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GOLDEN MOMENTS
2 The Business 4 Message by Chairman & Group Managing Director 8 Corporate Data 10 Group Structure 11 The Retail Network 12 The Golden Jubilee Collection 14 Singapore 24 Malaysia 30 China 34 Thailand 48 Taiwan 42 Indonesia 44 Korea 47 Financial Report SINCERE_AR-Front-FA 6/30/05 7:44 PM Page 2
THE BUSINESS
The golden jubilee year of 2004 marks intimate knowledge of consumers’ needs and equipped a momentous milestone in the eminent with strong brand management capability, Sincere Watch journey of Sincere Watch Limited. The is constantly in the forefront of innovative retail concepts; company started its humble beginnings establishing itself as Asia’s foremost purveyor of fine more than 50 years ago as a one-man watches and a premier watch specialist. The latter is watch counter along Singapore’s North especially demonstrated by Sincere Watch's innovative Bridge Road in 1954. Along this growth classification of its diverse product range into the three path, Sincere Watch overcame all odds series of Technics, Luxe and Active. The Series amidst an evolving political-economic Technics is targeted at the true appreciator of mechanical landscape and has assumed a leading timepieces that are of precise and laborious creations. role in developing the emerging market The Series Luxe caters to the connoisseurs of artistic of fine watches in the Southeast and horological masterpieces bejeweled with gems and precious North Asia regions. stones of the finest quality. The Series Active supports the physical rigours in the lifestyle of the sophisticated The continuous success of the company is built firmly on sporting individuals with its range of precise, accurate the foundation of its four strategic pillars: Brand timepieces equipped with specific performance-enhancing Management, Fine Watch Retailing, Lifestyle Watch functions. This classification has thus positioned Sincere Retailing and Travel Watch Retailing. With a keen sense Watch well to meet the needs of the increasingly on the pulse of the world’s horological development, an sophisticated consumers of today.
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Brand Fine Watch Travel Watch Lifestyle Watch Management Retailing Retailing Retailing The successes of notable Even with an expanded retail Travel watch retailing remains With a keen awareness of the watch brands like Franck Muller, focus, fine watch retailing still a viable element of the shifting trends and untapped A. Lange & Söhne, Chaumet, remains an integral part of the company’s business despite the markets with vast potential in Zenith, F.P. Journe, Pierre Kunz, company’s operations. The shockwaves suffered by the this region, Sincere Watch Dubey & Schaldenbrand, company’s pursuance of travel industry amidst rising forayed into the lifestyle watch de GRISOGONO and L.U.C by excellence through this pillar is security concerns. With fresh retailing through its emotus Time Chopard Manufacture within the pivoted on the company’s marketing and retail initiatives, Culture retail concept. Targeting fledgling Asian horological continuous strategic collaboration Sincere Watch is constantly the region’s growing mobile market, epitomizes the strong with the world’s best brands; reaching out to the market professionals armed with brand management capability of bringing them into this region attracted by the exceptionally increasing spending capacity, Sincere Watch. The rise in stature through its boutiques and retail low duty free prices through its emotus Time Culture presents of these coveted brands in this network. Besides its relentless retail outlets located in unique brands befitting the region is directly attributable to efforts in building the brand Singapore’s Changi International lifestyle of this group at the efforts of the company, awareness of the world’s finest Airport and Vietnam’s Ho Chi competitive prices. The having built and nurtured these brands, Sincere Watch lives up Minh City Airport. With revolutionary retail concept, brands carefully over the years. to its name as a premier watch Singapore Tourism Board’s drive which embraces minimalism in Based on its intimate knowledge specialist with its focus on to hit 17 million visitors to its store design, has met with of these brands and the needs equipping the staff in the Singapore by 2015, Sincere resounding success in Singapore of the region’s consumers, Sincere company with the knowledge Watch is certainly well and Malaysia since its inception Watch has consistently delivered and understanding of the positioned to take full in 2001 and will continue to reap the desired results on the brands products to serve its customers advantage of this niche market the potential present in this niche under its charge. with impeccable service quality. that will increase in tandem with market and availing the luxury of the growth of the inbound owning a quality timepiece to all. travel industry.
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MESSAGE BY CHAIRMAN & GROUP MANAGING DIRECTOR
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"We are very pleased to report another year of record achievements for the financial year ended 31 March 2005."
A YEAR OF RECORD ACHIEVEMENTS The past year had been a momentous one for us and we are delighted to be able to share the joy of Sincere’s Golden Jubilee celebrations with our business partners, customers, the public community at large and of course, you - our loyal shareholder.
We are very pleased to report another year of record achievements for the financial year ended 31 March 2005.
In terms of financial performance, Group revenue and profit rose to record levels. Group revenue rose 25.9% to an all-time high of S$324.3 million against the previous year’s record of S$257.7 million. Net Profit also grew 3.2% to S$19.1 million from S$18.5 million recorded last year. Group Earnings per Share (EPS) was 9.75 cents compared with 9.44 cents for the last financial year as Net Asset Value (NAV) rose to 46.88 cents, up from 41.19 cents.
Growth was robust in almost all sectors. North East Asia contributed 33% of the Group’s revenue and 57% of its profits whereas South East Asia accounted for the rest.
The Group’s sterling performance was due to increased tourist arrivals in the region and an upsurge in demand for luxury goods fueled by strong economic growth and lifestyle changes.
In conjunction with our Golden Jubilee celebration, we held “A Celebration of Time” exhibition in Singapore that was very well received by the general public. This first-of-its-kind public exhibition reinforced our brand name and leadership position in the horology industry.
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CHAIRMAN'S STATEMENT
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In addition to the spectacular display of innovative and unique GOING FORWARD : PROSPECTS AND FUTURE PLANS timepieces, we were also able to draw upon our principals’ Riding on the retail boom in the Asia Pacific, the Group will and valuable partners' support to develop and create a continue to enhance its brand equity and maintain its position collection of limited edition timepieces to commemorate our as one of the leading global players in the luxury watch 50th year in the business. We are thankful for the unwavering industry. The Group currently has 31 outlets in the region and support of the 26 renowned global brands who committed as it increases its product range, it will continue to seek new to this partnership. locations and other opportunities for growth.
HIGHLIGHTS FOR THE YEAR In our Fine Watch division, we have created a new retail concept – Sincere Haute Horlogerie (‘SHH’) – to penetrate MAINBOARD UPGRADE the top-end of the watch market. The first SHH shop is slated Beyond the good results, we were promoted to the Main to open at the beginning of the fiscal second quarter and this Board of the SGX on 1st February 2005. This will further new retail concept is expected to elevate Fine Watch retailing enhance our visibility among investors. to an even higher level. As part of our multifaceted retail strategy, Sincere Watch will be partnering international watch REWARDING SHAREHOLDERS brands to operate mono-brand boutiques to further enhance Furthermore, in order to reward our shareholders for their the retail landscape in this region. Our first collaboration will continuous support as well as to improve the market liquidity be with the Richemont Group for a Vacheron Constantin of our shares, the Company completed a share re-structuring boutique in both Singapore and Kuala Lumpur, targeting to exercise via a stock split followed by a post-split 1-for-5 bonus open by the end of our fiscal first quarter. issue during the year. The net result of this exercise: every 1,000 shares each of $0.25 par value previously owned by In line with our aim to promote the culture of horology shareholders has since been converted into 3,000 new shares and to develop an appreciation for the art of watchmaking each of $0.10 par value. among consumers and the media, we plan to set up a Watch Academy. We believe that this proposed Watch Academy, CURRENT YEAR DIVIDENDS which is the first-of-its-kind in the world, will reinforce In line with the positive results, the Board of Directors has Singapore's leading position in the global watch industry and proposed a First and Final dividend of 1 cent a share plus a provide an engine of growth in the coming years. Special Dividend of 1.5 cents a share, giving a total of S$3.9 million (net of tax) dividend payout for the year. As the While competition in the industry is expected to be stiff, the share price at the date of the announcement of our full year’s Group will remain profitable in the new financial year. results on 17th May 2005 was S$0.78, the gross dividend yield for the Group was therefore 3.2%. A NOTE OF APPRECIATION As we enter our 51st year in the industry, we would like to CONTRIBUTING BACK TO THE COMMUNITY acknowledge the contribution of all our Board members, our In addition to rewarding shareholders, the Group has also staff and their families, both past and present, for playing made exceptional efforts to contribute to the community such a significant role in our history. during our Golden Jubilee year. We are most pleased to have raised S$1.05 million for our adopted charities – The Tent and On the same note, we would also like to thank all our The Straits Times School Pocket Money Fund. This gesture is customers, business associates and shareholders for their in line with our corporate philosophy to provide support to support throughout all these years. We look forward to more underprivileged youths to create a better future for them. good years ahead.
AWARDS AND RECOGNITION Thank you. Our record achievements have not gone unnoticed. We are proud to be one of the six Singapore companies to make it into Forbes’ “Best Under a Billion” list of companies in the Asia-Pacific for 2004.
This award is a reflection of the hard work, impeccable customer service, constant innovation and determination of our people in working towards the achievement of a common vision of excellence, which have time and again brought Tay Boo Jiang Tay Liam Wee outstanding results. Chairman Group Managing Director
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CORPORATE DATA
BOARD OF DIRECTORS
FROM LEFT Lua Cheng Eng • Tay Ngiap Jiang • Tay Boo Jiang Chairman • Soh Gim Teik
Tay Liam Wee Group Managing Director • Tay Chok Yan • Khong Teck Kim • Cecil Vivian Richard Wong
AUDIT COMMITTEE NOMINATING COMMITTEE REGISTERED OFFICE
Mr Cecil Vivian Mr Khong Teck Kim Chairman Sincere Watch Limited Richard Wong Chairman Mr Cecil Vivian Richard Wong 8 Temasek Boulevard Mr Lua Cheng Eng Mr Lua Cheng Eng #23-03 Suntec Tower 3 Mr Khong Teck Kim Mr Tay Liam Wee Singapore 038988 Mr Soh Gim Teik Telephone +65.6737.4592 REMUNERATION COMMITTEE Facsimile +65.6733.0923 Mr Lua Cheng Eng Chairman COMPANY SECRETARIES Mr Cecil Vivian Richard Wong Mr Soh Gim Teik SHARE REGISTRAR Mr Khong Teck Kim Mr Lim Gwee Koon B.A.C.S. Private Limited Mr Tay Liam Wee 63 Cantonment Road Singapore 089758
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AUDITORS SOLICITORS PRINCIPAL BANKERS INVESTOR RELATIONS Deloitte & Touche Wong Tan & Molly Lim LLC Oversea-Chinese Banking Stratagem Consultants Pte Ltd Corporation Limited 6 Shenton Way 80 Robinson Road 10 Anson Road 65 Chulia Street, OCBC Centre #32-00 DBS Building Tower 2 #17-02 #15-05 International Plaza Singapore 049513 Singapore 068809 Singapore 068898 Singapore 079903 Partner-in-charge: Telephone +65.6227.0502 Development Bank Mr Kenny Horlley Young Bih Li & Lee Facsimile +65.6227.5663 of Singapore Limited (wef FY March 31, 2004) 79 Robinson Road 6 Shenton Way #24-08 CPF Building DBS Building, Tower One Singapore 068897 Singapore 068809
Malayan Banking Berhad 2 Battery Road, Maybank Tower Singapore 049907
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GROUP STRUCTURE
Avante Investment Pte Ltd Culina Pte Ltd 100% 50%
Culina Holdings Pte Ltd Culina Pte Ltd 100% 50%
Avante Marketing Pte Ltd 100%
British Master Time Pte Ltd 100%
Emotus Pte Ltd Emotus Sdn Bhd 100% 100%
Franck Muller Pte Ltd 100%
Heirloom Restoration Services Pte Ltd 100%
Heritage Distribution Pte Ltd 100%
Parisian Time Pte Ltd 100%
Richburgh Holdings Pte Ltd 50%
Sincere Watch Duty Free Pte Ltd Sincere Watch Limited 50%
Swiss Master Time Pte Ltd 100%
Times Legend International Pte Ltd 100%
Sincere Watch Limited Avante Marketing (M) Sdn Bhd Sincere Watch Sdn Bhd Hong Kong Branch 100% 15%
Sincere Watch Sdn Bhd 65%
BVL Partner Co Ltd 49%
Pendulum Ltd BVL Partner Co Ltd 49% 10%
Leoco Enterprise Limited 75%
Sincere Brand Holdings Limited 100%
Sincere Brand Management Limited (formerly known as Times Legend (Asia Pacific) Limited) Pendulum Limited 100% 100%
Sincere Watch (Hong Kong) Limited 100%
Unisky Limited 33.33%
Sincere Watch Co. Ltd 100%
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THE RETAIL NETWORK
SINCERE WATCH LIMITED Airport Office Lot G323C, Ground Floor Gaysorn Corporate Office #047-020 Passenger Terminal 2 One Utama Shopping Centre Unit No. 1F-12 8 Temasek Boulevard Singapore Changi Airport 1 Lebuh Bandar Utama The First Floor, #23-03 Suntec Tower 3 Singapore 918156 47800 Petaling Jaya Selangor 999 Plonchit Road, Lumpini, Singapore 038988 Telephone +65.6545.1961 Telephone +603.7725.6322 Patumwan, Bangkok 10330 Telephone +65.6737.4592 Facsimile +65.6545.4138 Facsimile +603.7725.9322 Telephone +662.656.1116 Facsimile +65.6733.0923 Email [email protected] Facsimile +662.656.1124 Email [email protected] HONG KONG SINCERE WATCH DUTY FREE PTE LTD SINCERE BRAND MANAGEMENT LIMITED BVLGARI BOUTIQUE SINGAPORE Concessions Office The Peninsula Plaza SINCERE FINE WATCHES Departure/Transit Lounge Suite 5402-04, Central Plaza Room 211, 2nd Floor 391 Orchard Road #021-13/14 Passenger Terminal 1 18 Harbour Road 153 Rajadamri Road, Lumpini, #01-12 Ngee Ann City East Shop Wan Chai, Hong Kong Patumwan, Bangkok 10330 Singapore 238872 Singapore Changi Airport Telephone +852.2506.1868 Telephone +662.652.1812 Telephone +65.6733.0618 Telephone +65.6542.4362 Facsimile +852.2506 1866 Facsimile +662.652.1814 Facsimile +65.6235.1204 #021-39/40 Passenger Terminal 1 FRANCK MULLER BOUTIQUE KOREA 304 Orchard Road West Shop Shop 3, Ground Floor FRANCK MULLER BOUTIQUE #01-22 Lucky Plaza Singapore Changi Airport St. George's Building 395 Namdaemoon 5 Ga, Chung Gu Singapore 238863 Telephone +65.6545.2909 2, Ice House Street 1st Floor, Seoul Hilton Hotel Telephone +65.6737.4593 Central, Hong Kong 100-095 Seoul, Korea Facsimile +65.6235.5991 MALAYSIA Telephone +852.2522.8800 Telephone +822.756.2602 SINCERE WATCH SDN BHD Facsimile +852.2522.1373 Facsimile +822.756.2605 3 Temasek Boulevard Office #01-17/21 Suntec City Mall Suite 15-3, Level 15 DE GRISOGONO BOUTIQUE 2/F Lotte Avenuel Singapore 038983 Wisma UOA 11 Shop 2062-2063, IFC Mall 130, Namdaemun-ro 2-ga Telephone +65.6337.5150 No. 21 Jalan Pinang 8 Finance Street Jung-gu, Seoul, Korea Facsimile +65.6336.5296 50450 Kuala Lumpur Central, Hong Kong Telephone +822.2118.6071 Telephone +603.2168.2700 Telephone +852.2522.8368 Facsimile +822.2118.6072 SINCERE HAUTE HORLOGERIE Facsimile +603.2168.2701 Facsimile +852.2522.8366 581 Orchard Road [email protected] TAIWAN #02-17/18 The Shopping Gallery EUROPEAN COMPANY SINCERE WATCH CO LTD at The Hilton SINCERE FINE WATCHES WATCH BOUTIQUE Office Singapore 238883 Lot G39A, Ground Floor Shop 28 Ground Floor 5F-1 Shen Hsiang Tang Building Telephone +65.6738.9971 Suria KLCC Shopping Centre Central Building 146 Sung Chiang Road Facsimile +65.6738.5221 50088 Kuala Lumpur 1-3 Pedder Street Taipei, Taiwan Telephone +603.2166.2181 Central, Hong Kong Telephone +8862.2565.1122 VACHERON CONSTANTIN BOUTIQUE Facsimile +603.2166.2182 Telephone +852.2522.2529 Facsimile +8862.2562.3322 391 Orchard Road Facsimile +852.2522.9119 #01-19A Ngee Ann City Lot G23B, Ground Floor VIETNAM Singapore 238872 Suria KLCC Shopping Centre THAILAND SAIGON DOWNTOWN DUTY FREE Telephone +65.6836.1573 50088 Kuala Lumpur PENDULUM LIMITED 102 Nguyen Hue Street Facsimile +65.6836.2903 Telephone +603.2166.2173 Office District 1, Ho Chi Minh City, Vietnam Facsimile +603.2166.2172 Maneeya Centre, 9th Floor Telephone +848.823.4553 EMOTUS TIME CULTURE 518/5 Ploenchit Road, Lumpini, Facsimile +848.823.4546 391B Orchard Road #B1-36/36A Lot G03A-06 Ground Floor Patumwan, Bangkok 10330 Ngee Ann City Kuala Lumpur Plaza Telephone +662.254.8371-3 Tan Son Nhat Airport Singapore 238872 179 Jalan Bukit Bintang Facsimile +662.254.8370 Ho Chi Minh City, Vietnam Telephone +65.6835.2690 55100 Kuala Lumpur Email [email protected] Facsimile +65.6835.2691 Telephone +603.2141.0540 Noi Bai International Airport Facsimile +603.2141.1178 PENDULUM International Departure Hall 80 Marine Parade Road 153, Peninsula Plaza Hanoi, Vietnam #B1-68/69 Parkway Parade VACHERON CONSTANTIN BOUTIQUE Room 115, 1st Floor Singapore 449269 Lot G03 Ground Floor Rajadamri Road, Lumpini, INDONESIA Telephone +65.6348.5295 Kuala Lumpur Plaza Patumwan, Bangkok 10330 FRANCK MULLER BOUTIQUE Facsimile +65.6348.4735 179 Jalan Bukit Bintang Telephone +662.254.9076 Plaza Senayan 55100 Kuala Lumpur Facsimile +662.254.9078 Level 1 Unit 121B Department Store Concessions Telephone +603.2141.0540 Jakarta 10270, Indonesia Level 1 Isetan Scotts Facsimile +603.2148.9804 622 Emporium Shopping Complex Telephone +6221.572.5688 Telephone +65.6735.0574 Room 19-20, Ground Floor Facsimile +6221.572.5355 EMOTUS TIME CULTURE Sukhumvit Road, Klongtan Level 1 Takashimaya S.C. Lot 124, 1st Floor Bangkok 10110 CHINA Telephone +65.6735.5068 Suria KLCC Shopping Centre Telephone +662.664.8377 FRANCK MULLER BOUTIQUE 50088 Kuala Lumpur Facsimile +662.664.8379 Shop 102, Level 1 Telephone +603.2163.3841 Citic Square Facsimile +603.2163.3840 1168 Nan Jing West Road Shanghai 200041, China Telephone +8621.5292.9596 Facsimile +8621.5292.8626
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LEFT TO RIGHT (FROM TOP) A. LANGE & SÖHNE "Jubilee Double Split Datograph", AUDEMARS PIGUET "Royal Oak Offshore Limited Edition Tantalum", BAUME & MERCIER "Capeland S Sincere", BREITLING "Heritage Chronomatic", BVLGARI "Bvlgari – Bvlgari", CHAUMET "Class One Noir", FRANCK MULLER "Cintree Curvex Crazy Hours Tourbillon", IWC "Pilot Perpetual", JAEGER-LECOULTRE "Reverso Grande Reserve", LONGINES "Evidenza", L.U.C BY CHOPARD MANUFACTURE "Steel Wings Tourbillon Jubilee", OMEGA "Constellation Sincere Golden Jubilee", PATEK PHILIPPE "5035 Annual Calendar"
The Golden Jubilee Collection Sincere Watch’s Golden Jubilee celebrations would not have been possible if not for the long-term partnerships fostered with brand owners. It is noteworthy that 26 world-renowned watch brands joined in the celebrations by creating special limited edition pieces for Sincere Watch’s 50th anniversary.
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LEFT TO RIGHT (FROM TOP) DE GRISOGONO "Instrumentino Cinque", DUBEY & SCHALDENBRAND "Jubilè Rattrapante Triple Calendar", EBEL "Sport Classic Mini", F.P. JOURNE "Tourbillon Souverain TN", FORTIS "Space Cartoon", GLASHÜTTE ORIGINAL "Panomaticlunar", GIRARD-PERREGAUX " Sincere's Golden Jubilee Three Gold Bridges", MONTBLANC "Timewalker", PANERAI "Radiomir Eight Days", PIAGET "Emperador Tourbillon", TAG HEUER "Monaco", VACHERON CONSTANTIN " Sincere Skeletal Tourbillon", ZENITH "Grande Chronomaster XXT Tourbillon"
This is a significant collaboration between the Singapore- The stunning Sincere Watch Golden Jubilee Collection, based group and world-renowned watch and jewellery valued at a staggering S$23 million, features world groups such as Swatch Group, Richemont Luxury, LVMH premieres, new calibres and mechanical innovations. The Group, as well as respectable independent watchmaking first piece from the 26-brand collection was auctioned at houses such as Patek Philippe, Franck Muller, F.P. Journe, the Sincere Watch charity gala dinner which culminated Audemars Piguet and Girard-Perregaux. Never before has the series of Golden Jubilee activities. Through such a feat, the horological world seen such an assemblage of fine Sincere Watch made its mark in watchmaking history, as and rare timepieces. the collection of this magnitude is a testament of the Group’s strength and credibility as a highly respected and trusted purveyor of fine watches.
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SINGAPORE
precious little moments The children of our future; let's watch them grow.
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Fuelled by the growth of Singapore into an important Watch Hub in South East Asia and being the 8th largest Swiss watch importer in the world, Sincere Watch soared ahead into the new year, making inroads into positioning itself as the world premier Watch Specialist. To commemorate the 50th anniversary, the Group marks its Golden Jubilee with a series of celebratory events themed “A Celebration of Time,” and the creation of Sincere Watch Golden Jubilee Collection.
CLOCKWISE FROM TOP Franck Muller Boutique, The Shopping Gallery at The Hilton Sincere Fine Watches, Ngee Ann City Sincere Fine Watches, Suntec City Mall Sincere Fine Watches, Lucky Plaza Sincere Watch Duty Free, East Shop Sincere Watch Duty Free, West Shop emotus Time Culture, Parkway Parade emotus Time Culture, Ngee Ann City
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Ernst & Young Entrepreneur of The Year Sincere Watch’s pioneering approach towards innovative retail concepts have been led by Mr Tay Liam Wee and his team since 1984 when he joined the company as its executive managing director. Recognising Asia's luxury watch business' strong growth potential, he was instrumental in steering the group’s regional expansion. His entrepreneurial acumen guided the Group through a successful SESDAQ listing in 1993. Under Mr Tay’s stewardship, brands like Franck Muller were nurtured into international best- sellers. From a turnover of S$6.7 million in 1984, Sincere Watch has since grown to become a business entity, which generated a turnover of S$258 million in 2004.
BELOW Judges and finalists of Ernst & Young's 'Entrepreneur Of The Year' 2004.
FROM LEFT The night of 1 November 2004 at the Shangri-La Hotel was a Mr Tay Liam Wee recieving the award from Mr Raymond Lim, Acting Second Minister great moment to remember for it was the day the contributions for Finance & Senior Minister of State for made by the visionary Mr Tay Liam Wee were duly recognised. Foreign Affairs. Past and present winners of Ernst & Young's There, Mr Tay was named the Ernst & Young Entrepreneur Of The 'Entrepreneur Of The Year' award, Mr Wong Ngit Liong, Mr Tay Liam Wee Year Singapore 2004. This prestigious award honours entrepreneurs and Mr Ron Sim. whose ingenuity and perseverance have created and sustained successful, growing business ventures.
The Ernst & Young's 'Entrepreneur Of The Year' awards programme was introduced in 2002 and Mr Tay is the third businessman to receive this award. The Lifestyle & Retail Entrepreneur Of The Year award also went to Mr Tay and these two awards are a reflection of the resilience and determination of the team at Sincere Watch. Receiving these awards during the year of its 50th founding anniversary has made it all the more significant for Sincere Watch.
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"A Celebration of Time" Golden Jubilee Press Conference Perfectly complimenting the historical milestone of the 50th anniversary, the Old Parliament House presents an excellent historical setting for the unveiling of the much-anticipated Sincere Watch Golden Jubilee Collection on 16 July 2004 to both the local and regional press. The press event marked the start of a host of activities to commemorate this momentous milestone for Sincere Watch. A fashion show featuring the FROM TOP Jubilee Collection was presented in three categories – The historic chamber of the Old Parliament House. Series Technics, Series Luxe and Series Active. Monumental imprints of Sincere Watch through the eras. Mr Tay Liam Wee with all the models wearing timepieces from the 26 brands. The hallway depicting the milestones of Sincere Watch.
FROM LEFT Girard-Perregaux Vintage 1945 Tourbillon with 3 White Gold Bridges. Franck Muller Long Island Jubilee Longines Evidenza.
FROM LEFT Team from TAG Heuer. Mr Tay Liam Wee, Dr Lee Boon Yang and Mr Tay Boo Jiang. Sentosa Golf Club. Golfer in action.
"A Celebration of Time" Golden Jubilee Charity Golf Day Corporate social responsibility ranks high at Sincere Watch. The Golden Jubilee Golf Day, held at the Sentosa Golf Club on 5 October 2004, was organised for a charitable cause to raise funds for The Straits Time School Pocket Money Fund, one of the adopted charities during the year-long 50th anniversary celebrations. Asian Professional Golfers were present to conduct golf clinic for the invited guests. Gracing the event as Guest-of-Honour was Dr Lee Boon Yang, Minister for Information, Communications and The Arts.
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TOP The Exhibition Centerpiece with the Sincere Golden Jubilee Collection. RIGHT Intricate detailing in the watch displays. LEFT The elaborate setup at the exhibition, showcasing the three series: Technics, Active, Luxe. The Watchmaker's Atelier by Girard-Perregaux.
"A Celebration of Time" Golden Jubilee Exhibition In October 2004, an exhibition showcasing the 26 brands participating in the Sincere Watch Golden Jubilee Collection was organised. “A Celebration of Time” was a mega-exhibition held at Takashimaya Square in Ngee Ann City. The exhibition provided an educational platform to introduce the public to the seemingly ‘complex’ world of fine watchmaking. To celebrate the world-debut of the Sincere Golden Jubilee Collection and the launch of the mega-exhibition, a select group of esteemed guests were invited to an exclusive champagne cocktail party where Mr Tay Liam Wee played host for the evening.
The brands showcased were categorised into three series: Series Technics, Series Luxe and Series Active. Every brand in each ‘Series’ had a special section for the comprehensive display of their timepieces complemented by both audio and visual effects. This magnificent extravaganza reinforced Singapore’s position as Asia's leading watch hub.
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In line with the overall objective of educating the public on the world of horology, a key highlight of the exhibition was the setup of a Watch Learning Centre by Girard-Perregaux. Aptly named the Watch Atelier, the learning centre was a resource centre with exhibits explaining the mechanics and workings of watch complications like the tourbillon, minute repeater, chronograph and the perpetual calendar. Girard-Perregaux specially flew in RIGHT Models aptly dressed to represent watchmakers and a well-known curator, Willy Schweizer, from its the three series of collection. museum to conduct guided tours and answer questions from the many curious visitors. Interactive sessions were also conducted by watchmakers from Jaeger-LeCoultre and A. Lange & Söhne who were on hand to demonstrate the finer points of watchmaking. The breadth and depth of the exhibition coupled with the ability to showcase the Golden Jubilee limited editions further underscore Sincere Watch’s position as a premier watch specialist.
THIS ROW FROM LEFT The world's largest heart-shaped black diamond by de GRISOGONO. Watchmakers at work to demonstrate finer points of watchmaking.
CLOCKWISE FROM LEFT Dr Luigi Macaluso, Mr Tay Liam Wee and Mr Nash Benjamin. The Watchmaker's Atelier. Mr Tan Soo Khoon and Mr Soh Gim Teik. Ms Sophia Lim and Ms Coco Tang. Ms Sulian Tan-Wijaya and Mr Lim Neo Chian from Singapore Tourism Board. Mrs Daisy Chong and Mr Tay Boo Jiang.
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RIGHT The highlight for the evening was the auction of the 'first pieces' in the Sincere Golden Jubilee Collection. BELOW Performers filled the night with entertainment. A showcase of the Golden Jubilee Collection. Sincere 'miniature' birthday cake.
FROM TOP OF PAGE The table settings. Dramatic transformation of the grand ballroom. LEFT The A. Lange & Söhne Jubilee Double Split Datograph, retailing at S$186,880, was auctioned at S$180,000 at the Sincere Charity Gala Dinner. In March 2004, the same piece fetched more than S$200,000 at the Sotheby's Auction.
"A Celebration of Time" Golden Jubilee Gala Dinner The Golden Jubilee celebrations culminated with a black-tie charity gala dinner held at the Ritz Carlton Hotel on 9 November 2004. Singapore’s head-of-state, President S R Nathan graced the occasion as the guest-of-honour. Guests for the evening included the who’s who of the corporate world, the glitterati from the social world and valuable partners. All the guests were treated to a visual, auditory and gastronomical extravaganza at the gala dinner. This exclusive evening was conceived to mark the golden jubilee milestone of the Group and capped the year-long celebrations. The menu was a highlight of the event as every course was specially created by world-renowned chefs such as Tetsuya Wakuda of Tetusya’s in Sydney, Justin Quek of La Petite Cuisine in Taipei, Shinji Shiraishi of Shiraishi in Singapore and Christophe Megel and Philippe Agnese of Ritz Carlton Millenia. The evening culminated to an exciting auction by international auction house, Christie’s, where the first piece from the 26-brand Golden Jubilee Collection were auctioned and proceeds of close to a million was raised for The Tent, a volunteer welfare organization set up to provide shelter and aid for female adolescents in need. A custom-made miniature “Sincere” birthday cake cemented a night of everlasting memories in the minds of the guests for this very special evening.
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FROM RIGHT Khun Chamnong Bhirom Bhakdi and Mr Tay Boo Jiang. Mr Walter Lange, Ms Annette Barnert and Mr Fabien Krone from A. Lange & Söhne.
FROM LEFT DOWN FROM TOP Mr Didier Decker and Ms Nadine Brodine Mr Dick Lee and Ms Celina Lin. from Franck Muller Watchland. Justice Lai Kew Chai, Mr Freddy Lee Mr Fawaz Gruosi from de GRISOGONO, and Mr Sim Kee Boon. Ms Caroline Scheufele from Chopard, Celebrity Chefs Justin Quek, Tetsuya Mr Tay Liam Wee and Mr Thierry Nataf Wakuda, Philippe Agnese, Christophe from Zenith. Megel and Shinji Shiraishi. Ladies dressed in their finest for the charity Mr Tay Liam Wee bringing President gala dinner. SR Nathan through the limited edition Mr David Tay and Mr Francois-Paul Journe watch collection. from F.P. Journe.
FROM TOP Mr & Mrs Lua Cheng Eng and Mrs Goh Chok Tong. Mr Nicolas Barelzki, Mr Maxime Labey, Mr Tay Liam Khoon and Mr David Ponzo.
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SINGAPORE
Vacheron Constantin's Tribute to the Great Explorers In keeping to its tradition as a creator of exquisite timepieces, Vacheron Constantin bedazzled many watch collectors on 19 October 2004 with a first taste of its Great Explorer enamelled timepieces at the Royal China restaurant in Raffles Hotel. Hosted by Mr Tay Liam Wee, Group Managing Director of Sincere Watch and Mr Claude-Daniel Proellochs, CEO of Vacheron Constantin, the event saw many invited guests taken in by the technical marvel from the Great Explorer series which pays a fitting tribute to great Western explorers like Ferdinand Magellan and adventurers like Chinese Admiral Zheng Ho.
FROM TOP Ms Sandra Ng and Ms Joyz Chan . Mr Leonard B. Ross and Mr David Heng. Mr and Mrs Richard Chee. FROM RIGHT Dr Bernard Cheong, Mrs Dolly Cheong and Temptations from de GRISOGONO Mr Claude-Daniel Proellochs. Gorgeous models adorned in Vacheron Constantin Great Explorer de GRISOGONO's latest collections – Zheng Ho. of jewellery and timepieces. Ms Vonny Sagita. Ms Rosnah Tjuatja. Ms Coco Tang and Mrs Triska Ang.
de GRISOGONO Ladies Luncheon Well-known for its black diamond creations and statement pieces, de GRISOGONO sent a thrill of excitement among the ladies when they were presented with the new Galuchat cuffs, rings and timepieces. The private luncheon hosted by Sincere Fine Watches and Prestige Magazine at The Shangri-La Hotel on 25 October 2004, gathered some of Singapore’s most discerning style setters for a personal viewing of de GRISOGONO’s latest collections of jewellery and timepieces.
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Pierre Balmain "Be Crazy" Launch The spirit of Pierre Balmain timepieces came alive at the emotus Time Culture boutique in Ngee Ann City especially during November 2004 when Pierre Balmain brand ambassador Michelle Liow launched the new “Be Crazy” collection. Fans and customers had the opportunity to view the latest collection and bring home a personalised autograph from the popular actress.
FROM TOP Mr Fahmy Fazillah and Ms Michelle Liow. Life-size poster of the brand ambassador. Pierre Balmain "Be Crazy" Watches.
FROM TOP Fashion Time Icon campaign. Urban Travelogue campaign. Vogue Travelogue campaign.
emotus Time Culture Campaigns 2004 The word EMOTUS means passion and the offering by this retail concept is especially for fashionable urbanites and the young at heart. The profile for emotus customers is further segmented into the vogue, the active, the urban and the classic. emotus is for everyone and the idea is to offer timepieces which are more casual, urban and reasonably-priced. Window Displays at A special advertisement campaign was created for emotus Time Culture selected brands offered at emotus. Through a series The beauty of the emotus Time Culture of fashionably-styled advertisements, the message concept is its ability to represent individual is apparent – that emotus has an offering that goes watch brands in a non-traditional retail beyond mere time-keeping, it is a retail concept setting. The window displays can be readily about timepieces becoming lifestyle products and transformed to reflect thematic promotions fashion accessories. Whether it is a timepiece from of various brands like Dior and TAG Heuer. Burberry, Dior, Fendi or Gucci, the advertisements were created to illustrate the ability to ‘mix-and- match’ these watches with clothes and other fashion accessories. SINCERE WATCH LIMITED ANNUAL REPORT 2005
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MALAYSIA
precious little moments Never forget that our lifetime of learning begins at birth.
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With economic developments fast gathering pace in Malaysia and the country’s focus on increasing tourism arrivals, Sincere Watch has established its presence in the Malaysia retail market with boutiques strategically located at prime locations such as the Kuala Lumpur City Centre, KL Plaza and One Utama. Sincere Watch leverages on its knowledge of market conditions and consumer trends and applies a combination of well-tailored business models and marketing concepts to bring vibrancy and dynamism to the high-end luxury lifestyle retailing.
CLOCKWISE FROM TOP Sincere Fine Watches, Suria KLCC Sincere Fine Watches Luxury Boutique, Suria KLCC Sincere Fine Watches, KL Plaza emotus Time Culture, Suria KLCC emotus Time Culture, One Utama
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MALAYSIA
"A Walk into the Heritage" of Vacheron Constantin On 17 October 2004, guests were invited to an exclusive private
FROM TOP affair to take “A Walk into the Heritage of Vacheron Constantin” Dato' and Datin Low Keng Kok. at Fic’s Restaurant in Kuala Lumpur. During the dinner, the Ms Jenny Tan, Ms Sylvia Gan and Ms Geok Lian. privileged guests were given a peek of the timeless vintage Datin Patsy Loh and Dato' K.K.Loh. Mrs Sally Duar and Mr Stephen Duar. timepieces from Vacheron Constantin’s Museum Collection worth Exquisite timepieces from Vacheron Constantin. more than seven million Malaysian Ringgit. Some of the rare museum pieces included a pendant watch for ladies made in 1780 and a Prestige de la France wristwatch produced in 1929. All the guests were also awed by the latest exquisite Vacheron Constantin timepieces.
FROM RIGHT Franck Muller watch display. Ms Tanny Tee, Datin Patsy Loh, Ms Rose Tan, Datin Laily and Ms Lily Iskandar. The nocturnal haven of the Franck Muller Concert Party. Ms Soong Ai Ling and Ms Elaine Daly. Ms Danielle Graham and Ms Carmen Soo.
Franck Muller's Nocturnal Concert Party The 2004 Franck Muller Concert Party sets the standard for stylish, trendy and chic parties attended by the country's most prominent and well-known personalities. With the spectacular setup inspired by the brand's highly successful and sought-after Crazy Hour collection, the party held on 23 June 2004 at the Shangri-La Hotel in Kuala Lumpur, was indeed the social event of the year. The party extravaganza saw an impressive turnout of celebrities, socialites and royalty who turned up in their most glamorous outfits to pay tribute to the watch brand and its creations. True to its spirit and form, the party turned out to be an eventful one for all the guests were entertained during the night by foreign acts specially flown in from Australia and Taiwan.
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Launch of Dubey & Schaldenbrand The Art Deco era was relived on 9 September 2004 in Kuala Lumpur when Sincere Fine Watches, together with Dubey & Schaldenbrand, hosted a private dinner to showcase the Swiss-brand's latest collection comprising the Aerodyn, Carré Cambré, Spiral and Series Limited. Decked out with showcases of the timepieces, guests were impressed with the exquisite timepieces that exude a quiet vintage elegance and a unique nostalgic aura.
FROM TOP Mr Patrick Tan, Mr Tay Liam Khoon and Mdm Cinette Robert, President of Dubey & Schaldenbrand. Datin Winnie Tong and Dato' Thomas Tong. Guests admiring the exquisite timepieces. Mr Wong Loke Yoong and Ms Naoko. FROM LEFT Dubey & Schaldenbrand dinner setup. Pierre Kunz watch display. Dubey & Schaldenbrand watch display. Feature wall decorated with Pierre Kunz visuals. Mr Simon Foong and Mrs Mina Foong. Mr Pierre Kunz and Mr Tay Liam Khoon. Mrs Alice Yong and Mr Adrian Yong.
Launch of Pierre Kunz Unique and creative retrograde timepieces by Pierre Kunz went on display on 12 August 2004 at the Marriot Hotel for avid collectors who attended a launch hosted by Sincere Fine Watches. Delighted watch collectors and connoisseurs in Malaysia were gathered to welcome the creator, Mr Pierre Kunz. Also on display that night were two other world-firsts, the Instant Retrograde Perpetual Calendar and the Large Date. It was indeed a delightful dichotomy for the senses to view the spectacular collection as these interesting timepieces exhibit Pierre Kunz’s hallmark of sobriety, readability and beauty in watches.
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MALAYSIA
Panerai "Deep Blue" Party The blues were chased away when guests turned out in full force for Panerai’s “Deep Blue” party, held at the Passion Bar on 10 December 2004. The party was an evening of fun and socialization for the proud owners of Panerai. The guests were jubilantly treated to view the Radiomir Black Seal, one of the hottest piece available in 2004, which prompted many to add that to their collection. FROM TOP Ms Carmen Soo and Ms Elaine Daly. Mr Yohan Rajan, Ms Wei Ling and Mr and Mrs Ooi Teik Huat. Hosts of the night, Mr Fabien Levrion from Panerai and Mr Ong Ban from Sincere Fine Watches. Ms Rekha Sen, Ms Ruthlene Abu Sahid and Ms Shireen Tan. Panerai "Deep Blue" setup. Panerai Radiomir Black Seal.
CLOCKWISE FROM LEFT Zenith watch display. Puan Sri Datin Enid Singh and Tan Sri Dato' Ajit Singh. Mr Thierry Nataf and models. Mr and Mrs Ooi Teik Huat. Mrs Shirley Tan and Mr Allen Tan. Zenith dinner setup. An upclose view of the Zenith watches.
Zenith Dinner Sincere Fine Watches co-hosted an exclusive dinner with Zenith Manufacture on 24 May 2004. Fans of the famed Swiss brand, Zenith, were enthralled by Mr Thierry Nataf, President of Zenith, when he presented the latest collection at the Mandarin Oriental Ballroom. Guests were privileged to be the first to view these timepieces in less than two months after making their debut at the annual watch fair in Basel.
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IWC Portuguese Automatic Launch Bar Savanh at the Asian Heritage Row was the scene of a most enjoyable cocktail party, on 2 September 2004, when IWC aficionados gathered for the unveiling of the new Portuguese Automatic watch.
FROM TOP Mr Matthew Ma and Mr Jonathan King. IWC Launch Setup. Mr James Beltran, Ms Jenny Tan and Mr Cyril Tan. Ms Adelena Ali, Ms Sabrina Shukri and Mr Andras Rud. Ms Tina Sia and Mr Ken Chan. IWC Portuguese Automatic.
FROM RIGHT Exhibition setup and display. Ms Wong Sze Zen, Ms Elaine Daly and Mr Nicolas Barelzki. Ms Faridah Teh, Datin Laily Azizi, Ms Adelina Tan, Mr Maxime Labey, Ms Jenny Tan and Ms Ellie Lam. Engraver, Dominique Vuez, at work.
Jaeger-LeCoultre 'The Manufacture Comes to You' Exhibition For those who has a keen interest to learn more about fine watchmaking, the opportunity presented itself when Jaeger-LeCoultre premiered the world tour of its exhibition known as “The Manufacture Comes to You” in September 2004. Held at the main concourse of Suria KLCC Shopping Centre, the exhibition included visual and interactive displays on watch- making. Vintage timepieces and movements, valued at more than 20 million Malaysian Ringgit, were showcased during the exhibition and guests were delighted with the key display of the Gyrotourbillon I – which was one of the most-talked about timepieces for 2004. To present the complexity in fine watchmaking and cultivate a greater appreciation for the art, watch enthusiasts attended the Master Class program to understand the intricacies and high detailing required in watchmaking. Each participant went away with memories of the practical experience in taking apart and assembling a watch movement.
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CHINA
HONG KONG & SHANGHAI
precious little moments We have to nurture our children today for they are the seeds of tomorrow.
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Sincere Watch has once again affirms itself in the Chinese retail scene with the opening of the new Franck Muller boutique in Shanghai and is certainly well-positioned to tap onto the expanding upper and middle class in this cosmopolitan city. The execution of innovative brand building concepts through strategic alliances with our partners and event marketing helped to strengthen the brand portfolio of Sincere Watch. The partnership with several leading retailers further bolstered Sincere Watch's market presence and dominance of the brands under its management.
CLOCKWISE FROM TOP de GRISOGONO boutique, IFC Mall, Hong Kong Franck Muller boutique, St. George's Building, Hong Kong European Company Watch boutique, Central Building, Hong Kong Franck Muller boutique, Citic Square, Shanghai
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CHINA
de GRISOGONO Gala Dinner Constantly seeking new and fresh interpretations of telling time, Sincere Watch was instrumental in bringing yet another renowned world brand to the markets of Asia. Heralded as the jeweler of the millennium, the extravagance of de GRISOGONO was clearly defined and communicated to the dazzled guests through the evening’s décor, menu and entertainment. The gala dinner held at the Grand Ballroom of Grand Hyatt Hong Kong last December gathered the crème de la crème socialites to view the breath-taking collection of the world’s most stunning and luxurious jewellery and timepieces. While the guests enjoyed the sumptuous Tuscan dinner, the atmosphere was filled with enchanting jazz music by Tyris Washington who was specially flown in from the United States to perform for the guests.
FROM TOP The dining hall exudes elegance and class. Ms Pansy Ho. Models adorned in de GRISOGONO jewellery. Mr Leigh Chou, Mr Stanley Chou and Mrs Reina Chau. Mr Fawaz Gruosi and Mr Kevin Chau. Display of de GRISOGONO timepieces and jewellery.
Franck Muller Party The party was a night of super-charged fun and “Franck Muller craziness” at Cyberport as guests enjoyed the entertainment by aerialists from New York and exhilarating music spun by famous DJ Joel Lai. The Franck Muller party, held in March 2005, saw the gathering of the staunchest followers to celebrate the brand’s continued success. At the party, guests immersed in the “World of Franck Muller” and were beguiled with the different scene settings from the Amazon to the Industrial Age and then the Cosmopolitan Manhattan. Aligning the brand with an event that epitomizes the brand’s essence and ethos of creative innovation coupled with meticulous timekeeping and ground- breaking new creations, Franck Muller has shown phenomenal
FROM TOP success under the nurturing hands of Sincere Watch. Franck Muller watch display. Performance by aerialists. Guests were dressed to the theme for the party. Franck Muller Party at Cyberport. Ms Fenni Yuen. The luminary attendance attracts the media.
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RIGHT Mr Michael Yap and Ms Gigi Yap. Mr Michael Wong and Mr Pino Piano.
Artistic Expression of Time Charity Gala in Aid of Wristwatch has become an integral part of Hong Kong Cancer Fund modern life, as it evolved from a utilitarian In the face of countless parties and extravagant time-keeping mechanism to a coveted object functions, Sincere Watch did not overlook its that combines craftsmanship, mechanical corporate social responsibility. In aid of the virtuosity and stylistic artistry. To celebrate the Hong Kong Cancer Fund, de GRISOGONO artistic expression of time, Franck Muller and hosted a charity gala dinner at ISOLA, a newly de GRISOGONO were amongst the 14 highly opened Italian restaurant at IFC Mall in May coveted watch brands invited to participate in 2004. More than 200 prestigious business elites an exhibition organized by Spiral, the watch and socialites were gathered at the philanthropic specialist magazine in June 2004. Renowned event. Guests were also treated to the photographers and illustrators in Hong Kong bejeweled collection by de GRISOGONO while were gathered to create works of fine art based their aural senses were touched with the live on their interpretation of each unique timepiece, jazz band setting the alluring mood throughout which was later exhibited at Fringe Club and the glittering evening. Harbour City.
FROM TOP Artistic interpretation of de GRISOGONO. Artistic interpretation of Franck Muller. RIGHT Franck Muller long island.
RIGHT de GRISOGONO Instrumentino.
Champion of Time Exhibition Members of the public had the rare opportunity to view a diverse collection of fine watches when Franck Muller, Swiss Delegation Visit to Shanghai together with 15 other coveted brands, The Geneva Conference 2004 was held in came together to participate in the Shanghai in September 2004. On the itinerary Champion of Time Exhibition in Shanghai. was a stop at the newly opened Franck Muller Organized by Time Square magazine, this flagship boutique in Citic Square. Led by 3-day exhibition, which garnered keen Mr Carlo Lamprecht, the contingent of interest from the public, showcased the 20 Swiss delegation members visited the highly intricate timepieces and provided boutique where Mr Kevin Chau, Chairman a platform to educate the visitors on the of Sincere Brand Management Limited was art of fine watchmaking. present to share his experiences on the retail business scene in China.
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THAILAND
precious little moments Time is equal to all, regardless of age, race or religion.
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Thailand is gradually becoming one of the key markets of luxury watch retailing in Asia. Through the chain of boutiques with our partner, Pendulum, Sincere Watch is well poised to meet the rising demand for high-end luxury timepieces as economic growth and development in Thailand gathers pace.
CLOCKWISE FROM TOP Pendulum, Gaysorn Pendulum, Emporium Shopping Complex Pendulum, Peninsula Plaza Bvlgari boutique, Peninsula Plaza
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THAILAND
The Spirit of Zenith Ardent watch collectors gathered in a silvery baroque Zenith mood at the Grand Ballroom of The Oriental Hotel in Bangkok on 25 November 2004 for a luxurious gala dinner. Mr. Thierry Nataf, President and CEO of Zenith Manufacture presented the guests with his latest creations. A watch and fashion show by Thailand's top models proved to be the highlight of the evening.
FROM TOP Mrs Petchprink and Mr Kalin Sarasin. Ms Vitida Wongpiwat, Mrs Yuki Srikarnchana, Mr Jirapat Nilwong, Ms Siriporn Kuprasertsin and Ms Yumi Ingkawat. FROM RIGHT Mrs Kitiya and Mr Peerayos Amartayakul. Hermès Barénia. Models presenting the Zenith watches. Mr Sakul Intakul and Mrs Yuki Srikarnachana,. Zenith Chronomaster Open. Multihued concept décor. Mrs Trakarnta Srivisorn and Mrs Claire Chatikavanich.
Hermès 'Barénia' Launch Pendulum partnered with one of the world's most sought-after luxury brands, Hermès to launch the Hermès Barénia collection at the Eat East Restaurant in Gaysorn on 26 May 2004. In line with the inspiration of the new collection, the event was set in a colourful atmosphere in the theme of "Colours and Imagination". Mr Sakul Intakul, a renowned floral artiste in Thailand, was specially invited to conduct a flower arrangement workshop. Guests were invited to arrange flowers with the design of the timepiece as a source of inspiration. All the guests went away with their beautiful creation and an experience filled with creativity and pure delight.
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Timeless World of Panerai After a year of much anticipation, Panerai lovers were united at "The Timeless World of Panerai" event to witness the unveiling of the latest Panerai collection from Switzerland. Popular celebrities like Mr Chamnong Bhirom Bhakdi, Mr Willy and Ms Kathaleeya Mcintosh and well-known singer Mr Pankorn Boonyachinda were among the many who turned up at the Pendulum showroom in Gaysorn. With the timepieces taking centre stage, guests were pleasantly delighted by the collection and many took the opportunity to reserve their favourite pieces.
FROM TOP Mr Kasidith Karnchanaranya and Ms Inthira Thanavisuth. Event setup. Ms Srikanya Sakdidej Bhanuphan and Mr Teerasak Phayapdechachai. Mr Thitipol and Mrs Nipaporn Hupnanonth, Mrs Yuki Srikarnchana and Dr Cathaleen Kijotharn. Panerai Luminor Chronograph Daylight.
FROM TOP New Pendulum Peninsula Plaza. H.E. Anand Panyarachun, UNICEF Ambassador for Thailand. Mrs Mondakam Kridakon, Mr Udom Chariyavilaskul, Mrs Yuki Srikarnchana and Mrs Pornsuk Sangkanit. Ms Kathaleeya Mcintosh and Ms Yumi Ingkawat. Pendulum at Peninsula Plaza His Excellency Anand Panyarachun, UNICEF Ambassador for Thailand, graced the opening celebration of the newly renovated Pendulum boutique in Peninsula Plaza on 23 November 2004. Having opened its doors since 1992, the Pendulum Peninsula Plaza boutique went through a major facelift to keep up with time so as to better serve its discerning clientele. The newly renovated outlet exudes a refreshing attitude of modern luxury, simplicity and solidarity. The selection of brands offered in this boutique includes A. Lange & Söhne, Patek Philippe, Vacheron Constantin, Franck Muller, Zenith, Panerai and IWC, clearly poised to cater to serious watch collectors and connoisseurs.
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TAIWAN
precious little moments Our role as elders of today is to bequeath the knowledge of yesterday to the generation of tomorrow.
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Taiwan is one of the top five importers of Swiss-made watches in the Asia Pacific region. To further fortify Sincere Watch’s brand portfolio and market position in this country, the company has been working closely with the retailers to conceptualise and execute innovative sales and marketing initiatives.
Franck Muller window display at various point-of-sales in Taiwan
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TAIWAN
Color Dreams Media Event Major media in Taiwan gathered in July 2004 to preview the latest Franck Muller Color Dreams collection that vibrantly decked the windows and set the vivacious mood for the press session. The event underscored Sincere Watch's strong ties with the local media in its efforts to grow and develop brand awareness among the target markets.
FROM TOP Franck Muller window display Press interview hosted by Mr Frederick Jeng. The event setup. BELOW Franck Muller Long Island Color Dreams.
RIGHT Franck Muller Conquistador Cortez. BELOW The ergonomic design of Conquistador Cortez. Mr Frederick Jeng addressing the media. Ms Tracy Wong.
Conquistador Cortez Media Launch From the stable of the latest 2004 Franck Muller collection, came a timepiece that embodies courageous and unwavering spirit of determination – The Conquistador Cortez Collection. The square-shaped case was the latest addition to the popular Franck Muller’s Cintrée Curvex and Long Island collections. An intimate media gathering was organized in September 2004 at the Les Suite Taipei Hotel to preview this new collection.
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Franck Muller Luncheon and Watch Exhibition Franck Muller hosted a private luncheon for a prestigious group of top customers at the Grand Hi Lai Hotel on 15 December 2004. The guests enjoyed an exclusive preview of the latest timepiece creations by Franck Muller. This was followed by a two-day watch exhibition, held at the royal suite of the Grand Hi Lai Hotel. A comprehensive range of the exquisite Franck Muller timepieces were showcased during the exhibition.
FROM TOP In the royal suite of Grand Hi Lai Hotel. Franck Muller VIP Luncheon. Franck Muller exclusive exhibition. Showcase of Franck Muller timepieces and jewellery.
FROM LEFT Franck Muller Color Dreams Franck Muller Conquistador Cortez
Franck Muller Watch Exhibitions A series of Franck Muller watch exhibitions were held at the retail boutiques of Sincere Watch’s partners in December 2004. Showcased at the exhibitions were some of the brand’s most significant inventions, complications and bejewelled timepieces. The popularity of Franck Muller was re-affirmed as evidenced by the huge crowd of budding watch enthusiasts who turned up at the boutiques.
FROM TOP The signature Arabic numerals of Franck Muller at Chung Tai Watch Store Franck Muller displays at Chung Tai Watch Store Franck Muller displays at Rich Watch Store
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INDONESIA
precious little moments Cherish the young of today, for they are the old of tomorrow.
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Indonesia continues to be one of the emerging markets for Sincere Watch. With a more
stable political climate and economic growth, Indonesia is certainly a country of immense growth opportunities.Through a strong partnership and a strategic location, Sincere Watch has established its retail presence through the Franck Muller boutique at Plaza Senayan in Jakarta. The retail success is attributable to the strength of this innovative brand which once again demonstrated its creativity with the launch of the Color Dreams collection. The new collection was launched at The Financial Club in Jakarta on 19 August 2004 amidst much stylish and glamourous fanfare. Attended by top Indonesian customers and business elites, the event enthralled guests with the multihued décor and setup and in particular, a colourful dessert bar that was created for the special evening.
FROM TOP Guests were greeted with a magnificent showcase of Franck Muller jewellery and timepieces. Franck Muller boutique, Plaza Senayan. Watch presentation by top Indonesian models. Models presenting the Franck Muller watch to the guests. Colourful dessert bar.
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KOREA
precious little moments The young are the future keepers of time.
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Korea is fast becoming a hotspot for tourists not only from the region but the world over. The Franck Muller boutiques cater to the discerning Korean watch collectors and tourists. Its strategic locations provide a retail ambience that is exclusive and professional in its attention to client comfort.
CLOCKWISE FROM TOP Franck Muller boutique, Millennium Seoul Hilton Franck Muller boutique, Lotte Avenuel Franck Muller boutique, Walkerhill Franck Muller corner, Hotel Shilla Arcade
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FINANCIAL REPORT 2005
49 Report of the Directors 51 Auditors' Report 52 Balance Sheets 53 Consolidated Profit & Loss Statement 54 Statements of Changes in Equity 55 Consolidated Cash Flow Statement 57 Notes to Financial Statements 80 Statement of Directors 81 Corporate Governance Report 89 Analysis of Shareholdings 90 Notice of Annual General Meeting 91 Proxy Form SINCERE_AR-tai-kor-FA 6/30/05 8:08 PM Page 11 REPORT OF THE DIRECTORS
SINCERE WATCH LIMITED AND ITS SUBSIDIARIES
The directors present their report together with the audited consolidated financial statements of the group and the balance sheet and statement of changes in equity of the company for the financial year ended March 31, 2005.
1 DIRECTORS The directors of the company in office at the date of this report are:
Mr Tay Boo Jiang Mr Tay Liam Wee Mr Soh Gim Teik Mr Tay Chok Yan Mr Tay Ngiap Jiang Mr Cecil Vivian Richard Wong Mr Lua Cheng Eng Mr Khong Teck Kim
2 ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE BENEFITS BY MEANS OF THE ACQUISITION OF SHARES AND DEBENTURES Neither at the end of the financial year nor at any time during the financial year did there subsist any arrangement whose object is to enable the directors of the company to acquire benefits by means of the acquisition of shares or debentures in the company or any other body corporate.
3 DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES The directors of the company holding office at the end of the financial year had no interests in the share capital and debentures of the company and related corporations as recorded in the register of directors’ shareholdings kept by the company under Section 164 of the Singapore Companies Act except as follows:
Shareholdings Shareholdings in registered in the name which the director is of the director deemed to have an interest Name of directors and company At beginning At end At beginning At end in which interests are held of financial year of financial year of financial year of financial year Ordinary shares of $0.10 each
Sincere Watch Limited (Note 1)
Mr Tay Boo Jiang - - 82,046,250 98,455,500 Mr Tay Liam Wee - - 82,046,250 98,455,500 Mr Tay Chok Yan 2,220,000 2,664,000 - - Mr Tay Ngiap Jiang 2,170,000 2,604,000 - - Mr Soh Gim Teik - - 6,540,000 7,848,000
Note 1: During the financial year, the par value of company’s ordinary shares was changed from $0.25 to $0.10 each following a consolidation and subdivision exercise of its ordinary shares. In addition, the shareholdings were adjusted for a post split 1-for-5 bonus issue of ordinary shares of par value of $0.10 each. As a result, the number of ordinary shares presented at the beginning and end of the financial year have been adjusted to reflect the revised shareholdings.
There was no change in the above mentioned interests between the end of the financial year and April 21, 2005.
By virtue of Section 7 of the Singapore Companies Act, Cap. 50, Mr Tay Boo Jiang and Mr Tay Liam Wee with shareholdings as above, are deemed to have an interest in the company and in all the related companies of the company.
SINCERE WATCH LIMITED ANNUAL REPORT 2005
49 4 DIRECTORS’ RECEIPT AND ENTITLEMENT TO CONTRACTUAL BENEFITS Since the beginning of the financial year, no director has received or become entitled to receive a benefit which is required to be disclosed under Section 201(8) of the Singapore Companies Act, Cap. 50, by reason of a contract made by the company or a related corporation with the director or with a firm of which he is a member, or with a company in which he has a substantial financial interest except as disclosed in the financial statements.
5 OPTION TO TAKE UP UNISSUED SHARES During the financial year, no option to take up unissued shares of the company or any corporation in the group was granted.
6 OPTION EXERCISED During the financial year, there were no shares of the company or any corporation in the group issued by virtue of the exercise of an option to take up unissued shares.
7 UNISSUED SHARES UNDER OPTION At the end of the financial year, there were no unissued shares of the company or any corporation in the group under option.
8 AUDIT COMMITTEE At the date of this report, the Audit Committee comprises three non-executive, independent directors:
Mr Cecil Vivian Richard Wong (Chairman) Mr Lua Cheng Eng Mr Khong Teck Kim
The Audit Committee carried out its functions in accordance with Section 201B(5) of the Singapore Companies Act, Cap. 50.
In performing its functions, the Audit Committee reviewed the overall scope of both internal and external audits and the assistance given by the company’s officers to the auditors. It met with the company’s internal and external auditors to discuss the scope and results of their respective audits.
In addition, the Audit Committee reviewed the financial statements of the group and the company before their submission to the directors of the company.
The Audit Committee has nominated Deloitte & Touche for re-appointment as auditors of the company at the forthcoming annual general meeting.
9 AUDITORS The auditors, Deloitte & Touche, have expressed their willingness to accept re-appointment.
ON BEHALF OF THE DIRECTORS
Mr Tay Liam Wee Mr Soh Gim Teik Singapore, May 17, 2005
50 AUDITORS' REPORT
TO THE MEMBERS OF SINCERE WATCH LIMITED
We have audited the accompanying financial statements of Sincere Watch Limited for the year ended March 31, 2005 set out on pages 52 to 79. 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 the 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 statements presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, a) the accompanying consolidated financial statements of the group and the balance sheet and statement of changes in equity of the company are properly drawn up in accordance with the provisions of the 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 March 31, 2005 and of the results and cash flows of the group and of the changes in equity of the group and company for the year ended on that date; and b) the accounting and other records required by the Act to be kept by the company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.
Deloitte & Touche Certified Public Accountants
Kenny Horlley Young Partner
Singapore May 17, 2005
SINCERE WATCH LIMITED ANNUAL REPORT 2005
51 BALANCE SHEETS
SINCERE WATCH LIMITED AND ITS SUBSIDIARIES MARCH 31, 2005
Group Company Note 2005 2004 2005 2004 $’000 $’000 $’000 $’000 ASSETS Current assets: Cash and bank balances 38,977 41,860 6,787 9,212 Fixed deposits 6 16,909 9,549 16,909 9,549 Trade receivables 7 24,858 13,644 1,167 1,867 Other receivables and prepaid expenses 8 4,301 3,987 25,086 24,564 Inventories 9 141,442 104,245 32,722 21,564 Total current assets 226,487 173,285 82,671 66,756
Non-current assets: Property, plant and equipment 10 18,017 18,165 12,577 12,810 Investment property 11 398 398 398 398 Investment in subsidiaries 12 - - 12,012 11,212 Investment in associates 13 5,335 4,029 3,102 2,020 Other investments 14 515 380 515 380 Intangible asset 15 1,831 2,456 - - Deferred tax assets 22 4,346 3,128 350 - Total non-current assets 30,442 28,556 28,954 26,820
Total assets 256,929 201,841 111,625 93,576
LIABILITIES AND EQUITY Current liabilities: Bank loans, overdrafts and bankers’ acceptance 16 20,114 11,698 5,000 524 Trade payables 17 116,560 81,254 27,614 20,677 Other payables 18 16,183 12,149 5,221 11,089 Income tax payable 6,275 5,079 1,572 1,364 Current portion of long-term debt 19 1,262 3,937 197 2,898 Total current liabilities 160,394 114,117 39,604 36,552
Non-current liabilities: Long-term debt 20 4,506 6,244 3,509 4,329 Deferred tax liabilities 22 - 229 - 213 Total non-current liabilities 4,506 6,473 3,509 4,542
Minority interests 55 437 - -
Capital and reserves: Issued capital 23 19,620 16,350 19,620 16,350 Currency translation reserves (3,317) (2,153) (185) (136) Legal reserve 109 - - - Accumulated profits 75,562 66,617 49,077 36,268 Total equity 91,974 80,814 68,512 52,482
Total liabilities and equity 256,929 201,841 111,625 93,576
See accompanying notes to financial statements.
52 CONSOLIDATED PROFIT & LOSS STATEMENT
SINCERE WATCH LIMITED AND ITS SUBSIDIARIES YEAR ENDED MARCH 31, 2005
Group Note 2005 2004 $’000 $’000
Revenue 24 324,261 257,656
Other operating income 25 690 2,909
Changes in inventories of goods for resale 37,197 (19,143)
Purchases of goods for resale (279,293) (172,299)
Staff costs 26 (20,669) (16,160)
Rental expense (15,714) (11,946)
Selling, advertising and promotional expense (11,149) (8,721)
Depreciation and amortisation expense (3,536) (2,564)
Other operating expenses 27 (7,386) (6,908)
Profit from operations 24,401 22,824
Finance costs 28 (973) (879)
Profit before share of results of associates 23,428 21,945
Share of profits of associates 393 502
Profit before income tax and minority interests 29 23,821 22,447
Income tax expense 30 (5,059) (3,839)
Profit before minority interests 18,762 18,608
Minority interests 364 (79)
Net profit for the year 19,126 18,529
Basic and fully diluted earnings per share (cents) 31 9.75 9.44
See accompanying notes to financial statements.
SINCERE WATCH LIMITED ANNUAL REPORT 2005
53 STATEMENTS OF CHANGES IN EQUITY
SINCERE WATCH LIMITED AND ITS SUBSIDIARIES YEAR ENDED MARCH 31, 2005
Currency Issued translation Legal Accumulated Note capital reserves reserve(a) profits Total $’000 $’000 $’000 $’000 $’000
Group
Balance at March 31, 2003 16,350 (761) - 49,874 65,463
Currency translation differences - (1,392) - - (1,392) Net profit for the year - - - 18,529 18,529 Final dividend of $0.02 per ordinary share and special dividend of $0.015 per ordinary share less tax of 22% paid in respect of previous financial year - - - (1,786) (1,786)
Balance at March 31, 2004 16,350 (2,153) - 66,617 80,814
Appropriation of legal reserve from accumulated profits - - 109 (109) - Bonus shares issue 3,270 - - (3,270) - Currency translation differences - (1,164) - - (1,164) Net profit for the year - - - 19,126 19,126 Final dividend of $0.02 per ordinary share and special dividend of $0.11 per ordinary share less tax of 20% paid in respect of previous financial year 39 - - - (6,802) (6,802)
Balance at March 31, 2005 19,620 (3,317) 109 75,562 91,974
Company
Balance at March 31, 2003 16,350 (37) - 28,019 44,332
Currency translation differences - (99) - - (99) Net profit for the year - - - 10,035 10,035 Final dividend of $0.02 per ordinary share and special dividend of $0.015 per ordinary share less tax of 22% paid in respect of previous financial year - - - (1,786) (1,786)
Balance at March 31, 2004 16,350 (136) - 36,268 52,482
Bonus shares issue 3,270 - - (3,270) - Currency translation differences - (49) - - (49) Net profit for the year - - - 22,881 22,881 Final dividend of $0.02 per ordinary share and special dividend of $0.11 per ordinary share less tax of 20% paid in respect of previous financial year 39 - - - (6,802) (6,802)
Balance at March 31, 2005 19,620 (185) - 49,077 68,512
See accompanying notes to financial statements.
(a) Legal reserve relates to Sincere Watch Co. Ltd, incorporated in the Republic of China (Taiwan). Legal reserve may be used to offset a deficit, if any, and, when the reserve amount exceeds or equals 50% of the capital stock, an amount up to 50% of such reserve may be transferred to capital stock.
54 CONSOLIDATED CASH FLOW STATEMENT
SINCERE WATCH LIMITED AND ITS SUBSIDIARIES YEAR ENDED MARCH 31, 2005
2005 2004 $’000 $’000
Cash flows from operating activities: Profit before share of results of associates and income tax 23,428 21,945 Adjustments for: Amortisation of intangible asset 625 224 Depreciation expense 2,911 2,340 (Gain) Loss on disposal of property, plant and equipment (219) 18 Property, plant and equipment written off 107 91 (Write-back of) impairment loss on other investments (160) 369 Impairment loss on intangible asset - 2,000 Interest expense 973 879 Interest income (176) (138) Dividend income (10) (8) Operating profit before working capital changes 27,479 27,720
Trade receivables (11,214) 3,768 Other receivables and prepaid expenses (390) 4,083 Inventories (37,197) 19,143 Trade payables 35,306 709 Other payables 4,034 (3,142) Cash generated from operations 18,018 52,281
Interest paid (973) (879) Interest received 176 138 Dividends received 10 8 Dividends paid (6,802) (1,786) Income tax paid (5,116) (3,784) Net cash from operating activities 5,313 45,978
Cash flows used in investing activities: Purchase of property, plant and equipment (Note A) (2,342) (5,157) Proceeds from sale of property, plant and equipment 280 223 Acquisition of subsidiary (Note B) - (1,946) Additional investment in associates (1,082) - Proceeds from sale of quoted investments 25 - Net cash used in investing activities (3,119) (6,880)
Cash flows from financing activities: Increase in bank loans 7,806 642 (Decrease) Increase in long-term debt (5,021) 461 Net cash from financing activities 2,785 1,103
Net effects of exchange rate changes in consolidating subsidiaries (1,112) (1,229)
Increase in cash and cash equivalents 3,867 38,972 Cash and cash equivalents at beginning of year 46,459 7,487 Cash and cash equivalents at end of year (Note 32) 50,326 46,459
SINCERE WATCH LIMITED ANNUAL REPORT 2005
55 Notes to the consolidated cash flow statement:
A. Purchase of property, plant and equipment 2005 2004 $’000 $’000
Cash purchase of property, plant and equipment 2,342 5,157 Purchase of property, plant and equipment under finance lease agreements 608 286 Total additions to property, plant and equipment (Note 10) 2,950 5,443
B. Summary of the effects of acquisition of subsidiary
Net liabilities acquired: Current assets - 9,320 Non-current assets - 114 Current liabilities - (10,686) - (1,252) Add: Reclassification of provision for associate’s loss - 626 Goodwill on acquisition of subsidiary - 4,009 Total purchase consideration - 3,383 Less: Non-cash consideration - (2,683) Add: Bank overdraft assumed on acquisition of subsidiary - 1,246 Net cash flow on acquisition of subsidiary - 1,946
See accompanying notes to financial statements.
56 NOTES TO FINANCIAL STATEMENTS
SINCERE WATCH LIMITED AND ITS SUBSIDIARIES MARCH 31, 2005
1 GENERAL The company (Registration No. 197700967C) is incorporated in the Republic of Singapore with its registered office and principal place of business at 8 Temasek Boulevard, #23-03 Suntec Tower 3, Singapore 038988. During the financial year, the company received an approval to transfer the listing and quotation of its securities from the official list of the Singapore Exchange Securities Trading Limited (“SGX-ST”) Dealing and Automated Quotation System (“SGX-SESDAQ”) to the Official List of the SGX-ST Mainboard. The financial statements are expressed in thousands of Singapore dollars.
The company is principally engaged in the business of watch and clock retailing.
The principal activities of the subsidiaries and associates are disclosed in Notes 12 and 13.
The consolidated financial statements of the group and the balance sheet and statement of changes in equity of the company for the financial year ended March 31, 2005 were authorised for issue by the Board of Directors on May 17, 2005.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING – The financial statements are prepared in accordance with the historical cost convention and are drawn up in accordance with the provisions of the Singapore Companies Act and Singapore Financial Reporting Standards (“FRS”).
BASIS OF CONSOLIDATION – The consolidated financial statements incorporate the financial statements of the company and enterprises controlled by the company (its subsidiaries) made up to March 31 each year. Control is achieved when the company has the power to govern the financial and operating policies of an investee enterprise so as to obtain benefit from its activities. On acquisition, the assets and liabilities of the relevant subsidiaries are measured at their fair values at the date of acquisition. The interest of minority shareholders is stated at the minority's proportion of the fair values of the assets and liabilities recognised. The results of subsidiaries acquired or disposed of during the year are included in the consolidated profit and loss statement from the effective date of acquisition or to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by other members of the group. All significant intercompany transactions and balances between group enterprises are eliminated on consolidation. Where a group transacts with an associate of the group, unrealised profits and losses are eliminated to the extent of the group’s interest on the relevant associate.
Associates are entities over which the group exercises significant influence, through participation in the financial and operating policy decisions of the investee. The equity method of accounting is used.
In the financial statements of the company, investments in subsidiaries and associates are carried at cost less any impairment in net recoverable value that have been recognised in the profit and loss statement.
FINANCIAL ASSETS – Financial assets include cash and bank balances, fixed deposits, trade and other receivables and investments. Trade and other receivables are stated at their nominal value as reduced by an appropriate allowance for estimated irrecoverable amounts.
Long-term investments, where the group is not in a position to exercise control or significant influence, are stated at cost less impairment losses recognised when the investment’s carrying amount exceeds its estimated recoverable amount.
FINANCIAL LIABILITIES AND EQUITY – Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. Financial liabilities include trade and other payables, bank loans, overdrafts and bankers' acceptance, finance lease obligations and term loans. Trade and other payables are stated at their nominal value. Bank loans, overdrafts and bankers' acceptance, and term loans are recorded at the proceeds received, net of direct issue costs. Finance lease obligations are stated in accordance with the accounting policy denoted below. Finance charges are accounted for on an accrual basis and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.
Equity instruments are recorded at the fair value of the consideration received, net of direct issue costs.
SINCERE WATCH LIMITED ANNUAL REPORT 2005
57 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd) Dividends on ordinary shares are recognised in shareholders’ equity in the year in which they are declared.
INVENTORIES – High-end inventories comprising goods for resale are stated at the lower of cost (specific identification method) and net realisable value. Low-end inventories comprising goods for resale are stated at the lower of cost (weighted average method) and net realisable value. Net realisable value represents the estimated selling price less all estimated costs to be incurred in marketing, selling and distribution.
PROPERTY, PLANT AND EQUIPMENT – Property, plant and equipment are carried at cost, less accumulated depreciation and any impairment loss where the recoverable amount of the asset is estimated to be lower than its carrying amount.
Depreciation is charged so as to write off the cost of assets over their estimated useful lives, using the straight-line method, on the following bases:
Leasehold properties and improvements – 2% to 50% Plant and equipment – 10% to 50%
Depreciation is not provided on freehold property.
Fully depreciated assets still in use are retained in the financial statements.
Assets held under finance lease arrangements are depreciated over their expected useful lives on the same basis as the owned assets or, where shorter, the term of the relevant lease.
INVESTMENT PROPERTY – Investment property held on a long-term basis for investment potential, is stated at cost, less any impairment in net recoverable value. No depreciation is provided on investment property.
GOODWILL – Goodwill arising on consolidation represents the excess of the cost of an acquisition over the group’s interest in the fair value of the net identifiable assets and liabilities of a subsidiary or associate at the date of acquisition.
Goodwill is recognised as an asset and amortised on a straight-line basis over its estimated useful life of 5 years.
On disposal of a subsidiary or associate, the attributable amount of unamortised goodwill is included in the determination of the profit or loss on disposal.
Goodwill arising from an acquisition of an associate is included within the carrying value of the associate. Goodwill arising on the acquisition of subsidiaries is presented separately in the balance sheet.
IMPAIRMENT OF ASSETS – At each balance sheet date, the group and company review the carrying amounts of their assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Recoverable amount is the greater of net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. Impairment losses are recognised as an expense immediately.
When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately.
PROVISIONS – Provisions are recognised when the group has a present obligation as a result of a past event where it is probable that it will result in an outflow of economic benefits that can be reasonably estimated.
58 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd) LEASES – Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
Assets held under finance lease are recognised as assets of the group and company at their fair values at the date of acquisition. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are charged to the profit and loss statement over the term of the relevant lease using the effective interest rate method.
Rentals payable under operating leases are charged to profit and loss on a straight-line basis over the term of the relevant lease.
MINORITY INTEREST – Minority interest is stated at the appropriate proportion of the pre-acquisition carrying amounts of the net assets of the subsidiaries adjusted for the appropriate share of post-acquisition profit and loss.
REVENUE RECOGNITION – Revenue from sale of goods is recognised when significant risks and rewards of ownership are transferred to the buyer and the amount of revenue and the costs of the transaction can be measured reliably. Revenue from rendering of services that are of short duration is recognised when the services are completed.
Interest income is accrued on a time proportionate basis, by reference to the principal outstanding and at the interest rate applicable, on an effective yield basis.
Dividend income from investments is recognised when the right to receive payment has been established.
RETIREMENT BENEFIT COSTS – Payments to defined contribution retirement benefit plans (including state-managed retirement benefit schemes, such as the Singapore Central Provident Fund) are charged as an expense when incurred.
EMPLOYEE LEAVE ENTITLEMENT – Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the balance sheet date.
INCOME TAX – Tax expense is determined on the basis of tax effect accounting, using the liability method, and it is applied to all significant temporary differences arising between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit except that a debit to the deferred tax balance is not carried forward unless there is reasonable expectation of realisation in the foreseeable future.
Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantially enacted by the balance sheet date. Deferred tax is charged or credited to the profit and loss statement. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same tax authority.
FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION – Transactions in foreign currencies are recorded using the rates ruling on the dates of the transactions. At each balance sheet date, recorded monetary balances and balances carried at fair value that are denominated in foreign currencies are reported at the rates ruling at the balance sheet date. All realised and unrealised exchange adjustment profits and losses are dealt with in the profit and loss statement.
For inclusion in the consolidated financial statements, assets and liabilities of the foreign entities are translated at the rates of exchange approximating those ruling at the balance sheet date. The profit and loss statements are translated at the average rates of exchange for the year, and the opening net investment in the foreign entities is translated at the historical rates. The resulting currency translation differences are taken to the currency translation reserves. On disposal of a foreign entity, the accumulated currency translation differences are recognised in the profit and loss statement as part of the profit or loss on disposal.
SINCERE WATCH LIMITED ANNUAL REPORT 2005
59 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd) FOREIGN CURRENCY FORWARD CONTRACTS – The group enters into foreign currency forward contracts to hedge its currency exposure. The contract gains and losses are recognised in the profit and loss statement upon the maturity of the contract which would normally coincide with the date of settlement of the underlying financial instrument being hedged.
CASH – Cash for the cash flow statement includes cash and bank balances, fixed deposits less bank overdrafts.
3 FINANCIAL RISKS AND MANAGEMENT (i) Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a loss to the group. The group has adopted the policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial losses from default and generally does not require collateral. The group places its cash and cash equivalents with creditworthy institutions and performs ongoing credit evaluation of its customers’ financial condition.
The group does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics.
The maximum exposure to credit risk in the event that the counterparties fail to perform their obligations as at the end of the financial year in relation to each class of recognised financial assets is the carrying amount of those assets as stated in the balance sheet.
(ii) Interest rate risk The group’s primary interest rate risk relates to interest bearing debt. The group primarily raises long-term loans based on expectation of future interest rate movements. As at the balance sheet date, the average term to maturity of the group’s loans was approximately 12 months (2004 : 24 months) and all the term loans have floating interest rate terms except for a term loan of $1,750,000 with a fixed interest rate of 3.23% per annum.
The group is also exposed to interest rate risk through the impact of rate changes on its short-term loans and bank overdrafts which bear interest at the rates disclosed in Note 16. 54% (2004 : 28%) of the short-term debts have fixed interest rate terms. Since these debts are short-term, with the current interest rate level, any future variations in interest rates is not expected to have a material impact on the group’s results.
(iii) Foreign exchange risk The group is exposed to foreign currency risk on its foreign currency denominated cash balances and trade payables. The currencies giving rise to this risk are primarily Swiss Franc and Euro. The group ensures that the net exposure is kept to an acceptable level by entering into hedging activities such as forward foreign exchange contracts and options and also by buying or selling foreign currencies at spot rates where necessary to address short-term imbalances.
The group is also exposed to foreign exchange movement on its net investments in subsidiaries and associates in Malaysia, Hong Kong, Taiwan and Thailand. No hedge has been taken up for this exposure.
(iv) Liquidity risk It is group policy for the raising of capital and placement of surplus fund to be managed centrally. The group has targets for available funds in the form of surplus liquidity and irrevocable credit facilities, which are available to the group at any given time.
(v) Fair value of financial assets and financial liabilities The carrying amount of financial assets and financial liabilities reported in the balance sheet approximates the fair value of those assets and liabilities except for unquoted investments. It is not practicable within the constraint of cost to reliably determine the fair value of unquoted investments. These investments are shown at cost less any impairment in value.
The fair values in respect of foreign currency contracts are disclosed in Note 36.
60 4 HOLDING COMPANY AND RELATED COMPANY TRANSACTIONS The company is a subsidiary of TBJ Holdings Pte Ltd, a company incorporated in Singapore which is also the group’s ultimate holding company.
Related companies in these financial statements refer to members of the holding company’s group of companies. Some of the company’s transactions and arrangements are between members of the group and the effect of these on the basis determined between the parties are reflected in these financial statements. The intercompany balances are unsecured, without fixed repayment terms and interest-free unless stated otherwise.
5 RELATED PARTY TRANSACTIONS Related parties are entities with common direct or indirect shareholders and/or directors with that of the company.
Some of the group’s transactions and arrangements are with related parties and the effect of these on the basis determined between the parties are reflected in these financial statements. The balances are unsecured, without fixed repayment terms and interest-free.
Significant related party transactions: Group 2005 2004 $’000 $’000 Sales of goods (2,342) (1,388) Purchases of goods 98 50 Interest income (105) (52) Rental income (57) (19) Delivery charges 105 37 Management fee expense - 488
Management fee expense of the group in year 2004 was for fees paid to a firm in which a director of a subsidiary has an interest.
6 FIXED DEPOSITS Group and Company 2005 2004 $’000 $’000 Fixed deposits in foreign currency 16,909 7,548 Fixed deposits in Singapore dollars - 2,001 16,909 9,549
Fixed deposits earn interest at a rate of 0.58% (2004 : 0.30% to 0.56%) per annum and mature 15 days (2004 : 29 days) within the financial year end.
7 TRADE RECEIVABLES Group Company 2005 2004 2005 2004 $’000 $’000 $’000 $’000 Outside parties 24,341 11,758 706 1,092 Subsidiaries (Notes 4 and 12) - - 259 662 Associates (Note 13) 517 534 202 113 Related party (Note 5) 2,690 2,572 - - 27,548 14,864 1,167 1,867 Less: Allowance for doubtful debts (2,690) (1,220) - - 24,858 13,644 1,167 1,867
SINCERE WATCH LIMITED ANNUAL REPORT 2005
61 8 OTHER RECEIVABLES AND PREPAID EXPENSES Group Company 2005 2004 2005 2004 $’000 $’000 $’000 $’000 Subsidiaries (Notes 4 and 12) - - 26,540 24,725 Associates (Note 13) 65 65 - - Related party (Note 5) 714 433 - - Prepaid expenses 1,300 1,044 113 102 Deposits 1,521 1,890 439 641 Income tax recoverable 21 97 17 93 Others 680 458 122 192 4,301 3,987 27,231 25,753 Less: Allowance for doubtful debts - - (2,145) (1,189) 4,301 3,987 25,086 24,564
Certain advances to subsidiaries and associates bear interest at a rate of 4.00% (2004 : 4.00% to 6.00%) per annum whilst other advances to subsidiaries and associates are interest-free. All advances to subsidiaries and associates are without fixed terms of repayment.
9 INVENTORIES Group Company 2005 2004 2005 2004 $’000 $’000 $’000 $’000 Goods for resale at cost 133,823 95,131 30,397 17,302 Goods for resale at net realisable value 7,619 9,114 2,325 4,262 141,442 104,245 32,722 21,564
62 10 PROPERTY, PLANT AND EQUIPMENT Leasehold Freehold properties and Plant and property improvements equipment Total $’000 $’000 $’000 $’000 Group
Cost: At beginning of year 3,254 12,607 14,499 30,360 Additions - 130 2,820 2,950 Disposals - - (840) (840) Written off - (92) (2,390) (2,482) Translation adjustment - - (66) (66) At end of year 3,254 12,645 14,023 29,922
Accumulated depreciation: At beginning of year - 1,867 10,328 12,195 Depreciation for the year - 389 2,522 2,911 Disposals - - (779) (779) Written off - (92) (2,283) (2,375) Translation adjustment - - (47) (47) At end of year - 2,164 9,741 11,905
Depreciation for last year - 270 2,070 2,340
Carrying value: At beginning of year 3,254 10,740 4,171 18,165
At end of year 3,254 10,481 4,282 18,017
Company
Cost: At beginning of year 3,254 9,607 5,861 18,722 Additions - 66 1,177 1,243 Disposals - - (823) (823) Written off - (92) (1,246) (1,338) At end of year 3,254 9,581 4,969 17,804
Accumulated depreciation: At beginning of year - 1,813 4,099 5,912 Depreciation for the year - 222 1,125 1,347 Disposals - - (775) (775) Written off - (92) (1,165) (1,257) At end of year - 1,943 3,284 5,227
Depreciation for last year - 215 722 937
Carrying amount: At beginning of year 3,254 7,794 1,762 12,810
At end of year 3,254 7,638 1,685 12,577
SINCERE WATCH LIMITED ANNUAL REPORT 2005
63 10 PROPERTY, PLANT AND EQUIPMENT (cont'd) Plant and equipment with a carrying amount of $1,243,000 (2004 : $924,000) and $914,000 (2004 : $702,000) for the group and company respectively were acquired under finance lease agreements (Note 21).
Group Properties in Singapore:
Group's effective Approximate Held by interest Location floor area Tenure Usage %
Sincere Watch 100 304 Orchard Road, 36 sq m Freehold Shop for Limited Lucky Plaza retailing of watches
Sincere Watch 100 150 Orchard Road, 212 sq m 103 years Office Limited Orchard Plaza 75 years unexpired
Sincere Watch 100 8 Temasek Boulevard, 325 sq m 99 years Corporate Limited Suntec City 83 years head unexpired office
Culina Holdings 100 24 Senoko Way 6,928 sq m 30 years Office and Pte Ltd 17 years warehouse unexpired
11 INVESTMENT PROPERTY This consists of the freehold property located at 304 Orchard Road, #23-04 Lucky Plaza, Singapore 238863. As at March 31, 2005, the directors estimated the fair value of the investment property to be approximately $600,000 based on recent transactions of similar properties. The valuation surplus of $202,000 is not reflected in the financial statements. The freehold property is currently vacant.
12 INVESTMENT IN SUBSIDIARIES Company 2005 2004 $’000 $’000 Unquoted equity shares at cost 10,512 10,512 Loans to subsidiaries (Note 4) 3,378 2,578 13,890 13,090 Less allowance for: Doubtful debts (1,678) (1,678) Impairment loss (200) (200) 12,012 11,212
Loans to two subsidiaries amounting to $1,700,000 (2004 : $900,000) are subordinated to bank overdrafts provided by a bank as part of the covenants covering the provision of overdraft facilities as disclosed in Note 16.
64 12 INVESTMENT IN SUBSIDIARIES (cont'd) The subsidiaries of the company are as follows:
Country of Effective Name of subsidiary incorporation Cost of interest held and principal activities and operation investment by the group 2005 2004 2005 2004 $’000 $’000 % %
Avante Investment Pte Ltd (1) Singapore - - 100 100 Investment holding company
Avante Marketing Pte Ltd (1) Singapore - - 100 100 Promoters, representatives and agents of fashion and luxury goods
British Master Time Pte Ltd (1) Singapore - - 100 100 Marketing of luxury goods
Culina Holdings Pte Ltd Singapore 2,000 2,000 100 100 Investment holding company
Culina Pte Ltd (5) Singapore - - 100 100 Supply and distribution of gourmet food, fine wines and pastry products
Emotus Pte Ltd Singapore 500 500 100 100 Retailing of watches and clocks
Franck Muller Pte Ltd Singapore 3,713 3,713 100 100 Marketing of Franck Muller time pieces
Heirloom Restoration Services Pte Ltd Singapore 500 500 100 100 Watch repair services
Heritage Distribution Pte Ltd Singapore 500 500 100 100 Marketing and distribution of watches
Parisian Time Pte Ltd (1) Singapore - - 100 100 Marketing of luxury goods
Richburgh Holdings Pte Ltd (2) Singapore 200 200 50 50 Retailing of watches and clocks
Sincere Watch Duty Free Pte Ltd (2) Singapore 50 50 50 50 Retailing of watches and clocks
Swiss Master Time Pte Ltd (1) Singapore - - 100 100 Marketing of luxury goods
Times Legend International Pte Ltd (1) Singapore - - 100 100 Marketing and distribution of watches
SINCERE WATCH LIMITED ANNUAL REPORT 2005
65 12 INVESTMENT IN SUBSIDIARIES (cont'd)
Country of Effective Name of subsidiary incorporation Cost of interest held and principal activities and operation investment by the group 2005 2004 2005 2004 $’000 $’000 % %
Leoco Enterprise Limited (3) Hong Kong - - 75 75 Investment holding company SAR
Pendulum Limited (4) (5) Hong Kong - - 100 100 Dormant SAR
Sincere Brand Management Limited Hong Kong 186 186 100 100 (formerly known as Times Legend SAR (Asia Pacific) Limited) (4) Marketing and distribution of watches
Avante Marketing (M) Sdn Bhd (1) (6) Malaysia - - 100 100 Investment holding company
Culina Products Sdn Bhd (4) (5) Malaysia - - 100 100 Dormant
Emotus Sdn Bhd (5) (7) Retailing of watches, clocks, pens Malaysia - - 100 100 and related accessories and servicing of watches
Sincere Watch Sdn Bhd (7) (8) Malaysia 2,806 2,806 80 80 Retailing of watches, clocks, pens and related accessories and servicing of watches
Shanghai Sincere Watch Co. Ltd (5) (9) People’s - - 75 75 Dormant Republic of China
Sincere Watch Co. Ltd (4) Republic of 57 57 100 100 Wholesale and retail of watches China (Taiwan)
Sincere Watch (Hong Kong) Limited The Cayman - - 100 - Investment holding (1) (9) (10) Islands
Sincere Brand Holdings Limited British Virgin - - 100 - Investment holding (1) (9) (10) Islands
10,512 10,512
66 12 INVESTMENT IN SUBSIDIARIES (cont'd) All subsidiaries are audited by Deloitte & Touche, Singapore except for the subsidiaries that are indicated as follows:
(1) Cost of investment is below $1,000. (2) Considered as subsidiaries by virtue of control by the group over their financial and operating policies. (3) Audited by Morison Heng, Hong Kong, SAR. Investment of $215,702 written off in year 2000. (4) Audited by overseas practices of Deloitte Touche Tohmatsu of which Deloitte & Touche – Singapore is a member. (5) Held by subsidiaries. (6) Audited by K. K. San, Lew & Loke, Malaysia. (7) Audited by Ernst & Young, Malaysia. (8) 15% interest in Sincere Watch Sdn Bhd is held through Avante Marketing (M) Sdn Bhd. (9) Not audited as not required in country of incorporation and not considered material. (10) Incorporated on August 18, 2004.
13 INVESTMENT IN ASSOCIATES Group Company 2005 2004 2005 2004 $’000 $’000 $’000 $’000 Unquoted equity shares at cost 3,382 2,300 3,382 2,300 Less: Impairment loss - - (280) (280) 3,382 2,300 3,102 2,020 Share of post-acquisition reserves 1,953 1,729 - - 5,335 4,029 3,102 2,020
The group's investment in associates comprises the following:
Name of associate Cost of and country of investment held Interest held incorporation/operation Principal activities by the group by the group 2005 2004 2005 2004 $’000 $’000 % % Pendulum Ltd (a) Retailing and distribution 2,744 1,966 49 49 Thailand of watches and clocks
BVL Partner Co. Ltd (a) Retailing and distribution of 638 334 49 49 Thailand watches, clocks and jewellery
Unisky Limited (b) Dormant - - 33 33 Hong Kong, SAR 3,382 2,300
The associates, whose net assets are less than 20% of the net assets of the group, are audited by: (a) SB Auditing Service Co. Ltd, Thailand. (b) Vincent Kwok & Co., Hong Kong, SAR.
Significant transactions with associates: Group 2005 2004 $’000 $’000 Sales of goods (6,488) (5,721) Interest income - (120) Management fee expense 42 42
SINCERE WATCH LIMITED ANNUAL REPORT 2005
67 14 OTHER INVESTMENTS Group and Company 2005 2004 $’000 $’000 Quoted equity shares at cost 501 540 Club memberships at cost 336 336 Others - unquoted 368 368 1,205 1,244 Less: Allowance for impairment loss (690) (864) 515 380
Market value of quoted equity shares 359 339
Market value of club memberships 173 184
It is not practicable within the constraint of cost to reliably determine the fair value of unquoted investments. These investments are shown at cost less any impairment in value.
15 INTANGIBLE ASSET Group $’000 Cost at beginning and end of year 5,438
Accumulated amortisation: At beginning of year 982 Amortisation for the year 625 At end of year 1,607
Impairment loss at beginning and end of year 2,000
Amortisation for last year 224
Carrying value: At beginning of year 2,456
At end of year 1,831
The intangible asset represents goodwill on consolidation arising from acquisition of subsidiaries. Goodwill amortisation has been included under depreciation and amortisation expense.
16 BANK LOANS, OVERDRAFTS AND BANKERS’ ACCEPTANCE Group Company 2005 2004 2005 2004 $’000 $’000 $’000 $’000 Bank overdrafts (Note 32) 5,560 4,950 - 524 Bank loans 10,875 3,323 5,000 - Bankers’ acceptance 3,679 3,425 - - 20,114 11,698 5,000 524
The group’s and company’s bank overdrafts bear interest at rates ranging from 5.25% to 8.00% (2004 : 5.00% to 8.00%) per annum and are unsecured except for:
(a) Bank overdrafts and other credit facilities of two subsidiaries amounting to $3,456,000 (2004 : $2,535,000) which are guaranteed by the company and a minority shareholder of those subsidiaries. In accordance to the terms and conditions for the provision of the banking facilities, these overdrafts and credit facilities are ranked first over all present and future loans from the company and the minority shareholder; and
68 16 BANK LOANS, OVERDRAFTS AND BANKERS’ ACCEPTANCE (cont'd) (b) Bank overdrafts of $2,104,000 (2004 : $1,891,000) of another two subsidiaries which are guaranteed by the company and secured by irrevocable standby letters of credit.
The group’s and company’s bank loans are unsecured and bear interest at rates ranging from 2.73% to 5.05% (2004 : 4.80% to 5.05%) per annum.
The group’s bankers’ acceptance is secured by a corporate guarantee given by the company and bears interest at rates ranging from 3.87% to 4.20% (2004 : 3.98% to 4.20%) per annum.
17 TRADE PAYABLES Group Company 2005 2004 2005 2004 $’000 $’000 $’000 $’000 Outside parties 116,490 81,254 5,307 2,588 Subsidiaries (Notes 4 and 12) - - 22,307 18,089 Related party (Note 5) 70 - - - 116,560 81,254 27,614 20,677
18 OTHER PAYABLES Group Company 2005 2004 2005 2004 $’000 $’000 $’000 $’000 Subsidiaries (Notes 4 and 12) - - 168 7,003 Associates (Note 13) 279 193 279 193 Directors 2,249 2,091 2,249 2,091 Minority shareholders of subsidiaries 1,700 900 - - Advances from customers 961 496 803 360 Accruals 8,997 6,654 1,615 1,368 Rental payable 775 790 - - Others 1,222 1,025 107 74 16,183 12,149 5,221 11,089
The other payables to directors are unsecured, without fixed repayment terms and interest-free.
19 CURRENT PORTION OF LONG-TERM DEBT Group Company 2005 2004 2005 2004 $’000 $’000 $’000 $’000 Term loans (Note 20) 1,000 3,740 - 2,740 Finance leases (Note 21) 262 197 197 158 1,262 3,937 197 2,898
20 LONG-TERM DEBT Group Company 2005 2004 2005 2004 $’000 $’000 $’000 $’000 Finance leases (Note 21) 756 529 509 364 Term loans 4,750 9,455 3,000 6,705 5,506 9,984 3,509 7,069 Term loans due within 12 months (Note 19) (1,000) (3,740) - (2,740) Net 4,506 6,244 3,509 4,329
SINCERE WATCH LIMITED ANNUAL REPORT 2005
69 20 LONG-TERM DEBT (cont'd) The group’s and company’s term loans are unsecured except for a term loan of $1,750,000 (2004 : $2,750,000) which is secured by a corporate guarantee from the company.
Details of the term loans are:
(a) Term loans of $3,705,000 which bore interest at rates ranging from 1.85% to 3.98% per annum have been fully repaid during the financial year.
(b) Term loan of $3,000,000 (2004 : $3,000,000) which bears interest at a rate of 3.50% (2004 : 3.50%) per annum and is repayable in August 2006.
(c) Term loan of $1,750,000 (2004 : $2,750,000) which bears interest at a rate of 3.23% (2004 : 3.23%) per annum and is repayable over one to two years by equal instalments.
21 FINANCE LEASE OBLIGATIONS Group Company Present value Present value Minimum of minimum Minimum of minimum lease payments lease payments lease payments lease payments 2005 2004 2005 2004 2005 2004 2005 2004 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Amounts payable under finance leases: Within one year 300 233 262 197 232 180 197 158 In the second to fifth years inclusive 822 604 685 508 511 399 438 343 After five years 71 25 71 21 71 25 71 21 1,193 862 1,018 726 814 604 706 522
Less: Future finance charges (175) (136) - - (108) (82) - - 1,018 726 1,018 726 706 522 706 522
The finance lease obligations of the group and company are secured against certain plant and equipment and bear interest at rates ranging from 3.63% to 5.10% (2004 : 2.20% to 5.00%) per annum.
22 DEFERRED TAX ASSETS (LIABILITIES) Group Company 2005 2004 2005 2004 $’000 $’000 $’000 $’000 Deferred tax assets
Allowance for inventories 3,735 2,850 424 - Allowance for doubtful debts 427 151 - - Excess of book depreciation over tax depreciation 184 127 (74) - Total deferred tax assets 4,346 3,128 350 -
Deferred tax liabilities
Accelerated tax depreciation - (229) - (213) Net deferred tax position 4,346 2,899 350 (213)
70 22 DEFERRED TAX ASSETS (LIABILITIES) (cont'd) Group Company 2005 2004 2005 2004 $’000 $’000 $’000 $’000 Movement in deferred tax assets (liabilities)
Balance at beginning of year 2,899 850 (213) (213) Write-back due to change in income tax rate - (67) - - Amounts transferred to profit and loss (Note 30) 1,502 2,049 563 - Translation adjustment (55) 67 - - Balance at end of year 4,346 2,899 350 (213)
23 ISSUED CAPITAL Group and Company 2005 2004 2005 2004 Number of ordinary shares of $’000 $’000 $0.10 each (’000) Authorised 500,000 500,000 50,000 50,000
Issued and fully paid: At beginning of year 163,500 163,500 16,350 16,350 Bonus shares issue 32,700 - 3,270 - At end of year 196,200 163,500 19,620 16,350
During the financial year, the capital structure of the company had been changed as follows:
(a) Consolidation of every 2 ordinary shares in the existing authorised and issued paid-up share capital of par value $0.25 each into 1 ordinary share of par value of $0.50 each;
(b) Subdivision of every 1 ordinary share of par value $0.50 into 5 ordinary shares of par value $0.10 each; and
(c) Post split 1-for-5 bonus issue of ordinary shares of par value $0.10 each.
As a result, the number of ordinary shares presented at the beginning and end of the financial year have been adjusted to reflect the revised shareholdings.
24 REVENUE Group 2005 2004 $’000 $’000 Sales of goods 323,697 257,139 Rendering of services 564 517 324,261 257,656
SINCERE WATCH LIMITED ANNUAL REPORT 2005
71 25 OTHER OPERATING INCOME Group 2005 2004 $’000 $’000 Interest income 176 138 Dividend income from quoted investments 10 8 Net foreign exchange gain - 2,052 Rental income 72 19 Others 432 692 690 2,909
26 STAFF COSTS Group 2005 2004 $’000 $’000 Salaries and wages 20,669 16,160
Defined contribution plans included in salaries and wages 1,093 1,064
2005 2004
Number of employees at end of year 298 267
27 OTHER OPERATING EXPENSES Group 2005 2004 $’000 $’000 Net foreign exchange loss 237 - Impairment (Write-back) of loss on: Intangible asset - 2,000 Other investments (160) 369 Allowance for (Write-back of) doubtful debts 1,632 (300) Donations 455 62 Legal and professional fees 486 265 Travelling and communication 1,920 1,467 Others 2,816 3,045 7,386 6,908
28 FINANCE COSTS Group 2005 2004 $’000 $’000 Interest expense on: Bank borrowings 925 853 Finance leases 48 26 973 879
72 29 PROFIT BEFORE INCOME TAX AND MINORITY INTERESTS In addition to the charges and credits disclosed elsewhere in the financial statements, this item includes the following charges (credits): Group 2005 2004 $’000 $’000 Allowance for inventories 5,866 3,300 Amortisation of intangible asset 625 224 Audit fees paid to auditors: Auditors of the company 152 131 Other auditors 70 65 Non-audit fees paid to auditors: Auditors of the company 24 23 Other auditors 204 - Directors’ remuneration: Company 3,562 3,193 Subsidiaries 2,232 1,286 Fees paid to a firm in which a director has an interest 15 15 (Gain) Loss on disposal of property, plant and equipment (219) 18 Management fees paid to a firm in which a director of a subsidiary has an interest - 488 Property, plant and equipment written off 107 91 Rental paid by a company in which a director has an interest (15) - (Write-back) Write-off of bad debts (12) 13 Write-off (Write-back) of inventories 3 (140)
30 INCOME TAX EXPENSE Group 2005 2004 $’000 $’000 Current 7,030 5,486 Deferred (Note 22) (1,246) (2,049) Associates 118 342 (Over) Under provision in prior years: Current (587) 60 Deferred (Note 22) (256) - 5,059 3,839
SINCERE WATCH LIMITED ANNUAL REPORT 2005
73 30 INCOME TAX EXPENSE (cont'd) The income tax expense varied from the amount of income tax determined by applying the Singapore income tax rate of 20% (2004 : 20%) to profit before share of results of associates and income tax as a result of the following: Group 2005 2004 $’000 $’000 Income tax expense at statutory rate 4,686 4,389 Non-allowable (taxable) items 842 (759) (Over) Under provision in prior years: Current (587) 60 Deferred (256) - Utilisation of deferred tax benefit previously unrecorded (120) (318) Deferred tax benefit unrecorded, net 722 212 Share of associates' income tax 118 342 Effect of different income tax rates of overseas subsidiaries (137) (190) Tax exemption (53) (70) Other items (156) 106 Effect of change in income tax rate - 67 5,059 3,839
The group has tax loss carryforwards available for offsetting against future taxable income as follows: Group 2005 2004 $’000 $’000 Amount at beginning of year 7,480 3,864 Adjustments 271 445 Arising from acquisition of subsidiary - 1,587 Amount in current year 2,398 2,025 Amount utilised in current year (13) (441) Amount at end of year 10,136 7,480
Deferred tax benefit 2,101 1,569
The group and company have temporary differences mainly from allowance for inventories, allowance for doubtful debts and capital allowances available for offsetting against future taxable income as follows: Group Company 2005 2004 2005 2004 $’000 $’000 $’000 $’000 Amount at beginning of year 21,632 19,436 1,053 2,255 Adjustments (197) (541) (195) (314) Arising from acquisition of subsidiary - 289 - - Amount in current year 8,909 4,256 1,064 - Amount utilised in current year (478) (1,808) (172) (888) Amount at end of year 29,866 21,632 1,750 1,053
Deferred tax benefit 5,615 4,029 350 206
Deferred tax benefits on above 7,716 5,598 350 206 Deferred tax benefits not recognised (3,370) (2,470) - (206) Deferred tax benefits recognised (Note 22) 4,346 3,128 350 -
These future income tax benefits in respect of unutilised tax losses are available for an unlimited future period only if the respective subsidiaries derive future assessable income of a nature and of sufficient amounts to enable the benefits to be realised and the conditions for deductibility imposed by law, including the retention of majority shareholders, as defined, are complied with.
74 31 EARNINGS PER SHARE The basic earnings per share is calculated by dividing the group’s net profit for the financial year by the existing number of shares in issue at the end of the year as follows: Group 2005 2004
Basic earnings per share (cents) 9.75 9.44
The calculation of the basic earnings per share is based on:
Profit attributable to shareholders (in $’000) 19,126 18,529
The existing number of fully paid shares of $0.10 each in issue at end of year (in ’000) 196,200 196,200
The fully diluted earnings per share is equal to the basic earnings per share as there is no dilution. For compliance with FRS 33 – Earnings Per Share, basic earnings per share is calculated by dividing the group’s net profit attributable to shareholders by an adjusted 196,200,000 ordinary shares in issue during the year, after taking into account the effect of consolidation and subdivision of the par value from $0.25 to $0.10 each and the 1-for-5 bonus issue (Note 23). For comparative purposes, the number of shares for year 2004 is also adjusted retrospectively to 196,200,000.
32 CASH AND CASH EQUIVALENTS IN THE CONSOLIDATED CASH FLOW STATEMENT Group 2005 2004 $’000 $’000 Cash and bank balances 38,977 41,860 Fixed deposits (Note 6) 16,909 9,549 Bank overdrafts (Note 16) (5,560) (4,950) 50,326 46,459
33 OPERATING LEASE COMMITMENTS Group 2005 2004 $’000 $’000 Minimum lease payments under operating leases included in the profit and loss statement 14,648 11,943
At the balance sheet date, commitments in respect of non-cancellable operating leases for the rental of office, shop space and land with a term of more than one year are as follows: Group Company 2005 2004 2005 2004 $’000 $’000 $’000 $’000 Within one year 11,065 12,644 1,346 1,547 In the second to fifth years inclusive 8,478 15,181 1,310 1,284 After five years 1,026 - - - Total 20,569 27,825 2,656 2,831
The group has various operating lease agreements for its store outlets. Most leases contain renewable options and certain leases contain escalation clauses. Certain leases also provide for contingent rentals based on certain percentages of sales or/and the number of passengers compared against certain passenger statistics.
SINCERE WATCH LIMITED ANNUAL REPORT 2005
75 34 COMMITMENTS Certain subsidiaries are committed to making minimum total purchases from their suppliers pursuant to contracts signed with them: Group 2005 2004 $’000 $’000 Within one year 10,195 8,570 In the second to fifth years inclusive 11,409 20,599 Total 21,604 29,169
Certain suppliers have the right to terminate their exclusive distribution agreements if the respective subsidiary fails to meet the minimum purchase requirements pursuant to the terms and conditions of the agreements.
There was a shortfall of $1,341,000 (CHF 975,000) [2004 : $1,627,000 (CHF 1,241,000)] from the required purchase amount of $7,923,000 (CHF 5,760,000) [2004 : $6,295,200 (CHF 4,800,000)] as stipulated in the distribution agreement. The supplier has not exercised its right to terminate the exclusive distribution agreement. The group has no further commitment in respect of the shortfall.
35 CAPITAL EXPENDITURE COMMITMENTS Group and Company 2005 2004 $’000 $’000 Amount committed for future capital expenditure but not provided for in the financial statements 394 322
36 FOREIGN CURRENCY CONTRACTS As at the end of the financial year, the nominal value of foreign currency contracts translated at rates prevailing as at year end are as follows: Group Company 2005 2004 2005 2004 $’000 $’000 $’000 $’000 Principal/Notional amount
Bought: Swiss Francs 12,700 5,512 12,700 5,512
Euros 1,533 133 1,376 3
United States Dollars 44 53 - -
Australian Dollars 110 287 - -
Singapore Dollars 133 303 - -
New Zealand Dollars 15 - - -
Equivalent in Singapore Dollars 21,406 8,368 20,707 7,344
Fair values, net (216) (86) (213) (84)
Term to maturity April to April to April to April to July 2005 June 2004 July 2005 May 2004
76 37 CONTINGENT LIABILITIES, UNSECURED (i) The group and the company has the following:
Group Company 2005 2004 2005 2004 $’000 $’000 $’000 $’000 Guarantee of banking facilities provided to the subsidiaries and associates 4,005 4,047 26,947 29,869 Bankers’ guarantee 4,626 5,476 4,300 5,306
(ii) The group terminated the co-operative joint venture agreement for its subsidiary, Shanghai Sincere Watch Co. Ltd in September 1999. The co-operative joint venture partner had indicated it may institute legal proceedings against the group for breach of contract for the recovery of approximately $200,000 (2004 : $201,000).
(iii) The company filed a writ of summons against Bakery Mart Pte Ltd on September 5, 2002 for an amount of $2,179,500 for the repayment of loans and advances. Bakery Mart Pte Ltd has counterclaimed general damages and special damages in the sum of $2,125,000 on the basis of an alleged restructuring agreement. This action has stayed. The company has been advised by its lawyers in relation to this matter that there is no merit in the claims made by Bakery Mart Pte Ltd. Accordingly, no provision has been made for this claim.
SINCERE WATCH LIMITED ANNUAL REPORT 2005
77 38 SEGMENT INFORMATION The group is operating mainly in the Asian region, namely Southeast and Northeast Asia. The primary segments of the group are by geographical locations of assets.
Inter-segment pricing is on terms agreed between the parties.
Southeast Asia Northeast Asia Elimination Group 2005 2004 2005 2004 2005 2004 2005 2004 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Revenue External sales 218,793 172,668 105,468 84,988 - - 324,261 257,656 Inter-segment sales 51,851 46,599 13,683 9,350 (65,534) (55,949) - - Total revenue 270,644 219,267 119,151 94,338 (65,534) (55,949) 324,261 257,656
Result Segment result 32,341 20,422 13,385 13,004 (21,325) (10,602) 24,401 22,824 Finance costs (973) (879) Profit before share of results of associates 23,428 21,945 Profit from associates 393 502 Profit before income tax and minority interest 23,821 22,447 Income tax expense (5,059) (3,839) Profit before minority interest 18,762 18,608
Other information Segment assets 157,111 123,239 90,116 71,347 247,227 194,586 Investment in associates 5,335 4,029 - - 5,335 4,029 Unallocated corporate assets 4,367 3,226 Consolidated total assets 256,929 201,841
Segment liabilities 57,499 44,348 75,244 49,055 132,743 93,403 Unallocated corporate liabilities 32,157 27,187 Consolidated total liabilities 164,900 120,590
Capital expenditure 2,840 4,776 110 667 2,950 5,443 Acquisition of intangible asset - 4,009 - - - 4,009 Depreciation and amortisation 2,994 1,964 542 600 3,536 2,564 Other non-cash expenses 3,778 3,694 4,822 2,829 8,600 6,523
As the group is substantially in one business segment, namely the retailing and distribution of quality watches and clocks, no secondary segments have been disclosed.
78 39 DIVIDEND During the financial year, the company declared and paid a first and final dividend of $0.02 per ordinary share less tax totalling $1,046,400 and a special dividend of $0.11 per ordinary share less tax totalling $5,755,200 in respect of the financial year ended March 31, 2004.
Subsequent to the balance sheet date, the directors of the company recommended that a first and final dividend of $0.01 per ordinary share less tax totalling $1,569,600 and a special dividend of $0.015 per ordinary share less tax totalling $2,354,400 be paid for the financial year just ended on the ordinary shares of the company. The proposed dividends have not been accrued as a liability for the current financial year in accordance with FRS 10 – Events After the Balance Sheet Date.
40 SIGNIFICANT EVENT The company announced on August 18, 2004 that an application had been submitted to the Stock Exchange of Hong Kong Limited (the “HKE”) for the proposed listing of the group’s operations in Hong Kong, currently carried out through Sincere Brand Management Limited (“SBML”) (formerly known as Times Legend (Asia Pacific) Limited), on the Main Board of the HKE (“Proposed Listing”) pursuant to an initial public offering (“IPO”) exercise. The Proposed Listing will result in a material dilution of at least 25% shareholding interest in the company's interest in SBML, which is a principal subsidiary of the company.
In connection with the Proposed Listing, a group reorganisation exercise (“Proposed Reorganisation”) will be undertaken, and Sincere Watch (Hong Kong) Limited (“SWHK”) will be the designated listing vehicle for the Proposed Listing.
The Proposed Listing will consist entirely of an issue by SWHK of new shares in its capital (“IPO Shares”). The structure of the Proposed Listing, including the issue price of the IPO Shares, the size of the IPO and the underwriting arrangements, will be determined at a later date. SWHK will remain a subsidiary of the company after the Proposed Listing.
The Proposed Listing is conditional upon, inter alia, the following:
(i) the approval of Shareholders for the Proposed Listing and the resulting dilution of the group’s shareholding interest in SWHK being obtained at an extraordinary general meeting to be convened;
(ii) the approval of the HKE for the listing of, and permission to deal in, the shares of SWHK on the Main Board of the HKE;
(iii) SWHK and the underwriters to the Proposed Listing entering into an agreement whereby the latter will place and underwrite the IPO Shares at an issue price to be determined; and
(iv) the underwriting agreement in (iii) above becoming unconditional and not being terminated on or before the date on which dealings in the shares of SWHK are expected to commence on the Main Board of the HKE.
As at March 31, 2005, the Proposed Listing is still in progress and no further development has been announced.
SINCERE WATCH LIMITED ANNUAL REPORT 2005
79 STATEMENT OF DIRECTORS
SINCERE WATCH LIMITED AND ITS SUBSIDIARIES
In the opinion of the directors, the consolidated financial statements of the group and the balance sheet and statement of changes in equity of the company set out on pages 52 to 79 are drawn up so as to give a true and fair view of the state of affairs of the group and of the company as at March 31, 2005 and of the results and cash flows of the group and of the changes in equity of the group and company for the financial year ended on that date and 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 DIRECTORS
Mr Tay Liam Wee
Mr Soh Gim Teik
Singapore May 17, 2005
80 CORPORATE GOVERNANCE REPORT
The Board of Directors (the “Board”) of Sincere Watch Limited (the “Company” or “Sincere”) is committed to maintaining high standards of corporate governance and effective self-regulatory corporate practices to protect the interest of its shareholders. Pursuant to Rule 710(2) of the Listing Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST”), the Company’s corporate governance processes and activities for the financial year are outlined below:
Board Of Directors The Board currently comprises the following members: Mr Tay Boo Jiang Executive Chairman Mr Tay Liam Wee Executive Group Managing Director Mr Soh Gim Teik Executive Director Mr Tay Chok Yan Executive Director Mr Tay Ngiap Jiang Executive Director Mr Cecil Vivian Richard Wong Independent Non-Executive Director Mr Lua Cheng Eng Independent Non-Executive Director Mr Khong Teck Kim Independent Non-Executive Director
In addition, the Board is supported by the Nominating Committee (“NC”), the Remuneration Committee (“RC”) and the Audit Committee (“AC”).
Principle 1: The Board’s Conduct of Its Affairs The principal functions of the Board are: • Reviewing and approving the broad policies, strategic and financial objectives of the Group • Monitoring financial performance including approving financial results, annual reports and statutory accounts • Overseeing the business conduct and affairs of the Group via its Management • Overseeing the processes of risk management, financial reporting and compliances and evaluating the adequacy of internal controls • Approving the nominations of directors and appointment of senior management, and determining and reviewing their remuneration levels • Assuming the responsibility of corporate governance for the Group
Certain functions have been delegated to various Board Committees, namely, the AC, NC and RC. These Committees are made up wholly or predominantly of non-executive directors and chaired by independent directors.
The Board holds a minimum of four meetings a year to consider and resolve major financial and business matters of the Group. Important matters concerning the Group are also put to the Board for its decision by way of circular resolutions. Ad-hoc meetings are also held amongst members of the Board including the use of teleconferencing, faxes and emails as and when required.
Directors’ Attendances at Board and Committees’ Meetings Board Audit Nominating Remuneration Meeting Committee Committee Committee No. of No. of No. of No. of No. of No. of No. of No. of Meetings Meetings Meetings Meetings Meetings Meetings Meetings Meetings Director Held Attended Held Attended Held Attended Held Attended Tay Boo Jiang (Chairman) 4 3 NA NA NA NA NA NA Tay Liam Wee (CEO) 4 4 NA NA 2 1 2 2 Soh Gim Teik 4 4 NA NA 2 2 NA NA Tay Chok Yan 4 4 NA NA NA NA NA NA Tay Ngiap Jiang 4 4 NA NA NA NA NA NA Cecil Vivian Richard Wong 4 4 4322 2 2 Lua Cheng Eng 4 3 4322 2 2 Khong Teck Kim 4 4 4422 2 2
SINCERE WATCH LIMITED ANNUAL REPORT 2005
81 Principle 2: Board Composition and Balance The Board now consists of eight directors. Five of the Board members are executive directors while the other three are independent non-executive directors.
The composition of the Board is reviewed on an annual basis by the NC to ensure the Board has the appropriate mix of expertise and experience in the field of accounting and finance, business and management, strategic planning and industry knowledge. The profiles and key information of the directors at the date of the report are as follows:
Tay Boo Jiang Is the Founder and Executive Chairman of the Board. He has been responsible for the growth of the Company since its inception as a sole proprietor in 1954. With more than 50 years of experience in the retail trade, he continues to contribute to the Company with his vast experience and knowledge of the watch industry in Singapore and has built up an extensive business network over the decades.
Tay Liam Wee Is the Group Managing Director/CEO of the Company. He was appointed as Director and CEO since 1980 and 1993 respectively. He holds a Bachelor of Business Administration Degree from the Lake Head University, Canada, and is responsible for the overall management and the development of the Group. He has been instrumental in leading Sincere to its current growth phase that involves the development of the Group’s corporate vision and the implementation of various expansion strategies and plans.
Mr Tay is a member of the RC and the NC.
Soh Gim Teik Is the Finance Director/CFO and the Company Secretary of Sincere since 1993 and 1982 respectively. He graduated with a Bachelor of Accountancy Degree from the University of Singapore in 1978 and has several years of financial experience in various senior positions. He is responsible for the Group’s financial, legal and related corporate matters including corporate communications and investor relations. He is a member of the Institute of Certified Public Accountants of Singapore and is currently a Board member of two other listed companies where he chairs their Audit Committees.
Mr Soh is also a member of the NC.
Tay Chok Yan and Tay Ngiap Jiang Are Directors of the Company since 1980 and have more than 40 years of experience in the business. Their on-going responsibilities involved assisting the shops managers in the running of various retail outlets and attending to sales matters. Over the years, they have established a large and valuable clientele base and take direct responsibility in servicing their own clients. They provide a sense of stability in the retail outlets of Sincere and assist in the nurturing of younger retail staff.
Cecil Vivian Richard Wong Is the Independent Non-Executive Director and has served as the Audit Committee Chairman since 1993. He also sits in the RC and NC. Mr Wong was previously a Public Accountant and Partner of Ernst & Young until his retirement in 1987. He holds a Bachelor of Arts Degree from the University of Cambridge and is a member of the Institute of Certified Public Accountants of Singapore. Currently, Mr Wong is the Chairman of Bukit Sembawang Estates Limited and British & Malayan Trustee Limited and is also a Board member of various other companies listed on the Stock Exchange of Singapore.
Lua Cheng Eng Is the Independent Non-Executive Director since 1993 and the Chairman of the RC. He is also a member of the NC and AC. He holds a Bachelor of Arts Degree with Honours from the University of London and was elected a Fellow of the Chartered Institute of Transport (United Kingdom) in 1985. Mr Lua is the Chairman of Jurong Technologies Industrial Corporation and the Chairman of SembCorp Marine Ltd. He is also a Board Member of Sembcorp Industries Ltd where he chairs the Audit Committee. These companies are listed on the Stock Exchange of Singapore. Since May 2002, Mr Lua has retired as Chairman of Neptune Orient Lines Ltd (“NOL”), after having served NOL for more than 30 years including 20 years as NOL's CEO. He remains with NOL as its Senior Advisor. He is also an Advisor to several companies and organisations including being a Counsellor
82 in the Baltic International Maritime Council in Copenhagen and Nippon Kaiji Kyokai in Japan. Currently, Mr Lua serves as the Chairman of the Committee on Maritime Transport of the International Chamber of Commerce (“ICC”) in Paris. He is also the Vice-Chairman of the ICC Commission on Transport and Logistics. Mr Lua is Singapore’s non-resident Ambassador to Finland and Panama. Prior to his ambassadorial appointments, he was recognised for his service to the nation with the award of Public Service Medal (“PBM”) in 1979 and Public Service Star (“BBM”) in 1999 by the Singapore Government.
Khong Teck Kim Is an Independent Non-Executive Director since 2003 and the Chairman for the NC. He is also a member of the RC and AC. Mr Khong has previously served in the Civil Aviation Authority of Singapore (“CAAS”) for more than 30 years until his retirement in August 2002. He held several senior positions in CAAS and was involved in travel retail planning, marketing and management at Singapore Changi Airport. He was also the Chairman of the Economics Committee of the Airport Council International (“ACI”) for the Pacific Region as well as the Pacific Region’s representative to the ACI’s World Economics Committee. Since his retirement, he has been appointed as the Honorary Consul and Representative of the Kingdom of Tonga in Singapore and the Executive Director of Aviation Business Network, a consultancy firm as well as representatives of airports and airlines.
Mr Khong holds a Master Degree in Industrial Engineering, a Post-Graduate Diploma in Business Administration and a Bachelor Degree with Honours in Mathematics from the University of Singapore.
Senior Management Kevin Chau Is the Chairman for Sincere Brand Management Limited. Based in Hong Kong, he is responsible for the overall development of the North Asia market for the Group. Previously, Mr Chau was the Principal Officer for an investment company in Hong Kong dealing in real estates and the F&B industries in China. He began his career in 1982 with Manufacturers Hanover Limited, USA, dealing in Fixed Income and Derivative syndication and had been posted by the company to their New York, London and Tokyo offices. In 1990, he set up his own real estate investment company in California, USA, investing in projects in Texas and California. Mr Chau holds a Bachelor of Science Degree in Economics from the Wesleyan University in Connecticut, USA.
Tay Liam Wuan Is the Managing Director of Sincere Brand Management Limited. Based in Hong Kong, she is responsible for all aspects of the Group’s operations in North Asia. Prior to her current appointment, she was the Marketing Manager for Sincere before her secondment to Hong Kong. She was previously a Credit and Marketing Officer with Export Credit Insurance Corporation of Singapore.
Ms Tay holds a Bachelor Degree in Business Administration from the National University of Singapore.
Teng Chee Kiong Is the Senior Vice-President for Business Development and Corporate Affairs. In addition, he also oversees the Travel Retail, Lifestyle Watch Retail and Brand Management divisions of Sincere. He is responsible for developing the market presence and expanding the market share of these divisions in South East Asia. His previous work experience includes management positions in Duty Free Shoppers Pte Ltd and Metro Pte Ltd.
Mr Teng has more than 25 years of experience in retail and distribution management and has a Degree in Business Administration from the University of Singapore as well as a MBA in Retailing from the University of Stirling.
Tay Kok Kian Is the Senior Vice-President of the Fine Watch Retail Division. He has been with the Company for more than 30 years and is currently responsible for the operation of Fine Watch boutiques in Singapore and Malaysia. He has been instrumental in forging the strategic transformation of the Sincere’s business of general watch retailing in the 70s to its present day business of fine watch retailing. He continues to play a key role in lifting the service standards of the Company.
SINCERE WATCH LIMITED ANNUAL REPORT 2005
83 Lim Gwee Koon Is the Group Financial Controller and Company Secretary of Sincere. He joined the Company in 1993 and is responsible for the Group’s financial reporting and accounting, corporate finance and treasury function. He is also involved in strategic business planning and coordinates the financial needs of the entire Group. He has several years of experience as an external auditor with established public accounting firms.
Mr Lim is a Fellow of the Association of Chartered Certified Accountants, UK, and a member of the Institute of Certified Public Accountants of Singapore.
Laurence Chan Is the General Manager, Operations and Finance, of Sincere Brand Management Limited. Based in Hong Kong, he is responsible for the financial management and control in addition to the administration of the Group’s operations in North Asia. Mr Chan has held directorships in several private equity fund management companies and has extensive experience in management and finance. Mr Chan is a CFA Charterholder. He obtained his MBA from the University of Manchester, Manchester Business School, UK, as well his Bachelor Degree in Engineering from the National University of Singapore.
Ong Ban Is the Executive Vice-President of the Fine Watch and Lifestyle Watch Retail Division. He joined Sincere in 1996 and is responsible for all operational matters including the market development of the Fine Watch business in Singapore and Malaysia. Before joining Sincere, he held several management positions in retailing and trading companies, Coop International (S) Pte Ltd and Trisindo International (S) Pte Ltd.
Mr Ong graduated from the University of Cardiff in Wales, UK, with a Law Degree.
Susanna Kang Is the Vice-President of the Brand Management Division and has been with the Company since 1994. She is responsible for the marketing and business development of the Group’s agency business. Brands under her portfolio include Franck Muller, European Company Watch and Cvstos. Her previous work experience includes sales and brand management roles in FJ Benjamin and Cosa Liebermann.
Ms Kang holds a Bachelor Degree in Business Administration from the National University of Singapore.
Chew Nam Yeo Is the Executive Vice-President for Finance and has been with Sincere since 1994. Besides being responsible for the overall financial and accounting functions of the Group, she also has compliance responsibilities and ensures that all companies within the Group adhere to Group accounting policies and practices. Her other duties cover corporate secretarial, treasury, corporate finance and corporate communications matters. She also has several years of audit experience in an established public accounting firm.
Ms Chew holds a Bachelor Degree in Accountancy with Honours from the National University of Singapore and is a member of the Institute of Certified Public Accountants of Singapore.
Tay Liam Sze Is the Vice-President of Marketing for Singapore and key markets in Asia. She has been with Sincere since 1999 and is currently responsible for advertising, promotions, public relations and all other marketing communications matters for the Sincere Group. Prior to joining Sincere, she held marketing positions with United Overseas Bank Limited, IKEA Asia Pacific Pte Ltd and DHL International (S) Pte Ltd.
Ms Tay holds a Bachelor Degree in Business Administration from the National University of Singapore and a Graduate Diploma in Marketing Management from the Singapore Institute of Management.
84 Principle 3: Chairman and Chief Executive Officer The roles of the Chairman and CEO are separate. The Chairman leaves the daily running of the business to the CEO although he bears responsibility for the working of the Board. The CEO is the son of the Chairman.
Nevertheless, in view of the Board composition of which three of the eight directors are non-executive and independent and the accessibility of information extended to non-executive directors, the Board is satisfied that the current arrangement represents an appropriate balance of power and authority and no individual member of the Board represents a considerable concentration of power. Directors are given Board papers in advance of meetings for them to be adequately prepared for the meetings and senior management staff are, where necessary, in attendance at Board and Committees' meetings.
Principle 4: Board Membership The NC comprises five directors, three of whom, including its chairman Mr Khong Teck Kim, Mr Lua Cheng Eng and Mr Cecil Vivian Richard Wong are independent. The other two members, Mr Tay Liam Wee and Mr Soh Gim Teik, are the CEO and the CFO respectively.
The Articles of Association of the Company require one-third of the Board directors to retire from office at each Annual General Meeting ("AGM"). Accordingly, the directors submit themselves for re-nomination and re-election at regular intervals of at least once every three years. In addition, a newly appointed director is required to retire at the AGM immediately following his appointment. He may, subject to the recommendation of the NC and the Board, offer himself for re-election at the AGM and he becomes subject to the one-third rotation rule if re-elected.
Principle 5: Board Performance As stated in the terms of reference, the NC will be responsible for reviewing and evaluating the performance of each director. The directors’ evaluation is based on their participation and contribution at Board and Committees’ meetings.
Principle 6: Access to Information Directors are given full access to all minutes and documents concerning all Board and Committees’ meetings. It is a policy that all Board papers are submitted to the directors prior to every Board and Committees' meeting. Additionally, directors have access to any key officers of the Company when required.
Should the directors, either as individual or as a group, require independent professional advice to fulfil their duties and responsibilities as directors, the Company will bear the costs of such advice.
Principle 7: Remuneration Matters The RC comprises Mr Lua Cheng Eng, who serves as its Chairman, Mr Khong Teck Kim, Mr Cecil Vivian Richard Wong and Mr Tay Liam Wee. With the exception of Mr Tay Liam Wee, who is the CEO, all members are independent non-executive directors of the Board. In matters relating to the remuneration of the CEO, the CEO will abstain from the deliberation and decision process of the RC. The RC must have absolute independence and be free from any business or other relationships which may materially interfere with the exercise of its independent judgement.
Principle 8: Level and Mix of Remuneration An appropriate and attractive level of remuneration has been set to retain and motivate all staff and directors. The current remuneration package generally includes a fixed as well as a variable component. The variable portion is determined based on the performance of both the individual employee as well as the Group’s performance. The remuneration of all employees in the Group is subject to approval by the executive directors in consultation with the respective Heads of Department. Annual adjustments and increments to remuneration are based on the results of the annual review.
The remuneration of independent directors is determined, after taking into account the effort and time spent and level of responsibilities assigned. The recommendation is submitted annually by the Board for the approval of shareholders at the AGM.
SINCERE WATCH LIMITED ANNUAL REPORT 2005
85 Principle 9: Disclosure of Remuneration The Executive Chairman and the CEO, as Executive Directors, do not receive directors’ fees. Their compensation comprise salaries, bonuses and a performance related variable bonus element based on their achievement of certain performance targets. A breakdown of the remuneration paid to each director in remuneration bands of $250,000 for the year 2005 is as follows:
Remuneration Fees Salary Bonus Performance Band Bonus* $%%%% Executive Directors Tay Liam Wee 1.75m – 2m - 32 - 68 Tay Boo Jiang 750k – 1m - 11 - 89 Soh Gim Teik 500k – 750k - 70 30 - Tay Ngiap Jiang < 250k - 80 20 - Tay Chok Yan < 250k - 80 20 -
Non-Executive Directors Cecil Vivian Richard Wong < 250k 100 - - - Lua Cheng Eng < 250k 100 - - - Khong Teck Kim < 250k 100 - - - * Performance bonus is based on the employment contract.
Employees who are immediate family members of the directors of the Company and whose remuneration exceed $150,000 during the financial year are as follows:
Name Remuneration Band Immediate Family Member of Designation $
Tay Liam Wuan 250K - 500K Tay Chok Yan Managing Director of Hong Kong subsidiary, Sincere Brand Management Limited
Tay Liam Tze <250K Tay Ngiap Jiang Vice-President – Regional Marketing Manager of Sincere Watch Limited and key markets in Asia
Mr Kevin Chau, Chairman of Sincere Brand Management Limited, was paid in the region of $1.5m – $1.75m during the financial year. This entire amount comprised performance bonus calculated on the basis of the profitability of the subsidiary.
Save for the above and for competitive reasons, the Company is not disclosing the remuneration paid to its other executives.
Accountability and Audit
Principle 10: Accountability The Board is accountable to the shareholders while the Management is accountable to the Board.
The Board has provided shareholders with a balanced and understandable assessment of the Company’s and Group’s performance, position and prospects via its interim reporting and other SGX-ST announcements.
86 Principle 11: Audit Committee The AC presently comprises Mr Cecil Vivian Richard Wong, who serves as its Chairman, Mr Lua Cheng Eng and Mr Khong Teck Kim. The AC is wholly made up of independent directors and thus it is in compliance with the Code. The Board is also satisfied that each of the AC members has appropriate accounting and/or related financial management expertise and experience.
The AC terms of reference are as follows: The duties of the AC shall be: • To review the audit plan with the external auditors and their evaluation of the system of internal controls, audit report, management letters and responses from Management • To review the quarterly, half-year and annual financial statements for announcement to SGX-ST before submission to the Board for approval • To discuss problems and concerns, if any, arising from the interim and final audits, and any matters which the auditors may wish to discuss in the absence of Management where necessary • To review the internal audit programme and ensure co-ordination between the internal and external auditors and Management • To review the scope and results of the internal audit procedures • To review the accounts of the Company and the consolidated accounts of the Group before submission to the Board for approval • To review and discuss with the external auditors, any suspected fraud or irregularity, or suspected infringement of any Singapore law, rules and regulations, which has or is likely to have a material impact on the Group's operating results or financial position • To review transactions falling within the scope of Chapter 9 of the SGX-ST Listing Manual • To consider the appointment of the external auditors at each AGM, the audit fees and matters relating to the resignation or dismissal of the auditors • To review all non-audit services provided by the external auditors with a view of establishing their independence
Four AC meetings were held during the year 2005. Members of the Management have, by invitation of the AC, been present at all meetings to answer queries from the AC.
The AC reviewed the non-audit services provided by the external auditors and in their opinion, they did not affect the independence of the external auditors.
Principle 12: Internal Controls The Group’s internal controls and systems are designed to provide reasonable assurance as to the integrity and reliability of the financial information and to safeguard and maintain accountability of its assets. Procedures are in place to identify major business risks and to evaluate its potential financial impact.
The Board acknowledges its responsibility for ensuring that there is a sound system of internal controls to safeguard shareholders’ investments and Company’s assets.
Principle 13: Internal Audit The AC has reviewed and evaluated the system of internal controls with the external auditors and internal auditor. The Board is of the view that there are no major weaknesses in the existing system of internal controls.
The Internal Audit Function reports directly to the Chairman of the AC on audit matters, and the CEO and CFO on administrative matters. The Internal Audit Department is independent of Management and submits its internal audit plan to the AC for approval at the beginning of each year after consultation with the Management.
The Internal Audit Department has adopted the Standards for Professional Practice of Internal Auditing as set by the Institute of Internal Auditors.
Principle 14: Regular, Effective and Fair Communication The Board is committed to provide timely disclosure of information to the shareholders.
SINCERE WATCH LIMITED ANNUAL REPORT 2005
87 Principle 15: Greater Shareholder Participation All information on the Company’s performance is published through the SGXNET. Annual report and notices of general meeting are sent to all shareholders of the Company.
The Company has also retained an investor relations firm and has at regular intervals, updated investors and the general public on the progress of the Group.
External auditors are also present at AGMs to assist directors in addressing any relevant queries from shareholders.
Interested Persons Transactions During the financial year under review, the aggregate value of all transactions conducted with interested persons as defined in Chapter 9, Clause 904 of the Listing Manual of SGX-ST did not exceed $100,000. All transactions with interested persons are reviewed by the AC and the Board.
Material Contracts Other than transactions mentioned under Interested Persons Transactions above and for the remuneration received by the directors in their capacity as directors, there were no material contracts entered into in the ordinary course of business, by the Company and its subsidiaries involving the interests of the CEO, the directors or the controlling shareholders.
Dealing With Securities The Group has adopted the SGX-ST Best Practices Guide with respect to the dealings in securities. All officers are prohibited from dealing in securities of the Company during the period of four weeks before the announcement of the Company’s full-year and half-year results and ending two days after the announcement of the results, in accordance to the guidelines set out in the Best Practices Guide. Similarly, the ‘closed’ period before the announcement of the Company’s results for the first and third quarters is one week before the announcement until one day after the announcement.
The directors and officers are not expected to deal in the Company’s securities on a short-term basis. Directors and officers are required to observe insider trading provisions under the Securities and Futures Act at all times even when dealing in the Company’s securities within the permitted periods. To enable the Company to monitor such transactions, directors of the Company are required to report all dealings to the Company Secretaries.
Managing Risk Business & Operational Risk Management The Group is subject to business and operational risks common to the luxury watch retail industry. These risks include, among other things, competition from other watch retailers, availability of suitable operating sites, increases in operating costs such as rental and labour costs, the recurring need to refurbish and upgrade retail boutiques/outlets, government regulations and adverse local or international economic and market conditions.
In addition, the Group adopts additional measures by observing a comprehensive brand management policy and constantly seeks diversification in brands to mitigate the incident of over-reliance on a particular brand.
Competition Risk Management The luxury watch industry is a highly competitive market. Changes in economic conditions, domestic market conditions and consumer behavioural preferences may affect the demand of the Group’s range of products. As such risks cannot be completely eliminated, the Group has undertaken continuous efforts in improving and developing its market share and brand awareness through comprehensive marketing and promotional programmes.
Foreign Exchange Risk As the Group transacts in currencies like the Swiss Franc and the Euro, any significant adverse movement in exchange rates will have an impact on the Group’s performance. The Group seeks to minimise this impact by entering into forward foreign exchange contracts and options and also buy or sell foreign currencies at spot rates where necessary to address any short-term imbalances. Forward foreign exchange contracts and options are entered purely as a hedging tool and the Group does not take speculative positions for trading purposes.
88 ANALYSIS OF SHAREHOLDINGS
SINCERE WATCH LIMITED AS AT 9 JUNE 2005
Authorised Share Capital : $50,000,000 Issued And Fully Paid-up Capital : $19,620,000 Class Of Shares : Ordinary Shares Of $0.10 Each Voting Rights : 1 Vote Per Share
DISTRIBUTION OF SHAREHOLDERS BY SIZE OF SHAREHOLDINGS Size Of Shareholdings No. of Shareholders % No. of Shares % 1 - 999 22 2.19 9,405 0.01 1,000 - 10,000 614 61.15 3,461,845 1.76 10,001 - 1,000,000 357 35.56 21,482,748 10.95 1,000,001 & Above 11 1.10 171,246,002 87.28 Total 1,004 100.00 196,200,000 100.00
TOP TWENTY SHAREHOLDERS AS AT 9 JUNE 2005 Name No. of Shares % TBJ Holdings Pte Ltd 98,455,500 50.18 HSBC (Singapore) Nominees Pte Ltd 19,730,500 10.05 Tay Liam Tiak 11,358,000 5.79 Tay Liam Hwee @ Tay Yong Tiak 7,848,000 4.00 Tay Liam Kiat 7,848,000 4.00 United Overseas Bank Nominees Pte Ltd 6,588,000 3.36 DBS Nominees Pte Ltd 5,427,500 2.77 DB Nominees (S) Pte Ltd 4,965,000 2.53 Estate Of Tay Liam Hoong 3,757,502 1.92 Tay Chok Yan 2,664,000 1.36 Tay Ngiap Jiang 2,604,000 1.33 Lim Mee Hwa 975,000 0.50 Citibank Nominees Singapore Pte Ltd 858,500 0.44 The Asia Life Assurance Society Ltd - Par Fund 769,000 0.39 Tay Liam Kai 610,500 0.31 G.K. Goh Stockbrokers Pte Ltd 562,760 0.29 Lam Lai Cheng 555,000 0.28 MayBan Nominees (S) Pte Ltd 538,000 0.27 Wee Aik Koon Pte Ltd 495,000 0.25 Silvaroyal Pte Ltd 360,000 0.18 176,969,762 90.20
SUBSTANTIAL SHAREHOLDERS Name Direct Interest % Deemed Interest % TBJ Holdings Pte Ltd 98,455,500 50.18 - - Tay Boo Jiang - - 98,455,500 (1) 50.18 Tay Liam Wee - - 98,455,500 (1) 50.18 Chartered Asset Management Pte Ltd - - 23,432,000 (2) 11.94 CAM-GTF Limited 18,579,000 (3) 9.47 - - Tay Liam Tiak 11,802,000 (4) 6.02 - -
SHAREHOLDING HELD IN THE HANDS OF PUBLIC Based on the information available to the company as at 9 June 2005, approximately 31% of the issued ordinary shares of the company is held by the public, and therefore, Rule 723 of the Listing Manual of SGX-ST is complied with.
Notes: (1) Deemed interests of Mr Tay Boo Jiang and Mr Tay Liam Wee comprise the total interest of TBJ Holdings Pte Ltd
(2) Chartered Asset Management Pte Ltd is deemed to have an interest in the shares held as follows: (i) HSBC (Singapore) Nominees Pte Ltd 18,579,000 (ii) Citibank Nominees Pte Ltd 654,000 (iii) G.K. Goh Stockbrokers Pte Ltd 285,000 (iv) DBS Nominees Pte Ltd 3,914,000
(3) Direct interest of CAM-GTF limited is held through HSBC (Singapore) Nominees Pte Ltd
(4) Direct interest of Mr Tay Liam Tiak includes interest acquired through CPF investment account and under the Supplementary Retirement Scheme
SINCERE WATCH LIMITED ANNUAL REPORT 2005
89 NOTICE OF ANNUAL GENERAL MEETING
SINCERE WATCH LIMITED (INCORPORATED IN THE REPUBLIC OF SINGAPORE)
Notice is hereby given that the 28th Annual General Meeting of the Company will be held at Suntec Singapore International Convention & Exhibition Centre, 1 Raffles Boulevard, Suntec City, Level 3, Meeting Room 307, Singapore 039593, on Tuesday, July 19, 2005 at 10.00 a.m. for the following purposes:
As Ordinary Business
1 To receive and to adopt the Audited Accounts for the year ended March 31, 2005, the Auditors' Report and the Directors' Report thereon.
2 To declare a first and final dividend of 1 cent per share (10%) less tax of 20% as recommended by the Directors for the year ended March 31, 2005.
3 To declare a special dividend of 1.5 cents (15%) less tax of 20% as recommended by the Directors for the year ended March 31, 2005.
4 To approve Directors' Fees of $120,000 for the year ended March 31, 2005.
5 To re-elect Mr Lua Cheng Eng, a Director who is retiring under Article 92 of the Company's Articles of Association.
Mr Lua Cheng Eng, upon re-election as Director of the Company, will remain as a member of the Audit Committee and will be considered to be independant for the purpose of Rule 704(8) of the Listing Manual of the Singapore Exchange Securities Trading Limited.
6 To re-elect Mr Khong Teck Kim, a Director who is retiring under Article 92 of the Company’s Articles of Association.
Mr Khong Teck Kim, upon re-election as Director of the Company, will remain as a member of the Audit Committee and will be considered to be independant for the purpose of Rule 704(8) of the Listing Manual of the Singapore Exchange Securities Trading Limited.
7 To re-appoint Messrs Deloitte & Touche as the Auditors of the Company and to authorise the Directors to fix their remuneration.
As Special Business
8 To consider, and if thought fit, to pass with or without modification the following resolution:
"That pursuant to Section 153(6) of the Companies Act, Cap. 50, Mr Cecil Vivian Richard Wong be and is hereby re- appointed a Director of the Company to hold such office until the next Annual General Meeting of the Company."
Mr Cecil Vivian Richard Wong, upon re-election as Director of the Company, will remain as the Chairman of the Audit Committee and will be considered to be independent for the purpose of Rule 704(8) of the Listing Manual of the Singapore Exchange Securities Trading Limited.
9 To consider, and if thought fit, to pass with or without modification the following resolution:
"That pursuant to Section 153(6) of the Companies Act, Cap. 50, Mr Tay Boo Jiang be and is hereby re-appointed a Director of the Company to hold such office until the next Annual General Meeting of the Company."
10 To consider, and if thought fit, to pass with or without modification the following resolution:
"That pursuant to Section 153(6) of the Companies Act, Cap. 50, Mr Tay Chok Yan be and is hereby re-appointed a Director of the Company to hold such office until the next Annual General Meeting of the Company."
11 Any other business.
By Order of the Board
Soh Gim Teik Company Secretary
July 4, 2005 Singapore
Note: A member entitled to attend and vote at the above Meeting may appoint a Proxy (or a representative in the case of a corporation) to attend and vote on his/her behalf and such Proxy (or representative) need not be a member of the Company. Every instrument of proxy shall be deposited at the registered office of the Company at 8 Temasek Boulevard, #23-03 Suntec Tower 3, Singapore 038988 not less than 48 hours before the time set for the holding of the Meeting or any adjournment thereof.
90 IMPORTANT: 1. For investors who have used their CPF monies to buy Sincere Watch Limited Proxy Form shares, this Annual Report is forwarded to them at the request of their CPF Approved Nominees and is sent solely FOR INFORMATION ONLY. SINCERE WATCH LIMITED 2. This Proxy Form is not valid for use by CPF Investors and shall be ineffective for all intents and purposes if used or purported to be used by them. (INCORPORATED IN THE REPUBLIC OF SINGAPORE)
I/We
Of being a member/members of the above named Company, hereby appoint:
NAME ADDRESS NRIC NO./ PROPORTION OF PASSPORT NO. SHAREHOLDINGS (%)
AND OR (DELETE AS APPROPRIATE)
as my/our proxy/proxies to attend and to vote for me/us on my/our behalf, and if necessary, to demand a poll, at the 28th Annual General Meeting of the Company to be held at Suntec Singapore International Convention & Exhibition Centre, 1 Raffles Boulevard, Suntec City, Level 3, Meeting Room 307, Singapore 039593, on Tuesday, July 19, 2005 at 10.00 a.m. and any adjournment thereof. I/We have indicated with a "X" in the appropriate box against any such item, how I/we wish my/our proxy/proxies to vote. If no specific direction as to voting is given or in the event of any item arising not summarised below, my/our proxy/proxies may vote or abstain at the discretion of my/our proxy/proxies.
ORDINARY RESOLUTIONS RELATING TO : FOR AGAINST 1 Adoption of Reports and Accounts 2 Declaration of a first and final dividend of 1.0 cent per share less tax 3 Declaration of a special dividend of 1.5 cents per share less tax 4 Approval of Directors' Fees 5 Re-election of retiring Director, Mr Lua Cheng Eng 6 Re-election of retiring Director, Mr Khong Teck Kim 7 Re-appointment of Auditors and fixing their remuneration 8 Re-appointment of Director pursuant to Section 153(6) of the Companies Act, Cap. 50: Mr Cecil Vivian Richard Wong 9 Re-appointment of Director pursuant to Section 153(6) of the Companies Act, Cap. 50: Mr Tay Boo Jiang 10 Re-appointment of Director pursuant to Section 153(6) of the Companies Act, Cap. 50: Mr Tay Chok Yan
Signed this day of 2005.
TOTAL NO. OF SHARES HELD IN CDP REGISTER MEMBER'S REGISTER
Signature(s) of Member(s) or Common Seal Important: Please read notes overleaf FOLD THIS FLAP
AFFIX 23 CENTS STAMP
THE SECRETARY SINCERE WATCH LIMITED 8 TEMASEK BOULEVARD #23-03 SUNTEC TOWER 3 SINGAPORE 038988
NOTES 1 Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of Shares. If you have Shares entered against your name in the Depository Register and Shares registered in your name in the Register of Members, you should insert the aggregate number of Shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted the instrument appointing a proxy or proxies shall be deemed to relate to all the Shares held by you.
2 A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxy or proxies to attend and vote instead of him.
3 Where a member appoints two proxies, the appointments shall be invalid un-less he specifies the proportion of his shareholding (expressed as a percentage of the whole) to be represented by each proxy.
4 The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 8 Temasek Boulevard, #23-03 Suntec Tower 3, Singapore 038988, not less than 48 hours before the time appointed for the Annual General Meeting.
5 The instrument appointing a proxy or proxies must be under the hand of the appointer 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 seal or under the hand of an officer or attorney duly authorised.
6 A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the Annual General Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore.
GENERAL The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly complete or illegible or where the true intentions of the appointer are not ascertainable from the instructions of the appointer specified in the instrument appointing a proxy or proxies. In addition, in the case of Shares entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointer is now shown to have Shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the Annual General Meeting, as certified by the Central Depository (Pte) Limited to the Company.