BUSINESS.

By ORDER OF THE BOARD

yeo Swee Gim, JoanneNg Siew Ping, JaslinCompany Secretaries

13 April 2009Singapore

The Company had on 26 February 2009 advised that the Register of Members of the Company will be closed on 12 May 2009 for the preparation of dividend warrants. Duly completed transfers received by the Company up to 5.00 p.m. on 11 May 2009 will be registered before entitlements to the proposed dividend for the year ended 31 December 2008 are determined.

Directors have recommended a tax exempt (1-tier) final dividend of 2 cents per ordinary share in respect of the financial year ended 31 December 2008 for approval by Members at the Annual General Meeting to be held on 30 April 2009. The final dividend, if approved, will be payable on 22 May 2009.

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NOTES:

1. A member of the Company entitled to attend and vote at the Meeting is entitled to appoint not more than two proxies (whether a member or not) as his proxy to attend and vote on his behalf. The instrument appointing a proxy must be deposited at the Secretary’s Office at 36 Robinson Road, #03-01 City House, Singapore 068877, not less than forty-eight (48) hours before the time appointed for holding the Meeting.

2. With reference to item 4(i) above (under the heading “Ordinary Business”), Mr Kwek Leng Peck will, upon re-election as a Director of the Company, remain as a member of the Share Option Scheme Committee.

3. With reference to item 4(ii) above (under the heading “Ordinary Business”), Mr Ernest Colin Lee will, upon re-election as a Director of the Company, remain as Chairman of the Nominating, Remuneration and Share Option Scheme Committees as well as a member of the Audit Committee. Mr Lee is an independent Director.

4. With reference to item 5 above (under the heading “Ordinary Business”), Mr Quek Shi Kui will, upon re-appointment as a Director of the Company, remain as Chairman of the Audit Committee and as a member of the Nominating, Remuneration and Share Option Scheme Committees. Mr Quek is an independent Director.

5. The Ordinary Resolution proposed in item 7 above (under the heading “Special Business”), if passed, will empower the Directors of the Company from the date of the Meeting until the next Annual General Meeting (unless such authority is previously revoked or varied at a general meeting), to issue shares and/or make or grant Instruments that might require new shares to be issued up to a number not exceeding (i) 100% for Renounceable Rights Issues, and (ii) 50% for Other Share Issues of which up to 20% may be issued other than on a pro rata basis to shareholders, provided that the total number of shares which may be issued pursuant to (i) and (ii) shall not exceed 100% of the total number of the Company’s issued shares excluding treasury shares. The aggregate number of shares which may be issued under this Ordinary Resolution will be calculated based on the total number of issued shares, excluding treasury shares, in the capital of the Company at the time that 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 and subsisting at the time this Ordinary Resolution is passed and any subsequent bonus issue, consolidation or subdivision of shares. The authority for 100% Renounceable Rights Issues is proposed pursuant to the SGX news release of 19 February 2009 which introduced further measures to accelerate and facilitate listed issuers’ fund raising efforts (“SGX News Release”).

6. The Ordinary Resolution proposed in item 8 above (under the heading “Special Business”), if passed, will empower the Directors to fix the issue price for shares that may be issued by way of placement pursuant to the 20% sub-limit for Other Share Issues on a non pro rata basis (referred to in the Ordinary Resolution proposed in item 7 above) at a discount exceeding 10% but not more than 20% of the price as determined in accordance with the Listing Manual of the SGX-ST. This Ordinary Resolution is proposed pursuant to the SGX News Release.

7. The Ordinary Resolution proposed in item 9 above (under the heading “Special Business”), if passed, will empower the Directors to offer and grant options under the Share Option Scheme and to issue from time to time such number of shares in the capital of the Company pursuant to the exercise of such options under the Share Option Scheme subject to such limits or sub-limits as prescribed in the Share Option Scheme.

8. The Ordinary Resolution proposed in item 10 above (under the heading “Special Business”), if passed, will empower the Directors of the Company to make purchases or otherwise acquire issued shares in the capital of the Company from time to time subject to and in accordance with the guidelines set out in Annexure I of the Appendix to the Notice of this Meeting. This authority will continue in force until the next Annual General Meeting of the Company, unless previously revoked or varied at a general meeting.

9. The Ordinary Resolution proposed in item 11 above (under the heading “Special Business”), if passed, will renew the IPT

Mandate first approved by shareholders on 30 May 2003 to facilitate the Company, its subsidiaries and its associated companies, to enter into Interested Person Transactions, the details of which are set out in Annexures II and III of the Appendix to the Notice of this Meeting. The IPT Mandate will continue in force until the next Annual General Meeting of the Company, unless previously revoked or varied at a general meeting.


ANNUAL REPORT 2008

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HONG LEONG ASIA LTD.Co. Reg. No. 196300306G(Incorporated in the Republic of Singapore)

IMPORTANT1. For investors who have used their CPF monies to buy the Company’s shares, the Annual

Report is forwarded to them at the request of their CPF Approved Nominee and is sent solely FOR INFORMATION ONLy.

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

3. CPF Investors who wish to attend the AGM as OBSERVERS have to submit their requests through their respective Agent Banks so that their Agent Banks may register with the Company Secretary of Hong Leong Asia Ltd.

PROXY FORMFor Annual General Meeting

*I/We, with NRIC/Passport No.

of

being a *member/members of HONG LEONG ASIA LTD. (the “Company”), hereby appoint

Name Address NRIC/Passport Number

Proportion ofShareholdings (%)

and/or (delete as appropriate)

as *my/our *proxy/proxies to vote for *me/us and on *my/our behalf at the Forty-Eighth Annual General Meeting of the Company (the “AGM”) to be held at Grand Copthorne Waterfront Hotel, Riverfront 1 & 2, Level 2, 392 Havelock Road, Singapore 169663 on Thursday, 30 April 2009 at 3.00 p.m. and at any adjournment thereof. *I/We direct *my/our *proxy/proxies to vote for or against the Resolutions to be proposed at the AGM as indicated with an “X” in the spaces provided hereunder. If no specific direction as to voting is given or in the event of any other matter arising at the AGM, *my/our *proxy/proxies will vote or abstain from voting at the discretion of *my/our *proxy/proxies.

No. Resolutions For AgainstA. ORDINARY BUSINESS:1. Adoption of Reports and Accounts2. Declaration of Final Dividend3. Approval of Directors’ Fees and Audit Committee Fees4. Re-election of Directors: (i) Mr Kwek Leng Peck

(ii) Mr Ernest Colin Lee

5. Re-appointment of Mr Quek Shi Kui as Director under Section 153(6) of the Companies Act, Chapter 50

6. Re-appointment of Messrs KPMG LLP as AuditorsB. SPECIAL BUSINESS:7. Authority for Directors to issue shares and/or make or grant offers, agreements or options

pursuant to Section 161 of the Companies Act, Chapter 50 and the listing rules of the Singapore Exchange Securities Trading Limited

8. Approval of Share Placement Discount9. Authority for Directors to offer and grant options and to issue shares in accordance with

the provisions of the Hong Leong Asia Share Option Scheme 200010. Renewal of Share Purchase Mandate11. Renewal of Shareholders’ Mandate for Interested Person Transactions

Dated this day of 2009

Total No. of Shares Held

* Delete accordingly Signature(s) ofNotes: See overleaf Member(s)/Common Seal

NOTES :

1. A member of the Company entitled to attend and vote at the AGM is entitled to appoint one or two proxies to attend and vote in his/her stead. A proxy need not be a member of the Company.

2. Where a member appoints two proxies, the appointments shall be invalid unless he specifies the proportion of his shareholding (expressed as a percentage of the whole) to be represented by each proxy.

3. Completion and return of this instrument appointing a proxy shall not preclude a member from attending and voting at the AGM. Any appointment of a proxy or proxies shall be deemed to be revoked if a member attends the AGM in person, and in such event, the Company reserves the right to refuse to admit any person or persons appointed under the instrument of proxy, to the AGM.

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

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

6. A body corporate which is a member may also appoint by resolution of its directors or other governing body an authorised representative or representatives in accordance with its Articles of Association and Section 179 of the Companies Act, Chapter 50 of Singapore to attend and vote for and on behalf of such body corporate.

7. This instrument appointing a proxy or proxies (together with the power of attorney, if any, under which it is signed or a certified copy thereof), must be deposited at the Secretary’s Office at 36 Robinson Road, #03-01 City House, Singapore 068877 not less than 48 hours before the time fixed for holding the AGM.

8. The Company shall be entitled to reject this instrument of proxy if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in this instrument of proxy. In addition, in the case of shares entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged 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 AGM as certified by The Central Depository (Pte) Limited to the Company.

9. Agent Banks acting on the request of CPF Investors who wish to attend the AGM as Observers are required to submit in writing, a list with details of the investor’s name, NRIC/Passport number, addresses and number of shares held. The list, signed by an authorised signatory of the agent bank, should reach the Company Secretary, at the Secretary’s Office at 36 Robinson Road, #03-01 City House, Singapore 068877, not less than 48 hours before the time fixed for holding the AGM.

Fold Here

PROXy FORM

The Company SecretaryHONG LEONG ASIA LTD.

36 Robinson Road#03-01 City HouseSingapore 068877

Fold Here

AffixStampHere



CORPORATE OFFICEHong Leong Asia Ltd.16RafflesQuay#26-00,Hong Leong Building,Singapore 048581Tel: (65) 6220 8411 (17 Lines)Fax: (65) 6222 0087 / 6226 0502

Hong Leong Asia (Shanghai) Co., Ltd.Room 1006, Urban Development International Tower,No. 355 Hongqiao Road,Shanghai 200030, People’s Republic of ChinaTel: (86) 21-346 01011/12/13/15Fax: (86) 21-346 01016

CONSUMER PRODUCTSHenan Xinfei Electric Co., Ltd.Henan Xinfei Household Appliance Co., Ltd.Henan Xinfei Refrigeration Appliances Co., Ltd.370 Hong Li Road, Xinxiang,Henan 453002, People’s Republic of ChinaTel: (86) 373-338 1616Fax: (86) 373-338 4788

DIESEL ENGINESExecutive OfficeChina Yuchai International Limited16RafflesQuay#39-01A,Hong Leong Building,Singapore 048581Tel: (65) 6220 8411 (17 Lines)Fax: (65) 6221 1172

Guangxi Yuchai Machinery Company Limited88 Tianqiao West Road, Yulin, Guangxi, 537005 People’s Republic of ChinaTel: (86) 775-322 2188Fax: (86) 775-328 8168

INDUSTRIAL PACKAGINGHong Leong (China) Limited14 Ang Mo Kio St. 63,Singapore 569116Tel: (65) 6853 8162 - 164Fax: (65) 6752 5939

Shanghai Rex Packaging Co., Ltd1500 Bei Song Road, Minhang District,Shanghai 201111, People’s Republic of ChinaTel: (86) 21-640 90357Fax: (86) 21-640 90356

Tianjin Rex Packaging Co., Ltd.167 Dongting Road, Tianjin Economic & Technological Development Area, 300457,People’s Republic of ChinaTel: (86) 22-6620 0950Fax: (86) 22-6620 1128

Dongguan Rex Packaging Company LimitedSu Keng, Chang Ping, Dongguan,Guangdong Province 523577,People’s Republic of ChinaTel: (86) 769-8391 0878Fax: (86) 769-8391 0879

Rex Plastics (Malaysia) Sdn. Bhd.Lot45JalanDelima1/1,Subang Hi-Tech Industrial Park,40000 Shah Alam,Selangor Darul Ehsan, MalaysiaTel: (603) 5629 3000Fax: (603) 5636 4977

Rexpak Sdn. Bhd.Lot45JalanDelima1/1,Subang Hi-Tech Industrial Park,40000 Shah Alam,Selangor Darul Ehsan, MalaysiaTel: (603) 5629 3000Fax: (603) 5636 4977

PT RexplastJl.BerbekIndustriV/10,Sidoarjo 61256EastJava,IndonesiaTel: (62) 31-843 6668/9Fax: (62) 31-843 6667

GREEN PACKAGINGGPac Technology (S) Pte. Ltd.14 Ang Mo Kio St. 63,Singapore 569116Tel: (65) 6484 0383Fax: (65) 6484 4548

GPac Technology (M) Sdn. Bhd.PLO19,JalanPersiaranTeknologi,TamanTeknologiJohor,81400 Senai,Johor,MalaysiaTel: (607) 599 6899Fax: (607) 599 3719

BUILDING MATERIALSCement & Granite DivisionHL Building Materials Pte. Ltd.43/45 Sungei Kadut Street 4,Singapore 729061Tel: (65) 6488 5777Fax: (65) 6368 0312

Tasek Corporation BerhadPersiaran Tasek,Tasek Industrial Estate,31400 Ipoh, Perak, MalaysiaTel: (605) 291 1011Fax: (605) 291 9932

Singapore Cement Manufacturing Company (Private) Limited43/45 Sungei Kadut Street 4, Singapore 729061Tel: (65) 6488 5777Fax: (65) 6362 7327

Ready-mix Concrete DivisionIsland Concrete (Private) Limited43/45 Sungei Kadut Street 4,Singapore 729061Tel: (65) 6488 5777Fax: (65) 6368 1837

Pre-cast Concrete DivisionHL Building Materials Pte. Ltd.7A Tuas Avenue 13,Singapore 638979Tel: (65) 6862 3501Fax: (65) 6861 0674

Steel DivisionAngkasa Hong Leong Pte LtdNo. 20 Woodlands Loop, Singapore 738321Tel: (65) 6759 5973Fax: (65) 6759 5967

Quarry DivisionPT. Karimun GranitePlaza Kebon Sirih Lantai 1,UnitP1-08,JalanKebonSirihNo.17-19,Jakarta10340,IndonesiaTel: (021) 392 9446/7Fax: (021) 392 9454

OTHERSHL Global Enterprises Limited70 Shenton Way,#20-01 Marina House,Singapore 079118Tel: (65) 6324 9500Fax: (65) 6221 4861

Thakral Corporation Ltd20 Upper Circular Road,#03-06 The Riverwalk, Singapore 058416Tel: (65) 6336 8966Fax: (65) 6336 7225

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HONG LEONG ASIA LTD. ANNUAL REPORT - · PDF fileHONG LEONG ASIA LTD.2008 ANNUAL REPORT Consumer Products ... 105 Analysis of Shareholdings ... industry in China and Southeast Asia