Stamford Tyres Ar 2004 Full

Page 1

Financial Report Established since 1930s

Annual Report 2004 of Stamford Tyres Corporation Limted

Website: http://www.stamfordtyres.com

Contents • • • • •

Report on Corporate Governance Report of the Directors Statement by Directors Auditors’ Report Consolidated Profit and Loss Account • Balance Sheets

01 09 13 14 15 16

• Consolidated Statement of Changes in Equity • Consolidated Statement of Cash Flow • Notes to the Financial Statements

17 18 19

• • • •

List of Major Properties Statistics of Shareholdings Statistics of Warrantholdings Notice of Annual General Meeting • Proxy Form

55 56 58 59 61

Page 2

Page 1

Report on Corporate Governance

The Company is committed to high standards of corporate governance. Good corporate governance establishes and maintains a legal and ethical environment in which the Group strives to preserve the interest of all stakeholders. This Report describes the Company’s corporate governance practices with specific reference to the Code of Corporate Governance (“Code”), pursuant to Rule 710(2) of the Listing Manual of the Singapore Exchange Securities Trading Limited. BOARD MATTERS Principle 1 : Board’s Conduct of its Affairs The Board oversees the business affairs of the Group, approves the Group’s strategic plans, key business initiatives, major investment and funding decisions. It also monitors and evaluates the Group’s operations and financial performance. These functions are carried by the Board directly or through committees of the Board which have been set up to support its functions. The Board met 5 times during the financial year to review, consider and approve strategic, operational and financial matters, as well as to supervise senior management. In between the meetings, important matters concerning the Group are put to the Board for its decision by circulating resolution-in-writing for the directors’ approval. Directors are briefed on regulatory changes, especially those on the Company’s or director’s disclosure obligations. In order to ensure that the Board is able to fulfill its responsibilities, prior to the Board meetings, the Management provides the Board with information containing relevant background or explanatory information required to support the decision-making process. Newly-appointed directors will be given briefings by the Management on the business activities of the Group and its strategic directions as well as its corporate governance practices. Principle 2 : Board’s Composition and Balance The Board comprises : Non-executive directors Chua Kim Yeow Tay Puan Siong Dr Kwok Weng Fai Sam Chong Keen Goh Chee Wee Michael David Nesbitt

(Chairman)

Executive directors Wee Kok Wah Dawn Wee Wai Ying

(President) (Executive Vice President)

The Board considers the Board’s present size and composition appropriate taking into account the nature and scope of the Group’s operations, the depth and breadth of knowledge, expertise and business experiences of the directors to govern and manage the Group’s affairs and that two-thirds of the Board is independent. The Board has no dissenting view on the President’s Letter to Shareholders for the financial year in review.

Page 2 Report on Corporate Governance (cont’d)

Principle 3 : Chairman and President The roles of Chairman and President are separate. The Chairman assumes the responsibilities of scheduling and preparing agendas for Board meetings and exercises control over the quality, quantity and timeliness of information flow between the Board and Management. The President provides overall vision and strategic guidance and bears full executive responsibility for the Group’s operations. Principle 4 to 5 : Board Membership Board Performance The Nominating Committee comprises : Sam Chong Keen Tay Puan Siong Michael David Nesbitt

(Chairman)

The Nominating Committee recommends all appointments and re-nominations of directors to the Board and Board committees. The Company’s Articles of Association provide for one-third of the directors to retire by rotation and be subject to re-election at every Annual General Meeting. A newly appointed director must also subject himself for retirement and re-election at the Annual General Meeting immediately following his appointment. The Nominating Committee also determines the independence of directors and evaluates and assesses the effectiveness of the Board taking into consideration appropriate performance criteria. The Board, through the delegation of its authority to the Nominating Committee, has used its best efforts to ensure that directors appointed to the Board possess the background, experience and knowledge in technology, business, finance and management skills critical to the Group’s businesses and that each director, through his unique contributions, brings to the Board an independent and objective perspective to enable balanced and well-considered decisions to be made. Principle 6 : Access to Information Directors are given full access to the management team and company secretary, all Board and Board committees’ minutes and all approval and information papers. Where a decision has to be made before a formal Board meeting is scheduled, a circulating Directors Resolution is done in accordance with the Company’s Articles of Association and all necessary information is provided. The Company supports the directors, either individually or as a group, if they require independent professional advice in furthering their duties to the Company. The company secretary attends Board meetings of the Company.

Page 3 Report on Corporate Governance (cont’d)

REMUNERATION MATTERS Principle 7 to 9 : Procedures for Developing Remuneration Policies Level and Mix of Remuneration Remuneration Committee The Remuneration Committee comprises : Chua Kim Yeow Sam Chong Keen Goh Chee Wee

(Chairman)

This committee reviews the remuneration packages needed to retain and motivate the Group’s employees. It also administers the Company’s employee share option scheme. No member of the committee shall be involved in any deliberation or decision making in respect of any compensation to be offered or granted to him/her. The review of specific remuneration packages includes fees, salaries, bonuses and incentives. Executive directors have service contracts which include terms for termination under appropriate notice. Non-executive directors are remunerated based on basic fees for serving on the Board and Board committees. Such fees are recommended for approval by shareholders as a lump sum payment at the Annual General Meeting. The Remuneration Committee has access to expert professional advice on remuneration matters whenever there is a need to obtain such advice. Details of the Company’s Employee Share Option Scheme is provided in the Report of the Directors and Note 29 to the financial statements. Breakdown of directors’ remuneration (in percentage terms) :

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

Fixed salary and benefits %

Performancerelated bonuses %

Director’s fees %

Total %

– 49 65 – – – – –

– 51 35 – – – – –

100 – – 100 100 100 100 100

100 100 100 100 100 100 100 100

Page 4 Report on Corporate Governance (cont’d)

Number of directors in remuneration bands : Executive directors 2004 2003 $500,000 and above $250,000 to $499,999 Below $250,000

Non-executive directors 2004 2003

2 – –

1 1 –

– – 6

– – 6

2

2

6

6

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

$250,000 to $499,999 Below $250,000

2004

2003

– 5

– 5

5

5

Immediate family members of directors : Number of employees who are immediate family members of the Chairman and directors in remuneration bands :

$250,000 to $499,999 Below $250,000

ACCOUNTABILITY AND AUDIT Principle 10 to 13 : Accountability Audit Committee Internal Controls Internal Audit The Audit Committee comprises : Tay Puan Siong Sam Chong Keen Chua Kim Yeow

(Chairman)

2004

2003

– 2

– 1

2

1

Page 5 Report on Corporate Governance (cont’d)

In the course of the financial year, the Committee held 4 meetings and performed, inter-alia, the following functions : 1. review the audit plan with the external auditor; 2. review with the external auditor their evaluation of internal / financial controls together with Management’s response thereon; 3. review the assistance given by the Company’s officers to the external and internal auditors; 4. review the scope and results of internal audit procedures; 5. review the financial statements of the Company and the Group before their submission to the Board, together with the external auditor’s report thereon; 6. nomination of external auditor; and 7. review of interested person transactions. Half year and full year results are reviewed by the Audit Committee prior to their submission to the Board as are interested person transactions. The Audit Committee has full access to and co-operation by the Company’s Management and the internal and external auditors and has full discretion to invite any director or executive officer to attend its meetings. The auditors have unrestricted access to the Audit Committee. Provision is made at least once annually for the Audit Committee to meet with the external and internal auditors without the presence of Management. The Audit Committee has reasonable resources to enable it to discharge its functions properly. The Audit Committee may examine whatever aspects it deems appropriate of the Group’s financial affairs, its internal and external audits and its exposure to risks of a regulatory or legal nature. It keeps under review the effectiveness of the Company’s system of accounting and internal financial controls, for which the directors are responsible. It also keeps under review the Company’s programme to monitor compliance with its legal, regulatory and contractual obligations. The Audit Committee overseas the internal audit function of the Group, which has been outsourced to an external professional firm. The primary line of reporting is to the Chairman of the Audit Committee. The Audit Committee reviews and approves the internal audit plan proposed by the internal auditors. The Group’s system of internal control is designed to manage the risk of failure to achieve business objectives. The review of the Group’s system of internal control is a continuing process. Based on the audit reports reviewed by the Audit Committee and management controls in place, the Audit Committee is satisfied that there are adequate internal control systems within the Group. The Board acknowledges its overall responsibility for ensuring that there is a sound system of internal control and is satisfied that there is no significant weakness in the system of internal control of the Group that may result in material loss to the Group. Having undertaken a review of non-audit services rendered by the external auditors during the financial year, the Audit Committee is satisfied with the independence and objectivity of the external auditors and recommends to the Board the reappointment of Messrs Ernst & Young as the external auditors of the Company at the forthcoming Annual General Meeting.

Page 6 Report on Corporate Governance (cont’d)

RISK MANAGEMENT POLICIES The Group has set up objectives to manage the risks that arise from the normal course of its operations. The significant risks are summarised below : (i) General business risk The Group’s major business is distribution of tyres and wheels. The Group is reliant on a few key suppliers for the supply of certain major brand of tyres. Some of these suppliers have granted exclusive distribution rights. Although we have a strong relationship with the principals (some exceeding 30 years), there is no assurance that the principals will continue to appoint us as their exclusive distribution agent in the future. Should any of the major principals decide to discontinue the distribution rights in the future, the Group could lose some of its market share and this could then have adverse financial impact on the Group. To mitigate this risk, the Group has been focusing in developing its own range of ‘in-house’ brands like Sumo and Firenza to become less reliant on its principals. As in any other business environment, the Group’s assets are exposed to various risk arising from normal operations and natural disasters. Especially, our inventory is highly flammable and susceptible to the risk of fire. It is the Group’s practice to annually assess these risks and/or exposure to ensure that the Group is protected from potential monetary loss. In addition to other preventive measures, the Group ensures that adequate insurance coverage is maintained at all times to mitigate such risk except where the cost of insuring the asset is considered prohibitive in relation to the risks identified. (ii) Product liability claims The Group is exposed to claims from its customers from products sold by the Group which contain defects or found to be unfit for their intended use. The Group may be required to make financial compensation to its customers in such circumstances. The Group’s principals are well established in the market place and their products are usually tested for safety before being marketed. The Group continues to spend considerable effort in ensuring the quality of its products and services. The Group provides its employees with relevant trainings, on a regular basis, to uphold the quality of services provided to its customers. The Group has no history of any significant claim made by its customers. (iii) Credit and inventory risk The Group faces normal business risks associated with collection of trade receivables and inventory obsolescence. The Group’s exposure to credit risks arises mainly from sales made to distributors and retailers in various geographical locations. The Group has tight credit control policies and procedures to evaluate the credit worthiness of customers before credit is granted and to prevent significant concentration of credit risk. The Group also has adequate policies and procedures to minimise the risk of inventory obsolescence. The risk of inventory obsolescence may arise from change in consumer preference and technology. It is the Group’s policy to maintain optimum inventory level at all times. Inventory level is monitored regularly and slow moving inventories are quickly identified for early disposal. The Group has also put in place a ‘supply chain management’ system to procure inventories in an effective manner to prevent excess inventories on hand. The financial risk management objectives and policies are discussed in Note 36 to the financial statements.

Page 7 Report on Corporate Governance (cont’d)

COMMUNICATION WITH SHAREHOLDERS Principle 14 to 15 : Communication with Shareholders Greater Shareholder Participation The Company believes that a high standard of disclosure is key to raise the level of corporate governance. Accordingly, the Company adopts a policy of giving full disclosure in all public announcements, press releases and annual report. Shareholders are kept informed of the developments in the Group’s businesses and operations through announcements via MASNET as well as through the annual report. Announcements are made as soon as possible to ensure timely dissemination of the information to shareholders and the public. The participation of shareholders is encouraged at the Company’s general meetings. The Board and Management are on hand at these meetings to address any question that shareholders may have concerning the Company. The external auditors are also present to assist the Board in answering the relevant shareholders’ queries. To facilitate voting by shareholders, the Company’s Articles allow shareholders to vote by proxies. Proxy forms can be sent to the Company by mail. At the Annual General Meetings, each distinct issue is voted via separate resolutions. INTERNAL CODE ON DEALINGS WITH SECURITIES Besides the Board of Directors, Audit Committee and Remuneration Committee, the Company has also put in place an internal code on dealings with securities (“Code”). This “Code” has been issued to directors and employees setting out the implications on insider trading. The Code prohibits the dealings in securities of the Company by directors and employees while in possession of price-sensitive information, and during the period beginning one month before the announcement of the annual and half yearly results, and ending on the date of announcement. It also discourages dealings on short-term considerations. Directors are required to report securities dealings to the company secretary who will assist to make the necessary announcements. INTERESTED PERSON TRANSACTIONS There were no significant interested person transactions conducted during the financial year.

Page 8 Report on Corporate Governance (cont’d)

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

Chairman President Executive Vice President Member Member Member Member Member

Audit Committee

Nominating Committee

Remuneration Committee

Member –

– –

Chairman –

– Chairman – Member – –

– Member – Chairman – Member

– – – Member Member –

Directors’ Attendance at Board & Committee Meetings held since May 2003 Board of Directors

Audit Committee

No. of No. of Meetings Meetings Held Attended

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

5 5 5 5 5 5 5 5

5 5 5 5 4 5 5 5

No. of No. of Meetings Meetings Held Attended

4 – – 4 – 4 – –

4 – – 4 – 4 – –

Nominating Committee

Remuneration Committee

No. of No. of Meetings Meetings Held Attended

No. of No. of Meetings Meetings Held Attended

– – – 1 – 1 – 1

– – – 1 – 1 – 1

5 – – – – 5 5 –

4 – – – – 5 5 –

Page 9

Report of the Directors

The directors have pleasure in presenting their report together with the audited financial statements of Stamford Tyres Corporation Limited (the “Company”) and its subsidiary companies (the “Group”) for the financial year ended 30 April 2004. DIRECTORS OF THE COMPANY The names of the directors of the Company in office at the date of this report are : Chua Kim Yeow Wee Kok Wah Dawn Wee Wai Ying Tay Puan Siong Dr Kwok Weng Fai Sam Chong Keen Goh Chee Wee Michael David Nesbitt

(Chairman) (President) (Executive Vice President)

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

Name of director

Direct Interest At beginning At end of of financial year financial year

$0.25 each Chua Kim Yeow Wee Kok Wah Dawn Wee Wai Ying Dr Kwok Weng Fai Michael David Nesbitt

– 9,050,090 4,668,054 1,008,016 –

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

Ordinary shares of $0.10 each $0.25 each – 9,107,353 3,887,567 2,778,810 –

100,000 16,168,054 20,550,090 – 5,000,000

$0.10 each 230,000 57,051,319 62,271,105 – –

Warrant 2007 Wee Kok Wah Dawn Wee Wai Ying Dr Kwok Weng Fai

8,325,045 3,254,027 504,008

18,334,367 – 1,250

3,254,027 8,325,045 –

– 18,334,367 –

There was no change in any of the abovementioned interests between the end of the financial year and 21 May 2004. By virtue of Section 7 of the Act, Wee Kok Wah and Dawn Wee Wai Ying are deemed to have an interest in the ordinary shares of all the subsidiary companies at the beginning and at the end of the financial year. No other director who held office at the end of the financial year had an interest in shares or debentures of the Company’s subsidiary companies.

Page 10 Report of the Directors (cont’d)

Except as disclosed in the financial statements, since the end of the previous financial year, no director has received or has become entitled to receive benefits under contracts required to be disclosed by Section 201(8) of the Act. Except as disclosed above, neither at the end of the financial year, nor at any time during the financial year, did there subsist any arrangements, to which the Company is a party, whereby directors might acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate. SHARE OPTIONS AND WARRANTS TO SUBSCRIBE FOR ORDINARY SHARES At the Extraordinary General Meeting of the Company held on 19 September 2003, the shareholders approved the sub-division of every two existing ordinary shares of par value $0.25 each in the issued and paid up capital of the Company into five new ordinary shares of par value $0.10 each. Correspondingly, -

The exercise price of the share options was reduced from $0.315 to $0.126 for options with an original exercise price of $0.315 and from $0.325 to $0.130 for options with an original exercise price of $0.325; and

-

The number of Warrant 2007 outstanding at the point of sub-division was increased from 14,994,135 to 37,485,337 and the exercise price was reduced from $0.25 to $0.10 per share.

(i) Share options On 22 June 2001, the shareholders approved the STC Share Option Scheme 2001 (the “Scheme”). The Scheme is open to full-time confirmed employees, executive and non-executive directors, but not controlling shareholders or their associates of the Company, and entitles the option holders to exercise their options and subscribe for new ordinary shares in the Company either at the market price or at a price set at a discount not exceeding 20% of the market price. Market price is equal to the average last dealt price of the share for 3 consecutive trading days immediately preceding the offer date. Options granted with the exercise price set at market price may be exercised after the first anniversary of the offer date. Options granted with the exercise price set at a discount to market price may only be exercised after the second anniversary of the offer date. Executive options granted under the Scheme are exercisable for a period of 10 years whereas non-executive options are exercisable for a period of 5 years from the offer date. The total number of shares that may be issued shall not exceed 15% of the issued share capital of the Company. The Scheme is administered by members of the Company’s Remuneration Committee. During the financial year : (i) The Company issued 2,074,000 ordinary shares of $0.25 each upon the exercise of 2,074,000 share options at exercise prices between $0.315 and $0.325 per share, prior to the sub-division; and (ii) The Company issued 267,500 ordinary shares of $0.10 each upon the exercise of 267,500 share options at exercise prices between $0.126 and $0.130 per share, after the sub-division. As at 30 April 2004, the holders of the options are entitled to subscribe for 25,000 new ordinary shares of $0.10 each in the Company at an exercise price of $0.126 per share at any time up to 23 June 2011.

Page 11 Report of the Directors (cont’d)

None of the directors and controlling shareholders of the Company has been granted options under the Scheme and none of the employees who participated in the Scheme has received 5% or more of the total number of options available under the Scheme. (ii) Warrant 2007 Warrant 2007 were issued pursuant to an Abridged Prospectus dated 28 January 2002. During the financial year : (i) The Company issued 13,924,865 ordinary shares of $0.25 each upon the exercise of 13,924,865 Warrant 2007 at the exercise price of $0.25 per share, prior to the sub-division; and (ii) The Company issued 10,195,070 ordinary shares of $0.10 each upon the exercise of 10,195,070 Warrant 2007 at the exercise price of $0.10 per share, after the sub-division. As at 30 April 2004, the holders of the warrants are entitled to subscribe for 27,290,267 new ordinary shares of $0.10 in the Company at an exercise price of $0.10 per share at any time up to 21 February 2007. The above options and warrant do not allow the holders to participate in any share issue of any other company in the Group. MATERIAL CONTRACTS OF THE COMPANY AND ITS SUBSIDIARY COMPANIES There were no material contracts (or loans) entered into by the Company and/or its subsidiary companies with the directors or chief executive officer or substantial shareholders of the Company which were still subsisting at the end of the financial year under review, or if not then subsisting, entered into since the end of the previous financial year. AUDIT COMMITTEE The Audit Committee performed the functions specified in the Act. The functions performed are detailed in the Report on Corporate Governance.

Page 12 Report of the Directors (cont’d)

AUDITORS The auditors, Ernst & Young, Certified Public Accountants, have expressed their willingness to accept re-appointment.

On behalf of the Board,

Wee Kok Wah Director

Dawn Wee Wai Ying Director

Singapore 16 July 2004

Page 13

Statement by Directors Pursuant to Section 201 (15) of the Singapore Companies Act, Cap. 50.

We, Wee Kok Wah and Dawn Wee Wai Ying, being two of the directors of Stamford Tyres Corporation Limited, do hereby state that, in the opinion of the directors : (a) the accompanying balance sheets, consolidated profit and loss account, consolidated statement of changes in equity and consolidated statement of cash flow together with notes thereto are drawn up so as to give a true and fair view of the state of affairs of Stamford Tyres Corporation Limited (the “Company”) and its subsidiary companies (the “Group”) as at 30 April 2004, and of the results of the business, changes in equity and cash flows of the Group for the year then ended; and (b) at the date of this statement there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.

On behalf of the Board,

Wee Kok Wah Director

Dawn Wee Wai Ying Director

Singapore 16 July 2004

Page 14

Auditors’ Report to the Members of Stamford Tyres Corporation Limited

We have audited the accompanying financial statements of Stamford Tyres Corporation Limited (the “Company”) and its subsidiary companies (the “Group”) set out on pages 15 to 54 for the year ended 30 April 2004. These financial statements are the responsibility of the Company’s directors. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the directors, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, (a) the consolidated financial statements of the Group and the balance sheet of the Company are properly drawn up in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 30 April 2004, and the results, changes in equity and cash flows of the Group for the financial year ended on that date; and (b) the accounting and other records required by the Act to be kept by the Company and by those subsidiary companies incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

ERNST & YOUNG Certified Public Accountants

Singapore 16 July 2004

Page 15

Consolidated Profit and Loss Account for the year ended 30 April 2004 (In Singapore Dollars)

Note

2004 $’000

2003 $’000 Restated

3 4

189,779 226

163,443 169

Total revenue

190,005

163,612

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

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

123,103 11,916 5,095 3,651 2,993 1,230 4,099

Total expenditure

(173,195)

(152,087)

5 6 7 13

16,810 – (2,453) (9)

11,525 594 (2,464) –

8

14,348 (2,788)

9,655 (1,459)

Profit after taxation Minority interests

11,560 (16)

8,196 (14)

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

11,544

8,182

6.23 5.19

5.43 4.53

Revenue Other revenue

Profit from operating activities Exceptional item Finance costs Share of losses of associated companies Profit before taxation Taxation

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

9

The accounting policies and explanatory notes on pages 19 to 54 form an integral part of the financial statements.

Page 16

Balance Sheets as at 30 April 2004 (In Singapore Dollars)

Group

Non-current assets Property, plant and equipment Subsidiary companies Joint venture company Associated companies Prepayment Intangible assets Other non-current asset Deferred tax asset Current assets Inventories Trade receivables Other receivables Marketable securities Cash and bank balances Less : Current liabilities Trade payables Trust receipts and bills payable (secured) Other payables Short-term loans (secured) Hire purchase liabilities Provision for taxation

Note

2004 $’000

2003 $’000 Restated

10 11 12 13 14 15 16 26

45,735 – – 2,306 – 26 53 440

40,357 – – 246 225 312 54 190

– 35,252 1,571 72 – – – –

– 32,377 – 60 – – – –

48,560

41,384

36,895

32,437

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

40,432 48,527 2,766 14 12,263

– – 4,154 – 541

– – 1,495 – 282

133,557

104,002

4,695

1,777

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

18,913 26,305 7,287 3,773 318 3,178

– – 386 – – 66

– – 281 – – 138

85,326

59,774

452

419

48,231

44,228

4,243

1,358

546 32,100 616

423 34,877 868

– – –

– – –

(33,262)

(36,168)

–

–

63,529

49,444

41,138

33,795

20,341 43,016

15,295 33,987

20,341 20,797

15,295 18,500

63,357 172

49,282 162

41,138 –

33,795 –

63,529

49,444

41,138

33,795

17 18 19 20

21 22 23 24

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

Equity Share capital Reserves Minority interests

Company 2004 2003 $’000 $’000

24 25 26

27

The accounting policies and explanatory notes on pages 19 to 54 form an integral part of the financial statements.

Page 17

Consolidated Statement of Changes in Equity for the year ended 30 April 2004 (In Singapore Dollars)

Share capital $’000

Share premium $’000

Capital reserve $’000

Revenue reserve $’000

Foreign currency translation reserve $’000

15,011

9,830

782

16,545

558

42,726

284

4

–

–

–

288

– –

23 –

(23) –

– (1,172)

– –

– (1,172)

–

–

–

8,182

–

8,182

–

–

–

–

(742)

(742)

Balance at 30 April 2003 Issue of ordinary shares on exercise of share options and Warrant 2007 (Note 27) Transfer from capital reserve as a result of exercise of Warrant 2007 (Note 30) Dividend (Note 31) Profit for the financial year attributable to the shareholders of the Company Translation adjustments arising on consolidation

15,295

9,857

759

23,555

(184)

49,282

5,046

148

–

–

–

5,194

– –

384 –

(384) –

– (2,107)

– –

– (2,107)

–

–

–

11,544

–

11,544

–

–

–

–

(556)

(556)

Balance at 30 April 2004

20,341

10,389

375

32,992

(740)

63,357

Group Balance at 1 May 2002 Issue of ordinary shares on exercise of share options and Warrant 2007 (Note 27) Transfer from capital reserve as a result of exercise of Warrant 2007 (Note 30) Dividend Profit for the financial year attributable to the shareholders of the Company Translation adjustments arising on consolidation

Total $’000

The details of the movement in reserves of the Company are set out in Note 28 to the financial statements.

The accounting policies and explanatory notes on pages 19 to 54 form an integral part of the financial statements.

Page 18

Consolidated Statement of Cash Flow for the year ended 30 April 2004 (In Singapore Dollars)

2004 $’000

2003 $’000 Restated

16,810

11,525

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

2,922 62 197 (68) 71 – 11 (46) (73)

Operating profit before reinvestment in working capital (Increase)/decrease in inventories Increase in receivables Increase in payables Increase in trust receipts and bills payable

20,205 (12,225) (8,984) 3,538 20,050

14,601 3,455 (5,618) 5,302 724

Cash generated from operations Interest received Interest paid Income tax paid

22,584 101 (1,918) (2,239)

18,464 46 (2,545) (2,270)

Net cash provided by operating activities

18,528

13,695

(8,969) 15 414 (2) – (2,046) –

(2,868) – 353 (71) (13) – (18)

(10,588)

(2,617)

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

(384) (2,860) 1,556 288 (1,172)

(138)

(2,572)

7,802

8,506

Cash and cash equivalents at beginning of financial year (Note 32) Exchange rate adjustment to cash and cash equivalents at beginning of financial year

11,080 (183)

2,501 73

Cash and cash equivalents at end of financial year (Note 32)

18,699

11,080

Cash flows from operating activities : Profit from operating activities Adjustments for : Depreciation of property, plant and equipment Property, plant and equipment written off Impairment (reversal)/loss on property, plant and equipment Gain on disposal of property, plant and equipment Amortisation of intangible assets Gain on disposal of marketable securities Provision for diminution in value of marketable securities Interest income Foreign currency translation adjustment

Cash flows from investing activities : Additions to property, plant and equipment Proceeds from disposal of marketable securities Proceeds from disposal of property, plant and equipment Additions to intangible assets Net cash outflow on deregistration of a subsidiary company (Note 32) Investment in associated companies Additions to club membership Net cash used in investing activities Cash flows from financing activities : Repayment of hire purchase liabilities Repayment of long-term loans Proceeds from long-term loans Proceeds from issue of shares Dividend paid Net cash used in financing activities Net increase in cash and cash equivalents

The accounting policies and explanatory notes on pages 19 to 54 form an integral part of the financial statements.

Page 19

Notes to the Financial Statements for the year ended 30 April 2004 (In Singapore Dollars)

1. CORPORATION INFORMATION Stamford Tyres Corporation Limited is a limited liability company incorporated in Singapore. Its registered office is at 19 Lok Yang Way, Jurong, Singapore 628635. The principal activity of the Company is that of an investment holding company and the principal activities of the subsidiary companies consist of wholesale and retail of tyres and wheels, tyre retreading, equipment trading and the servicing of motor vehicles. The Group operates in 9 countries and had 443 employees (2003 : 361) as at 30 April 2004. The Company had no employee as at 30 April 2004 and 2003. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of preparation The financial statements have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”) as required by the Singapore Companies Act, Cap. 50 (the “Act”). In previous years, the financial statements were prepared in accordance with Singapore Statements of Accounting Standard (“SAS”). The transition from SAS to FRS did not result in any significant change in accounting policies. The accounting policies have been consistently applied by the Company and Group and are consistent with those used in the previous year, except for the change in the method of accounting for the Group’s investment in a joint venture company as detailed in Note 2(h). The financial statements have been prepared on a historical cost basis and are presented in Singapore Dollars ($). (b) Basis of consolidation The financial statements of the Group incorporate the audited financial statements of the Company, all its subsidiary companies and the joint venture company to the end of the financial year except for those subsidiary companies that are not required to be audited under the laws of their country of incorporation. In such cases, the unaudited financial statements are used for the purposes of consolidation into the financial statements of the Group. The results of subsidiary companies acquired or disposed of during the financial year are included in or excluded from the respective dates of acquisition or disposal as applicable. Inter-company balances and transactions and the resulting unrealised profits are eliminated in full on consolidation. Assets, liabilities and results of overseas subsidiary companies are translated into Singapore dollars on the basis outlined in Note 2(u). (c) Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured :

Page 20 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

2. Summary of Significant Accounting Policies (cont’d) (c) Revenue recognition (cont’d) -

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

-

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

-

Advertising and promotional rebates from suppliers are recognised as follows : • those that are determined based on the amount of purchases made during the financial year are credited against marketing and promotion expenses in the profit and loss account; and • those that are reimbursed at the discretion of the suppliers are credited against marketing and promotion expenses in the profit and loss account when these are received.

-

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

-

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

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

-

Leasehold improvements Motor vehicles Plant and equipment Computer hardware and software

-

over their lease period, ranging from 1.6% to 5.0% per annum 10% per annum 20% per annum 5% to 10% per annum 331/3% per annum

No depreciation is provided on freehold land. No depreciation is provided for construction-in-progress until it is completed and put into use. A full year’s depreciation is charged in the financial year of acquisition. No depreciation is charged in the financial year of disposal. Fully depreciated assets are retained in the financial statements until they are no longer in use. The useful life and depreciation method are reviewed annually to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits from items of property, plant and equipment. During the financial year, a subsidiary company changed the period of depreciation for computer hardware and software from 10 years to 3 years to reflect more accurately the impact of faster technological changes in these items. The change has resulted in an additional depreciation charge of $507,000 for the financial year.

Page 21 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

2. Summary of Significant Accounting Policies (cont’d) (e) Borrowing costs Borrowing costs are recognised as expense in the financial year in which they are incurred. The interest prepaid on term loan is charged to the profit and loss account over the term of the loan. (f) Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and any impairment in value. All items of property, plant and equipment are initially recorded at cost. The initial cost of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes and any directly attributable costs of bringing the asset to its working condition and location for its intended use, any trade discounts and rebates are deducted in arriving at the purchase price. Expenditure incurred after the property, plant and equipment have been put into operation, such as repairs and maintenance and overhaul costs, is normally charged to the profit and loss account in the period in which the costs are incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of an item of property, plant and equipment beyond its originally assessed standard of performance, the expenditure is capitalised as an additional cost of property, plant and equipment. When assets are sold or retired, their cost and accumulated depreciation are removed from the financial statements and any gain or loss resulting from their disposal is included in the profit and loss account. (g) Subsidiary companies Investments in subsidiary companies are stated at cost in the financial statements of the Company. Provision is made for any diminution in value. Details of the subsidiary companies are set out in Note 38. (h) Joint venture company Entities in which the Group holds an interest on a long-term basis and are jointly controlled by the Group with one or more parties under a contractual agreement are treated as joint ventures. The Group’s share of the results of the joint venture company is included in the consolidated balance sheet and profit and loss account using the proportionate consolidation method, whereby the Group’s share of the joint venture company’s assets, liabilities, income and expenses are combined on a line by line basis with similar items in the consolidated financial statements. In the previous financial years, the Group accounted for its investment in the joint venture company using the equity method. The Directors are of the opinion that accounting for the Group’s investment using the proportionate consolidation method reflects more appropriately the substance and economic reality of the joint venture arrangement. The change has not resulted in any impact to the profit for the financial year and equity of the Group as at 30 April 2004. The comparative figures of the Group have been restated accordingly to provide a proper and meaningful comparison with current financial year’s presentation. The financial effects of the above change is detailed in Note 39.

Page 22 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

2. Summary of Significant Accounting Policies (cont’d) (h) Joint venture company (cont’d) Investment in joint venture company is stated in the Company’s financial statements at cost. Provision is made for any diminution in value. Details of the joint venture company are set out in Note 38. (i) Associated companies An associated company is defined as a company, not being a subsidiary company, in which the Group has a long-term interest of not less than 20% of the equity and in whose financial and operating policy decisions the Group exercises significant influence. The Group’s share of the results of associated companies is included in the consolidated profit and loss account. The Group’s share of the post-acquisition reserves of associated companies is included in the investments in the consolidated balance sheet. When the Group’s share of post-acquisition losses exceeds the carrying amount of the respective investment, the investment is reported at nil value and recognition of losses is discontinued except to the extent of the Group’s commitment. Where the audited financial statements are not co-terminous with those of the Group, the share of profits is arrived at from the last audited financial statements available and unaudited management financial statements to the end of the accounting period. Investments in associated companies are stated in the Company’s financial statements at cost. Provision is made for any impairment in value. Details of the associated companies are set out in Note 38. (j) Intangible assets (i) Computer software Software are stated at cost less accumulated amortisation and impairment, if any. The cost is amortised on a straight line basis over 3 years from the date the software is made available for use. (ii) Goodwill Goodwill represents the excess of the fair value of the consideration given over the fair value of the identifiable net assets of subsidiary, joint venture and associated companies when acquired. Positive goodwill is amortised through the consolidated profit and loss account on a straight line basis over its useful economic life up to a maximum of 20 years, determined on individual basis. Goodwill which is assessed as having no continuing economic value is written off to the consolidated profit and loss account. (iii) Others Preliminary, pre-operating expenses and research and development costs are expensed as incurred, except for development costs which are expected to generate future economic benefits. Such development expenses are capitalised and amortised through the profit and loss account on a straight line basis over a period of 5 years upon commencement of operations.

Page 23 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

2. Summary of Significant Accounting Policies (cont’d) (k) Other non-current asset Investment in club memberships are stated at cost. Provision is made for any diminution in value. (l) Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined on a weighted average cost method and includes all costs in bringing the inventories to their present location and condition. In the case of retread products, cost includes all direct expenditure and production overheads based on normal level of activity. Net realisable value is the price at which the inventories can be realised in the normal course of business after allowing for the costs of realisation and, where appropriate, the cost of conversion from the existing state to a finished condition. Tyres rented to customers (“inventories held for rental”) are stated at cost less an accumulated charge for their consumption. The consumption charge is calculated to write off the cost of the tyres based on the actual running hours of usage by the customer in relation to the estimated life of the rental tyre of between 2,000 and 5,000 running hours depending on the model of tyre. Provision is made where necessary for obsolete, slow moving and defective inventories. (m) Trade and other receivables Trade and other receivables are recognised and carried at original invoiced amount less an allowance for doubtful receivables. An allowance for doubtful receivables is made when collection of the full amount is no longer probable. Bad debts are written off to the profit and loss account as incurred. Receivables from related parties are recognised and carried at cost less provision for doubtful receivables. (n) Marketable securities Quoted short-term investments are stated at the lower of cost and market value, which are determined on an individual basis. Any decrease in carrying amount is included in the profit and loss account. (o) Impairment of assets Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognised in the profit and loss account. Reversal of impairment losses recognised in previous financial years is recorded when there is an indication that the impairment losses recognised for the asset no longer exist or have decreased. The reversal is recorded in the profit and loss account. However, the increased carrying amount of an asset due to a reversal of an impairment loss is recognised to the extent it does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for that asset in previous financial years. (p) Trade and other payables Trade and other payables are carried at cost, which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the Group.

Page 24 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

2. Summary of Significant Accounting Policies (cont’d) (q) Loans and borrowings All loans and borrowings are initially recognised at cost, being the fair value of the consideration received and including acquisition charges associated with the borrowing/loan. (r) Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) where as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. (s) Leased assets (i) Hire purchase liabilities Where assets are financed by hire purchase agreements that give rights approximating to ownership, the assets are capitalised under property, plant and equipment as if they had been purchased outright at the values equivalent to the present values of the total rental payable during the periods of the hire and the corresponding hire purchase commitments are included under liabilities. The excess of the hire purchase payments over the recorded lease obligations is treated as finance charges, which are amortised over each hire term to give a constant rate of charge on the remaining balance of the obligation. Depreciation on the relevant assets is charged to profit and loss account on the basis outlined in Note 2(d). (ii) Operating lease Leases where substantially all the risks and benefits of ownership of the lease effectively remains with the lessor, are classified as operating leases. Rental expenses pursuant to operating leases are charged to the profit and loss account. (t) Income taxes Deferred income tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets and liabilities are measured using the tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled based on tax rates enacted or substantively enacted at the balance sheet date. Deferred tax liabilities are recognised for all taxable temporary differences associated with investments in subsidiary, associated and joint venture companies, except where the timing of the reversal of the temporary difference can be controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax losses and unabsorbed capital allowances, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.

Page 25 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

2. Summary of Significant Accounting Policies (cont’d) (t) Income taxes (cont’d) At each balance sheet date, the Group re-assesses unrecognised deferred tax assets and the carrying amount of deferred tax assets. The Group recognises a previously unrecognised deferred tax asset to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. The Group conversely reduces the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of the deferred tax asset to be utilised. Deferred tax is charged or credited directly to equity if the tax relates to items that are credited or charged, in the same or a different period, directly to equity. (u) Foreign currencies Foreign currency transactions Transactions arising in foreign currencies during the financial year are translated and recorded into the measurement currency at rates closely approximating those ruling on the transaction dates. Foreign currency monetary assets and liabilities at the balance sheet date are translated into the measurement currency at the exchange rates ruling at that date. All exchange differences arising from such translation are included in the profit and loss account. Foreign entities For inclusion in the consolidated financial statements, all assets and liabilities of foreign subsidiary and joint venture companies are translated into Singapore dollars at exchange rates ruling at the balance sheet date and the results of foreign subsidiary companies, associated and joint venture companies are translated into Singapore dollars at the weighted average exchange rates for the financial year. Exchange differences due to such currency translations are included in foreign currency translation reserve. On disposal of a foreign subsidiary and joint venture company, such foreign currency translation reserves are recognised in the profit and loss account as a component of the gain or loss on disposal. Exchange differences arising from long-term inter-company balances which are effectively part of net investments are included in the foreign currency translation reserve. Forward contracts Gains and losses arising from forward contracts on foreign currencies are recognised in the profit and loss account on the maturity dates of the respective contracts. (v) Cash and cash equivalents Cash and cash equivalents consist of cash at bank and in hand less bank overdrafts and revolving credit facilities. (w) Employee benefits (i) Executives’ Share Option Scheme The Company has in place the STC Share Option Scheme 2001 (the “Scheme”) for the granting of share options to eligible employees of the Group to subscribe for ordinary shares in the Company. When the options are exercised, the nominal value of the shares subscribed for is credited to the share capital account and the balance of the proceeds, net of any transaction costs, is credited to the share premium account. Details of the Scheme are disclosed in Note 29.

Page 26 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

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

Wholesale and distribution Retail and fleet Services

2004 $’000

2003 $’000

152,005 37,692 82

132,648 30,711 84

189,779

163,443

101 90 35

46 94 29

226

169

4. OTHER REVENUE Interest income from bank deposits Sundry income Rental income

Page 27 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

5. PROFIT FROM OPERATING ACTIVITIES Group

Profit from operating activities is stated after charging/(crediting) : Directors’ remuneration : - directors of the Company - other directors of subsidiary companies Contribution to CPF and other similar funds Auditors’ remuneration : - auditors of the Company : • current year’s audit fees • under/(over)provision of audit fees in prior financial years • non-audit fees - other auditors : • audit fees • non-audit fees Gain on disposal of marketable securities Impairment (reversal)/loss on property, plant and equipment Foreign exchange (gain)/loss

2004 $’000

2003 $’000

2,429 185 642

1,332 204 631

123 5 21

128 (1) 58

98 44 (5) (166) (223)

127 25 – 197 4

–

3

–

591

–

594

1,105 913 435

1,183 981 300

2,453

2,464

6. EXCEPTIONAL ITEM Gain on deregistration of a subsidiary company Release of foreign currency translation reserve on deregistration of a subsidiary company

7. FINANCE COSTS Interest expense on : - bank overdrafts, trust receipts and bills payable and hire purchase liabilities - long-term loans Amortisation of interest prepaid on a term loan (Note 14)

Page 28 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

8. TAXATION Group

Provision for taxation in respect of profit for the financial year : Current taxation Deferred taxation (Note 26) Overprovision in respect of previous financial years : Current taxation Deferred taxation (Note 26)

2004 $’000

2003 $’000

4,283 (361)

2,031 2

3,922

2,033

(983) (151)

(244) (330)

2,788

1,459

The income tax expense on the results of the Group differ from the amount of tax determined by applying the Singapore statutory rate of income tax of 20% (2003 : 22%) to the profit before taxation due to the following factors : Profit before taxation

14,348

9,655

Taxation at statutory tax rate of 20% (2003 : 22%) Adjustments : - expenses not deductible for income tax purposes - income not subject to tax - higher/(lower) effective tax rates in other countries - deferred tax assets not recognised - utilisation of previously unrecognised tax losses - effect of change in statutory tax rate - overprovision in respect of previous financial years - others

2,870

2,124

608 (38) 325 158 (37) (84) (1,050) 36

292 (137) (178) 9 (61) (248) (326) (16)

Taxation

2,788

1,459

The statutory income tax rate applicable to the Company and other Singapore subsidiary companies was reduced to 20% for Year of Assessment 2005 from 22% for Year of Assessment 2004. As at 30 April 2004, the Group has unutilised tax losses of approximately $907,000 (2003 : $946,000) which may, subject to the agreement with the relevant tax authorities, be carried forward and utilised to set-off against future taxable profits. The potential tax benefit of $181,000 (2003 : $208,000) arising from the unutilised tax losses has not been recognised in the financial statements due to the uncertainty of its recoverability.

Page 29 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

9. EARNINGS PER SHARE The calculation of earnings per share (“EPS”) is based on the following figures : Group 2004 $’000

2003 $’000

11,544

8,182

’000

’000

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

185,168 37,316

150,708 29,865

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

222,484

180,573

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

Basic EPS is calculated on the Group’s profit for the financial year attributable to the shareholders of the Company divided by the weighted average number of ordinary shares in issue during the financial year. Diluted EPS is calculated on the same basis as Basic EPS except that the weighted average number of ordinary shares in issue during the financial year have been adjusted for the effects of all dilutive potential ordinary shares, being the outstanding share options and Warrant 2007 (Notes 29 and 30). The number of outstanding share options and Warrant 2007 included in the calculation of diluted EPS has been determined based on the average number of days they were outstanding during the financial year. To provide proper comparison, the basic and diluted EPS for the financial year ended 30 April 2003 were adjusted on the assumption that the share sub-division (Note 27) had occurred at the beginning of that financial year.

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

10. PROPERTY, PLANT AND EQUIPMENT

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

Freehold land $’000

Leasehold land and buildings $’000

Plant and equipment $’000

Construction -in-progress $’000

Total $’000

2,630

33,333

3,398

4,028

9,917

164

53,470

6 – – –

(332) 1,665 – –

(17) 733 (395) –

6 205 – –

(64) 1,047 (648) (267)

(12) 5,747 – –

(413) 9,397 (1,043) (267)

2,636

34,666

3,719

4,239

9,985

5,899

61,144

Motor Leasehold vehicles improvements $’000 $’000

Accumulated depreciation and impairment : At beginning of financial year : - Accumulated depreciation - Accumulated impairment loss Foreign currency translation adjustment Charge for the financial year Reversal of impairment loss Disposals Written off

– –

4,138 274

2,391 –

1,686 –

4,624 –

– –

12,839 274

– – – – –

(15) 968 (166) – –

(10) 486 – (322) –

(2) 376 – – –

(45) 1,531 – (347) (158)

– – – – –

(72) 3,361 (166) (669) (158)

At end of financial year

–

5,199

2,545

2,060

5,605

– 15,409

Charge for last financial year

–

755

468

403

1,296

–

Net book value : At end of financial year

2,636

29,467

1,174

2,179

4,380

5,899 45,735

At beginning of financial year

2,630

28,921

1,007

2,342

5,293

164 40,357

2,922

The Group’s freehold land, certain leasehold land and buildings, leasehold improvements and constructionin-progress with a total net book value of $36,668,000 as at 30 April 2004 (2003 : $30,288,000) are subject to legal mortgages referred to in Notes 23 and 25. The Group has motor vehicles and plant and equipment under hire purchase agreements with a total net book value of $1,541,000 as at 30 April 2004 (2003 : $1,496,000).

Page 31 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

11. SUBSIDIARY COMPANIES Company 2004 2003 $’000 $’000 Unquoted equity shares, at cost (Note 38) Less : Provision for diminution in value

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

21,296 (2,991)

21,297 (2,991)

18,305

18,306

13,767 4,125 (945)

13,767 3,471 (3,167)

16,947

14,071

35,252

32,377

The loan to a subsidiary company is unsecured, bears interest at 2.89% (2003 : 2.89%) per annum, with no fixed term of repayment and is not expected to be repaid within the next 12 months. This loan is subordinate to certain banking facilities obtained by the subsidiary company. The non-trade amounts due from and to subsidiary companies are unsecured, have no fixed terms of repayment and not expected to be repaid within the next 12 months, and interest free except for an amount of $379,000 (2003 : nil) due from a subsidiary company which bears interest at 7% (2003 : nil) per annum. Details of the subsidiary companies are set out in Note 38. 12. JOINT VENTURE COMPANY Unquoted equity shares, at cost

1,571

–

During the financial year, a subsidiary company transferred its investment in the joint venture to the Company. Details of the joint venture company are set out in Note 38. The Group’s share of the assets and liabilities of the joint venture company comprise : Group

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

2004 $’000

2003 $’000

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

4,302 8,431 (3,343) –

10,665

9,390

Page 32 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

12. Joint Venture Company (cont’d) The Group’s share of the profits of the joint venture company comprise : Group 2004 $’000

2003 $’000

15,810 (13,570)

17,528 (15,036)

Profit before taxation Taxation

2,240 (353)

2,492 (317)

Profit after taxation

1,887

2,175

Revenue Expenditure

13. ASSOCIATED COMPANIES Group 2004 2003 $’000 $’000

Company 2004 2003 $’000 $’000

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

2,266 114 (74)

220 123 (97)

220 – –

220 – –

Less : Provision for diminution in value

2,306 –

246 –

220 (148)

220 (160)

2,306

246

72

60

Details of the associated companies are set out in Note 38. 14. PREPAYMENT Group

Interest prepaid on a term loan Less : Current portion (Note 19) Non-current portion

2004 $’000

2003 $’000

90 (90)

525 (300)

–

225

The interest prepaid on a term loan is charged to the profit and loss account over the tenure of the loan of 30 months commencing February 2002.

Page 33 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

15. INTANGIBLE ASSETS

Goodwill $’000

Preliminary and preoperating expenses $’000

Deferred expenditure $’000

Computer software $’000

Total $’000

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

61 – –

425 (17) –

342 – –

596 (3) 2

1,424 (20) 2

At end of financial year

61

408

342

595

1,406

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

61 – –

425 (17) –

342 – –

284 (1) 286

1,112 (18) 286

At end of financial year

61

408

342

569

1,380

Amortisation for last financial year

–

–

–

71

71

Net book value : At end of financial year

–

–

–

26

26

At beginning of financial year

–

–

–

312

312

16. OTHER NON-CURRENT ASSET Group

Investment in transferable club memberships, at cost Foreign currency translation adjustment

2004 $’000

2003 $’000

54 (1)

54 –

53

54

Page 34 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

17. INVENTORIES Group

Inventories for resale : - at cost - at net realisable value Inventories held for rental, at cost less accumulated amount charged to the profit and loss account Raw materials, at cost Inventories for resale are stated after deducting an allowance for obsolescence of

2004 $’000

2003 $’000

45,875 4,262

34,811 3,414

1,977 543

1,820 387

52,657

40,432

4,913

3,412

61,147 (4,478)

52,376 (3,849)

56,669

48,527

7

176

18. TRADE RECEIVABLES External parties Less : Allowance for doubtful trade receivables

Bad external trade debts written off directly to the profit and loss account 19. OTHER RECEIVABLES

Amounts due from : - subsidiary companies - joint venture company - shareholders of subsidiary companies - shareholders of associated companies Sundry receivables Deposits Interest prepaid on a term loan (Note 14) Taxes recoverable Staff loans Prepayments Less : Allowance for doubtful receivables amounts due from shareholders of associated companies

2004 $’000

Group 2003 $’000

2004 $’000

Company 2003 $’000

– 28 – 230 850 1,108 90 909 154 259

– 28 – 230 872 978 300 205 143 224

2,582 274 1,298 230 – – – – – –

144 – 1,273 230 10 52 – – – –

3,628

2,980

4,384

1,709

(230)

(214)

(230)

(214)

3,398

2,766

4,154

1,495

Page 35 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

19. Other Receivables (cont’d) The non-trade amounts due from the subsidiary and joint venture companies, and shareholders of subsidiary and associated companies are unsecured, interest-free and have no fixed terms of repayment. Staff loans are unsecured, bear interest at rates ranging from 4.7% to 8.7% (2003 : 4% to 8%) per annum and repayable in fixed monthly instalments not exceeding 5 years from the date of grant of the loan. 20. MARKETABLE SECURITIES Group

Quoted equity shares, at cost Less : Provision for diminution in value of investment

Market value at end of financial year

2004 $’000

2003 $’000

5 –

56 (42)

5

14

5

14

21. TRUST RECEIPTS AND BILLS PAYABLE (SECURED) Trust receipts and bills payable are secured by corporate guarantees from the Company, a negative pledge over the assets excluding its leasehold buildings of Stamford Tyres International Pte Ltd. These facilities are subject to compliance with certain financial covenants, including a minimum amount of tangible net worth and the ratio of total liabilities to tangible net worth. 22. OTHER PAYABLES

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

2004 $’000

Group 2003 $’000

Company 2004 2003 $’000 $’000

89 3,269 3,272 3,485

89 1,953 2,635 2,610

89 227 – 70

89 151 – 41

531

–

–

–

10,646

7,287

386

281

The non-trade amounts due to the associated companies are unsecured, interest-free and have no fixed terms of repayment.

Page 36 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

23. SHORT-TERM LOANS (SECURED) Group

Short-term loans (Note 32) Long-term loans - current portion (Note 25)

2004 $’000

2003 $’000

2,129 2,486

1,183 2,590

4,615

3,773

The short-term loans are secured by negative pledge over the assets of Stamford Tires Distributor Co., Ltd excluding its hire purchase assets and corporate guarantees from the Company. The short-term loans bear interest at rates ranging from 2.75% to 3.25% (2003 : 3.25% to 9.9%) per annum. 24. HIRE PURCHASE LIABILITIES The future minimum payments under hire purchase agreements to acquire motor vehicles and plant and equipment are as follows :

Minimum payments 2004 $’000

Group Present value of Minimum payments payments 2004 2003 $’000 $’000

Present value of payments 2003 $’000

Within one year

319

279

356

318

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

560 69

488 58

445 36

392 31

629

546

481

423

Total minimum hire purchase payments Less : Amounts representing finance charges

948 (123)

825 –

837 (96)

741 –

Present value of minimum hire purchase payments

825

825

741

741

Page 37 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

25. LONG-TERM LOANS (SECURED) Group 2004 $’000

2003 $’000

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

27,616 2,999 1,910 704 215 405 – –

31,008

33,849

741 1,416 1,421

699 1,457 1,462

3,578

3,618

Less : Current portion (Note 23)

34,586 (2,486)

37,467 (2,590)

Long-term portion of loans

32,100

34,877

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

Loan A bears interest at rates ranging 1.24% to 1.45% (2003 : 1.43% to 1.67%) per annum, except for two portions of the loan of $6,000,000 each which bear interest at the fixed rate of 1.51% (2003 : nil) and 1.57% (2003 : nil) per annum respectively. A portion of this loan is repayable in 5 equal semi-annual instalments of $800,000 each commencing August 2002 and the remaining portion is repayable in full upon maturity of the loan in February 2005. Loan A is secured by a mortgage over a leasehold building of Stamford Tyres International Pte Ltd, a corporate guarantee from the Company and assignment of the proceeds arising from the exercise of Warrant 2007 (Note 30). This loan is subject to compliance with certain financial covenants by the subsidiary company and the Company, over their respective gearing ratios and debt service coverage ratios. Subsequent to the financial year end, Stamford Tyres International Pte Ltd accepted the bank’s offer to refinance the loan for a term of 5 years from August 2004. Accordingly, the loan has been classified as noncurrent liability as at 30 April 2004. Loan B bears interest at 5.25% (2003 : 5.25% to 5.50%) per annum and is repayable in 240 equal monthly instalments commencing March 2001. This loan is secured by a mortgage over a leasehold building of Stamford Tyres International Pte Ltd and a corporate guarantee from the Company. Loan C bears interest at 7.50% (2003 : 7.90%) per annum and is repayable in 120 equal monthly instalments commencing January 1998. The loan is secured by an assignment of the land and building of STC Tyres (Malaysia) Sdn Bhd and a corporate guarantee from the Company.

Page 38 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

25. Long-Term Loans (Secured) (cont’d) Loan D bears interest at rates ranging from 5.00% to 5.50% (2003 : 5.00%) per annum and is repayable in 240 equal monthly instalments commencing November 2000. This loan is secured by a mortgage over a leasehold building of Stamford Tyres International Pte Ltd and a corporate guarantee from the Company. Loan E was repaid during the financial year. Loan F bears interest at 7.00% (2003 : 7.00%) per annum and is repayable in 360 equal monthly instalments commencing May 2002. The loan is secured by a mortgage over a freehold property of Stamford Tires (Latin America), Inc. Loan G bears interest at rates ranging from 3.12% to 4.50% (2003 : nil) per annum and repayable in equal quarterly instalments commencing 18 months from the first drawdown in February 2004. This loan is secured by a mortgage over the land and building, and plant and equipment of Stamford Sport Wheels Company Limited and a corporate guarantee from the Company. Loan H bears interest at 3.25% (2003 : nil) per annum and is repayable in 117 equal monthly instalments for principal repayment commencing March 2004. This loan is secured by a mortgage over a leasehold building of Stamford Tyres International Pte Ltd and a corporate guarantee from the Company. Loan I bears interest ranging from 3.75% to 4.63% (2003 : 4.21% to 4.71%) per annum and is repayable in 180 equal monthly instalments commencing October 2001. The loan is secured by a mortgage over a leasehold building of Stamford Tyres International Pte Ltd and a corporate guarantee from the Company. Loans J and K bear interest at 3.75% (2003 : 3.75%) per annum and are repayable in 240 equal monthly instalments commencing June 2003. The loans are secured by mortgage over certain leasehold buildings of Stamford Tyres International Pte Ltd and a corporate guarantee from the Company.

26. DEFERRED TAXATION Group 2004 $’000

2003 $’000

190 (10) 130 130

275 (6) (2) (77)

At end of financial year

440

190

The deferred tax asset arises as a result of : (i) Excess of net book value over tax written down value of property, plant and equipment (ii) Sundry provisions

(10) 450

– 190

440

190

(a) Deferred tax asset : At beginning of financial year Foreign currency translation adjustment Addition/(reversal) for the financial year (Note 8) Addition/(reversal) in respect of the previous financial years (Note 8)

Page 39 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

26. Deferred Taxation (con’td) Group 2004 $’000

2003 $’000

868 (231) (21)

1,275 – (407)

At end of financial year

616

868

The deferred tax liability arises as a result of : (i) Excess of net book value over tax written down value of property, plant and equipment (ii) Sundry provisions

966 (350)

1,174 (306)

616

868

Group and Company Share Number of capital shares 2004 2003 $’000 ’000

Share capital 2003 $’000

(b) Deferred tax liability : At beginning of financial year Reversal for the financial year (Note 8) Overprovision in respect of the previous financial years (Note 8)

27. SHARE CAPITAL Number of shares 2004 ’000 Authorised : Ordinary shares of $0.10 (2003 : $0.25) each Issued and fully paid : At beginning of financial year : Ordinary shares of $0.25 each Issued during the financial year : Ordinary shares of $0.25 each for cash on the exercise of options Ordinary shares of $0.25 each for cash on the exercise of Warrant 2007 Total before sub-division of every 2 existing shares of $0.25 each into 5 new shares of $0.10 each Increased by sub-division Ordinary shares of $0.10 (2003: $0.25) each Issued during the financial year : Ordinary shares of $0.10 each for cash on the exercise of options (2003:nil) Ordinary shares of $0.10 each for cash on the exercise of Warrant 2007 (2003:nil) At end of financial year : Ordinary shares of $0.10 (2003: $0.25) each

500,000

50,000

200,000

50,000

61,181

15,295

60,043

15,011

2,074

519

52

13

13,925

3,481

1,086

271

77,180 115,770

19,295 –

61,181 –

15,295 –

192,950

19,295

61,181

15,295

267

27

–

–

10,195

1,019

–

–

203,412

20,341

61,181

15,295

Page 40 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

27. Share Capital (cont’d) At the Extraordinary General Meeting of the Company held on 19 September 2003, the shareholders approved the sub-division of every two existing ordinary shares of par value $0.25 each into five new ordinary shares of par value $0.10 each. The holders of the ordinary shares are entitled to receive dividends as and when declared by the Company. Each ordinary share carry one vote without restriction. Unissued shares under share options and warrants as at 30 April 2004 comprise : (i) 25,000 (2003 : 5,552,500*) options entitling holders to subscribe at any time during the exercise period for the same number of ordinary shares in the Company at the exercise price of $0.126 (2003 : $0.126 to $0.130) per share. The details of the share options are discussed in Note 29. (ii) 27,290,267 (2003 : 72,297,499*) Warrant 2007 entitling holders to subscribe at any time up to 21 February 2007 for the same number of ordinary shares in the Company at an exercise price of $0.10 per share. The details of the Warrant 2007 are discussed in Note 30. The holders of the share options and Warrant 2007 have no right to participate by virtue of these options in any share issue of any other company in the Group. The dilutive effects of the outstanding share options and Warrant 2007 were considered in the computation of earnings per share (Note 9). *

The number of options and Warrant 2007 as at 30 April 2003 have been adjusted on the assumption that the subdivision of ordinary shares had occurred at beginning of that financial year.

28. RESERVES Company 2004 2003 $’000 $’000 Share premium At beginning of financial year Issue of ordinary shares on exercise of share options and Warrant 2007 (Note 27) Transfer from capital reserve upon exercise of Warrant 2007 (Note 30)

9,857 148 384

9,830 4 23

10,389

9,857

Capital reserve At beginning of financial year Transfer to share premium account upon exercise of Warrant 2007 (Note 30)

616 (384)

639 (23)

At end of financial year

232

616

8,027 4,256 (2,107)

2,576 6,623 (1,172)

At end of financial year

10,176

8,027

Total

20,797

18,500

At end of financial year

Revenue reserve At beginning of financial year Profit for the financial year attributable to the shareholders of the Company Dividends (Note 31)

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

Page 41 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

28. Reserves (cont’d) (a) Share premium This represents cash proceeds received in excess of the par value of the shares issued by the Company less issue expenses. The utilisation of the share premium account is governed by Section 69 - 69F of the Singapore Companies Act, Cap. 50. (b) Capital reserve This mainly represents the net proceeds received on the issuance of Warrant 2007. (c) Foreign currency translation reserve This comprises foreign exchange differences arising from the translation of the financial statements of overseas subsidiary, associated and joint venture companies and from the translation of long-term intercompany advances which are effectively part of net investments in the overseas subsidiary companies. (d) Revenue reserve This represents the accumulated profits less distributions made to the shareholders of the Company. 29. SHARE OPTIONS The Group has granted share options to eligible employees under its STC Share Option Scheme 2001 that was approved by the members of the Company at an Extraordinary General Meeting held on 22 June 2001 (the “Scheme”). The Scheme replaced the Stamford Tyres Employees’ Share Option Scheme (the “Old Scheme”). The termination of the Old Scheme does not affect the rights of the holders of the outstanding option issued under that scheme and the options granted under the Old Scheme remain valid and exercisable until their expiry dates. The Scheme is open to full-time confirmed employees, executive and non-executive directors, but not controlling shareholders or their associates of the Company, and entitles the option holders to exercise their options and subscribe for new ordinary shares in the Company either at the market price or at a price set at a discount not exceeding 20% of the market price. Market price is equal to the average last dealt price of the share for 3 consecutive trading days immediately preceding the offer date. Options granted with the exercise price set at market price may be exercised after the first anniversary of the offer date. Options granted with the exercise price set at a discount to market price may only be exercised after the second anniversary of the offer date. Executive options granted under the Scheme are exercisable for a period of 10 years whereas non-executive options are exercisable for a period of 5 years from the offer date. The total number of shares that may be issued shall not exceed 15% of the issued share capital of the Company.

Page 42 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

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

At beginning of financial year*

Exercised*

Forfeited*

At end of financial year

4.3.1999 23.6.2001 11.3.2002

1,477,500 3,837,500 237,500

(1,477,500) (3,737,500) (237,500)

– (75,000) –

– 25,000 –

5,552,500

(5,452,500)

(75,000)

25,000

Exercise price

Exercise date from to

$0.130 5.3.2000- 4.3.2004 $0.126 24.6.2003-23.6.2011 $0.126 12.3.2004-11.3.2012

25,000 (2003 : 1,477,500) options are exercisable as at the financial year end. * The number of options at beginning of financial year, exercised and forfeited during the financial year have been adjusted on the assumption that the sub-division of ordinary shares had occurred at beginning of the financial year.

30. WARRANT 2007 The net proceeds relating to the Warrant 2007 and included in the capital reserve are as follows : Group and Company 2004 2003 $’000 $’000 At beginning of financial year : 72,297,499 (2003 : 75,012,499) warrants at an issue price of $0.012 per warrant, net of issue expenses Less : Transfer to share premium account upon exercise of 45,007,232 (2003 : 2,715,000) warrants At end of financial year : 27,290,267 (2003 : 72,297,499) warrants at an issue price of $0.012 per warrant, net of issue expenses

616

639

(384)

(23)

232

616

In 2002, the Company made a renounceable rights issue of 75,015,000 warrants (“Warrant 2007”) at an issue price of $0.012 per warrant carrying the right to subscribe for new ordinary shares of $0.10 each in the capital of the Company at an exercise price of $0.10 per share. The proceeds arising from the exercise of Warrant 2007 have been assigned to a bank in connection with a term loan granted to a subsidiary company (Note 25). The number of Warrant 2007 outstanding at beginning of financial year and exercised during the financial year have been adjusted on the assumption that the sub-division of ordinary shares had occurred at beginning of the financial year.

Page 43 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

31. DIVIDEND The directors have proposed a first and final dividend of 1.25 cents (2003 : 1.00 cents) per ordinary share, less income tax at 20% (2003 : 22%), amounting to $2,034,122 (2003 : $1,505,007) and a special dividend of 0.75 cents (2003 : 0.40 cents) per ordinary share, less income tax of 20% (2003 : 22%), amounting to $1,220,473 (2003 : $602,003) be paid in respect of the financial year ended 30 April 2004. The dividend will be recorded as a liability on the balance sheet of the Company and Group upon approval by the shareholders of the Company at the next Annual General Meeting of the Company. 32. NOTE TO CONSOLIDATED STATEMENT OF CASH FLOW Group 2004 $’000

2003 $’000

Cash and cash equivalents included in the consolidated statement of cash flow comprise the following balance sheet amounts : Cash and bank balances Short-term loans (Note 23)

20,828 (2,129)

12,263 (1,183)

Cash and cash equivalents

18,699

11,080

Current liabilities Cash at bank

– –

(16) 13

Net liabilities on deregistration Gain on deregistration (Note 6)

– –

(3) 3

Proceeds received on deregistration Less: Cash at bank on deregistration

– –

– (13)

Cash outflow on deregistration

–

(13)

(i) Cash and cash equivalents

(ii) Net effect of deregistration of a subsidiary company :

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

Within one year Within two to five years After five years

2004 $’000

2003 $’000

916 2,135 10,037

823 1,908 9,938

13,088

12,669

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

Page 44 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

33. Commitments (cont’d) (ii) Capital commitments Group

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

2004 $’000

2003 $’000

491

3,914

4,944

5,144

5,435

9,058

(iii) Other commitments Forward contracts As at financial year end, the Group has the following outstanding foreign exchange forward contract commitments for the purpose of hedging against currency fluctuations in connection with payments to overseas suppliers and receipts from overseas customers : Range of forward exchange rate 2004 2003

To buy : - United States dollars - Euro - Japanese Yen To buy Euro with Hong Kong dollars To sell : - United States dollars - Euro - Australian dollars - British pound To sell Australian dollars for United States dollars

1.675 - 1.724 1.997 - 2.138 0.015

1.729 - 1.789 1.857 - 1.893 –

Group 2004 $’000

2003 $’000

13,411 3,748 240

10,595 3,997 –

17,399

14,592

9.513

–

18

–

1.673 - 1.714 2.009 - 2.060 1.237 2.997 - 3.007

1.730 - 1.787 1.895 - 1.972 1.081 - 1.100 2.785

20,335 4,984 62 300

12,415 2,796 196 242

25,681

15,649

1,036

–

(59)

164

0.757 - 0.762

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

–

Page 45 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

34. CONTINGENT LIABILITIES Group

Guarantees issued for bank facilities granted to subsidiary companies

2004 $’000

2003 $’000

–

–

Company 2004 2003 $’000 $’000

79,912

62,669

The above indicates amounts utilised by subsidiary companies as at balance sheet date. 35. RELATED PARTY TRANSACTIONS In addition to the information on related parties shown elsewhere in the notes to the financial statements, the Group has significant transactions with related parties on terms agreed between the parties as follows : Group

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

2004 $’000

2003 $’000

83

84

375

369

44

44

94

59

36. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The main risks faced by the Group and Company are foreign currency risk, interest rate risk, credit risk and liquidity risk that arise through its normal operations. Foreign currency risk Foreign exchange risk arises from a change in foreign currency exchange rate, which is expected to have adverse effect on the Group in the current reporting period and in future years. The Group operates in several countries and subsidiary, associated and joint venture companies within the Group maintain their books and records in their respective functional currencies. The Group’s accounting policy is to translate the results of overseas subsidiary, associated and joint venture companies using the weighted average exchange rates. Net assets denominated in foreign currencies and held at the financial year end are translated into Singapore dollars, the Group’s reporting currency, at year end exchange rates. Fluctuations in the exchange rate between the functional currencies and Singapore dollar will therefore have an impact on the Group. It is the Group’s policy not to hedge exposures arising from such translations. The Group’s strategy is to fund overseas operations with borrowings denominated in their functional currency as a natural hedge against overseas assets.

Page 46 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

36. Financial Risk Management Objectives and Policies (cont’d) Foreign currency risk (cont’d) The Company is exposed to the volatility in the foreign currency cash flows related to repatriation of the investments and advances to its subsidiary, associated and joint venture companies. The Company does not hedge exposures arising from such risks. The Group’s main trading subsidiary company, Stamford Tyres International Pte Ltd, is exposed to movements in foreign currency rates arising from the purchases of goods from manufacturers and sales made to customers in several countries. Whenever necessary, foreign exchange forward contracts are used by the subsidiary company to manage the foreign currency exposure arising from its trading activities. The outstanding foreign exchange forward contracts at financial year end are disclosed in Note 33. Interest rate risk Interest rate risk is the risk that changes in interest rates will have an adverse financial effect on the Group’s financial conditions and/or results. The primary source of the Group’s interest rate risk is its borrowings from banks and other financial institutions in Singapore, Malaysia, Thailand, Hong Kong and the United States of America. The Group ensures that it obtains borrowings at competitive interest rates under the most favourable terms and conditions. Information relating to the interest rate is disclosed in Notes 23 and 25. Credit risk Credit risk is the risk that entities and individuals will be unable to meet their obligations to the Group resulting in financial loss to the Group. It is the Group’s policy to enter into transactions with a diversity of credit-worthy parties to mitigate any significant concentration of credit risk. The Group ensures that sales of products and services are rendered to customers with appropriate credit history and has internal mechanisms to monitor the granting of credit and management of credit exposures. The Group has made provisions for potential losses on credits extended. Surplus funds are placed with reputable financial institutions. The Group’s maximum exposure to credit risk in the event the parties fail to perform their obligations in relation to each class of recognised financial assets is the carrying amount of those assets as indicated in the balance sheet. As at financial year end there were no significant concentration of credit risk to the Group or Company. Liquidity risk The Group monitors its daily and monthly projected and actual cash inflows and outflows to ensure that funding needs are identified and managed in advance. The Group actively manages its debt maturity profile, operating cash flows and availability of committed credit facilities to ensure that all refinancing, repayment and funding needs are met. The Group strives to maintain a sufficient level of banking facilities to meet its funding requirements and utilise trust receipts and bills payable, overdrafts, revolving credit facilities, loans and hire purchase contracts for this purpose. The credit facilities provided by the banks and finance companies are subject to certain financial covenants and terms and conditions which are summarised in Notes 21, 23, 24 and 25.

Page 47 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

36. Financial Risk Management Objectives and Policies (cont’d) Derivative financial instruments The Group does not hold or issue derivative financial instruments for trading purposes. Fair value of financial assets and financial liabilities The fair value, determined based on the market price, of the investment in the marketable securities is disclosed in Note 20. In the opinion of the directors, it is impractical to determine the fair value of the unquoted equity shares in the subsidiary, associated and joint venture companies, and the long-term advances to subsidiary companies as they do not have repayment terms. The fair values of other financial assets and liabilities are not materially different from their carrying values as at 30 April 2004 due to the relatively short-term maturity of these instruments, except for the hire purchase liabilities and certain longterm bank loans which bear interest at fixed rates. Their fair values at the balance sheet date determined by discounting the relevant cash flows using current interest rates for similar instruments are :

Carrying amount 2004 $’000 Hire purchase liabilities Long-term loans

825 34,586

Group Estimated Carrying fair value amount 2004 2003 $’000 $’000 887 34,575

741 37,467

Estimated fair value 2003 $’000 796 37,463

37. SEGMENT INFORMATION The Group operates in one segment industry, that of wholesale and retail of tyres and wheels, tyre retreading and equipment trading, and its operating businesses are organised and managed separately based on geographic areas, representing a strategic business unit that serves different markets. The following tables present revenue and profit information regarding geographical segments for the financial years ended 30 April 2004 and 2003 and certain assets and liabilities information regarding geographical segments as at 30 April 2004 and 2003. The unallocated revenue and expenses comprise general corporate income and expense items. Segment accounting policies are the same as the policies described in Note 2 to the financial statements. Revenues are attributed to geographic areas based on the location of the assets producing the revenues. The Group companies use a cost plus basis for inter-segment pricing for the sale and purchase of goods between the transacting parties.

5,245 719 122

8,809 1,013

8,332

8,323 – 9 –

149

5,402

5,345 56 1 –

179

2,281

2,244 – 37 –

167

2,467

2,452 – 15 –

239

3,984

3,984 – – –

Total of segments 2004 2003 $’000 $’000 Elimination 2004 2003 $’000 $’000

Consolidated 2004 2003 $’000 $’000

232

(9)

17,630

–

11,975

–

–

46 (496)

8,182

9,655 (1,459) (14)

16,810 11,525 – 594 (2,453) (2,464) (9) –

101 (921)

17,630 11,975

2,581 234,547 196,036 (44,643) (32,470) 190,005 163,612

2,581 189,779 163,443 – – 189,779 163,443 – 44,643 32,470 (44,643) (32,470) – – – 125 123 – – 125 123 – – – – – 101 46

Others 2004 2003 $’000 $’000

11,544

2,018

10,925

8,790 – 19 –

Latin America 2004 2003 $’000 $’000

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

–

2,383

30,261

10,925 – – –

Indonesia 2004 2003 $’000 $’000

14,348 (2,788) (16)

(9)

4,042

36,069

28,676 24,609 7,392 5,645 1 7 – –

Thailand 2004 2003 $’000 $’000

Profit before taxation and minority interests Taxation Minority interests

Profit from operating activities Exceptional item Finance costs Share of losses of associated companies

Add : Unallocated revenue Less : Unallocated expenses

8,983

4,114

32,821 34,573

Total revenue

Segment result

32,594 34,314 156 207 71 52 – –

Revenue External revenue 103,033 85,352 Inter-segment revenue 37,095 26,562 Other revenue 7 29 Unallocated revenue – –

140,135 111,943

Hong Kong/ China 2004 2003 $’000 $’000

Singapore 2004 2003 $’000 $’000

37. Segment Information (cont’d)

Malaysia 2004 2003 $’000 $’000

Notes to the Financial Statements (cont’d)

(In Singapore Dollars)

Page 48

181

(21)

Significant non-cash expenses : Amortisation and depreciation 2,538 1,912

737

1,144

–

–

Provision/(reversal) for doubtful trade receivables

Provision for obsolete inventories

Impairment (reversal)/ loss on property, plant and equipment

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

–

–

628

–

–

591

(165)

155

24 –

2,040

“Others” comprise South Africa, Australia and South Korea.

1

–

175

499

71 –

1,967 70

Other segment information Capital expenditure : - property, plant and equipment 2,498 - intangible assets –

1,820

8,135

9,818

Total liabilities

8,135 –

9,818 –

Segment liabilities Unallocated liabilities

2,040 –

22,676 18,847

Total assets

1,820 –

20,639 18,847 2,037 – – –

Other information Segment assets 107,095 89,843 Associated companies – – Unallocated assets – –

107,095 89,843

Hong Kong/ China 2004 2003 $’000 $’000

Singapore 2004 2003 $’000 $’000

37. Segment Information (cont’d)

2

–

–

143

392

283 –

9,602

9,602 –

20,411

20,411 – –

2

–

55

57

404

281 1

10,722

10,722 –

20,161

20,161 – –

Malaysia 2004 2003 $’000 $’000

Notes to the Financial Statements (cont’d)

(In Singapore Dollars)

5

(166)

31

113

311

5,928 –

3,630

3,630 –

17,246

16,977 269 –

152

197

(34)

(84)

313

5 –

1,810

1,810 –

8,131

7,885 246 –

Thailand 2004 2003 $’000 $’000

–

–

95

26

141

438 –

3,754

3,754 –

5,671

5,671 – –

–

–

79

188

66

554 –

2,266

2,266 –

3,663

3,663 – –

Indonesia 2004 2003 $’000 $’000

–

–

(43)

134

64

7 2

164

164 –

3,314

3,314 – –

21

–

272

215

129

408 –

377

377 –

2,428

2,428 – –

Latin America 2004 2003 $’000 $’000

–

–

19

66

20

172 –

664

664 –

4,695

4,695 – –

Total of segments 2004 2003 $’000 $’000

–

–

6

86

14

1 –

569

569 –

7

(166)

1,874

1,198

3,647

9,397 2

29,452

29,452 –

176

197

1,144

796

2,993

3,240 71

25,919

25,919 –

1,797 181,108 144,870

1,797 178,802 144,624 – 2,306 246 – – –

Others 2004 2003 $’000 $’000

–

–

–

–

–

– –

–

– –

–

– – –

Consolidated 2004 2003 $’000 $’000

29,452 25,919 89,136 70,023

–

-

–

–

–

– –

7

(166)

1,874

1,198

3,647

9,397 2

176

197

1,144

796

2,993

3,240 71

– 118,588 95,942

– –

– 182,117 145,386

– 178,802 144,624 – 2,306 246 – 1,009 516

Elimination 2004 2003 $’000 $’000

Page 49

Page 50 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

38. SUBSIDIARY, ASSOCIATED AND JOINT VENTURE COMPANIES The subsidiary, associated and joint venture companies as at 30 April 2004 are :

Name of Company (Country of incorporation)

Principal activities (Place of business)

Cost of investment 2004 2003 $’000 $’000

Percentage of equity held by the Group 2004 2003 % %

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

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

Stamford Tyres (M) Sdn Bhd ➁ (Malaysia) # STC Tyres (Malaysia) Sdn Bhd ➁ (Malaysia) Stamford Tyre Mart Sdn Bhd ➁ (Malaysia)

11,000

11,000

100

100

Wholesale of tyres and wheels (Malaysia)

580

580

100

100

Property holding company (Malaysia)

458

458

50

50

@

@

100

100

Retail of tyres and wheels (Malaysia)

# Stamford Tires Distributor Co., Ltd ➂ (Thailand)

Wholesale of tyres and wheels (Thailand)

625

412

49

49

# STC Tyres Limited ➂ (Thailand)

Inactive (Thailand)

288

574

49

49

# Stamford Auto Mart Limited ➂ (Thailand)

Inactive (Thailand)

21

21

49

49

1,040

1,040

100

100

@

@

100

100

Stamford Tyres (China) Limited ➃ (Hong Kong)

Wholesale of tyres (Hong Kong and China)

Boon Tyre Holdings Limited ➄ (Hong Kong)

Investment holding (Hong Kong)

Page 51 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

38. Subsidiary, Associated and Joint Venture Companies (cont’d) Name of Company (Country of incorporation)

Principal activities (Place of business)

## Stamford Tires Wholesale of tyres (Latin America), Inc. (Latin America) (United States of America) Stamford Tyres (Africa) (Proprietary) Limited ➅ (South Africa)

Wholesale of tyres (South Africa)

Cost of investment 2004 2003 $’000 $’000

Percentage of equity held by the Group 2004 2003 % %

14

14

100

100

1,127

1,127

100

100

## PT Stamford Tyres Indonesia (Indonesia)

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

726

726

100

100

## PT Stamford Tyres Distributor Indonesia (Indonesia)

Wholesale of tyres and wheels (Indonesia)

530

530

100

100

Green Tyre Singapore Pte Ltd ➀ (Singapore)

Inactive (Singapore)

@

@

100

100

Stamford Auto City Pte Ltd ➀ (Singapore)

Inactive (Singapore)

200

200

100

100

Wahsan Trading Pte Ltd ➀ (Singapore)

Inactive (Singapore)

218

218

100

100

Stamford Sport Wheels Company Limited ➂ (Thailand)

To manufacture aluminium 4,075 alloy wheels (Thailand)

4,075

100

100

+ Stamford International Inactive 322 ## Trading (Tianjin) Co. Ltd. (People’s Republic of China) (People’s Republic of China)

322

100

100

Stamford Tyres Australia Pty Limited ➆ (Australia) ## Stamford Tyres Korea Limited (South Korea)

Wholesale of tyres (Australia)

@

–

100

–

Wholesale of tyres (South Korea)

72

–

100

–

21,296

21,297

Page 52 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

38. Subsidiary, Associated and Joint Venture Companies (cont’d)

Name of Company (Country of incorporation)

Principal activities (Place of business)

Percentage of equity held by the Group 2004 2003 % %

Subsidiary company Held by Boon Tyre Holdings Limited : Raffles Resources Singapore Pte Ltd ➀ (Singapore)

Procurement of tyres (Singapore)

100

100

50

50

Inactive (Philippines)

40

40

Inactive (Thailand)

49

49

20

–

Joint venture company Held by the Company : ++ Tyre Pacific (HK) Limited ➇ Tyre wholesale (Hong Kong) (Hong Kong and China) Associated companies Held by the Company : Stamford Tyres Philippines, Inc. ➈ (Philippines) ## Stamford Tyres (Thailand) Co., Ltd (Thailand)

Held by Tyre Pacific (HK) Limited : SRITP Limited (British Virgin Islands)

Tyre wholesale (China)

@ Cost of investment at one hundred units of local currency or less. # The company is treated as a subsidiary company and incorporated in the consolidated financial statements as the Group has the power to control, by agreement, the financial and operating policies of the management of the company. ## Not required to be audited under the laws of the country of incorporation. Limited financial review has been performed for the purposes of consolidation into the financial statements of the Group. + Statutory year end is 31 December. Limited financial review has been performed for the purposes of consolidation into the financial statements of the Group. ++ Statutory year end is 31 December. An audit has been performed by KPMG, Hong Kong on the financial statements for the financial period from 1 May 2003 to 30 April 2004 for the purposes of consolidation into the financial statements of the Group.

Page 53 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

38. Subsidiary, Associated and Joint Venture Companies (cont’d) Audited by : ➀ ➁ ➂ ➃ ➄ ➅ ➆ ➇ ➈

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

39. COMPARATIVE FIGURES As stated in Note 2(h), comparative figures of the Group have been restated to provide proper and meaningful comparison with current financial year’s presentation. Additionally, certain administrative and documentation charges have been reclassified from finance costs to other operating expenses to properly reflect their nature. The significant comparative figures that were restated are : 30 April 2003 as currently reported $’000

Group 30 April 2003 as previously reported $’000

41,384 104,002 (59,774) (36,168)

46,472 95,571 (56,431) (36,168)

49,444

49,444

163,612 (152,087)

146,084 (137,140)

11,525 594 (2,464) – 9,655 (1,459)

8,944 594 (2,375) 2,492 9,655 (1,459)

Profit after taxation Minority interests

8,196 (14)

8,196 (14)

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

8,182

8,182

Balance Sheet Non-current assets Current assets Current liabilities Non-current liabilities Net assets Profit and loss account Total revenue Total expenditure Profit from operating activities Exceptional item Finance costs Share of profits of joint venture company Profit before taxation Taxation

Page 54 Notes to the Financial Statements (cont’d) (In Singapore Dollars)

39. Comparative Figures (cont’d)

30 April 2003 as currently reported $’000

Group 30 April 2003 as previously reported $’000

Statement of cash flow Net cash provided by operating activities Net cash used in investing activities Net cash used in financing activities

13,695 (2,617) (2,572)

11,235 (1,809) (2,572)

Net increase in cash and cash equivalents

8,506

6,854

40. AUTHORISATION OF FINANCIAL STATEMENTS FOR ISSUE These financial statements were authorised for issue in accordance with a resolution of the directors on 16 July 2004.

Page 55

List of Major Properties

Location

Tenure of Lease

Area (sqm)

Description

SINGAPORE 19 Lok Yang Way, Jurong Singapore 628635

36 years lease from 2000

18,024.7

21 Lok Yang Way, Jurong Singapore 628636

60 years lease from 1973

7,352.6

Warehouse

21-A Lok Yang Way, Jurong Singapore 628637

60 years lease from 1978

5,769.5

Truck service centre with showroom, retreading plant and warehouse

207 Balestier Road #01-13 Balestier Towers Singapore 329683

Freehold

143.0

Tyre retail centre with showroom

455 Macpherson Road Singapore 368173

63 years lease from 2001

951.0

Tyre retail centre with showroom

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

55 years lease from 2002

276.0

Tyre retail centre with showroom

10 Admiralty Street #01-85 North Link Building Singapore 757695

56 years lease from 2003

689.0

Tyre retail centre with showroom

31 Loyang Way Singapore 508729

16 years lease from 2004

2,510.4

Tyre retail centre with showroom

Freehold

6,968.0

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

Freehold

7,740.0

Wheels factory with showroom and warehouse

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

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

7 years lease from 2003

144.0

Office with warehouse

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

28 years lease from 2004

484.0

Tyre retail and service centre with showroom and warehouse

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

10 years lease from 2004

12,558.0

Truck service centre with retreading plant

Page 56

Statistics of Shareholdings as at 20 July 2004

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

: : : :

$50,000,000.00 $20,459,923.20 Ordinary shares of $0.10 each 1 vote per share

DISTRIBUTION OF SHAREHOLDINGS

Size of Shareholdings 1 1,000 10,001 1,000,001 and

No. of Shareholders

%

No. of Shares

%

81 2,145 1,470 25

2.18 57.65 39.50 0.67

18,917 14,001,750 61,414,838 129,163,727

0.01 6.84 30.02 63.13

3,721

100.00

204,599,232

100.00

999 10,000 1,000,000 above

TOTAL :

Based on the information available to the Company as at 20 July 2004, approximately 57.50% of the issued ordinary shares of the Company is held by the public and hence, Rule 723 of the Listing Manual issued by the Singapore Exchange Securities Trading Limited is complied with. TWENTY LARGEST SHAREHOLDERS No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

Name LIM & TAN SECURITIES PTE LTD WAH HOLDINGS PTE LTD MAYBAN NOMINEES (S) PTE LTD KWOK WAI YING DAWN WEE KOK WAH UNITED OVERSEAS BANK NOMINEES PTE LTD SINGAPORE NOMINEES PTE LTD TEO CHENG TUAN DONALD HSBC (SINGAPORE) NOMINEES PTE LTD SOUTHERN NOMINEES (S) SDN BHD KWOK WENG FAI ING NOMINEES (SINGAPORE) PTE LTD UOB KAY HIAN PTE LTD PETER LEONG KOCK WAH DBS NOMINEES PTE LTD RAFFLES NOMINEES PTE LTD DBS VICKERS SECURITIES (S) PTE LTD PHILLIP SECURITIES PTE LTD HL BANK NOMINEES (S) PTE LTD OCBC SECURITIES PRIVATE LTD TOTAL :

No. of Shares

%

18,969,500 17,713,752 15,370,000 11,887,567 9,107,353 7,828,000 7,678,000 6,445,000 4,300,000 3,000,000 2,828,810 2,391,000 2,017,000 2,000,000 1,953,500 1,929,000 1,905,500 1,884,145 1,800,000 1,785,100

9.27 8.66 7.51 5.81 4.45 3.83 3.75 3.15 2.10 1.47 1.38 1.17 0.99 0.98 0.96 0.94 0.93 0.92 0.88 0.87

122,793,227

60.02

Page 57 Statistics of Shareholdings (con’t) as at 20 July 2004

SUBSTANTIAL SHAREHOLDERS AS AT 20 JULY 2004 as recorded in the Register of Substantial Shareholders Name of Substantial Shareholders Wee Kok Wah

Direct Interest No. of Shares %

Deemed Interest No. of Shares

%

9,107,353

4.45

57,051,319

27.88

Dawn Wee Wai Ying

11,887,567

5.81

54,271,105

26.53

Wah Holdings Pte Ltd

17,713,752

8.66

18,200,000

8.90

Lim & Tan Securities Pte Ltd

16,836,000

8.23

–

–

Note : Mr Wee Kok Wah is deemed to have an interest in the shareholdings of Mrs Dawn Wee Wai Ying and vice versa by virtue of their relationship as husband and wife. By virtue of Section 7 of the Singapore Companies Act, Cap. 50 Mr Wee Kok Wah and Mrs Dawn Wee Wai Ying are deemed to have an interest in the shares owned by Wah Holdings Pte Ltd. No. of Shares Mr Wee Kok Wah is deemed to be interested in the shares held as follows : Shares registered in the name of Singapore Nominees Pte Ltd

7,500,000

Shares owned by Mrs Dawn Wee Wai Ying : - registered in the name of Dawn Wee Wai Ying - registered in the name of HL Bank Nominees (S) Pte Ltd

11,887,567 1,750,000

Shares owned by Wah Holdings Pte Ltd : - registered in the name of Wah Holdings Pte Ltd - registered in the name of Southern Nominees (S) Sdn Bhd - registered in the name of Mayban Nominees (S) Pte Ltd

17,713,752 3,000,000 15,200,000 57,051,319

Mrs Dawn Wee Wai Ying is deemed to be interested in the shares held as follows : Shares registered in the name of HL Bank Nominess (S) Pte Ltd

1,750,000

Shares owned by Mr Wee Kok Wah : - registered in the name of Wee Kok Wah - registered in the name of Singapore Nominees Pte Ltd

9,107,353 7,500,000

Shares owned by Wah Holdings Pte Ltd : - registered in the name of Wah Holdings Pte Ltd - registered in the name of Southern Nominees (S) Sdn Bhd - registered in the name of Mayban Nominees (S) Pte Ltd

17,713,752 3,000,000 15,200,000 54,271,105

Page 58

Statistics of Warrantholdings as at 20 July 2004

DISTRIBUTION OF WARRANTHOLDINGS

Size of Warrantholdings 1 1,000 10,001 1,000,001 and TOTAL :

999 10,000 1,000,000 above

No. of Warrantholders

%

No. of Warrants

%

17 129 135 1

6.03 45.75 47.87 0.35

5,502 712,225 7,076,173 18,334,367

0.02 2.73 27.08 70.17

282

100.00

26,128,267

100.00

TWENTY LARGEST WARRANTHOLDERS No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

Name

No. of Warrants

WEE KOK WAH CHEONG HOCK LAI ANG KONG BENG @ ANG KONG ENG LEE PUI CHEE WEE KWEE HUAY HELENE LIM TECK CHEONG TAN KOK HIANG WONG WAI FONG PANG HENG KWEE LEONG CHAN TEIK TAN KAI GUAN CLEMENT PANG FUI NAM WEE TIONG KIAN CHEW CHONG KEE GO MEI LIN HON WONG YUEN NEE GIANG CHON LEE MUN YEAN UOB KAY HIAN PTE LTD PHILLIP SECURITIES PTE LTD ONG CHIN HIN TOTAL :

%

18,334,367 705,000 600,000 525,000 420,000 237,500 213,000 200,000 179,000 150,000 112,000 110,000 105,000 102,500 100,000 90,000 88,000 84,500 82,822 80,000

70.17 2.70 2.30 2.01 1.61 0.91 0.82 0.77 0.69 0.57 0.43 0.42 0.40 0.39 0.38 0.34 0.34 0.32 0.32 0.31

22,518,689

86.20

Page 59

Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN that the Fifteenth Annual General Meeting of the shareholders of the Company will be held on Tuesday, 31 August 2004 at 3.00 p.m. at 19 Lok Yang Way Singapore 628635 to transact the following businesses : ORDINARY BUSINESS 1. To read, consider and adopt the balance sheet, the report of the Directors and Auditors and other accounts and documents required to be annexed to the balance sheet for the financial year ended 30 April 2004.

Resolution 1

2. To approve the proposed Directors’ fees of $243,000 (2003: $161,500).

Resolution 2

3. To declare and approve a first & final dividend of 1.25 cents per share of 10 cents each less income tax of 20% for the financial year ended 30 April 2004.

Resolution 3

4. To declare and approve a special dividend of 0.75 cent per share of 10 cents each less income tax of 20% for the financial year ended 30 April 2004.

Resolution 4

5. To re-elect Dr Kwok Weng Fai pursuant to Article 99 of the Articles of Association.

Resolution 5

6. To re-elect Mr Sam Chong Keen pursuant to Article 99 of the Articles of Association [see Explanatory Note (a)].

Resolution 6

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

Resolution 7

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

Resolution 8

9. To transact any other business of the Company which may properly be transacted at an Annual General Meeting. SPECIAL BUSINESS To consider and if thought fit to pass the following as Ordinary Resolutions : 10.“That pursuant to Section 161 of the Companies Act, Cap. 50 and the listing rules of the Singapore Exchange Securities Trading Limited, the Directors be and are hereby authorised to issue shares in the Company (whether by way of bonus issue, rights issue or otherwise) at any time and upon such terms and conditions and for such purposes and to such persons as the Directors may, in their absolute discretion, deem fit provided that : (i) the aggregate number of shares to be issued pursuant to this Resolution does not exceed 50% of the issued share capital of the Company, of which the aggregate number of shares to be issued other than on a pro-rata basis to existing shareholders of the Company does not exceed 20% of the Company’s issued share capital; (ii) for the purpose of determining the aggregate number of shares that may be issued under (i) above, the percentage of issued share capital shall be based on the issued share capital of the Company at the time this Resolution is passed, after adjusting for : (a) new shares arising from the conversion or exercise of any convertible securities or employee share options that are outstanding when this Resolution is passed, and (b) any subsequent consolidation or subdivision of shares; and

Page 60 Notice of Annual General Meeting (cont’d)

(iii) unless revoked or varied by the Company in general meeting, such authority conferred by this Resolution shall continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier.” [see Explanatory Note (c)].

Resolution 9

11. “That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors be and are hereby authorised to allot and issue from time to time such number of shares as may be required to be issued pursuant to the exercise of the Options under the STC Share Option Scheme 2001 (“the Scheme 2001”) provided always that : (a) the aggregate number of shares to be issued pursuant to the Scheme 2001 shall not exceed fifteen (15) per cent. of the total issued share capital of the Company from time to time and that, subject to such adjustments as may be made in accordance with the Scheme 2001; (b) the total number of shares in respect of which Options may be granted to any one of the Grantees shall not exceed ten (10) per cent. of the total number of shares available under the Scheme 2001; and (c) the total number of shares in respect of which Options may be granted to any one of the non-Executive Directors shall not exceed 50,000.” [see Explanatory Note (d)]. Resolution 10 Notice is hereby given that the Transfer Books and Register of Members of the Company will be closed on 14 September 2004 to 15 September 2004 for the preparation of dividend warrants. Duly completed transfers received by the Company’s Registrar, Messrs Lim Associates (Pte) Ltd of 10 Collyer Quay #19-08 Ocean Building Singapore 049315, up to the close of business at 5.00 p.m. on 13 September 2004 will be registered to determine shareholders’ entitlement to the proposed dividends. The dividends if approved, will be paid on 30 September 2004 to shareholders registered in the books of the Company on 13 September 2004. In respect of shares in security accounts with the Central Depository (Pte) Limited (“CDP”), the said dividends will be paid by the Company to CDP which will in turn distribute the dividend entitlements to holders of shares in accordance with its practice. By Order Of The Board Chuang Sheue Ling Company Secretary 13 August 2004 Explanatory Notes : (a) Mr Sam Chong Keen, if re-elected, will remain as the Nominating Committee chairman and Audit Committee member and is considered an Independent Director for purposes of Rule 704(8) of the Listing Manual of Singapore Exchange Securities Trading Limited. (b) The effect of Ordinary Resolution 7 proposed in item 7 above is to re-appoint the Director who is over 70 years of age. Section 153(6) of the Companies Act, Cap. 50, provides that this resolution has to be passed by an Ordinary Resolution at the Annual General Meeting of the Company. (c) The proposed ordinary resolution 9 above, if passed, will empower the Directors from the date of the Annual General Meeting until the date of the next Annual General Meeting to issue further shares in the Company. The maximum number of shares, which the Directors may issue under this resolution, shall not exceed the quantum set out in the resolution. (d) The proposed ordinary resolution 10 above, if passed, will empower the Directors to issue shares in the Company pursuant to the STC Share Option Scheme 2001 (“the Scheme 2001”), duly approved at the Extraordinary General Meeting of the Company held on 22 June 2001. Note : 1. A member, entitled to attend and vote at this meeting, is entitled to appoint a proxy to attend and vote in his stead. A proxy need not be a member of the Company. 2. If a proxy is to be appointed, the form must be deposited at the registered office of the Company, at 19 Lok Yang Way Singapore 628635 not less than 48 hours before the meeting. 3. The form of proxy must be signed by the appointor or his attorney duly authorised in writing. 4. In case of joint shareholders, all holders must sign the form of proxy.

Page 61

Proxy Form

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

Important 1. For investors who have used their CPF monies to buy Stamford Tyres shares, this Annual Report is sent to them at the request of their CPF Approved Nominees solely FOR INFORMATION ONLY. 2. This Proxy Form is FOR USE ONLY BY MEMBERS whose shares in Stamford Tyres are registered in their names. It is not valid for use by CPF investors and persons whose shares are not registered in their own names, and shall be ineffective for all intents and purposes if used or purported to be used by them.

I/We __________________________________________________________________________ (Name) of___________________________________________________________________________ (Address) being a member/members of STAMFORD TYRES CORPORATION LIMITED hereby appoint : Name

Address

NRIC/Passport Number

Proportion of Shareholdings (%)

NRIC/Passport Number

Proportion of Shareholdings (%)

and/or (delete as appropriate) Name

Address

or failing whom, the Chairman of the Meeting, as my/our proxy/proxies to vote for me/us on my/our behalf, at the Annual General Meeting of the Company to be held on Tuesday, 31 August 2004 at 3.00 p.m. and at any adjournment thereof. I/We have indicated with an “✓“ in the appropriate box below how I/we wish my/our proxy/proxies to vote. If no specific direction as to voting is given, my/our proxy/proxies will vote or abstain from voting at his/their discretion, as he/they will on any other matter arising at the Meeting. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Resolutions Adoption of Directors’ Reports and Accounts. Approval of Directors’ Fees. Declaration of First & Final Dividend. Declaration of Special Dividend. Re-election of Dr Kwok Weng Fai as Director. Re-election of Mr Sam Chong Keen as Director. Re-appointment of Mr Chua Kim Yeow pursuant to Section 153(6). Re-appointment of Auditors. Authority to issue additional shares pursuant to Section 161. Authority to issue shares pursuant to Share Option Scheme.

For

Dated this ____________________ day of ____________________ 2004.

______________________________________ Signature(s) of Member(s)/Common Seal IMPORTANT: PLEASE READ NOTES OVERLEAF

Total No. of Shares Held

Against

Page 62

NOTES 1. A member entitled to attend and vote at the Meeting is entitled to appoint one or two proxies to attend and vote in his stead. 2. Where a member appoints more than one proxy, the appointments shall be invalid unless he specifies the proportion of his holding (expressed as a percentage of the whole) to be represented by each proxy. 3. A proxy need not be a member of the Company. 4. A member should insert the total number of shares held. If the member has shares entered against his name in the Depository Register (as defined in Section 130A of the Companies Act, Cap. 50 of Singapore), he should insert that number of shares. If the member has shares registered in his name in the Register of Members of the Company, he should insert that number of shares. If the member has shares entered against his name in the Depository Register and registered in his name in the Register of Members, he should insert the aggregate number of shares. If no number is inserted, this form of proxy will be deemed to relate to all shares held by the member. 5. The instrument appointing a proxy or proxies must be deposited at the Company’s registered office at 19 Lok Yang Way Singapore 628635 not less than 48 hours before the time set for the Meeting. 6. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its common seal or under the hand of its attorney or a duly authorised officer. 7. Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certified copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy, failing which the instrument may be treated as invalid. GENERAL The Company shall be entitled to reject a Proxy Form which is incomplete, improperly completed, illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified on the Proxy Form. In addition, in the case of shares entered in the Depository Register, the Company may reject a Proxy Form if the member, being the appointor, is not shown to have shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.