The Power of Tyre Contract Manufacturing

An inside focus on Stamford Tyres' Operations contents Blueprint for the Future STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 How will Stamford Tyres resume its growth? Evolution is the answer. The Group must tap on its strengths for Regulars opportunities as they unfold. Stamford Tyres conducted its operations over FY2005 with a long-term 01 Letter to Shareholders – Right on Track strategy in mind. The objective is to better serve its business partners 03 Five Year Financial Highlights and customers. The result is to integrate and augment its operations and services to meet customers' needs. 04 Board of Directors Leveraging on its strength, the business activities of Stamford Tyres has 06 Key Executives evolved into two core segments – integrated concept with value-added services and manufacturing activities. 20 Stamford in the News This is the story of Stamford Tyres' evolution for the future – to build a strong and robust enterprise that adds value to their customers Features and business partners. 10 People Make the Difference 11 Rewarding Shareholders 11 At a Glance 11 Review 12 Our Products – Major Brands, Proprietary Brands, and Major Subsidiaries

Cover Story – Behind the Blueprint 14 Integrated Concept with Value-Added Services 18 Manufacturing Activities

Also in this issue Corporate Governance Financial Statements 2005 10 08

Corporate Information Board of Directors Remuneration Committee Share Registrar Chairman Chua Kim Yeow Chairman Chua Kim Yeow Lim Associates (Pte) Ltd Executive Directors Wee Kok Wah Members Sam Chong Keen 10 Collyer Quay #19-08 Ocean Building (President) Goh Chee Wee Singapore 049315 Dawn Wee Wai Ying (Executive Vice President) Nominating Committee Principal Bankers Non-executive Director Kwok Weng Fai Chairman Sam Chong Keen United Overseas Bank Limited Independent Directors Tay Puan Siong Members Tay Puan Siong Malayan Banking Berhad Sam Chong Keen Michael David Nesbitt Overseas-Chinese Banking Corporation Limited Goh Chee Wee DBS Bank Limited Auditors BNP Paribas Michael David Nesbitt Ernst & Young Audit Committee 10 Collyer Quay #21-01 Ocean Building Registered Office Chairman Tay Puan Siong Singapore 049315 19 Lok Yang Way Jurong Members Chua Kim Yeow Audit Partner: Yen Heng Fook Singapore 628635 Sam Chong Keen (Since the financial year ended 30 April 2001) Tel : (65) 6268 3111 Company Secretary Fax : (65) 6264 0148 / 6264 4708 Chuang Sheue Ling Email : [email protected] Website : www.stamfordtyres.com LETTER TO SHAREHOLDERS Right on Track Stamford Tyres gathers momentum for growth Dear Shareholders,

When I wrote to you last year, I said that we intended to embark on several initiatives to lay the groundwork for our next phase of growth. This is an important undertaking to position the Group for the future. During the past year, we made several significant commitments towards this goal. I am happy to report to you on what we did and how we anticipate these undertakings will shape the fortunes of the Group.

More focused and responsive business model

Over the past few years, my I am pleased to management team and I have observed and report that the evaluated the significance commitment and of the rising affluence and resolve of my rapid economic growth in In order to respond quickly to market needs, we realigned our colleagues and staff South East Asia and China. distribution structure from a central warehousing system in Singapore have spurred us to In these territories, we noted to direct shipment to our overseas operations. This initiative has the rise in demand for truck enhanced our position to be closer to our dealer-retail network. accomplish our goals and passenger car tyres. and to deliver results There was also a growing We continue to value-add to our existing major international tyre as targeted for the demand for Off-The-Road brands – Falken, Dunlop, Continental and Toyo – by focusing on financial year under (OTR) tyres rising from the wider and deeper market penetration through our integrated review. boom in the mining industry. concept in the territories that we operate. We expect to benefit All these developments have from the consistent organic growth from this business activity. directed us to sharpen our – Mr Wee Kok Wah business focus to develop a more responsive business Manufacturing activities model that will meet the needs of our customers with flexibility and efficiency in the years to come. Rapid increases in industrial and commercial activities contribute to higher economic growth. Higher economic growth translates to The result is a business and operating model that focuses on two rising affluence and higher disposable income. Recognising these core segments of our business activities – an integrated concept with developments in the territories that we operate, it is evident that value-added services and manufacturing activities. we should leverage on the strengths in our international distribution network to pursue opportunities in manufacturing that will allow the Group to develop our own proprietary brands – Sumo Firenza, Integrated concept with value-added services Sumo, Firenza and Stamford Sport Wheels (SSW). This will broaden our product range for global distribution. The integrated concept with value-added services segment comprises our international distribution network, retail chain operations and Our manufacturing business segment comprises the manufacturing fleet and mining tyre management services. Though separate and of our proprietary brand, SSW light alloy wheels and tyre outsource with their unique inherent strengths, these business units can support contract manufacturing of our proprietary brands. each other to provide an integrated whole that will offer our customers the level of value-added services that they demand.

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STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 01 Our SSW wheel plant in Thailand commenced operation in the Outlook for FY2006 first half of FY2005. It broke-even after six months of operations. Based on the success of the first production line, we added a The management team and I are confident that the new business second line in May 2005. With the additional capacity, our annual model and the initiatives undertaken in FY2005, will put Stamford output is expected to range between 350,000 and 400,000 pieces. Tyres in a stronger position and propel us to achieve our next level of growth. My team and I recognised that in order to drive growth in our distribution business, we have to increase our tyre supply. Due to The seeds have been planted and FY2006 will be the year of the rapid economic growth in China and South East Asia countries, harvest. We expect organic growth from our existing major brands tyre manufacturers have ramped up their production capacity. and incremental sales from our proprietary brands through the However, demand exceeds supply. This prompted us to explore the manufacturing activities. Collectively, all these activities will contribute tyre outsource contract manufacturing that would enable us to create to a double-digit growth in our FY2006 revenue. our own proprietary tyre brands to meet demands from customers and to better manage the supply situation in the future. Also, with The Group expects the results for FY2006 to be better than FY2005. less geographical restrictions, we can widen the market coverage for our proprietary products . We have since commenced production Rewarding shareholders for Sumo Truck Bus Radial (TBR) tyres in In appreciation of May 2005, and your loyalty stepped up ongoing and continued arrangements for the confidence in supply of Sumo Truck Stamford Tyres, the Bus Bias (TBB) tyres Board is pleased to and Passenger Car propose a final Radial (PCR) tyres dividend of 1.25 from manufacturers Singapore cents per in China. ordinary share and a special dividend of 0.75 Singapore Duty to our cents per ordinary shareholders share for FY2005. We expect organic growth from our existing major The total dividend Major undertakings brands and incremental sales from our proprietary brands of two cents per of these magnitudes share translates into through the manufacturing activities. – Mr Wee Kok Wah require meticulous a gross dividend planning, vigilance rate of 20 percent. in its execution and short-term sacrifices especially when our profit trend was on the rise till FY2004. Appreciation Unforeseen developments and the lack of vigilance can invite undesirable outcome. Mindful of the consequences, I felt duty These achievements in FY2005 would not have been possible bound to inform you of the outlook as forecasted by management without the guidance of the Board, support from management for FY2005. and staff, who have worked tirelessly to help to sow the seeds for the next phase of growth. Their sacrifices are often personal. Accordingly, in the 2004 annual report I had guided that, “we I want to record our appreciation to them and their families. expect profit for FY2005 to be lower than FY2004 due to the start- up costs for our alloy wheel plant, as well as additional investment The confidence of our suppliers, bankers and business associates in infrastructure to improve our overseas distribution network. in us is also crucial. My team and I could not ask for better partners. However, earnings are expected to remain above the healthy level that was recorded in FY2003.” Finally, as we look forward to a better FY2006, I want to thank you, our shareholders, for standing by us during this year of consolidation. I am pleased to report that the commitment and resolve of my I look forward to meeting you at our coming annual general colleagues and staff have spurred us to accomplish our goals and meeting to be held on Friday, 26 August 2005. to deliver results as targeted for the financial year under review.

For FY2005, we delivered a net profit of S$8.61 million and revenue of Yours sincerely, S$191.29 million. Our focus on higher value-added products and services, Wee Kok Wah continuous efforts to improve the product mix of our major international President and proprietary brands, and optimisation of business opportunities Stamford Tyres Corporation Limited through our international distribution network, enabled us to maintain our gross margin at 26.8 percent in FY2005.

02 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Five Year Financial Highlights

For the Year ended 30 April 2005 2005 2004 2003 2002* 2001*

Group Turnover (S$'000) 191,293 189,779 163,443 120,058 119,083

Profit Before Tax (S$'000) 11,563 14,348 9,655 5,186 2,814

Profit After Tax (S$'000) 8,670 11,560 8,196 2,754 1,666

Total Assets (S$'000) 199,470 182,117 145,386 132,632 132,764

Shareholders' Funds (S$'000) 68,225 63,357 49,282 42,726 40,671

Basic Earnings per Share (cents) 4.15 6.23 5.43 1.83 1.20

Gross Dividend per Share (cents) 2.00 2.00 1.40 1.00 1.00

Return on Shareholders' Equity (%) 13.08 20.47 17.79 6.59 4.52

* Group turnover and total assets for FY2001 to FY2002 do not include the Group’s proportionate share of the joint venture company’s results as the joint venture company’s results were accounted for using equity method in FY2001 to FY2002.

Group Turnover Profit Before Tax Profit After Tax (S$ Million) (S$ Million) (S$ Million) 200 20 20

150 15 15

100 10 10

50 5 5

0 0 0 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 $119.1 $120.1 $163.4 $189.8 $191.3 $2.8 $5.2 $9.7 $14.3 $11.6 $1.7 $2.8 $8.2 $11.6 $8.7

Basic Earnings per Share Gross Dividend per Share Return on Shareholders’ Equity (Cents) (Cents) (%) 20 2.0 40

15 1.5 30

10 1.0 20

5 0.5 10

0 0 0 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 $1.2 $1.8 $5.4 $6.2 $4.2 1.0 1.0 1.4 2.0 2.0 4.5% 6.6% 17.8% 20.5% 13.1%

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 03 Top (left to right): Mr Chua Kim Yeow, Mr Wee Kok Wah, Mrs Dawn Wee Wai Ying

Middle (left to right): Dr Kwok Weng Fai, Mr Tay Puan Siong, JP, Mr Sam Chong Keen

Bottom (left to right): Mr Goh Chee Wee, Mr Michael David Nesbitt Board of Directors

Mr Chua Kim Yeow A Fellow Member of the Institute of Certified Public Accountants Non-Executive Chairman of Singapore, Mr Chua has previously held numerous key posts. He was the Accountant-General with the Ministry of Finance, a Mr Chua is a well-respected individual to many circles and a trusted Board Member of the Monetary Authority of Singapore, President adviser to Stamford Tyres. A part of the Stamford Tyres family since of the Development Bank of Singapore (now known as DBS Bank 3 April 1991, he served as Chairman of the Company and Audit Limited), Executive Chairman of the Post Office Savings Bank, and Committee up to 28 October 1994. From then, he was chairman Chairman of the Securities Industry Council. of the Stock Exchange of Singapore Limited (SGX) until 3 January 2000, concurrently serving as Adviser to the Stamford Tyres Board. Upon retirement from SGX, he was reappointed as independent Mr Wee Kok Wah director and non-executive chairman of Stamford Tyres until 28 President September 2001. On 13 December 2002, he was appointed as member of the Stamford Tyres Audit Committee and Remuneration Behind Mr Wee's down-to-earth and personable nature is a Committee. His most recent appointment as non-executive chairman remarkably astute business mind. Both a visionary leader and has been held since 9 January 2002. entrepreneur who some fondly say has "tyre dust" in his blood,

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04 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Mr Wee has propelled Stamford Tyres forward as its CEO since companies. Mr Tay graduated from the University of Singapore the 1970s. Mr Wee has steered Stamford Tyres to become a public with a Bachelor of Business Adminstration degree in 1971, attended listed company which its global stakeholders trust, rely on, and the Havard Business School Program for Management Development wish to grow with in the future. in 1984 and is a member of the Chartered Institue of Logistics and Transport. Previously, he was Executive Deputy Chairman of L&M His passion for and dedication to the business shows clearly through Group Investments Ltd and Executive Vice President of Singapore his hands-on working style, endearing him to partners, colleagues Bus Service Ltd. Mr Tay is a Justice of the Peace. and staff alike. Always one to actively seek out and tap on business opportunities, Mr Wee never fails to deliver and maximise value for both the business and stakeholders. Mr Sam Chong Keen Independent Director In 2004, Mr Wee was nominated and selected as a finalist for the Ernst & Young Entrepreneur of the Year under the category of Following his invaluable contributions while on the Board when Services and Business Products. Comfort Group Ltd was a substantial shareholder, Mr Sam was appointed as Independent Director of Stamford Tyres in December Mr Wee holds a Bachelor of Social Science in Economics and Law 1994. A member of the Audit Committee and Remuneration from the then University of Singapore. Committee, he is also Chairman of the Nominating Committee. The co-founder and CEO of Megatalk Pte Ltd, Mr Sam holds a Bachelor of Arts(Hons) from the University of Oxford and a Diploma Mrs Dawn Wee Wai Ying from the Institute of Marketing, UK. He also has a wealth of Executive Vice President management experience, having worked at senior positions in the Singapore Government Administration Service, National Trades Mrs Wee is a warm and sincere people person, well known in the Union Congress (NTUC), Intraco Ltd, Comfort Group Ltd, VICOM business for being a resourceful organiser and capable administrator. Ltd, Lion Asiapac Ltd and Lion Teck Chiang Ltd. He was also the She has been on the Stamford Tyres Board since 1982, playing a Political Secretary to the Minister for Education between 1988 to key role in the Group's operations. She currently oversees the 1991, and served on various government boards and committees, Group's supporting functions, which effectively complement its including the Central Provident Fund Board, and the National Co- operating functions. A firm, fair and competent decision maker, operative Federation. she has been instrumental in the Group's decades of achievement.

Brimming with ideas, Mrs Wee leads and challenges her staff to Mr Goh Chee Wee think out-of-the box, encouraging them to excel in all that they do. Independent Director

Prior to joining Stamford Tyres, she worked as an officer in a major Appointed as a nominated director of substantial shareholder Comfort local bank for eight years. Mrs Wee holds a Bachelor of Social Group Ltd on 29 October 1998, Mr Goh has since joined Stamford Science (Honours) in Economics from the then University of Singapore. Tyres, on 10 April 2003, as an Independent Director. He is also a member of the Remuneration Committee. Besides directorships in a number of public-listed companies, Mr Goh is Director of the Singapore Dr Kwok Weng Fai Labour Foundation. The former Member of Parliament, Minister of Non-Executive Director State, and CEO of Comfort Group Ltd also has strong ties with the National Trades Union Congress (NTUC). He holds chairmanship of Dr Kwok joined the Board in 1982 as one of its pioneering the NTUC Board of Trustees, NTUC Foodfare Co-operative Ltd, and directors. Since then, he has lent his unwavering support and NTUC Childcare Co-operative Ltd, and is a consultant to the NTUC valuable advice to the Group. A Colombo Plan Scholar, his Fairprice Co-operative Ltd. qualifications include a Bachelor of Medicine and a Bachelor of Surgery from Sydney University. Before setting up his own private medical practice, he was a medical practitioner in various Mr Michael David Nesbitt government hospitals for eight years. Presently, he is the senior Independent Director partner of a group medical practice. Mr Nesbitt is no stranger to Stamford Tyres. A business associate of the Group since the mid-1970s, he was appointed to the Board Mr Tay Puan Siong, JP as an Independent Director since September 2002. With 32 years Independent Director of valuable experience as Founder and Chairman of Australian enterprise, Marathon Tyres, Mr Nesbitt brings to the Board extensive Mr Tay has been an independent Director of Stamford Tyres since knowledge of the tyre distribution business, especially in fleet tyre 1994 and is Chairman of the Audit Committee and a member of management and maintenance services. Mr Nesbitt is also a the Nominating Committee. He is a Director of 3 other public member of the Nominating Committee.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 05 Key Executives

Roger Chang Toon Weng Clare Law Lay Kian

Conson Tiu Sia Lim Gek Choon

Roger Chang Toon Weng, 48 Clare Law Lay Kian, 37 Senior Vice President and Vice President, Head of Supply Chain Management CEO for Stamford Sport Wheels (SSW) Clare joined the Group's Supply Chain Management Department Roger is a strategist with a keen eye for opportunities and the in 1994 and has been operationally active in establishing the core foresight and drive to act upon them. With Stamford Tyres for over competencies of the Supply Chain Management System of the 20 years, he has held various key marketing positions within the Group. Currently, she is responsible for the Group's pricing policies, Group and has been instrumental towards establishing the Group's implementation of the Group's Supply Chain Management System retail chain. Roger's strong leadership skills and passion for car and handling of major negotiation issues with the Group's major wheels has made him an obvious choice to helm the SSW operations suppliers and contract manufacturers worldwide. Responsible, in Thailand. He also assists in business development and management dedicated, focused and infinitely capable, Clare helps ensure the strategies of the Group, leveraging off his intimate market knowledge Group always has what it takes to meet customers' needs. She and experiences to achieve the Group's profit and growth objectives. holds a Bachelor of Business Degree in Transport from the Royal Melbourne Institute of Technology in Australia.

Conson Tiu Sia, 38 Senior Vice President and Group CFO Lim Gek Choon, 53 Vice President, Head of Singapore Distribution Accounting-trained with a sound business acumen, Conson has been a boon to the Group since joining Stamford Tyres in 1993. He began With 30 years of "track" record and experience, Choon is respectfully his career as an Auditor with Ernst and Young, Philippines and was known as "Lao Da" (Big Brother) in the local tyre scene. He passionately in charge of the Group's Philippines operations prior to his appointment understands the business of tyres and is currently responsible for as Group Finance Manager in 1999. Today, the Certified Public product distribution in the Singapore and Brunei markets. This Accountant excels in his role as a Senior Vice President in the Group, recognised tyre veteran joined the Group in 1985 and is presently overseeing the financial operations and conducting risk management the Chairman of the Singapore Motor Tyre Dealers Association, a analysis to ensure the Group's businesses conform to the statutory position held since 1998. regulations and corporate governance. As a member of the management team, this mild-mannered but determined executive plays an important role in sustaining the profitability and growth of the Group. continues on pg 07...

06 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Brian U ren Patricia Danker

Michael Paul McCarthy Kelvin Lam Mun Kong

Brian U ren, 38 Patricia Danker, 43 Assistant Vice President, Head of Senior Manager, Head of Retail (Singapore) International Distribution Patricia leads those who serve. With the Group for over 20 years, Since joining the Group in 1993, he has been exposed both locally Patricia has held various key roles within the Group in Administration, and internationally to various business units within the Group. He International Distribution, Warehouse and Retail operations. Currently possesses strong and intimate knowledge of the Group's International as Retail Manager for Singapore, this resourceful executive manages Distribution business. This world-watching globetrotter helps ensure a team of over 100 personnel with the objective of achieving sales the smooth running and profitability of his division. His customers targets and total customer satisfaction. A people person with a span the Asian, African, American and European continents. Literally- friendly disposition, she ensures the exceptional service and speaking, Brian merticulously monitors the world at his fingertips. professionalism of Stamford Tyres' retail chain, as well as plans for Brian has a Bachelor of Arts from the National University of Singapore. its business development.

Michael Paul McCarthy, 53 Kelvin Lam Mun Kong, 36 Senior Manager, Head of Mining and Senior Manager, Head of Finance Fleet Tyre Management Kelvin joined the Group in 2004. He started his career 10 years "Mickey" handles the Group's mining and fleet divisions. The affable ago as an Auditor with Deloitte & Touche and is currently Group Irishman joined Stamford Tyres in 1993, bringing with him over 20 Finance Manager. He and his team proactively monitor every years of international experiences in Off-The-Road tyres and fleet aspect of the Group's finances; a no mean feat considering the tyre management expertise. His technical know-how and hands- scope and depth of Stamford Tyres' business today. His team also on approach make him a welcome partner in the tyre management facilitates the Group's expansion by evaluating and providing vital of major mining companies in South East Asia. He sets high analysis on its business proposals and growth strategies across professional standards for the Group’s fleet tyre management all continents the Group has a presence in. Kelvin holds a Masters teams in Singapore, Malaysia, Indonesia, Thailand and China. of Business Administration from Nanyang Technological University in Singapore and is a Certified Public Accountant with the Institute of Certified Public Accountants of Singapore.

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STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 07 Key Executives

Cham Soon Kian Jason Goh Sim Leng

Ler Hwee Tiong Colin Choo Nee Ann

Cham Soon Kian, 37 Jason Goh Sim Leng, 29 CEO of Malaysia General Manager of Indonesia

Soon Kian, has proven to be a capable leader by substantially Jason joined the Group in 2000 and has distinguished himself as growing the Group's Malaysian operations since he took the helm a driven and dedicated individual. Trained in the Group’s Retail in 1992. Under his stewardship, Soon Kian has evolved the Malaysian Department, he developed a passion for High Performance Radial operations from a primarily wholesale activity to an integrated tyres and car wheels. With his creative marketing skills, he was able business set-up with value-added services including retail, fleet tyre to penetrate the complex Indonesian market and establish the management and retreading facilities. He has an easy-going Stamford Tyres brand name firmly. He is a member of the Indonesian management style which belies an astute business mind with a Imported Tyres and Traders Association. strong determination to succeed. An ASEAN scholar, Soon Kian holds a Bachelor of Accountancy degree. Well-known in the Malaysian tyre trade, he is active as a member of the Selangor & Federal Colin Choo Nee Ann, 33 Territory Tyre Dealers and Retreaders Association. General Manager of Thailand

Colin began his career with the Group at the Thailand operations Ler Hwee Tiong, 34 in 2002. He has since immersed into the local culture and business CEO of North Asia environment. Currently, he is the General Manager of the Thailand branch and is responsible for its overall operations. He is highly Ler joined the Group in 2000 and brought along with him years of principled and leads by example a skilled and energetic team. trade knowledge and experiences in the tyre business. His capability Colin has a Bachelor of Accounting degree from the International is perhaps best demonstrated by the challenges the Group entrusts Islamic University, Malaysia and is a member of the Malaysian him with. He is responsible for carving a niche for Stamford Tyres Institute of Accountants. in the competitive China, Hong Kong and Korea markets, something which he has already made substantial advancements in since being posted there. A deep thinking strategist, Ler holds a Degree of Bachelor of Arts from the National University of Singapore.

continues on pg 09...

08 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 John Ang Sze Hian Lionel Leow Soon Meng

Michael Yiew Keng Hanifah Abu Bakar Leong

John Ang Sze Hian, 30 Lionel Leow Soon Meng, 34 General Manager of Australia and New Zealand Senior Manager, Management Information Systems

There are "no worries" for the Group's Australian operations with John Lionel joined the Group in 1999 and has since helped the Group managing it. As a graduate of Curtin University of Technology in Western systematically streamline and computerise its business operations. He Australia, John is familiar with his environment. He is fast making in- and his competent team harnesses the latest Information Technology roads into building up a strong distribution base "down-under". A to achieve synergy and effectiveness in the operation aspects of the dynamic and committed individual, John actively promotes the Group’s Group's various business units across the world. A creative systems proprietary brands with his earnest young team. professional, Lionel holds a Bachelor of Science Degree in Management from the University of London.

Hanifah Abu Bakar, 47 CEO of USA and Latin America Michael Yiew Keng Leong, 35 Manager, Human Resource In over two decades with Stamford Tyres, Hanifah has amassed a wealth of knowledge of the international tyre industry. She utilises Michael joined the Group in 2004 and has been instrumental in this to the Group's advantage as CEO of its USA and Latin American establishing and spearheading Human Resource policies and markets. This highly energised and efficient lady is constantly on guidelines in accordance to statutory and corporate requirements. the move marketing the Group’s proprietary brands as well as He is also proactive in the recruitment of key personnel ensuring managing the operations in Miami. The markets under her care that the Group has the “talent” for its next phase of growth. This HR are highly competitive and volatile but Hanifah takes up every professional is key in implementing the Group's professional challenge bravely and effectively. development and technical training programmes. He holds a Master of Business Administration from Swinburne University in Australia.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 09 People Make the Difference Stamford Tyres believes excellent service and exceptional value are what will distinguish it as a trusted global distributor and retailer of a full range of tyres, wheels and car services. And these traits are evident in the people that make up the Group.

Whether it's the Group's President or a mechanic, the Group's foremost priority is its dedication to serving the customer.

This includes technical expertise from its fleet and tyre management specialists, extensive product knowledge sharing from its retail staff, and marketing and sales support from its international distribution division. The core businesses of tyre and wheel distribution, retail and fleet tyre management and maintenance offer to customer, services that are fully integrated.

Supplying tyres and wheels is but one aspect of the Stamford Tyres commitment. As tyre and wheel specialists, the Group is determined to help its customers, dealers and partners grow their business, generate sales, increase their consumer base, and remain profitable.

It is an unflagging commitment.

The Winning People Factor • Expert Tyre Technical Advisors • Knowledgeable Wheel Specialists • Experienced Sales Representatives • Dedicated Export Sales Managers • Friendly Retail Service Staff

Helping People Help Customers

Stamford Tyres regularly conducts product training for it’s sales team, keeping them updated on the latest tyre and wheel offerings. By doing so, they are in turn able to support the dealers and customers with the appropriate product knowledge and expertise when needed.

To ensure that our customers receive the highest form of service at our retail outlets, our retail service staff, technicians and mechanics undergo training and development sessions regularly. During these sessions, the retail service staff are taught team-building skills, leadership skills and customer service techniques.

10 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Rewarding Shareholders

FY2005 was a year in which the Group invested for the future Group President, Mr Wee Kok Wah commented, "The dividend to sustain growth, and shareholders who believed in the Group's is the least we can do for our shareholders, who believe in us, vision were rewarded. our vision and our merits. This is how we say 'thank you', for their unwavering support." The Group is proposing a final dividend of 1.25 cents per share and a special dividend of 0.75 cents per share, which translates As Stamford Tyres heads into the next phase of growth, it is doing into a gross dividend rate of 20%. so with the intention of ensuring a continuing and incremental growth in rewarding shareholders.

At a Glance

Singapore — Stamford Tyres’ Central Hub

Singapore continued to remain as the Group's largest revenue earner FY2004 in FY2005, contributing 49.8% of total turnover. But in FY2004, it was 54.3%. The lower contribution to the total turnover for FY2005 was FY2005 the result of realignment of the business model for Passenger Car Tyres (PCR) from central warehousing to direct shipments. There was higher demand for OTR and commercial tyres from the region's booming mining and transport industry in FY2005 making the contribution only marginally lower. The Singapore unit continues to tap on its well-established logistic facilities to serve the growing markets in the region.

South East Asia — The Growing Markets

Higher turnover in FY2005 as compared to FY2004 was achieved FY2004 in this region arising from strong commercial vehicle tyre and higher SSW rim sales. Distribution points in Indonesia continue FY2005 to increase beyond Jakarta, bringing Stamford Tyres closer to its dealers and customers. The Group is also expanding its retail network and fleet tyre management services in Thailand and Indonesia.

North Asia — Consolidating for Growth

Turnover from this region decreased to S$30.3 million as a result of stiff price competition in the Hong Kong market and an oversupply of passenger car tyres in the China market. During the year, the Group established its fleet tyre management services in Shanghai. FY2004 This adds on to the Group's existing operations in China. Moving forward, the Group intends to set up its retail presence in Guangzhou. FY2005

The newly established branch in Korea continues to experience an increase in turnover.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 11 Our Products Major Brands Proprietary Brands Falken Stamford Sport Wheels (SSW) A brand renowed for its SSW is Stamford Tyres’ own brand of light alloy wheels that high performance passenger car tyres produced by Sumitomo are designed and produced by our wheel plant in Thailand. Rubber Industries Co. Ltd, a major Japanese manufacturer. They are also contract manufactured in Taiwan. SSW alloy The brand also includes a full range of 4x4 tyres, light truck wheels are manufactured using the latest Japanese Tilting Casting method and radial tyres as well as truck and bus radial tyres. Sumitomo under stringent quality control to ensure the best balance of aesthetics and performance. Rubber Industries Co. Ltd also participates in an array of auto All wheels are manufactured in accordance to internationally recognised quality races, providing tyres to entrants in competitions around the standards (VIA/JWL). SSW alloy wheels are tailored for passenger cars and 4x4 world, including rallies held in Singapore and Malaysia. We vehicles with rim sizes ranging from 13” to 22”. distribute Falken tyres in South East Asia, China and the Indian Sub-Continent. Sumo Firenza The Sumo Firenza line is a new range of Continental truck and bus radial tyres covering tube A high-end range of tyres type and tubeless type. The Sumo Firenza Truck Radial tyre comes in both Standard engineered in Germany and Extra Load specifications. The Standard Load tyres are intended for the American that consists of passenger car radials, light truck radials, and European markets, while the Extra Load tyres are designed for South East Asian truck and bus radials, military, agricultural and industrial and Middle Eastern markets where operating conditions are more demanding. solid tyres for commercial vehicles. Continental AG is also Contract manufactured in Asia, the tyres provide superior, long-lasting quality even involved in supplying tyres for original equipment on the toughest roads. manufacturers (OEM). They are the OEM suppliers for both passenger cars and commercial vehicles for Porsche, Sumo Tire BMW, Mercedes-Benz, Volkswagen and DAF. We market Sumo Tire is a selection of light truck tyres, truck and Continental tyres in Singapore, Malaysia, Thailand, Brunei, bus tyres, agricultural tyres and off-the-road tyres of Indonesia, Korea and China. Asian origin. These are our own designs and are constructed to meet different operating conditions. The tyres are manufactured Toyo Tires according to Tyre and Rim Association (TRA) standards and are well-received by A well-known brand produced customers internationally. by a full line Japanese manufacturer with the capacity to produce off-the-road tyres Firenza for mining and construction equipment. They also produce Firenza is a series of ultra high performance industrial tyres for port use, light truck radial tyres and truck passanger radial tyres contracted manufactured bus radial tyres for commercial vehicles. We represent Toyo by our principal supplier in Japan. It provides us with a wider area of distribution commercial and mining tyres in Singapore, Brunei, Malaysia coverage and are very popular in Australia, Taiwan, Hong Kong and Middle East. and Indonesia. Stamford Tyres is committed to make this brand a success.

Stamford Sport Wheels Company Limited Indonesia Australia Major Subsidiaries 111/2, 5 Moo 2, Highway 340, PT Stamford Tyres Distributor Indonesia Stamford Tyres (Australia) Pty Ltd Suphanburi Road, Jl. Boulevard Raya PA 19 81 Market Street, Smithfield, Singapore Tambon Saiyai, Amphur Sainoi, No. 4-5 Kelapa Gading Permai NSW 2164, Australia Stamford Tyres International Pte Ltd Nonthaburi 11150 Thailand Jakarta 14240 Indonesia Tel: (61) 2 9604 1908/0590 19, Lok Yang Way, Jurong, Tel: (66) 2 985 5701 Tel: (62) 21 450 4388 Fax: (61) 2 9756 0375 Singapore 628635 Fax: (66) 2 985 5374 Fax: (62) 21 450 4384 Email: [email protected] Tel: (65) 6268 3111 Email: [email protected] Email: [email protected] Fax: (65) 6264 0148 / 6264 4708 Korea Email: [email protected] China/Hong Kong PT. Stamford Tyres Indonesia Stamford Tyres Korea Ltd Stamford Tyres (China) Limited Jl. Kuala Kuningan, L.I.P. Kuala Kencana, 57-3, Munjung-Dong, Songpa-Gu, Malaysia Unit A, Floor 2, Timika – PAPUA 99920, Indonesia Seoul 138200, Korea Stamford Tyres (M) Sdn Bhd Yuen Long Hi-Tech Centre, Tel: (62) 901 301889 Tel: (82) 2 400 0063 16 Jalan Juru Nilai, #11 Wang Yip Street West, Fax: (62) 901 301889 Fax: (82) 2 400 0013 U1/20 Section U1, Yuen Long, N.T., Hong Kong SAR Email: [email protected] Email: [email protected] Hicom Glenmarie Industrial Park Tel: (852) 2406 2381 40150 Shah Alam, Malaysia Fax: (852) 2406 7100 Africa Philippines Tel: (60) 3 5567 2601/606 Email: [email protected] Stamford Tyres (Africa) (Proprietary) Limited Stamford Tyres Philippines, Inc. Fax: (60) 3 5569 3096 Unit 6, 36 Victoria Avenue, Room G, #11 Taurus Street, Email: [email protected] Stamford Tyres (Guangzhou) Limited Hout Bay 7806, Pamplona Park Subd., Pamplona, Website: www.stamfordtyres.com.my Rm. B, 10/F., San Xin Building, Cape Town, South Africa Las Pinas City 1740, Philippines #33 West Huang Pu Ave., Tian He Area, Tel: (27) 21 790 1302 Tel: (63) 2 872 7330 Thailand Guangzhou City, Guang Dong Province, China Fax: (27) 21 790 0017 Fax: (63) 2 872 7330 Stamford Tires Distributor Co., Ltd Tel: (86) 020 3366 5804 Email: [email protected] Email: [email protected] 2210/16-17 Narathiwas Rachanakharin Road, Fax: (86) 020 3820 1896 Chongnonsi, Yannawa, Bangkok 10120, Thailand USA / Latin America Joint Venture Company Tel: (66) 2 678 2355 Stamford Tyres (Shanghai) Limited Stamford Tires (Latin America), Inc. Fax: (66) 2 678 2351 Rm. D, 7/F., Kai Li Building, 9398 NW 101st Street, Medley, Florida 33178, China/Hong Kong Email: [email protected] #432 Huai Hai Xi Road, United States of America Tyre Pacific (HK) Limited Shanghai City, China Tel: (1) 305 888 8010 13th Floor, Sandoz Centre, 178/182 Texaco Road, Tel: (86) 21 6122 4849 Fax: (1) 305 888 7871 Tsuen Wan, N.T., Hong Kong SAR Fax: (86) 21 6122 4850 Email: [email protected] Tel: (852) 2407 8268 Fax: (852) 2407 5020 Email: [email protected]

12 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Behind the Blueprint: An Inside Focus on Stamford Tyres’ Operations Integrated Concept With Value-Added Services This business segment draws on the strength of each division from distribution, retail, fleet and tyre management, and supporting manufacturing functions, combining them into an integrated whole. The integrated concept will provide the capabilities for the Group to widen its markets in the international arena and deepen the value-added chain to meet the needs of its customers.

Expanding the Business Horizon of our INTERNATIONAL DISTRIBUTION International Distribution

The logic is simple. The Group should capitalise on its strength in international distribution to expand its business horizon for growth. S$152m S$157m For Stamford Tyres, this means that its flagship tyre and wheel distribution businesses will go beyond its established network of business links in over 30 countries.

The Group has firm working relationships with Sumitomo Rubber Industries Co. Ltd of Japan, Continental AG of Germany and Toyo Tire & Rubber Co. Ltd of Japan. The Group's strong presence in potential markets, these brands will pave the way for incremental Asia Pacific makes Stamford Tyres their strategic partner in distributing sales for the Group the major brands of Falken, Dunlop, Continental and Toyo. Sales from these major brands will contribute to the organic growth of During the financial year under review, the Group made the Group. significant inroads into new markets in India as well as the Middle East and Europe. With its proprietary Stamford Sport Wheels, Sumo, Firenza and Sumo Firenza brands, the Group stretches its reach to customers worldwide. Sales for both international and proprietary brands were aided by Leveraging on the existing international network, as well as new focused marketing efforts through participation in international trade shows and exhibitions. Personal interactions between our sales personnel and customers in both new and existing markets fostered business activities. All these efforts generated increased brand awareness and encouraged stronger market acceptance.

The cumulative result of all these activities for FY2005 was a tyre and wheelFY2004 distribution turnover of S$157 million. This marked an increase of 3.1% from S$152 million in FY2004. FY2005 The Group expects a double-digit percentage increase in turnover from the distribution business in the coming financial year. This is achievable because of their established global distribution network, which is continually expanding, as well as organic growth in sales from its major brands together with incremental sales from its proprietary brands.

continues on pg 16...

14 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 18 Retail Chains — The Vital Link Going the Extra Mile with Total Tyre Management Services

The retail chain operation is a vital part of this integrated concept. To the commercial fleet vehicle owners in Singapore, Malaysia, It allows the Group to maintain direct contact with the consumers, Indonesia and China, Stamford Tyres is no stranger. The Group understand the changing dynamics of the market and to respond offers them fleet and mining tyre management services, which appropriately as trends evolve. is part of the Group's integrated concept of value-added services.

This operation was instrumental in showcasing its international brands These value-added services provide them with expert consultancy to end-users. It complements the Group's distribution and manufacturing and maintenance services for their tyres. By leveraging on the activities. More importantly, this value- Group's competence in tyres, added activity serves to enhance the fleet owners are able to reduce Group's overall profit margins. As a RETAIL AND FLEET the cost per kilometre of tyre public listed company, it also builds travelled thereby lowering their up the Stamford Tyres image making operating cost. it a "household" name in the tyre and wheel market. Complementing this service are S$37m S$34m the Group's retreading plants With 26 retail marts located across located in Singapore, Malaysia South East Asia and North Asia, and Indonesia. Retreading extends customers are able to experience the life span of tyres, which means a "One-Stop Auto Service Centre" further cost savings. that caters to all their tyre and motoring needs. At these retail facilities, customers enjoy a choice In Singapore, satisfied fleet vehicle customers include the Port of a full range of tyres, wheels and accessories as well as car of Singapore Authority (PSA), SembWaste and Colex. Overseas servicing and repair. clients like PT Inco, a major mining company in South Sulawesi Indonesia, and other clients from Malaysia, Thailand and China Customers are also rewarded through the "In-Tune" Club loyalty are similarly supported by the Stamford Tyres' technically programme. The loyalty programme currently has close to 30,000 competent commercial fleet team. members. These members enjoy special privileges at Stamford Tyres outlets, regular car and tyre maintenance information, as With the boom in the mining industry, supply of Off-the-Road well as professional advice on matters pertaining to tyres through (OTR) tyres remained tight. Despite this, Stamford Tyres was the Group's online portal. able to successfully meet customers' demand and address the negative impact of an OTR tyre shortage in FY2005. This In addition, members also benefit from discounts on magazine resulted in a commendable increase in turnover from S$11.7 subscriptions and dining places. This is another example of million to S$19.8 million for this sector. While the OTR tyre how the Group harnesses on its strength and engages in joint shortage is expected to prevail till 2007, Stamford Tyres is marketing activities with partners in other industries for mutual working to expand its OTR tyre supply capacity. This will benefits. complement the Group's tyre management services – another example of how the Group draws on its strength and taps on Following the success of their retail chains in Singapore and Malaysia, new opportunities for growth. tyre marts were established in Thailand, Indonesia and China.

16 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Mega Marts East Coast Tyre Mart 355 East Coast Road Jurong Mega Mart Caltex Service Station 19 Lok Yang Way, Jurong Singapore 428972 Singapore 628635 Tel: 6342-0981, Fax: 6342-0978 Tel: 6262-3355, fax 6262-1494 Dunearn Tyre Mart Changi Mega Mart 130 Dunearn Road 31 Loyang Way Caltex Service Stqtion Singapore 508729 Singapore 309436 Tel: 6542-23355, Fax: 6542-3066 Tel: 6251-6055, Fax: 6251-6544 Hougang Mega Mart Tyre Workshops in Car Distribution Centres 120 Hougang Avenue 2 Singapore 538858 Kah Motor Company Sdn Bhd (Honda) Tel: 6286-3355, Fax: 6286-6553 370 Ubi Road 3 Singapore 408651 Tel: (65) 6840 6734 MacPherson Mega Mart 455 MacPherson Road Regent Motors Ltd (Ford) Singapore 368173 1 Ubi Road 4 Singapore 408607 Tel: 6841-33355 Fax: 6742-8167 Tel: (65) 6746 8880 Leng Kee Mega Mart Performance Motors Ltd (BMW) 5 Chang Charn Road 315 Alexandra Road #01-01 Singapore 159634 Performance Centre Singapore 159944 Tel: 6475-3355, Fax: 6475-5275 Tel: (65) 6319 0270 Woodlands Mega Mart Performance Motors Ltd (Kampong Arang) (BMW) 10 Admiralty Street 80 Kampong Arang Road, East Coast Centre, #01-85 Northlink Building Singapore 438180 Singapore 757695 Tel: (65) 6319 0888 Tel: 6555-3355, Fax: 6853-3145 Komoco Pte Ltd (Hyundai) Bukit Batok Mega Mart 253 Alexandra Road #01-01 50 Bukit Batok Street 23 Singapore 159936 #02-19 Midview Building Tel: (65) 6475 8888 Singapore 659578 Tel: 6261-3355, Fax: 6567-1870 Tan Chong & Sons Motors (Nissan) 911 Bukit Timah Road Singapore 589622 Tyre Marts Tel: (65) 6463 4132 Balestier Tyre Mart Mazda Motors Singapore Pte Ltd, 207 Balestier Road PDC (Pre-Delivery Centre) (Mazda) #01-13 Balestier Tower Blk 167, Pasir Panjang Road, Singapore 329683 #01-17, Pasir Panjang Distripark Tel: 6256-3337, Fax: 6256-8467 Singapore 118500 Tel: (65) 6276 7798 Jalan Ahmad Ibrahim Tyre Mart 400 Jalan Ahmad Ibrahim Tyre Pluz Caltex Service Station Singapore 619595 Hoe Tyres Tel: 6262-0489 10 Braddell Road Singapore 359899 Thomson Tyre Mart Tel: (65) 6282 8735 553 Upper Thomson Road Esso Service Station Hock Hua Hin Tyre Service Singapore 574416 319 Braddell Road Tel: 6752-8769, Fax: 6452-2532 Singapore 579707 Tel: (65) 6268 7077 Tyre House #01-176 Tyrwhitt Road Singapore 207576 Tel: (65) 6286 7002

Behind the Blueprint: Manufacturing Activities I The Wheel Deal

Since the wheels were introduced into the market in early 2005, SSW is gaining market acceptance as one of the more popular high-end wheel choices. With close to a year since SSW was rolled from its spanking high The design of the wheels is an important element to the success of tech factory in Thailand, the Group has already commissioned two SSW. The SSW team travels extensively to monitor and understand production lines with an estimated total commercial production of market design trends. This research was translated into over 30 35,000 to 40,000 alloy wheels per month. All equipment in the wheel designs that were introduced globally through the Group's factory is automated and computerised, and each production step retail chain and international distribution network. closely monitored and controlled by a team of engineers from Singapore, Taiwan and Japan. In addition, an in-depth understanding of the wheel design trends helped the Group to anticipate demand. To minimise The Group is also working together with SIMTech (Singapore Institute the risk of over-production, the small-lot production strategy of Manufacturing Technology), a research institute of A*STAR adopted by SSW allows them to respond quickly to changing (Agency for Science, Technology and Research, Singapore) to market needs. ensure that the wheels were manufactured to exacting standards. As a result, the Group has obtained numerous quality accreditations There is strong indication to suggest a quick success for SSW. It from Japan and Europe for these wheels. holds promise to be a strong revenue source for the Group.

Behind the Blueprint: Manufacturing Activities II The Power of Tyre Contract Manufacturing By entering into tyre outsource contract manufacturing, it provides Stamford Tyres the opportunity to develop its own proprietary brands. This provides a wider product range for the Group to offer its customers. Also, it opens up new markets. This is yet another example of the evolution process. Through tyre outsource contract manufacturing with dependable manufacturers, Stamford Tyres will leverage on its decades of tyre expertise, experience and product knowledge to build quality tyre products under the Group's proprietary Sumo, Sumo Firenza and Firenza brands. Stamford Tyres' In-house tyre technical advisers and tyre engineers also research, design and develop the ideal tyre that cater to individual market requirements therefore ensuring there is no compromise.

These tyres are distributed through the Group's established international network to meet the needs of the market, especially in developed countries for radial tyres, developing countries for its bias tyres and for multiple markets across the globe. This is an effective way to mimimise the Group's capital expenditure commitment and a better alternative to owning and operating a tyre manufacturing facility but not compromising on quality.

18 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Stamford in the News

TheEdge Singapore | Monday, May 30, 2005

20 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 The Business Times | Thursday, December 9, 2004

The Business Times | Wednesday, June 29, 2004 The Business Times | Wednesday, December 1, 2004

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 21 Stamford in the News

The Business Times | Saturday-Sunday, April 2-3, 2005

The Business Times | Wednesday, December 1, 2005

22 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Vol. 258 Shares Investment Facts & Figures

11/07/2005 to 24/07/2005

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 23 We provide the best service and technical advice on off-the-road tyres to port authorities, mining, logging and construction companies throughout the region.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 STAMFORD TYRES CORPORATION LIMITED AND SUBSIDIARY COMPANIES FINANCIAL REPORT Page 26–92

26 Report on Corporate Governance 34 Report of the Directors 37 Statement by Directors 38 Auditors’ Report 39 Consolidated Proﬁt and Loss Account 40 Balance Sheet 41 Consolidated Statement of Changes in Equity 42 Consolidated Statement of Cash Flow 43 Notes to the Financial Statements 82 List of Major Properties 83 Statistics of Shareholdings 84 List of Substantial Shareholders 85 Statistics of Warrantholdings 86 Notice of Annual General Meeting 89 Proxy Form Corporate Governance Report

Stamford Tyres Corporation Limited

The Company is committed to high standards of corporate governance. Good corporate governance establishes and maintains a legal and ethical environment in which the Group strives to preserve the interest of all stakeholders. This Report describes the Company’s corporate governance practices with speciﬁc reference to the Code of Corporate Governance (“Code”), pursuant to Rule 710(2) of the Listing Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST”).

Board Matters

Principle 1 : Board’s Conduct of its Affairs

The Board oversees the business affairs of the Group, approves the Group’s strategic plans, key business initiatives, major investment and funding decisions. It also monitors and evaluates the Group’s operations and ﬁnancial performance. These functions are carried by the Board directly or through committees of the Board which have been set up to support its functions.

The Board met 4 times during the ﬁnancial year to review, consider and approve strategic, operational and ﬁnancial matters, as well as to supervise senior management. In between the meetings, important matters concerning the Group are put to the Board for its decision by circulating resolution-in-writing for the directors’ approval.

Directors are briefed on regulatory changes, especially those on the Company’s or director’s disclosure obligations. In order to ensure that the Board is able to fulﬁl its responsibilities, prior to the Board meetings, the Management provides the Board with information containing relevant background or explanatory information required to support the decision-making process.

Newly-appointed directors will be given brieﬁngs by the Management on the business activities of the Group and its strategic directions as well as its corporate governance practices.

Principle 2 : Board’s Composition and Balance

The Board comprises :

Non-executive directors Chua Kim Yeow Chairman Dr Kwok Weng Fai Tay Puan Siong Sam Chong Keen Goh Chee Wee Michael David Nesbitt

Executive directors Wee Kok Wah President Dawn Wee Wai Ying Executive Vice President

The Board considers the Board’s present size and composition appropriate taking into account the nature and scope of the Group’s operations, the depth and breadth of knowledge, expertise and business experiences of the directors to govern and manage the Group’s affairs and that two-thirds of the Board is independent.

The Board has no dissenting view on the President’s Letter to Shareholders for the ﬁnancial year in review.

26 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Corporate Governance Report (cont’d)

Principle 3 : Chairman and President

The roles of Chairman and President are separate.

The Chairman assumes the responsibilities of scheduling and preparing agendas for Board meetings and exercises control over the quality, quantity and timeliness of information ﬂow between the Board and Management.

The President provides overall vision and strategic guidance and bears full executive responsibility for the Group’s operations.

Principle 4 to 5 :

- Board Membership - Board Performance

The Nominating Committee comprises : Sam Chong Keen Chairman Tay Puan Siong Michael David Nesbitt

The Nominating Committee recommends all appointments and re-nominations of directors to the Board and Board committees. The Company’s Articles of Association provide for one-third of the directors, to retire by rotation and be subject to re-election at every Annual General Meeting. A newly appointed director must also subject himself for retirement and re-election at the annual general meeting immediately following his appointment.

The Nominating Committee also determines the independence of directors and evaluates and assesses the effectiveness of the Board taking into consideration appropriate performance criteria.

The Board, through the delegation of its authority to the Nominating Committee, has used its best efforts to ensure that directors appointed to the Board possess the background, experience and knowledge in technology, business, ﬁnance and management skills critical to the Group’s businesses and that each director, through his unique contributions, brings to the Board an independent and objective perspective to enable balanced and well-considered decisions to be made.

Principle 6 : Access to Information

Directors are given full access to the management team and company secretary, all Board and Board committees’ minutes and all approval and information papers. Where a decision has to be made before a formal Board meeting is scheduled, a circulating Directors Resolution is done in accordance with the Company’s Articles of Association and all necessary information is provided. The Company supports the directors, either individually or as a group, if they require independent professional advice in furthering their duties to the Company. The company secretary attends Board meetings of the Company.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 27 Corporate Governance Report (cont’d)

Remuneration Matters

Principle 7 to 9 :

- Procedures for Developing Remuneration Policies - Level and Mix of Remuneration - Remuneration Committee

The Remuneration Committee comprises : Chua Kim Yeow Chairman Sam Chong Keen Goh Chee Wee

This committee reviews the remuneration packages needed to retain and motivate the Group’s employees. It also administers the Company’s employee share option scheme. No member of the committee shall be involved in any deliberation or decision making in respect of any compensation to be offered or granted to him/her.

The review of speciﬁc remuneration packages includes fees, salaries, bonuses and incentives. Executive directors have service contracts which include terms for termination under appropriate notice. Non-executive directors are remunerated based on basic fees for serving on the Board and Board committees. Such fees are recommended for approval by shareholders as a lump sum payment at the Annual General Meeting.

The Remuneration Committee has access to expert professional advice on remuneration matters whenever there is a need to obtain such advice.

Details of the Company’s Employee Share Option Scheme is provided in the Report of the Directors.

Breakdown of directors’ remuneration (in percentage terms) : Fixed Performance- salary related Director’s and beneﬁts bonuses fees Total % % % %

Chua Kim Yeow – – 100 100 Wee Kok Wah 52 48 – 100 Dawn Wee Wai Ying 73 27 – 100 Dr. Kwok Weng Fai – – 100 100 Tay Puan Siong – – 100 100 Sam Chong Keen – – 100 100 Goh Chee Wee – – 100 100 Michael David Nesbitt – – 100 100

Number of directors in remuneration bands : Executive directors Non-executive directors 2005 2004 2005 2004

$500,000 and above 1 2 – – $250,000 to $499,999 1 – – – Below $250,000 – – 6 6

2 2 6 6

28 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Corporate Governance Report (cont’d)

Number of key management in remuneration bands :

The Code requires the remuneration of at least the top 5 key executives who are also not directors to be disclosed. The Group believes that such information is conﬁdential and could be disadvantageous to its business interest. The Group has instead presented the remuneration of the top 5 executives in bands of $250,000 as below : 2005 2004

$250,000 to $499,999 – – Below $250,000 5 5

5 5

Immediate family members of directors :

Number of employees who are immediate family members of the Chairman and President in remuneration bands : 2005 2004

$500,000 to $749,999 – – Below $250,000 2 2

2 2

Accountability and Audit

Principle 10 to 13 :

- Accountability - Audit Committee - Internal Controls - Internal Audit

The Audit Committee comprises: Tay Puan Siong Chairman Sam Chong Keen Chua Kim Yeow

In the course of the ﬁnancial year, the Committee held 4 meetings and performed, inter-alia, the following functions :

1. review the audit plan with the external auditor; 2. review with the external auditor their evaluation of internal financial controls with Management’s response thereon; 3. review the assistance given by the Company’s officers to the external and internal auditors; 4. review the scope and results of internal audit procedures; 5. review the financial statements of the Company and the Group before their submission to the Board, together with the external auditor’s report thereon; 6. nomination of external auditor; and 7. review of interested person transactions.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 29 Corporate Governance Report (cont’d)

Half year and full year results are reviewed by the Audit Committee prior to their submission to the Board as are interested person transactions.

The Audit Committee has full access to and co-operation by the Company’s management and the internal and external auditors and has full discretion to invite any director or executive ofﬁcer to attend its meetings. The auditors have unrestricted access to the Audit Committee. Provision is made at least once annually for the Audit Committee to meet with the external and internal auditors without the presence of Management. The Audit Committee has reasonable resources to enable it to discharge its functions properly.

The Audit Committee may examine whatever aspects it deems appropriate of the Group’s ﬁnancial affairs, its internal and external audits and its exposure to risks of a regulatory or legal nature. It keeps under review the effectiveness of the Company’s system of accounting and internal ﬁnancial controls, for which the directors are responsible. It also keeps under review the Company’s programme to monitor compliance with its legal, regulatory and contractual obligations.

The Audit Committee overseas the internal audit function of the Group, which has been outsourced to an external professional ﬁrm. The primary line of reporting is to the Chairman of the Audit Committee. The Audit Committee reviews and approves the internal audit plan proposed by the internal auditors.

The Group’s system of internal control is designed to manage the risk of internal to achieve business objectives. The review of the Group’s system of internal control is a continuing process. Based on the internal audit reports reviewed by the Audit Committee and management controls in place, the Audit Committee is satisﬁed that there are adequate internal control systems within the Group.

The Board acknowledges its overall responsibility for ensuring that there is a sound system of internal control and is satisﬁed that there is no signiﬁcant weaknesses in the system of internal control of the Group that may result in material loss to the Group.

Having undertaken a review of non-audit services rendered by the external auditors during the ﬁnancial year, the Audit Committee is satisﬁed with the independence and objectivity of the external auditors and recommends to the Board the reappointment of Messrs Ernst & Young as the external auditors.

Risk Management Policies

The Group has set up objectives to manage the risks that arise from the normal course of its operations. The signiﬁcant risks are summarised below :

(i) General business risk

The Group’s major business is distribution of tyres and wheels. The Group is reliant on a few key suppliers for the supply of certain major brand of tyres. Some of these suppliers have granted exclusive distribution rights. Although we have a strong relationship with the principals (some exceeding 30 years), there is no assurance that the principals will continue to appoint us as their exclusive distribution agent in the future. Should any of the major principals decide to discontinue the distribution rights in the future, the Group could lose some of its market share and this could then have adverse ﬁnancial impact on the Group. To mitigate this risk, the Group has been focusing in developing its own range of ‘in-house’ brands like SSW, Sumo, Firenza and Sumo-Firenza to become less reliant on its principals.

30 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Corporate Governance Report (cont’d)

As in any other business environment, the Group’s assets are exposed to various risk arising from normal operations and natural disasters. Especially, our inventory is highly flammable and susceptible to the risk of fire. It is the Group’s practice to annually assess these risks and/or exposure to ensure that the Group is protected from potential monetary loss. In addition to other preventive measures, the Group ensures that adequate insurance coverage is maintained at all times to mitigate such risk except where the cost of insuring the asset is considered prohibitive in relation to the risks identified.

(ii) Product liability claims

The Group is exposed to claims from its customers from products sold by the Group which contain defects or found to be unfit for their intended use. The Group may be required to make financial compensation to its customers in such circumstances. The Group’s principals are well established in the market place and their products are usually tested for safety before being marketed. The Group continues to spend considerable effort in ensuring the quality of its products and services. The Group provides its employees with relevant trainings, on a regular basis, to uphold the quality of services provided to its customers. The Group has no history of any significant claim made by its customers.

(iii) Credit and inventory risk

The Group faces normal business risks associated with collection of trade receivables and inventory obsolescence. The Group’s exposure to credit risks arises mainly from sales made to distributors and retailers in various geographical locations. The Group has tight credit control policies and procedures to evaluate the credit worthiness of customers before credit is granted and to prevent signiﬁcant concentration of credit risk. The Group also has adequate policies and procedures to minimise the risk of inventory obsolescence. The risk of inventory obsolescence may arise from change in consumer preference and technology. It is the Group’s policy to maintain optimum inventory level at all times. Inventory level is monitored regularly and slow moving inventories are quickly identiﬁed for early disposal. The Group has also put in place a ‘supply chain management’ system to procure inventories in an effective manner to prevent excess inventories on hand.

The ﬁnancial risk management objectives and policies are discussed in Note 34 to the ﬁnancial statements.

Communication with Shareholders

Principle 14 to 15 :

- Communication with Shareholders - Greater Shareholder Participation

The Company believes that a high standard of disclosure is key to raise the level of corporate governance. Accordingly, the Company adopts a policy of giving full disclosure in all public announcements, press releases and annual report.

Shareholders are kept informed of the developments in the Group’s businesses and operations through announcements via SGXnet as well as through the annual report. Announcements are made as soon as possible to ensure timely dissemination of the information to shareholders and the public.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 31 Corporate Governance Report (cont’d)

The participation of shareholders is encouraged at the Company’s general meetings. The Board and Management are on hand at these meetings to address any question that shareholders may have concerning the Company. The external auditors are also present to assist the Board in answering the relevant shareholders’ queries.

To facilitate voting by shareholders, the Company’s Articles allow shareholders to vote by proxies. Proxy forms can be sent to the Company by mail. At the annual general meetings, each distinct issue is voted via separate resolutions.

Internal Code on Dealings with Securities

Besides the Board of Directors, Audit Committee and Remuneration Committee, the Company has also put in place an internal code on dealings with securities, (“Code”). This “Code” has been issued to directors and employees setting out the implications on insider trading.

The Code prohibits the dealings in securities of the Company by directors and employees while in possession of price-sensitive information, and during the period beginning one month before the announcement of the annual and half yearly results, and ending on the date of announcement.

It also discourages dealings on short-term considerations. Directors are required to report securities dealings to the company secretary who will assist to make the necessary announcements.

Interested Person Transactions

There were no signiﬁcant interested person transactions conducted during the current ﬁnancial year.

32 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Board Composition

Board Audit Nominating Remuneration Committee Committee Committee

Chua Kim Yeow Chairman Member – Chairman Wee Kok Wah President – – – Dawn Wee Wai Ying Executive Vice – – – President – – – Kwok Weng Fai Member – – – Tay Puan Siong Member Chairman Member – Sam Chong Keen Member Member Chairman Member Goh Chee Wee Member – – Member Michael David Nesbitt Member – Member –

Directors’ Attendance at Board & Committee Meetings held since May 2004

Board of Audit Nominating Remuneration Directors 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 Held* Attended Held* Attended Held* Attended Held* Attended

Chua Kim Yeow 4 2 4 2 – – 1 1 Wee Kok Wah 4 4 – – – – – – Dawn Wee Wai Ying 4 4 – – – – – – Kwok Weng Fai 4 4 – – – – – – Tay Puan Siong 4 3 4 3 1 1 – – Sam Chong Keen 4 4 4 4 1 1 1 1 Goh Chee Wee 4 4 – – – – 1 1 Michael David Nesbitt 4 4 – – 1 1 – –

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 33 Report of the Directors

The directors have pleasure in presenting their report together with the audited ﬁnancial statements of Stamford Tyres Corporation Limited (the “Company”) and its subsidiary companies (the “Group”) for the ﬁnancial year ended 30 April 2005.

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

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

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

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

Name of director Ordinary shares of $0.10 each

Chua Kim Yeow – – 230,000 230,000 Wee Kok Wah 9,107,353 13,210,252 57,051,319 57,051,319 Dawn Wee Wai Ying 3,887,567 11,887,567 62,271,105 58,374,004 Dr Kwok Weng Fai 2,778,810 2,778,810 – –

Warrant 2007

Wee Kok Wah 18,334,367 14,231,468 – – Dawn Wee Wai Ying – – 18,334,367 14,231,468 Dr Kwok Weng Fai 1,250 1,250 – –

There was no change in any of the abovementioned interests between the end of the ﬁnancial year and 21 May 2005.

By virtue of Section 7 of the Act, Wee Kok Wah and Dawn Wee Wai Ying are deemed to have an interest in the ordinary shares of all the subsidiary companies at the beginning and at the end of the ﬁnancial year.

No other director who held ofﬁce at the end of the ﬁnancial year had an interest in shares or debentures of the Company’s subsidiary companies.

34 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Report of the Directors (cont’d)

Except as disclosed in the financial statements, since the end of the previous financial year, no director has received or has become entitled to receive benefits under contracts required to be disclosed by Section 201(8) of the Act.

Except as disclosed above, neither at the end of the financial year, nor at any time during the financial year, did there subsist any arrangements, to which the Company is a party, whereby directors might acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

Share options and warrants to subscribe for ordinary shares

(i) Share options

On 22 June 2001, the shareholders approved the STC Share Option Scheme 2001 (the “Scheme”). The Scheme is open to full-time conﬁrmed employees, executive and non-executive directors, but not controlling shareholders or their associates of the Company, and entitles the option holders to exercise their options and subscribe for new ordinary shares in the Company either at the market price or at a price set at a discount not exceeding 20% of the market price. Market price is equal to the average last dealt price of the share for 3 consecutive trading days immediately preceding the offer date.

Options granted with the exercise price set at market price may be exercised after the ﬁrst anniversary of the offer date. Options granted with the exercise price set at a discount to market price may only be exercised after the second anniversary of the offer date. Executive options granted under the Scheme are exercisable for a period of 10 years whereas non-executive options are exercisable for a period of 5 years from the offer date.

The total number of shares that may be issued shall not exceed 15% of the issued share capital of the Company.

The Scheme is administered by members of the Company’s Remuneration Committee.

During the ﬁnancial year, the Company issued 25,000 ordinary shares of $0.10 each upon the exercise of 25,000 share options at exercise prices of $0.126 per share.

There were no outstanding share options as at 30 April 2005.

None of the directors and controlling shareholders of the Company has been granted options under the Scheme and none of the employees who participated in the Scheme has received 5% or more of the total number of options available under the Scheme.

(ii) Warrant 2007

Warrant 2007 were issued pursuant to an Abridged Prospectus dated 28 January 2002.

During the ﬁnancial year, the Company issued 7,389,399 ordinary shares of $0.10 each upon the exercise of 7,389,399 Warrant 2007 at the exercise price of $0.10 per share.

As at 30 April 2005, the holders of the warrants are entitled to subscribe for 19,900,868 new ordinary shares of $0.10 in the Company at an exercise price of $0.10 per share at any time up to 21 February 2007.

The above options and warrant do not allow the holders to participate in any share issue of any other company in the Group.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 35 Report of the Directors (cont’d)

Material contracts of the Company and its subsidiary companies

There were no material contracts (or loans) entered into by the Company and/or its subsidiary companies with the directors or chief executive officer or substantial shareholders of the Company which were still subsisting at the end of the financial year under review, or if not then subsisting, entered into since the end of the previous financial year.

Audit Committee

The Audit Committee performed the functions speciﬁed in the Act. The functions performed are detailed in the Report on Corporate Governance.

Auditors

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

On behalf of the Board,

Wee Kok Wah Director

Dawn Wee Wai Ying Director

Singapore 15 July 2005

36 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Statement by Directors Pursuant to Section 201(15) of the Singapore Companies Act, Cap. 50.

We, Wee Kok Wah and Dawn Wee Wai Ying, being two of the directors of Stamford Tyres Corporation Limited, do hereby state that, in the opinion of the directors :

(a) the accompanying balance sheets, consolidated profit and loss account, consolidated statement of changes in equity and consolidated statement of cash flow together with notes thereto are drawn up so as to give a true and fair view of the state of affairs of Stamford Tyres Corporation Limited (the “Company”) and its subsidiary companies (the “Group”) as at 30 April 2005, and of the results of the business, changes in equity and cash flows of the Group for the year then ended; and

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

On behalf of the Board,

Wee Kok Wah Director

Dawn Wee Wai Ying Director

Singapore 15 July 2005

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 37 Auditors’ Report to the Members of Stamford Tyres Corporation Limited

We have audited the accompanying financial statements of Stamford Tyres Corporation Limited (the “Company”) and its subsidiary companies (the “Group”) set out on pages 39 to 81 for the financial year ended 30 April 2005. These financial statements are the responsibility of the Company’s directors. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the directors, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion,

(a) the consolidated financial statements of the Group and the balance sheet of the Company are properly drawn up in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 30 April 2005, and the results, changes in equity and cash flows of the Group for the financial year ended on that date; and

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

ERNST & YOUNG Certiﬁed Public Accountants

Singapore 15 July 2005

38 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Consolidated Proﬁt and Loss Account for the year ended 30 April 2005

(In Singapore dollars) Note 2005 2004 $’000 $’000

Revenue 3 191,293 189,779 Other revenue 4 288 226

Total revenue 191,581 190,005

Less : Costs and expenditure Cost of raw materials and goods sold 138,811 138,805 Salaries and employees beneﬁts 15,473 14,409 Marketing and promotion 5,579 5,374 Utilities, repairs and maintenance 4,583 4,027 Amortisation and depreciation 4,424 3,647 Operating lease rentals 1,783 1,287 Other operating expenses 5,779 5,646

Total expenditure (176,432) (173,195)

Proﬁt from operating activities 5 15,149 16,810 Finance costs 6 (2,944) (2,453) Share of losses of an associated company (642) (9)

Proﬁt before taxation 11,563 14,348 Taxation 7 (2,893) (2,788)

Proﬁt after taxation 8,670 11,560 Minority interests (62) (16)

Proﬁt for the ﬁnancial year attributable to the shareholders of the Company 8,608 11,544

Earnings per share : 8 – basic (cents) 4.15 6.23

– diluted (cents) 3.82 5.19

The accounting policies and explanatory notes on pages 43 to 81 form an integral part of the ﬁnancial statements.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 39 Balance Sheets as at 30 April 2005

(In Singapore dollars) Group Company Note 2005 2004 2005 2004 $’000 $’000 $’000 $’000 Non-current assets Property, plant and equipment 9 51,417 45,735 – – Subsidiary companies 10 – – 39,374 35,252 Joint venture company 11 – – 1,571 1,571 Associated companies 12 1,642 2,306 72 72 Intangible assets 13 28 26 – – Other non-current asset 14 41 53 – – Deferred tax assets 24 1,424 440 – –

54,552 48,560 41,017 36,895

Current assets Inventories 15 62,338 52,657 – – Trade receivables 16 63,804 56,669 – – Other receivables 17 4,944 3,398 1,568 4,154 Marketable securities 18 15 5 – – Cash and bank balances 13,817 20,828 124 541

144,918 133,557 1,692 4,695

Less : Current liabilities Trade payables 24,916 19,192 – – Trust receipts (secured) 19 39,176 46,355 – – Other payables 20 9,497 10,646 468 386 Short-term loans (secured) 21 8,829 4,615 – – Hire purchase liabilities 22 255 279 – – Provision for taxation 3,849 4,239 140 66

86,522 85,326 608 452

Net current assets 58,396 48,231 1,084 4,243

Non-current liabilities Hire purchase liabilities 22 526 546 – – Long-term loans (secured) 23 43,246 32,100 – – Deferred tax liabilities 24 724 616 – – (44,496) (33,262) – –

68,452 63,529 42,101 41,138

Equity Share capital 25 21,082 20,341 21,082 20,341 Reserves 47,143 43,016 21,019 20,797 68,225 63,357 42,101 41,138 Minority interests 227 172 – –

68,452 63,529 42,101 41,138

The accounting policies and explanatory notes on pages 43 to 81 form an integral part of the ﬁnancial statements.

40 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Consolidated Statement of Changes in Equity for the year ended 30 April 2005

(In Singapore dollars) Foreign currency Share Share Capital Revenue translation capital premium reserve reserve reserve Total $’000 $’000 $’000 $’000 $’000 $’000 Group Balance at 1 May 2003 15,295 9,857 759 23,555 (184) 49,282 Issue of ordinary shares on exercise of share options and Warrant 2007 (Note 25) 5,046 148 – – – 5,194 Transfer from capital reserve as a result of exercise of Warrant 2007 (Note 28) – 384 (384) – – – Dividend (Note 29) – – – (2,107) – (2,107) Proﬁt for the ﬁnancial year attributable to the shareholders of the Company – – – 11,544 – 11,544 Translation adjustments arising on consolidation – – – – (556) (556)

Balance at 30 April 2004 20,341 10,389 375 32,992 (740) 63,357 Issue of ordinary shares on exercise of share options and Warrant 2007 (Note 25) 741 1 – – – 742 Transfer from capital reserve as a result of exercise of Warrant 2007 (Note 28) – 63 (63) – – – Dividend (Note 29) – – – (3,304) – (3,304) Proﬁt for the ﬁnancial year attributable to the shareholders of the Company – – – 8,608 – 8,608 Translation adjustments arising on consolidation – – – – (1,178) (1,178)

Balance at 30 April 2005 21,082 10,453 312 38,296 (1,918) 68,225

The details of the movement in reserves of the Company are set out in Note 26 to the ﬁnancial statements.

The accounting policies and explanatory notes on pages 43 to 81 form an integral part of the ﬁnancial statements.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 41 Consolidated Statement of Cash Flow for the year ended 30 April 2005

(In Singapore dollars) 2005 2004 $’000 $’000

Cash ﬂows from operating activities : Proﬁt from operating activities 15,149 16,810 Adjustments for : Depreciation of property, plant and equipment 4,384 3,361 Property, plant and equipment written off – 109 Impairment reversal on property, plant and equipment – (166) Gain on disposal of property, plant and equipment (193) (40) Provision for diminution on other investment 11 – Amortisation of intangible assets 40 286 Gain on disposal of marketable securities – (5) Loss arising from acquisition of a subsidiary company 146 – Interest income (81) (101) Foreign currency translation adjustment (255) (49)

Operating proﬁt before reinvestment in working capital 19,201 20,205 Increase in inventories (9,681) (12,225) Increase in receivables (8,767) (8,984) Increase in payables 4,120 3,538

Cash generated from operations 4,873 2,534 Interest received 81 101 Interest paid (2,854) (1,918) Income tax paid (4,159) (2,239) Net cash used in operating activities (2,059) (1,522)

Cash ﬂows from investing activities : Additions to property, plant and equipment (10,631) (8,969) Proceeds from disposal of marketable securities – 15 Proceeds from disposal of property, plant and equipment 416 414 Additions to intangible assets (42) (2) Investment in associated companies – (2,046) Additions to marketable securities (10) – Net cash ﬂow from the acquisition of a subsidiary company, net of cash acquired (Note 30) 5 – Net cash used in investing activities (10,262) (10,588)

Cash flows from financing activities : Repayment of hire purchase liabilities (306) (344) Repayment of long-term loans (1,678) (6,847) (Repayment of)/proceeds from trust receipts (7,179) 20,050 Proceeds from long-term loans 14,126 3,966 Proceeds from issue of shares 742 5,194 Dividend paid (3,304) (2,107) Net cash provided by financing activities 2,401 19,912

Net (decrease)/increase in cash and cash equivalents (9,920) 7,802 Cash and cash equivalents at beginning of financial year (Note 30) 18,699 11,080 Exchange rate adjustment to cash and cash equivalents at beginning of financial year (3) (183) Cash and cash equivalents at end of financial year (Note 30) 8,776 18,699

The accounting policies and explanatory notes on pages 43 to 81 form an integral part of the ﬁnancial statements.

42 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Notes to the Financial Statements 30 April 2005 (In Singapore Dollars)

1. Corporation information

Stamford Tyres Corporation Limited is a limited liability company incorporated in Singapore. Its registered ofﬁce is at 19 Lok Yang Way, Singapore 628635.

The principal activity of the Company is that of an investment holding company and the principal activities of the subsidiary companies consist of wholesale and retail of tyres and wheels, tyre retreading, equipment trading, the servicing of motor vehicles and manufacturing and sale of aluminium alloy wheels.

The Group operates in 9 countries and had 653 employees (2004 : 430) as at 30 April 2005. The Company had no employees as at 30 April 2005 and 2004.

2. Summary of signiﬁcant accounting policies

(a) Basis of preparation

The ﬁnancial statements have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”) as required by the Singapore Companies Act, Cap. 50 (the “Act”).

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

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

(b) Basis of consolidation

The financial statements of the Group incorporate the audited financial statements of the Company, its subsidiary companies and the joint venture company to the end of the financial year except for those subsidiary companies that are not required to be audited under the laws of their country of incorporation. In such cases, the unaudited financial statements are used for the purposes of consolidation into the financial statements of the Group.

The results of subsidiary companies acquired or disposed of during the ﬁnancial year are included in or excluded from the respective dates of acquisition or disposal as applicable. Inter-company balances and transactions and the resulting unrealised proﬁts are eliminated in full on consolidation.

Assets, liabilities and results of overseas subsidiary companies are translated into Singapore dollars on the basis outlined in Note 2(u).

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 43 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

Revenue is recognised to the extent that it is probable that the economic beneﬁts will ﬂow to the Group and the revenue can be reliably measured :

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

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

– Advertising and promotional rebates from suppliers are recognised as follows :

– those that are determined based on the amount of purchases made during the ﬁnancial year are credited against marketing and promotion expenses in the proﬁt and loss account; and

– those that are reimbursed at the discretion of the suppliers are credited against marketing and promotion expenses in the proﬁt and loss account when these are received.

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

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

(d) Depreciation of property, plant and equipment

Depreciation is calculated so as to write off the cost of the assets on a straight line basis over the expected useful lives of the assets concerned. The principal rates used for this purpose are :

Leasehold land and buildings – over their lease period, ranging from 1.7% to 5.0% per annum Leasehold improvements – 10% per annum Motor vehicles – 20% per annum Plant and equipment – 5% to 10% per annum 1 Computer hardware and software – 33 /3% per annum

No depreciation is provided on freehold land. No depreciation is provided for construction-in-progress until it is completed and put into use.

44 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

(d) Depreciation of property, plant and equipment (cont’d)

A full year’s depreciation is charged in the financial year of acquisition. No depreciation is charged in the financial year of disposal. Fully depreciated assets are retained in the financial statements until they are no longer in use.

The useful life and depreciation method are reviewed annually to ensure that the method and period of depreciation are consistent with the expected pattern of economic beneﬁts from items of property, plant and equipment.

During the financial year, a subsidiary company changed the period of depreciation for a leasehold building from 64 years to 50 years and for office furniture and equipment from 10 years to 8 years to reflect more accurately the expected consumption pattern of economic benefits from these assets. The changes have resulted in an additional depreciation charge of $294,000 for the financial year.

(e) Borrowing costs

Interest on borrowings to ﬁnance the construction of properties and plants is capitalised. Interest is capitalised from the date work starts on the property to the date when substantially all the activites that are necessary to get the property ready for use are completed. Interest on other borrowings are recognised as expense in the period in which they are incurred. Interest differentials under interest rate swap arrangements are accrued and recorded in the proﬁt and loss account as adjustments to the interest expense.

The interest prepaid on term loan is charged to the proﬁt and loss account over the term of the loan.

(f) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any impairment in value. All items of property, plant and equipment are initially recorded at cost.

The initial cost of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes and any directly attributable costs of bringing the asset to its working condition and location for its intended use, any trade discounts and rebates are deducted in arriving at the purchase price. Expenditure incurred after the property, plant and equipment have been put into operation, such as repairs and maintenance and overhaul costs, is normally charged to the proﬁt and loss account in the period in which the costs are incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic beneﬁts expected to be obtained from the use of an item of property, plant and equipment beyond its originally assessed standard of performance, the expenditure is capitalised as an additional cost of property, plant and equipment.

When assets are sold or retired, their cost and accumulated depreciation are removed from the ﬁnancial statements and any gain or loss resulting from their disposal is included in the proﬁt and loss account.

(g) Subsidiary companies

In the ﬁnancial statements of the Company, investments in subsidiary companies are stated at cost less provision for any diminution in value. Acquisition of subsidiary companies are accounted for using the purchase method of accounting. Details of the subsidiary companies are set out in Note 36.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 45 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

(h) Joint venture company

Entities in which the Group holds an interest on a long-term basis and are jointly controlled by the Group with one or more parties under a contractual agreement are treated as joint ventures.

The Group’s interest in the joint venture company is included in the consolidated balance sheet and proﬁt and loss account using the proportionate consolidation method, whereby the Group’s share of the joint venture company’s assets, liabilities, income and expenses are combined on a line by line basis with similar items in the consolidated ﬁnancial statements.

In the ﬁnancial statements of the Company, investment in joint venture company is stated at cost less provision for any diminution in value. Details of the joint venture company are set out in Note 36.

(i) Associated companies

An associated company is defined as a company, not being a subsidiary company, in which the Group has a long-term interest of not less than 20% of the equity and in whose financial and operating policy decisions the Group exercises significant influence.

The Group’s share of the results of associated companies is included in the consolidated proﬁt and loss account. The Group’s share of the post-acquisition reserves of associated companies is included in the investments in the consolidated balance sheet. When the Group’s share of post-acquisition losses exceeds the carrying amount of the respective investment, the investment is reported at nil value and recognition of losses is discontinued except to the extent of the Group’s commitment.

Where the audited financial statements of these associated companies are not co-terminous with those of the Group, the share of profits is arrived at from the last audited financial statements available and unaudited management financial statements to the end of the accounting period.

In the ﬁnancial statements of the Company, investments in associated companies are stated at cost less provision for any diminution in value. Details of the associated companies are set out in Note 36.

(j) Intangible assets

(i) Computer software

Software are stated at cost less accumulated amortisation and any impairment loss. The cost is amortised on a straight line basis over 3 years from the date the software is made available for use.

(ii) Goodwill

Goodwill represents the excess of the fair value of the consideration given over the fair value of the identifiable net assets of subsidiary, joint venture and associated companies when acquired. Positive goodwill is amortised through the consolidated profit and loss account on a straight line basis over its useful economic life up to a maximum of 20 years, determined on individual basis. Goodwill which is assessed as having no continuing economic value is written off to the consolidated profit and loss account.

46 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

(j) Intangible assets (cont’d)

(iii) Others

Preliminary, pre-operating expenses and research and development costs are expensed as incurred, except for development costs which are expected to generate future economic beneﬁts. Such development expenses are capitalised and amortised through the proﬁt and loss account on a straight line basis over a period of 5 years upon commencement of operations.

(k) Other non-current asset

Investment in club memberships are stated at cost less any impairment loss.

(l) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on a weighted average cost method and includes all costs in bringing the inventories to their present location and condition. In the case of manufactured and retread products, and work-in-progress, cost includes all direct expenditure and production overheads based on normal level of activity. Net realisable value is the price at which the inventories can be realised in the normal course of business after allowing for the costs of realisation and, where appropriate, the cost of conversion from the existing state to a ﬁnished condition.

Tyres rented to customers (“inventories held for rental”) are stated at cost less an accumulated charge for their consumption. The consumption charge is calculated to write off the cost of the tyres based on the actual running hours of usage by the customer in relation to the estimated life of the rental tyres of between 2,000 and 5,000 running hours depending on the model of tyres.

An allowance is made where necessary for obsolete, slow moving and defective inventories.

(m) Trade and other receivables

Trade and other receivables are recognised and carried at original invoiced amount less an allowance for doubtful receivables. An allowance for doubtful receivables is made when collection of the full amount is no longer probable. Bad debts are written off to the proﬁt and loss account as incurred.

Receivables from related parties are recognised and carried at cost less allowance for doubtful receivables, if any.

(n) Marketable securities

Quoted short-term investments are stated at the lower of cost and market value, which are determined on an individual basis. Any decrease in carrying amount is included in the proﬁt and loss account.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 47 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

(o) Impairment of assets

Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognised in the proﬁt and loss account.

Reversal of impairment losses recognised in previous financial years is recorded when there is an indication that the impairment losses recognised for the asset no longer exist or have decreased. The reversal is recorded in the profit and loss account. However, the increased carrying amount of an asset due to a reversal of an impairment loss is recognised to the extent it does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for that asset in previous financial years.

(p) Trade and other payables

Trade and other payables are carried at cost, which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the Group.

(q) Loans and borrowings

All loans and borrowings are initially recognised at cost, being the fair value of the consideration received and including acquisition charges associated with the borrowing/loan.

(r) Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) where as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate.

(s) Leased assets

(i) Hire purchase liabilities

Where assets are ﬁnanced by hire purchase agreements that give rights approximating to ownership, the assets are capitalised under property, plant and equipment as if they had been purchased outright at the values equivalent to the present values of the total rental payable during the periods of the hire and the corresponding hire purchase commitments are included under liabilities. The excess of the hire purchase payments over the recorded lease obligations is treated as ﬁnance charges, which are amortised over each hire term to give a constant rate of charge on the remaining balance of the obligation.

Depreciation on the relevant assets is charged to proﬁt and loss account on the basis outlined in Note 2(d).

48 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

(s) Leased assets (cont’d)

(ii) Operating lease

Leases where substantially all the risks and beneﬁts of ownership of the lease effectively remains with the lessor are classiﬁed as operating leases.

Rental expenses pursuant to operating leases are charged to the proﬁt and loss account on a straight line basis.

(t) Income taxes

Deferred income tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for ﬁnancial reporting purposes. Deferred tax assets and liabilities are measured using the tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled based on tax rates enacted or substantively enacted at the balance sheet date.

Deferred tax liabilities are recognised for all taxable temporary differences associated with investments in subsidiary, associated and joint venture companies, except where the timing of the reversal of the temporary difference can be controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

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

At each balance sheet date, the Group re-assesses unrecognised deferred tax assets and the carrying amount of deferred tax assets. The Group recognises a previously unrecognised deferred tax asset to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. The Group conversely reduces the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of the deferred tax asset to be utilised.

Deferred tax is charged or credited directly to equity if the tax relates to items that are credited or charged, in the same or a different period, directly to equity.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 49 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

(u) Foreign currencies

(i) Foreign currency transactions

Transactions arising in foreign currencies during the ﬁnancial year are translated and recorded into the measurement currency at rates closely approximating those ruling on the transaction dates. Foreign currency monetary assets and liabilities at the balance sheet date are translated into the measurement currency at the exchange rates ruling at that date. All exchange differences arising from such translations are included in the proﬁt and loss account.

(ii) Foreign entities

For inclusion in the consolidated financial statements, all assets and liabilities of foreign subsidiary and joint venture companies are translated into Singapore dollars at exchange rates ruling at the balance sheet date and the results of foreign subsidiary companies, associated and joint venture companies are translated into Singapore dollars at the weighted average exchange rates for the financial year. Exchange differences due to such currency translations are included in foreign currency translation reserve. On disposal of a foreign subsidiary and joint venture company, such foreign currency translation reserves are recognised in the profit and loss account as a component of the gain or loss on disposal. Exchange differences arising from long-term inter-company balances which are effectively part of net investments are included in the foreign currency translation reserve.

(iii) Forward contracts

Gains and losses arising from forward contracts on foreign currencies for the purpose of hedging against currency ﬂuctuations in connection with payments to overseas suppliers and receipts from overseas customers are recognised in the proﬁt and loss account on the maturity date of the respective contracts.

(v) Cash and cash equivalents

Cash and cash equivalents consist of cash at bank and in hand less bank overdrafts and short-term loans in the form of revolving credit facilities.

(w) Employee beneﬁts

(i) Executives’ Share Option Scheme

The Company has in place the STC Share Option Scheme 2001 (the “Scheme”) for the granting of share options to eligible employees of the Group to subscribe for ordinary shares in the Company. When the options are exercised, the nominal value of the shares subscribed for is credited to the share capital account and the balance of the proceeds, net of any transaction costs, is credited to the share premium account. Details of the Scheme are disclosed in Note 27.

50 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

(w) Employee beneﬁts (cont’d)

(ii) Deﬁned contribution/beneﬁt plans

As required by law, the Group’s companies in Singapore make contributions to the state pension scheme, the Central Provident Fund (“CPF”). Certain of the Group’s companies outside Singapore make contributions to their respective countries’ pension scheme. Such contributions are recognised as compensation expense in the same period as the employment that gives rise to the contribution.

(iii) Employee entitlements

Liabilities for paid leave are recognised and are measured as the amount unpaid at the balance sheet date at current pay rates in respect of employees’ services up to that date.

(x) Share capital, share premium and reserves

Ordinary shares are classiﬁed as equity and recorded at the fair value of the consideration received by the Company. Dividends on ordinary shares are accounted for in the shareholders’ equity in the period in which they are declared payable.

Proceeds from the issuance of warrants are credited to the capital reserve. When the warrants are exercised, the value of such warrants exercised standing to the credit of the capital reserve account will be transferred to the share premium account. At the expiry of the warrants, the balance in the capital reserve will be transferred to the revenue reserve.

3. Revenue Group 2005 2004 $’000 $’000 Tyres and wheels : – Wholesale and distribution 157,191 152,005 – Retail and ﬂeet 34,022 37,692 Servicing of motor vehicles 80 82

191,293 189,779

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 51 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

4. Other revenue Group 2005 2004 $’000 $’000

Interest income from bank deposits 81 101 Sundry income 205 90 Rental income 2 35

288 226

5. Proﬁt from operating activities Group 2005 2004 $’000 $’000 Proﬁt from operating activities is stated after charging/(crediting) :

Directors’ remuneration : – directors of the Company 1,752 2,429 – other directors of subsidiary companies 191 185 Contribution to CPF and other similar funds 955 642 Non-audit fees : – auditors of the Company 25 21 – other auditors 9 44 Gain on disposal of property, plant and equipment (193) (40) Foreign exchange gain (285) (223) Loss arising from acquisition of a subsidiary company (Note 30) 146 – Provision for diminution on other investment (Note 14) 11 – Gain on disposal of marketable securities – (5) Property, plant and equipment written off – 109 Impairment reversal on property, plant and equipment – (166)

6. Finance costs Group 2005 2004 $’000 $’000 Interest expense on : – bank overdrafts, trust receipts and hire purchase liabilities 1,331 1,105 – long-term loans 1,523 913 Amortisation of interest prepaid on a term loan 90 435

2,944 2,453

52 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

7. Taxation Group 2005 2004 $’000 $’000 Provision for taxation in respect of proﬁt for the ﬁnancial year : – Current taxation 3,816 4,283 – Deferred taxation (Note 24) (416) (361)

3,400 3,922

Overprovision in respect of previous ﬁnancial years : – Current taxation (47) (983) – Deferred taxation (Note 24) (460) (151)

(507) (1,134)

2,893 2,788

The income tax expense on the results of the Group differ from the amount of tax determined by applying the Singapore statutory rate of income tax of 20% (2004 : 20%) to the proﬁt before taxation due to the following factors :

Proﬁt before taxation 11,563 14,348

Taxation at statutory tax rate of 20% (2004 : 20%) 2,313 2,870 Adjustments : – expenses not deductible for income tax purposes 774 608 – income not subject to tax (7) (38) – higher tax rates in other countries 255 325 – deferred tax assets in respect of allowances for stock obsolescence and doubtful receivables not recognised 263 158 – utilisation of previously unrecognised tax losses (145) (37) – effect of change in statutory tax rate – (84) – overprovision in respect of previous ﬁnancial years (507) (1,050) – others (53) 36

Taxation 2,893 2,788

As at 30 April 2005, the Group, primarily through its subsidiary companies in Thailand, has unutilised tax losses of approximately $332,000 (2004 : $907,000) which may, subject to the agreement with the relevant tax authorities, be carried forward and utilised to set-off against future taxable profits. The potential tax benefit of approximately $100,000 (2004 : $245,000) arising from the unutilised tax losses has not been recognised in the financial statements due to the uncertainty of its recoverability.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 53 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

8. Earnings per share

The calculation of earnings per share (“EPS”) is based on the following figures : Group 2005 2004 $’000 $’000 Group earnings used for the calculation of EPS : Profit for the financial year attributable to the shareholders of the Company 8,608 11,544

’000 ’000 Number of shares used for the calculation of basic and diluted EPS : Weighted average number of ordinary shares in issue used for the calculation of basic EPS 207,403 185,168 Adjustment for outstanding share options and Warrant 2007 18,122 37,316

Adjusted weighted average number of ordinary shares used for the calculation of diluted EPS 225,525 222,484

Basic EPS is calculated on the Group’s profit for the financial year attributable to the shareholders of the Company divided by the weighted average number of ordinary shares in issue during the financial year.

Diluted EPS is calculated on the Group’s profit for the financial year attributable to the shareholders of the Company divided by the weighted average number of ordinary shares in issue during the financial year which have been adjusted for the effects of all dilutive potential ordinary shares, being the outstanding share options and Warrant 2007 (Notes 27 and 28). The number of outstanding share options and Warrant 2007 included in the calculation of diluted EPS has been determined based on the average number of days they were outstanding during the financial year.

54 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

9. Property, plant and equipment

Leasehold Freehold land and Plant Motor Leasehold Construction- land buildings equipment vehicles improvements in-progress Total $’000 $’000 $’000 $’000 $’000 $’000 $’000

Group Cost : At beginning of ﬁnancial year 2,636 34,666 9,985 3,719 4,239 5,899 61,144 Foreign currency translation adjustment (73) (386) (110) (23) (25) (151) (768) Additions – 345 4,270 582 498 5,198 10,893 Disposals – (125) (262) (498) – – (885) Reclassiﬁcation – 2,368 4,606 – – (6,974) –

At end of ﬁnancial year 2,563 36,868 18,489 3,780 4,712 3,972 70,384

Accumulated depreciation and impairment :

At beginning of ﬁnancial year : – Accumulated depreciation – 5,091 5,605 2,545 2,060 – 15,301 – Accumulated impairment loss – 108 – – – – 108 Foreign currency translation adjustment – (57) (72) (13) (22) – (164) Charge for the ﬁnancial year – 1,151 2,353 442 438 – 4,384 Disposals – (32) (140) (490) – – (662)

At end of ﬁnancial year – 6,261 7,746 2,484 2,476 – 18,967

Charge for last ﬁnancial year – 968 1,531 486 376 – 3,361

Net book value :

At end of ﬁnancial year 2,563 30,607 10,743 1,296 2,236 3,972 51,417

At beginning of ﬁnancial year 2,636 29,467 4,380 1,174 2,179 5,899 45,735

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 55 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

9. Property, plant and equipment (cont’d)

The Group’s property, plant and equipment with a total net book value of $35,797,000 as at 30 April 2005 (2004 : $36,668,000) are subject to legal mortgages referred to in Notes 19, 21 and 23. Additions to property, plant and equipment for the ﬁnancial year includes $262,000 (2004 : $428,000) acquired under hire purchase agreements. Interst on borrowings amounting to $67,000 (2004 : nil) was capitalised during the ﬁnancial year and included in the cost of plant and machinery. The Group has motor vehicles and plant and equipment acquired under hire purchase agreements with a total net book value of $832,000 as at 30 April 2005 (2004 : $1,028,000).

10. Subsidiary companies Company 2005 2004 $’000 $’000

Unquoted equity shares, at cost (Note 36) 25,833 21,296 Less : Provision for diminution in value (3,424) (2,991)

22,409 18,305

Loan to a subsidiary company (unsecured) 13,767 13,767 Amounts due from subsidiary companies (non-trade) 6,862 4,125 Amounts due to subsidiary companies (non-trade) (3,150) (945)

17,479 16,947

Less : Allowance for doubtful non-trade receivable from a subsidiary company (514) –

16,965 16,947

39,374 35,252

During the financial year, the Company increases its interest in an associated company, Stamford Tyres Philippines, Inc. (“STP”) from 40% to 100%. With this increase, STP became a wholly-owned subsidiary company of the Company. The loss of $146,000 arising from this acquisition has been charged to the profit and loss account (Note 30). Other than this loss, the acquistion of additional interest in STP does not have any significant impact on the result and financial position of the Group for the financial year. The loan to a subsidiary company is unsecured, bears interest at 2.89% (2004 : 2.89%) per annum, with no fixed term of repayment and is not expected to be repaid within the next 12 months. The subsidiary company cannot repay this loan to the Company until the subsidiary company has repaid a term loan it obtained from a bank (Note 23). The non-trade amounts due from and to subsidiary companies are unsecured, have no fixed terms of repayment and not expected to be repaid within the next 12 months, and interest-free except for an amount of $422,000 (2004 : $379,000) due from a subsidiary company which bears interest at 7.00% (2004 : 7.00%) per annum. Details of the subsidiary companies are set out in Note 36.

56 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

11. Joint venture company Company 2005 2004 $’000 $’000

Unquoted equity shares, at cost 1,571 1,571

Details of the joint venture company are set out in Note 36.

The Group’s share of the assets and liabilities of the joint venture company comprise :

Group 2005 2004 $’000 $’000

Non-current assets 5,098 6,054 Current assets 12,042 8,786 Current liabilities (6,043) (4,155) Non-current liabilities (6) (20)

11,091 10,665

The Group’s share of the proﬁts of the joint venture company comprise :

Revenue 15,491 15,810 Expenditure (14,152) (13,570)

Proﬁt before taxation 1,339 2,240 Taxation (331) (353)

Proﬁt after taxation 1,008 1,887

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 57 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

12. Associated companies Group Company 2005 2004 2005 2004 $’000 $’000 $’000 $’000

Unquoted equity shares, at cost 2,118 2,266 72 220 Share of post-acquisition reserves (311) 114 – – Foreign currency translation adjustment (165) (74) – –

1,642 2,306 72 220

Less : Provision for diminution in value – – – (148)

1,642 2,306 72 72

Details of the associated companies are set out in Note 36.

13. Intangible assets Preliminary and pre-operating Deferred Computer Goodwill expenses expenditure software Total $’000 $’000 $’000 $’000 $’000 Group Cost : At beginning of ﬁnancial year 61 408 342 595 1,406 Foreign currency translation adjustment – – – (2) (2) Additions – – – 42 42

At end of ﬁnancial year 61 408 342 635 1,446

Accumulated amortisation : At beginning of ﬁnancial year 61 408 342 569 1,380 Foreign currency translation adjustment – – – (2) (2) Amortisation for the ﬁnancial year – – – 40 40

At end of ﬁnancial year 61 408 342 607 1,418

Amortisation for last ﬁnancial year – – – 286 286

Net book value : At end of ﬁnancial year – – – 28 28

At beginning of ﬁnancial year – – – 26 26

58 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

14. Other non-current asset Group 2005 2004 $’000 $’000

Investment in transferable club memberships, at cost 53 54 Less : Provision for diminution in value (Note 5) (11) – Foreign currency translation adjustment (1) (1)

41 53

15. Inventories Group 2005 2004 $’000 $’000 Inventories for sale : – at cost 51,346 45,875 – at net realisable value 3,730 4,262 Inventories held for rental, at cost less accumulated amount charged to the proﬁt and loss account 2,890 1,977 Raw materials, at cost 3,888 543 Work-in-progrss – aluminium alloy wheels 484 -

62,338 52,657

Inventories for sale are stated after deducting allowance for obsolescence of 6,278 4,913

16. Trade receivables Group 2005 2004 $’000 $’000

External parties 69,065 61,147 Less : Allowance for doubtful trade receivables (5,261) (4,478)

63,804 56,669

Bad external trade debts written off directly to the proﬁt and loss account 1 7

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 59 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

17. Other receivables Group Company 2005 2004 2005 2004 $’000 $’000 $’000 $’000 Amounts due from : – subsidiary companies – – – 2,582 – joint venture company 25 28 263 274 – shareholders of subsidiary companies – – 1,298 1,298 – shareholders of associated companies 16 230 16 230 Sundry receivables 851 850 – – Loans and deposits to suppliers 1,628 – – – Deposits 986 1,108 – – Taxes recoverable 751 909 – – Staff loans 112 154 – – Prepayments 643 259 7 – Interest prepaid on a term loan – 90 – –

5,012 3,628 1,584 4,384 Less : Allowance for doubtful receivables (68) (230) (16) (230)

4,944 3,398 1,568 4,154

The non-trade amounts due from the subsidiary and joint venture companies, and shareholders of subsidiary and associated companies are unsecured, interest-free and are repayable on demand.

The loans and deposits to suppliers are unsecured and interest-free. The loans are deductible against the amount payable on purchase of tyres from these suppliers. The deposits are refundable at the end of the manufacturing contracts with duration up to 2 years.

Staff loans are unsecured, bear interest at rates ranging from 4.5% to 9.0% (2004 : 4.7% to 8.7%) per annum and repayable in ﬁxed monthly instalments not exceeding 5 years from the date of grant of the loan.

The interest prepaid on a term loan is charged to the proﬁt and loss account over 30 months commencing on 12 February 2002. The interest has been fully charged to the proﬁt and loss account as at 30 April 2005.

60 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

18. Marketable securities Group 2005 2004 $’000 $’000

Quoted equity shares, at cost 15 5

Market value at end of ﬁnancial year 15 5

19. Trust receipts (secured)

Trust receipts have maturity dates of up to 6 (2004 : 6) months and are secured by corporate guarantees from the Company, a negative pledge over the assets excluding its leasehold buildings of Stamford Tyres International Pte Ltd. These facilities are subject to compliance with certain ﬁnancial covenants.

20. Other payables Group Company 2005 2004 2005 2004 $’000 $’000 $’000 $’000

Amounts due to associated companies 89 89 89 89 Payroll and staff related expenses 2,774 3,269 – – Sundry payables 3,223 3,272 – – Accrued operating expenses 3,274 3,485 379 297 Retention amount payable in relation to construction-in-progress 137 531 – –

9,497 10,646 468 386

The non-trade amounts due to the associated companies are unsecured, interest-free and are repayable on demand.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 61 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

21. Short-term loans (secured) Group 2005 2004 $’000 $’000

Short-term loans (revolving credit facilities) 5,041 2,129 Long-term loans - current portion (Note 23) 3,788 2,486

8,829 4,615

The short-term loans are secured by negative pledge over the assets of certain overseas subsidiary companies excluding hire purchase assets, and corporate guarantees from the Company. The short-term loans bear interest at rates ranging from 2.75% to 4.80% (2004 : 2.75% to 3.25%) per annum.

22. Hire purchase liabilities

The future minimum payments under hire purchase agreements to acquire motor vehicles and plant and equipment are as follows :

Group Present Present Minimum value Minimum value payments payments payments payments 2005 2005 2004 2004 $’000 $’000 $’000 $’000

Within one year 291 255 319 279 After one year but not more than ﬁve years 599 515 560 488 More than ﬁve years 17 11 69 58

616 526 629 546

Total minimum hire purchase payments 907 781 948 825 Less : Amounts representing ﬁnance charges (126) – (123) –

Present value of minimum hire purchase payments 781 781 825 825

62 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

23. Long-term loans (secured) Group 2005 2004 $’000 $’000 Loans from banks : – Loan A 29,000 21,777 – Loan B 2,769 2,895 – Loan C 3,248 1,419 – Loan D 645 678 – Loan E 399 388 – Loan F 5,839 3,065 – Loan G 705 786 – Loan H 1,000 –

43,605 31,008 Loans from a ﬁnance company : – Loan I 692 741 – Loan J 1,366 1,416 – Loan K 1,371 1,421

3,429 3,578

47,034 34,586 Less : Current portion (Note 21) (3,788) (2,486)

Long-term portion of loans 43,246 32,100

Long A bears interest at rates ranging from 2.93% to 3.47% (2004 : 2.79% to 3.12%) per annum. The loan is repayabe in semi-annual instalments amounting between $1,000,000 and $3,000,000 per instalment with a bullet repayment of $13,000,000 at the ﬁnal repayment date on 8 August 2009.

This loan is secured by a mortgage over a leasehold building of Stamford Tyres International Pte Ltd and a corporate guarantee from the Company. This loan is subject to compliance with certain ﬁnancial covenants by Stamford Tyres International Pte Ltd and the Company, and Stamford Tyres International Pte Ltd shall not repay the loan from the Company until Loan A is repaid (Note 10).

Stamford Tyres International Pte Ltd has also entered into an interest rate swap transaction with the lending bank to ﬁx the interest rate on a portion of $10,000,000 (2004 : $12,000,000) of Loan A at 3.47% (2004 : 3.06%) per annum for the period from 11 February 2005 to 12 February 2007.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 63 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

23. Long-term loans (secured) (cont’d)

Loan B bears interest at rates ranging from 2.50% to 5.50% (2004 : 5.25%) per annum and is repayable in 240 equal monthly instalments commencing March 2001. This loan is secured by a mortgage over a leasehold building of Stamford Tyres International Pte Ltd and a corporate guarantee from the Company.

Loan C includes two loans which bear interest at rates ranging from 7.25% to 7.50% (2004 : 7.50%) per annum, and is repayable in 120 equal monthly instalments commencing January 1998 and August 2004. The loans are secured by a mortgage on the land and building of STC Tyres (Malaysia) Sdn Bhd and a corporate guarantee from the Company.

Loan D bears interest at rates ranging from 2.50% to 5.50% (2004 : 5.00% to 5.50%) per annum and is repayable in 240 equal monthly instalments commencing November 2000. This loan is secured by a mortgage over a leasehold building of Stamford Tyres International Pte Ltd and a corporate guarantee from the Company.

Loan E bears interest at 7.00% (2004 : 7.00%) per annum and is repayable in 360 equal monthly instalments commencing May 2002. The loan is secured by a mortgage over a freehold property of Stamford Tires (Latin America), Inc.

Loan F includes two loans which bear interest at rates ranging from 3.12% to 4.58% (2004 : 3.12% to 4.50%) per annum and repayable in equal quarterly instalments commencing 18 months from the drawdown in February 2004 and October 2004. The loans are secured by a mortgage over the land and building, and plant and equipment of Stamford Sport Wheels Company Limited and a corporate guarantee from the Company.

Loan G bears interest rates ranging from 3.25% to 3.75% (2004 : 3.25%) per annum and is repayable in 117 equal monthly instalments commencing March 2004. This loan is secured by a mortgage over a leasehold building of Stamford Tyres International Pte Ltd and a corporate guarantee from the Company.

Loan H bears interest at 4.41% (2004 : nil) per annum and are repayable over 4 quarterly instalments commencing March 2005. The loan is secured by a corporate guarantee from the Company.

Loan I bears interest ranging from 3.75% to 4.00% (2004 : 3.75% to 4.63%) per annum and is repayable in 180 equal monthly instalments commencing October 2001. The loan is secured by a mortgage over a leasehold building of Stamford Tyres International Pte Ltd and a corporate guarantee from the Company.

Loans J and K bear interest at 4.00% (2004 : 3.75%) per annum and are repayable in 240 equal monthly instalments commencing June 2003. The loans are secured by mortgage over certain leasehold buildings of Stamford Tyres International Pte Ltd and a corporate guarantee from the Company.

64 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

24. Deferred taxation Group 2005 2004 $’000 $’000 (a) Deferred tax assets : At beginning of financial year 440 190 Foreign currency translation adjustment (18) (10) Acquisition of a subsidiary company (Note 30) 20 – Addition for the financial year (Note 7) 604 130 Underprovision in respect of the previous financial years (Note 7) 378 130

At end of ﬁnancial year 1,424 440

The deferred tax assets arise as a result of : (i) Excess of net book value over tax written down value of property, plant and equipment (29) (10) (ii) Allowances for doubtful receivables and stock obsolescence, and accrued operating expenses 1,453 450

1,424 440

(b) Deferred tax liabilities : At beginning of financial year 616 868 Foreign currency translation adjustment 2 – Addition/(reversal) for the financial year (Note 7) 188 (231) Overprovision in respect of the previous financial years (Note 7) (82) (21)

At end of ﬁnancial year 724 616

The deferred tax liabilities arises as a result of : (i) Excess of net book value over tax written down value of property, plant and equipment 918 966 (ii) Allowances for doubtful receivables and stock obsolescence, and accrued operating expenses (194) (350)

724 616

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 65 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

25. Share capital Group and Company Number of Share Number of Share Shares capital shares capital 2005 2005 2004 2004 ‘000 $’000 ‘000 $’000

Authorised :

Ordinary shares of $0.10 (2004 : $0.10) each 500,000 50,000 500,000 50,000

Issued and fully paid :

At beginning of ﬁnancial year : Ordinary shares of $0.10 (2004 : $0.25) each 203,412 20,341 61,181 15,295 Issued during the ﬁnancial year : Ordinary shares of $0.10 (2004 : $0.25) each for cash on the exercise of options 25 2 2,074 519 Ordinary shares of $0.10 (2004 : $0.25) each for cash on the exercise of Warrant 2007 7,389 739 13,925 3,481

7,414 741 15,999 4,000

Total before sub-division of every 2 existing shares of 210,826 21,082 77,180 19,295 $0.25 each into 5 new shares of $0.10 each Increased by sub-division – – 115,770 –

Ordinary shares of $0.10 (2004 : $0.10) each 210,826 21,082 192,950 19,295 Issued during the ﬁnancial year : Ordinary shares of $0.10 each for cash on the exercise of options (2004 : $0.10) – – 267 27 Ordinary shares of $0.10 each for cash on the exercise of Warrant 2007 (2004 : $0.10) – – 10,195 1,019

– – 10,462 1,046

At end of ﬁnancial year : Ordinary shares of $0.10 (2004 : $0.10) each 210,826 21,082 203,412 20,341

At the Extraordinary General Meeting of the Company held on 19 September 2003, the shareholders approved the sub-division of every two existing ordinary shares of par value $0.25 each into ﬁve new ordinary shares of par value $0.10 each.

The holders of the ordinary shares are entitled to receive dividends as and when declared by the Company. Each ordinary share carry one vote without restriction.

66 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

25. Share capital (cont’d)

Unissued shares under share options and warrants as at 30 April 2005 comprise :

(i) There are nil (2004 : 25,000) options entitling holders to subscribe at any time during the exercise period for the same number of ordinary shares in the Company at the exercise price of $0.126 (2004 : $0.126 to $0.130) per share. The details of the share options are discussed in Note 27.

(ii) 19,900,868 (2004 : 27,290,267) Warrant 2007 entitling holders to subscribe at any time up to 21 February 2007 for the same number of ordinary shares in the Company at an exercise price of $0.10 per share. The details of the Warrant 2007 are discussed in Note 28.

The holders of the share options and Warrant 2007 have no right to participate by virtue of these options in any share issue of any other company in the Group.

The dilutive effects of the outstanding share options and Warrant 2007 were considered in the computation of earnings per share (Note 8).

26. Reserves Company 2005 2004 $’000 $’000

Share premium At beginning of ﬁnancial year 10,389 9,857 Issue of ordinary shares on exercise of share options and Warrant 2007 (Note 25) 1 148 Transfer from capital reserve upon exercise of Warrant 2007 (Note 28) 63 384 At end of ﬁnancial year 10,453 10,389

Capital reserve At beginning of ﬁnancial year 232 616 Transfer to share premium account upon exercise of Warrant 2007 (Note 28) (63) (384) At end of ﬁnancial year 169 232

Revenue reserve At beginning of financial year 10,176 8,027 Profit for the financial year attributable to the shareholders of the Company 3,525 4,256 Dividends (Note 29) (3,304) (2,107) At end of financial year 10,397 10,176

Total 21,019 20,797

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

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 67 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

26. Reserves (cont’d)

(a) Share premium

This represents cash proceeds received in excess of the par value of the shares issued by the Company less issue expenses. The utilisation of the share premium account is governed by Section 69 – 69F of the Singapore Companies Act, Cap. 50.

(b) Capital reserve

This mainly represents the net proceeds received on the issuance of Warrant 2007.

This comprises foreign exchange differences arising from the translation of the ﬁnancial statements of overseas subsidiary, associated and joint venture companies and from the translation of long-term inter-company advances which are effectively part of net investments in the subsidiary companies.

(d) Revenue reserve

This represents the accumulated proﬁts less distributions made to the shareholders of the Company.

27. Share options

The Group has granted share options to eligible employees under its STC Share Option Scheme 2001 that was approved by the members of the Company at an Extraordinary General Meeting held on 22 June 2001 (the “Scheme”). The Scheme replaced the Stamford Tyres Employees’ Share Option Scheme (the “Old Scheme”). The termination of the Old Scheme does not affect the rights of the holders of the outstanding option issued under that scheme and the options granted under the Old Scheme remain valid and exercisable until their expiry dates.

The Scheme is open to full-time conﬁrmed employees, executive and non-executive directors, but not controlling shareholders or their associates of the Company, and entitles the option holders to exercise their options and subscribe for new ordinary shares in the Company either at the market price or at a price set at a discount not exceeding 20% of the market price. Market price is equal to the average last dealt price of the share for 3 consecutive trading days immediately preceding the offer date. Options granted with the exercise price set at market price may be exercised after the ﬁrst anniversary of the offer date. Options granted with the exercise price set at a discount to market price may only be exercised after the second anniversary of the offer date. Executive options granted under the Scheme are exercisable for a period of 10 years whereas non-executive options are exercisable for a period of 5 years from the offer date. The total number of shares that may be issued shall not exceed 15% of the issued share capital of the Company.

68 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

27. Share options (cont’d)

Information with respect to the total number of options granted under the Scheme and the Old Scheme are as follow :

At beginning At end of Date of of ﬁnancial ﬁnancial Exercise Exercise date grant year Exercised Forfeited year price From To

23.6.2001 25,000 (25,000) – – $0.126 24.6.2003 – 23.6.2011

Nil (2004 : 25,000) options are exercisable as at the ﬁnancial year end.

28. Warrant 2007

The net proceeds relating to the Warrant 2007 and included in the capital reserve are as follows :

Group and Company 2005 2004 $’000 $’000 At beginning of ﬁnancial year : 27,290,267 (2004 : 72,297,499) warrants at an issue price of $0.012 per warrant, net of issue expenses 232 616 Less : Transfer to share premium account upon exercise of 7,389,399 (2004 : 45,007,232) warrants (63) (384)

At end of ﬁnancial year : 19,900,868 (2004 : 27,290,267) warrants at an issue price of $0.012 per warrant, net of issue expenses 169 232

In ﬁnancial year 2002, the Company made a renounceable rights issue of 75,015,000 warrants (“Warrant 2007”) at an issue price of $0.012 per warrant carrying the right to subscribe for new ordinary shares of $0.10 each in the capital of the Company at an exercise price of $0.10 per share. The proceeds arising from the exercise of Warrant 2007 have been assigned to a bank in connection with a term loan granted to a subsidiary company (Note 23).

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 69 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

29. Dividend Group and Company 2005 2004 $’000 $’000 Final dividend of 1.25 (2004 : 1.25) cents, less income tax at 20% (2004 : 20%), per share in respect of the previous ﬁnancial year 2,065 1,505 Special dividend of 0.75 (2004 : 0.75) cents, less income tax at 20% (2004 : 20%), per ordinary share in respect of the previous ﬁnancial year 1,239 602

Dividend paid during the year 3,304 2,107

The directors have proposed a first and final dividend of 1.25 cents (2004 : 1.25 cents) per ordinary share, less income tax at 20% (2004 : less income tax at 20%), amounting to $2,108,426 (2004 : $2,064,962) and a special dividend of 0.75 cents (2004 : 0.75 cents) per ordinary share, less income tax of 20% (2004 : less income tax at 20%), amounting to $1,265,056 (2004 : $1,238,977) be paid in respect of the financial year ended 30 April 2005. The dividend will be recorded as a liability on the balance sheet of the Company and Group upon approval by the shareholders of the Company at the next Annual General Meeting of the Company.

30. Notes to consolidated statement of cash ﬂow

(i) Net cash ﬂow from the acquisition of a subsidiary company

As described in Note 10, during the ﬁnancial year the Company increased its interest in STP from 40% to 100% through the surrender of the shares in STP by the other shareholder to whom the Group has advanced as amount of $214,000 in the previous years. An allowance for this amount was made in the previous year. The net cash ﬂow from this acquisition is as follows: Group $’000

Other receivables 4 Deferred tax asset (Note 24) 20 Cash and bank balance 5 Other payables (455)

Total net liability (426) Loss recognised in prior years in the consolidated ﬁnancial statements 280 Loss in acquisition : – loss attributable to other shareholder 360 – allowance on advance made to the other shareholder written back (214) 146

Consideration paid - Cash and cash equivalent acquired 5

Cash inﬂow on acquisition 5

70 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

30. Notes to consolidated statement of cash ﬂow (cont’d)

(ii) Cash and cash equivalents

Cash and cash equivalents included in the consolidated statement of cash ﬂow comprise the following balance sheet amounts : Group 2005 2004 $’000 $’000

Cash and bank balances 13,817 20,828 Short-term loans (5,041) (2,129)

Cash and cash equivalents 8,776 18,699

31. Commitments

(i) Operating lease commitments

As at ﬁnancial year end, commitments for minimum rental payments under non-cancellable leases with a term of more than one year are as follows : Group 2005 2004 $’000 $’000

Within one year 721 916 Within two to ﬁve years 1,828 2,135 After ﬁve years 9,631 10,037

12,180 13,088

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

(ii) Capital commitments Group 2005 2004 $’000 $’000

Commitments in respect of contracts placed for the purchase of property, plant and equipment 651 491 Other amounts approved by directors but not contracted for the purchase of property, plant and equipment 3,929 4,944

4,580 5,435

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 71 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

31. Commitments (cont’d)

(iii) Other commitments

Forward contracts

As at ﬁnancial year end, the Group has the following outstanding foreign exchange forward contract commitments for the purpose of hedging against currency ﬂuctuations in connection with payments to overseas suppliers and receipts from overseas customers :

Range of forward exchange rates Group 2005 2004 2005 2004 $’000 $’000 To buy : – United States Dollars 1.619 - 1.656 1.675 - 1.724 16,941 13,411 – Euro 2.128 - 2.150 1.997 - 2.138 1,048 3,748 – Japanese Yen – 0.015 – 240

17,989 17,399

To buy Euro with Hong Kong Dollars – 9.513 – 18

To sell : – United States Dollars 1.619 - 1.656 1.673 - 1.714 26,180 20,335 – Euro 2.124 - 2.128 2.009 - 2.060 963 4,984 – British Pound 3.115 2.997 - 3.007 93 300 – Thai Baht 0.041 – 1,201 – – Australian Dollars – 1.237 – 62

28,437 25,681

To sell Australian Dollars for United States Dollars 0.764 - 0.780 0.757 - 0.762 2,099 1,036

Unrealised foreign exchange loss not accounted for in the ﬁnancial statements as at end of ﬁnancial year (58) (59)

32. Contingent liabilities Group Company 2005 2004 2005 2004 $’000 $’000 $’000 $’000

Guarantees issued for bank facilities granted to subsidiary companies – – 89,132 79,912

The above indicates amounts utilised by subsidiary companies as at balance sheet date.

72 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

33. Related party transactions

In addition to the information on related parties shown elsewhere in the notes to the ﬁnancial statements, the Group has signiﬁcant transactions with related parties on terms agreed between the parties as follows :

Group 2005 2004 $’000 $’000

Income from services rendered to a joint venture company 81 83 Management fee paid to other shareholder of a joint venture company 193 375 Rental of premises paid to a company in which a director of an overseas subsidiary company has an interest 42 44 Professional fee paid to a company in which a director of an overseas subsidiary company has an interest 115 94

34. Financial risk management objectives and policies

The main risks faced by the Group and Company are foreign currency risk, interest rate risk, credit risk and liquidity risk that arise through its normal operations.

Foreign currency risk

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

The Company is exposed to the volatility in the foreign currency cash ﬂows related to repatriation of the investments and advances to its subsidiary, associated and joint venture companies. The Company does not hedge exposures arising from such risks.

The Group’s trading subsidiary companies are exposed to movements in foreign currency rates arising from the purchases of goods from manufacturers and sales made to customers located in several countries. Whenever necessary, foreign exchange forward contracts are used by the subsidiary companies to manage the foreign currency exposure arising from their trading activities. The outstanding foreign exchange forward contracts at ﬁnancial year end are disclosed in Note 31.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 73 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

34. Financial risk management objectives and policies (cont’d)

Interest rate risk

Interest rate risk is the risk that changes in interest rates will have an adverse financial effect on the Group’s financial conditions and/or results. The primary source of the Group’s interest rate risk is its borrowings from banks and other financial institutions in Singapore, Malaysia, Thailand, Hong Kong and the United States of America. The Group ensures that it obtains borrowings at competitive interest rates under the most favourable terms and conditions. Where appropriate, the Group uses interest rate swaps to hedge its interest rate exposure for specific underlying debt obligations (Note 23), Information relating to the interest rate is disclosed in Notes 21 and 23.

Credit risk

Credit risk is the risk that entities and individuals will be unable to meet their obligations to the Group resulting in financial loss to the Group. It is the Group’s policy to enter into transactions with a diversity of credit worthy parties to mitigate any significant concentration of credit risk. The Group ensures that sales of products and services are rendered to customers with appropriate credit history and has internal mechanisms to monitor the granting of credit and management of credit exposures. The Group has made allowances for potential losses on credits extended. The Group’s maximum exposure to credit risk in the event the parties fail to perform their obligations in relation to each class of recognised financial assets is the carrying amount of those assets as indicated in the balance sheet. As at financial year end there were no significant concentration of credit risk to the Group or Company. Surplus funds are placed with reputable financial institutions.

Liquidity risk

The Group monitors its daily and monthly projected and actual cash inflows and outflows to ensure that funding needs are identified and managed in advance. The Group actively manages its debt maturity profile, operating cash flows and availability of committed credit facilities to ensure that all refinancing, repayment and funding needs are met. The Group strives to maintain a sufficient level of banking facilities to meet its funding requirements and utilise trust receipts, revolving credit facilities, loans and hire purchase contracts for this purpose. The credit facilities provided by the banks and finance companies are subject to certain financial covenants, and terms and conditions which are summarised in Notes 19, 21, 22 and 23.

Derivative ﬁnancial instruments

The Group does not hold or issue derivative ﬁnancial instruments for trading purposes.

74 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

34. Financial risk management objectives and policies (cont’d)

Fair value of ﬁnancial assets and ﬁnancial liabilities

The fair value, determined based on the market price, of the investment in the marketable securities is disclosed in Note 18. In the opinion of the directors, it is impractical to determine the fair value of the unquoted equity shares in the subsidiary, associated and joint venture companies, and the long- term advances to subsidiary companies as they do not have repayment terms. The fair values of other financial assets and liabilities are not materially different from their carrying values as at 30 April 2005 due to the relatively short-term maturity of these instruments, except for the hire purchase liabilities and certain long-term bank loans which bear interest at fixed rates. Their fair values of these items at the balance sheet date determined by discounting the relevant cash flows using current interest rates for similar instruments are : Carrying Estimated Carrying Estimated amount fair value amount fair value 2005 2005 2004 2004 $’000 $’000 $’000 $’000

Group Hire purchase liabilities 781 846 825 887 Long-term loans 47,034 46,958 34,586 34,575

The notional amount and fair value of the interest rate swap (Note 23) is $10,000,000 and $45,000 respectively, as at 30 April 2005. The fair value is determined using a rate quoted by the lending bank to terminate the contract at the balance sheet date.

35. Segment information

The Group operates on the wholesale and retail of tyres and wheels, tyre retreading and equipment trading, and manufacturing and distribution of aluminium alloy wheels. Its operating businesses are organised and managed separately based on geographical areas, representing a strategic business unit that serves different markets.

The following tables present revenue and profit information regarding geographical segments for the financial years ended 30 April 2005 and 2004 and certain assets and liabilities information regarding geographical segments as at 30 April 2005 and 2004. The unallocated revenue and expenses comprise general corporate income and expense items. Segment accounting policies are the same as the policies described in Note 2 to the financial statements. Revenues are attributed to geographical areas based on the location of the assets producing the revenues.

The Group companies use a cost plus basis for inter-segment pricing for the sale and purchase of goods between the transacting parties.

Segment information relating to the manufacturing of aluminium alloy wheels have not been shown separately as the amount is not signiﬁcant for the ﬁnancial year ended 30 April 2005.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 75

(921) 11,544 14,348 – 189,779 (9) (2,453) (2,788) (16) 101 189,904 125 190,005 16,810 101

17,630 – – 81 207 Consolidated (642) 8,608 11,563 16,431 191,293 191,293 191,500 191,581 (1,363) 81 15,149 (2,944) (2,893) (62)

(44,643) (44,643) (44,643) – – –

– – – Elimination

– (54,882) (54,882) (9) 189,779 189,779 125 44,643 17,630 234,547 Total of segments of Total 16,431 16,431 54,882 54,882 191,293 191,293 246,382 207

3 – 99 6,326 6,227 508 Others – – (7) 348 12,919 (642) 12,912

2 32,595 32,595 156 32,822 71 4,024 – – North Asia North 2,163 30,343 30,343 43 30,386

1 (9) 7,392 55,264 (52) 47,924 4,115 South Asia South 168 168 (642) (642) 14,404 14,404 52,687 67,259 3,827

37,095 8,983 7 103,033 103,033 140,135 140,135 Singapore 40,478 40,478 95,344 135,825 3 10,093 2005 $’000 2004 $’000 2005 $’000 2004 $’000 $’000 2005 $’000 2004 $’000 2005 $’000 2004 $’000 2005 $’000 2004 $’000 $’000 2005 $’000 2004 $’000 2005 2004 Taxation Taxation

Notes to the Statements Financial (cont’d) 2005 30 April Dollars) (In Singapore 35. (cont’d) Segment information Revenue revenue External revenue Inter-segment revenue Other revenue Unallocated revenue Total result Segment revenue Unallocated : Add expenses Unallocated : Less activities operating from Profit costs Finance company associated an of losses of Share interests minority and taxation before Profit interests Minority Company the of shareholders the to attributable year financial the for Profit

76 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 7 1,009 2,306 (166) 178,802 3,647 118,588 89,136 2 1,874 9,397 1,198 182,117 29,452 – – Consolidated 1,421 1,642 1,642 1,548 131,019 199,472 196,282 196,282 97,072 97,072 3,794 33,947 1 42 1,260 10,855

– – – – – – – – – – – – – – – Elimination

– 1,198 181,108 181,108 – 7 178,802 178,802 2 29,452 1,874 9,397 2,306 29,452 3,647 – (166) – – – – 1 42 42 1,260 1,260 Total of segments of Total 33,947 33,947 10,855 10,855 1,421 1,642 33,947 197,924 197,924 3,794 196,282 196,282 82 82

3 – – 2 460 – 460 7,632 126 7,632 – – 200 (24) Others – – – – – – – 66 66 54 54 717 882 882 628 882 882 – 12,025 12,025 12,025

2 2,036 2,036 – – – – (21) 628 – 183 124 21,015 2,187 2,187 23,051 – – – – – – – 13 13 North Asia North 179 179 580 580 289 289 2,517 2,517 1,310 1,310 – 25,604 24,294

1 270 270 – 43,060 43,060 – – 282 126 (166) 7 16,987 844 16,987 43,330 6,649 3 3 – 1 – – South Asia South 241 241 462 462 7,978 17,868 17,868 61,870 61,870 – 332 17,868 62,202 960 – – –

– 737 107,095 107,095 9,818 1,144 – – 107,095 2,498 – 9,818 2,538 – – – – – – Singapore 39 68 (28) (28) 12,680 12,680 12,680 98,093 98,093 2005 $’000 2004 $’000 2005 $’000 2004 $’000 $’000 2005 $’000 2004 $’000 2005 $’000 2004 $’000 2005 $’000 2004 $’000 $’000 2005 $’000 2004 $’000 2005 2004

– 98,093 2,534 2,589

Includes Malaysia, Philippines, Thailand and Indonesia Includes Malaysia, and China South Korea Includes Hong Kong and South Africa Australia Includes Latin America,

35. (cont’d) Segment information Other information assets Segment companies Associated assets Unallocated assets Total liabilities Segment liabilities Unallocated liabilities Total information segment Other : expenditure Capital equipment and plant property, - assets intangible - : expenses non-cash Signiﬁcant depreciation and Amortisation doubtful for Allowance/(reversal) inventories obsolete for Allowance Property, on reversal Impairment equipment and plant off written debts trade external Bad account loss and proﬁt to directly Note : 1 2 3 trade receivables receivables trade Notes to the Statements Financial (cont’d) 2005 30 April Dollars) (In Singapore

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 77 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

36. Subsidiary, associated and joint venture companies

The subsidiary, associated and joint venture companies as at 30 April 2005 are :

Percentage of equity held by Name of company Principal activities Cost of investment the Group (Country of incorporation) (Place of business) 2005 2004 2005 2004 $’000 $’000 % % Subsidiary companies Held by the Company :

Stamford Tyres International Wholesale and retail of Pte Ltd1 (Singapore) tyres and wheels, and retreading of tyres (Singapore) 11,000 11,000 100 100

Stamford Tyres (M) Wholesale of tyres and Sdn Bhd2 (Malaysia) wheels (Malaysia) 580 580 100 100

# STC Tyres (Malaysia) Property holding company Sdn Bhd2 (Malaysia) (Malaysia) 458 458 50 50

Stamford Tyre Mart Retail of tyres and wheels Sdn Bhd2 (Malaysia) (Malaysia) @ @ 100 100

# Stamford Tires Distributor Wholesale of tyres and Co., Ltd3 (Thailand) wheels (Thailand) 625 625 49 49

# STC Tyres Limited3 Inactive (Thailand) (Thailand) 288 288 49 49

# Stamford Auto Mart Inactive Limited3 (Thailand) (Thailand) 21 21 49 49

Stamford Tyres (China) Wholesale of tyres Limited4 (Hong Kong) (Hong Kong and China) 1,040 1,040 100 100

Boon Tyre Holdings Investment holding Limited5 (Hong Kong) (Hong Kong) @ @ 100 100

## Stamford Tires (Latin America), Inc. Wholesale of tyres and (United States of America) wheels (Latin America) 14 14 100 100

78 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

36. Subsidiary, associated and joint venture companies (cont’d)

Percentage of Name of company Principal activities equity held by (Country of incorporation) (Place of business) Cost of investment the Group 2005 2004 2005 2004 $’000 $’000 % %

Stamford Tyres (Africa) Wholesale of tyres (Proprietary) Limited6 (South Africa) (South Africa) 1,127 1,127 100 100

## PT Stamford Tyres Indonesia Wholesale and retail of (Indonesia) tyres and retreading of tyres (Indonesia) 726 726 100 100

## PT Stamford Tyres Distributor Wholesale of tyres and Indonesia (Indonesia) wheels (Indonesia) 530 530 100 100

Green Tyre Singapore Pte Ltd1 Inactive (Singapore) (Singapore) @ @ 100 100

Stamford Auto City Pte Ltd1 Inactive (Singapore) (Singapore) 200 200 100 100

Wahsan Trading Pte Ltd1 Inactive (Singapore) (Singapore) 218 218 100 100

Stamford Sport Wheels Company Manufacture aluminium Limited3 (Thailand) alloy wheels (Thailand) 8,251 4,075 100 100

+ Stamford International Trading Inactive ## (Tianjin) Co. Ltd. (People’s Republic of China) (People’s Republic of China) 322 322 100 100

## Stamford Tyres Australia Pty Wholesale of tyres Limited7 (Australia) and wheels (Australia) @ @ 100 100

## Stamford Tyres Korea Ltd Wholesale of tyres (South Korea) and wheels (South Korea) 72 72 100 100

Stamford Tyres Philippines, Inc.8 Inactive (Philippines) (Philippines) 361 – 100 40

25,833 21,296

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 79 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

36. Subsidiary, associated and joint venture companies (cont’d)

Percentage of Name of company Principal activities equity held by (Country of incorporation) (Place of business) the Group 2005 2004 % % Subsidiary companies Held by Stamford Tyres (China) Limited :

Stamford Tyres (Shanghai) Limited Wholesale of tyres and wheels (China)4 (China) 100 –

Stamford Tyres (Guangzhou) Limited Wholesale and retail of tyres and wheels (China)4 (China) 100 –

Held by Boon Tyre Holdings Limited :

Rafﬂes Resources Singapore Pte Ltd1 Procurement of tyres (Singapore) (Singapore) 100 100

Joint venture company Held by the Company :

++ Tyre Paciﬁc (HK) Limited9 Wholesale of tyres 50 50 (Hong Kong) (Hong Kong and China)

Associated companies Held by the Company :

## Stamford Tyres (Thailand) Co., Ltd Inactive 49 49 (Thailand) (Thailand)

Held by Tyre Paciﬁc (HK) Limited :

+ SRITP Limited (British Virgin Islands) Wholesale of tyres 20 20 (China)

@ Cost of investment at one hundred units of local currency or less. # The company is considered as a subsidiary company and included in the consolidated financial statements as the Group has the power to control, by agreement, the financial and operating policies of the management of the company. ## Not required to be audited under the laws of the country of incorporation. Unaudited financial statements have been used for the preparation of the consolidated financial statements of the Group. + Statutory year end is 31 December. A limited review of the financial statements has been performed for the purpose of the preparation of the consolidated financial statements of the Group. ++ Statutory year end is 31 December. An audit has been performed by KPMG, Hong Kong, on the financial statements for the financial period from 1 May 2004 to 30 April 2005.

80 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

36. Subsidiary, associated and joint venture companies (cont’d)

Audited by :

1 Ernst & Young, Singapore, Certified Public Accountants 2 Ernst & Young, Malaysia, Chartered Accountants 3 Ernst & Young Office Limited, Thailand, Certified Public Accountants 4 Tony Nedderman & Co, Hong Kong, Certified Public Accountants 5 Ernst & Young, Hong Kong, Certified Public Accountants 6 IC Mackay & Associates, South Africa, Chartered Accountants 7 Felsers, Australia, Chartered Accountants 8 Manuel Valdez, Ngo & Associates, Philippines, Certified Public Accountants 9 KPMG, Hong Kong, Certified Public Accountants

37. Comparative ﬁgures

The Group reclassified the trust receipts in the cash flow statement from operating activities to financing activities to better reflect its nature. The following comparative figures in the cash flow statement have been reclassified to provide a proper and meaningful comparison with current financial year’s presentation :

2004 2004 (Restated) (Previously reported) $’000 $’000

Net cash (used in)/generated from operating activities (1,522) 18,528 Net cash used in investing activities (10,588) (10,588) Net cash generated from/(used in) ﬁnancing activities 19,912 (138)

Net increase in cash and cash equivalents 7,802 7,802

38. Authorisation of ﬁnancial statements for issue

These ﬁnancial statements were authorised for issue in accordance with a resolution of the directors on 15 July 2005.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 81 List of Major Properties

Location Tenure of Lease Area (sqm) Description

SINGAPORE 19 Lok Yang Way, Jurong 36 years lease 18,024.7 Corporate ofﬁce, tyre retail and Singapore 628635 from 2000 service centre with showroom and warehouse

21 Lok Yang Way, Jurong 60 years lease 7,352.6 Warehouse Singapore 628636 from 1973

21-A Lok Yang Way, Jurong 60 years lease 5,769.5 Truck service centre with showroom, Singapore 628637 from 1978 retreading plant and warehouse

207 Balestier Road #01-13 Freehold 143.0 Tyre retail centre and showroom Balestier Towers Singapore 329683

455 Macpherson Road 63 years lease 951.0 Tyre retail centre with showroom Singapore 368173 from 2001

50 Bukit Batok Street 23 #02-19 55 years lease 276.0 Tyre retail centre with showroom Midview Building Singapore 659578 from 2002

10 Admiralty Street #01-85 56 years lease 689.0 Tyre retail centre with showroom North Link Building Singapore 757695 from 2003

31 Loyang Way 16 years lease 2,510.4 Tyre retail centre with showroom Singapore 508729 from 2004

MALAYSIA 16 Jalan Juru Nilai U1/20 Section U1 Freehold 6,968.0 Corporate ofﬁce, tyre retail and Hicom Glenmarie Industrial Park service centre with showroom 40150 Shah Alam, Selangor and warehouse

THAILAND 111/2, 5 Moo 2, Highway 340, Freehold 7,740.0 Wheel factory with showroom and Suphanburi Road, Tambon Saiyai, warehouse Amphur Sainoi, Nonthaburi 11150 Thailand

INDONESIA Kelapa Gading Boulevard Blok 7 years lease 144.0 Ofﬁce with warehouse PA 19 No. 4-5 Pegangsaan Dua from 2003 Kelapa Gading, Jakarta Utara Indonesia 14250

Jalan Sukarjo Wiryopranoto 28 years lease 484.0 Tyre retail and service centre with Block 4 GG-GH Kebon Kelapa, from 2004 showroom and warehouse Gambir Jakarta Central Indonesia

Lot D-4, Jalan Kuala Kuningan 10 years lease 12,558.0 Truck service centre with Kuala Kencana, Light Industrial Park from 2004 retreading plant Tembagapura, Mimika Baru Papua, Indonesia

82 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Statistics of Shareholdings As at 15 July 2005

Authorised Share Capital : $50,000,000.00 Issued and Paid Up : $21,120,563.10 Class of Shares : Ordinary shares of $0.10 each Voting Rights : 1 vote per share

Distribution of Shareholdings No. of Size of Shareholdings Shareholders % No. of Shares %

1 - 999 89 2.44 21,469 0.01 1,000 - 10,000 2,054 56.21 13,243,250 6.27 10,001 - 1,000,000 1,491 40.80 67,461,931 31.94 1,000,001 and above 20 0.55 130,478,981 61.78

TOTAL : 3,654 100.00 211,205,631 100.00

Based on the information available to the Company as at 15 July 2005, approximately 50.80% of the issued ordinary shares of the Company is held by the public and hence, Rule 723 of the Listing Manual issued by the Singapore Exchange Securities Trading Limited is complied with.

Twenty Largest Shareholders

No. Name No. of Shares %

1. LIM & TAN SECURITIES PTE LTD 30,057,500 14.23 2. MAYBAN NOMINEES (S) PTE LTD 20,640,000 9.77 3. WEE KOK WAH 13,210,252 6.25 4. WAH HOLDINGS PTE LTD 12,413,752 5.88 5. KWOK WAI YING DAWN 11,887,567 5.63 6. SINGAPORE NOMINEES PTE LTD 7,625,000 3.61 7. TEO CHENG TUAN DONALD 6,445,000 3.05 8. HSBC (SINGAPORE) NOMINEES PTE LTD 3,000,000 1.42 9. SOUTHERN NOMINEES (S) SDN BHD 3,000,000 1.42 10. KWOK WENG FAI 2,828,810 1.34 11. UNITED OVERSEAS BANK NOMINEES PTE LTD 2,555,000 1.21 12. ING NOMINEES (S’PORE) PTE LTD 2,510,000 1.19 13. DBS NOMINEES PTE LTD 2,137,500 1.01 14. TAN CHAW @ TAN KOW TEE 2,009,000 0.95 15. HL BANK NOMINEES (S) PTE LTD 1,988,000 0.94 16. OCBC SECURITIES PRIVATE LTD 1,842,100 0.87 17. UOB KAY HIAN PTE LTD 1,733,500 0.82 18. CHIA KEE KOON 1,564,000 0.74 19. DBS VICKERS SECURITIES (S) PTE LTD 1,522,000 0.72 20. KWEE LIONG TEK 1,510,000 0.71

TOTAL : 130,478,981 61.76

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 83 List of Substantial Shareholders As at 15 July 2005 as recorded in the Register of Substantial Shareholders

Name of Direct Interest Deemed Interest Substantial Shareholders No of Shares % No of Shares %

Wee Kok Wah 13,210,252 6.25% 57,051,319 27.01% Dawn Wee Wai Ying 11,887,567 5.63% 58,374,004 27.64% Wah Holdings Pte Ltd 12,413,752 5.87% 23,500,000 11.13% Lim & Tan Securities Pte Ltd 29,829,000 14.12% – –

Note: Mr Wee Kok Wah is deemed to have an interest in the shareholdings of Mrs Dawn Wee Wai Ying and vice versa by virtue of their relationship as husband and wife. By virtue of Section 7 of the Singapore Companies Act, cap 50, Mr Wee Kok Wah and Mrs Dawn Wee Wai Ying are deemed to have an interest in the shares owned by Wah Holdings Pte Ltd.

Mr Wee Kok Wah is deemed to be interested in the shares held as follows:- Shares registered in names of Singapore Nominees Pte Ltd 7,500,000 Shares owned by Mrs Dawn Wee Wai Ying: – registered in name of Dawn Wee Wai Ying 11,887,567 – registered in name of HL Bank Nominees (S) Pte Ltd 1,750,000 Shares owned by Wah Holdings Pte Ltd: – registered in Wah Holdings Pte Ltd 12,413,752 – registered in name of Southern Nominees (S) Sdn Bhd 3,000,000 – registered in name of Mayban Nominees (S) Pte Ltd 20,500,000 57,051,319

Mrs Dawn Wee Wai Ying is deemed to be interested in the shares held as follows:- Shares registered in names of HL Bank Nominess (S) Pte Ltd 1,750,000 Shares owned by Mr Wee Kok Wah: – registered in name of Wee Kok Wah 13,210,252 – registered in name of Singapore Nominees Pte Ltd 7,500,000 Shares owned by Wah Holdings Pte Ltd: – registered in name of Wah Holdings Pte Ltd 12,413,752 – registered in name of Southern Nominees (S) Sdn Bhd 3,000,000 – registered in name of Mayban Nominees (S) Pte Ltd 20,500,000 58,374,004

84 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Statistics of Warrantholdings As at 15 July 2005

Distribution of Warrant Holdings No. of Size of Warrant Holdings Warrant Holders % No. of Warrants %

1 - 999 19 7.60 6,752 0.03 1,000 - 10,000 111 44.40 592,975 3.04 10,001 - 1,000,000 119 47.60 4,690,673 24.03 1,000,001 and above 1 0.40 14,231,468 72.90

TOTAL : 250 100.00 19,521,868 100.00

Twenty Largest Warrant Holders

No. Name No. of Warrants %

1. WEE KOK WAH 14,231,468 72.90 2. CHEONG HOCK LAI 705,000 3.61 3. TAN KOK HIANG 213,000 1.09 4. LIM TECK CHEONG 212,500 1.09 5. LEE PUI CHEE 200,000 1.02 6. WONG WAI FONG 200,000 1.02 7. PANG FUI NAM 110,000 0.56 8. CHEW CHONG KEE 102,500 0.53 9. HON WONG YUEN NEE GIANG CHON 90,000 0.46 10. CHIANG SIEW JONG 77,500 0.40 11. PHILLIP SECURITIES PTE LTD 72,822 0.37 12. UOB KAY HIAN PTE LTD 72,500 0.37 13. LEE MUN YEAN 66,000 0.34 14. DBS VICKERS SECURITIES (S) PTE LTD 52,000 0.27 15. LEE PEK LOK 50,000 0.26 16. TANG AH MOY 50,000 0.26 17. LAI CHEE TUCK 47,500 0.24 18. KIM ENG SECURITIES PTE. LTD. 46,000 0.24 19. EASTPOINT INTERNATIONAL MARKETING PTE LTD 43,750 0.22 20. SEAH CHEONG LENG 43,750 0.22

TOTAL : 16,686,290 85.47

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 85 Notice of Annual General Meeting Company Registration No: 198904416M

NOTICE IS HEREBY GIVEN that the Sixteenth Annual General Meeting of the shareholders of the Company will be held on Friday, 26 August 2005 at 3.00 p.m. at 19 Lok Yang Way Singapore 628635 to transact the following businesses:-

ORDINARY BUSINESS

1. To read, consider and adopt the balance sheet, the report of the Directors and Auditors and other accounts and documents required to be annexed to the balance sheet for the ﬁnancial year ended 30 April 2005. Resolution 1

2. To approve the proposed Directors’ fees of $228,500. (2004 : $243,000) Resolution 2

3. To declare and approve a first & final dividend of 1.25 cents per share of 10 cents each less income tax of 20% for the financial year ended 30 April 2005. Resolution 3

4. To declare and approve a special dividend of 0.75 cent per share of 10 cents each less income tax of 20% for the ﬁnancial year ended 30 April 2005. Resolution 4

5. To re-elect Mrs. Dawn Wee Wai Ying pursuant to Article 99 of the Articles of Association. Resolution 5

6. To re-elect Mr Goh Chee Wee pursuant to Article 99 of the Articles of Association [see Explanatory Note (a)]. Resolution 6

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

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

9. To transact any other business of the Company which may properly be transacted at an Annual General Meeting.

86 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Notice of Annual General Meeting (cont’d)

SPECIAL BUSINESS

To consider and if thought ﬁt to pass the following as Ordinary Resolutions:

10. “That pursuant to Section 161 of the Companies Act, Cap. 50 and the listing rules of the Singapore Exchange Securities Trading Limited, the Directors be and are hereby authorised to issue shares in the Company (whether by way of bonus issue, rights issue or otherwise) at any time and upon such terms and conditions and for such purposes and to such persons as the Directors may, in their absolute discretion, deem ﬁt provided that:

(i) the aggregate number of shares to be issued pursuant to this Resolution does not exceed 50% of the issued share capital of the Company, of which the aggregate number of shares to be issued other than on a pro-rata basis to existing shareholders of the Company does not exceed 20% of the Company’s issued share capital;

(ii) for the purpose of determining the aggregate number of shares that may be issued under (i) above, the percentage of issued share capital shall be based on the issued share capital of the Company at the time this Resolution is passed, after adjusting for:

(a) new shares arising from the conversion or exercise of any convertible securities or employee share options that are outstanding when this Resolution is passed, and (b) any subsequent consolidation or subdivision of shares; and

(iii) unless revoked or varied by the Company in the general meeting, such authority conferred by this Resolution shall continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier.” [see Explanatory Note (c)]. Resolution 9

11. “That pursuant to Section 161 of the Companies Act, Cap. 50, the directors be and are hereby authorised to allot and issue from time to time such number of shares as may be required to be issued pursuant to the exercise of the Options under the STC Share Option Scheme 2001 (“the Scheme 2001”) provided always that

(a) the aggregate number of shares to be issued pursuant to the Scheme 2001 shall not exceed ﬁfteen (15) per cent. of the total issued share capital of the Company from time to time and that, subject to such adjustments as may be made in accordance with the Scheme 2001;

(b) the total number of shares in respect of which Options may be granted to any one of the Grantees shall not exceed ten (10) per cent. of the total number of shares available under the Scheme 2001; and

(c) the total number of shares in respect of which Options may be granted to any one of the non- Executive Directors shall not exceed 50,000.” [see Explanatory Note (d)] Resolution 10

Notice is hereby given that the Transfer Books and Register of Members of the Company will be closed on 15 September 2005 to 16 September 2005 for the preparation of dividend warrants.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 87 Notice of Annual General Meeting (cont’d)

Duly completed transfers received by the Company’s Registrar, Messrs Lim Associates (Pte) Ltd of 10 Collyer Quay #19-08 Ocean Building Singapore 049315, up to the close of business at 5.00 p.m. on 14 September 2005 will be registered to determine shareholders’ entitlement to the proposed dividends. The dividends if approved, will be paid on 30 September 2005 to shareholders registered in the books of the Company on 14 September 2005.

In respect of shares in security accounts with the Central Depository (Pte) Limited (“CDP”), the said dividends will be paid by the Company to CDP which will in turn distribute the dividend entitlements to holders of shares in accordance with its practice.

By Order Of The Board Chuang Sheue Ling Company Secretary 10 August 2005

Explanatory Notes: (a) Mr. Goh Chee Wee, an independent director, if re-elected, will remain as the member of Remuneration Committee .

(b) The effect of Ordinary Resolution 7 proposed in item 7 above is to re-appoint the Director who is over 70 years of age. Section 153(6) of the Companies Act, Cap. 50, provides that this resolution has to be passed by an Ordinary Resolution at the Annual General Meeting of the Company.

(c) The proposed ordinary resolution 9 above, if passed, will empower the Directors from the date of the Annual General Meeting until the date of the next Annual General Meeting to issue further shares in the Company. The maximum number of shares, which the Directors may issue under this resolution, shall not exceed the quantum set out in the resolution.

(d) The proposed ordinary resolution 10 above, if passed, will empower the Directors to issue shares in the Company pursuant to the STC Share Option Scheme 2001 (“the Scheme 2001”), duly approved at the Extraordinary General Meeting of the Company held on 22 June 2001.

Note: 1. A member, entitled to attend and vote at this meeting, is entitled to appoint a proxy to attend and vote in his stead. A proxy need not be a member of the Company. 2. If a proxy is to be appointed, the form must be deposited at the registered ofﬁce of the Company, at 19 Lok Yang Way Singapore 628635 not less than 48 hours before the meeting. 3. The form of proxy must be signed by the appointor or his attorney duly authorised in writing. 4. In case of joint shareholders, all holders must sign the form of proxy.

88 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 Important Proxy Form 1. For investors who have used their CPF monies to buy Stamford Tyres shares, this Annual Report is sent to them at the request of their CPF Approved Nominees solely FOR INFORMATION ONLY.

2. This Proxy Form is FOR USE ONLY BY MEMBERS whose shares in Stamford Tyres are registered in their names. It is not valid for use by CPF investors and persons whose shares are not registered in their ANNUAL GENERAL MEETING own names, and shall be ineffective for all intents and purposes if STAMFORD TYRES CORPORATION LIMITED used or purported to be used by them. (Incorporated in Singapore)

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

Name Address NRIC/Passport Number Proportion of shareholdings (%)

and/or (delete as appropriate)

Name Address NRIC/Passport Number Proportion of shareholdings (%)

or failing whom, the Chairman of the Meeting, as my/our proxy/proxies to vote for me/us on my/our behalf, at the Annual General Meeting of the Company to be held on Friday, 26 August 2005 at 3 p.m. and at any adjournment thereof.

I/We have indicated with an “✓“ in the appropriate box below how I/we wish my/our proxy/proxies to vote. If no speciﬁc direction as to voting is given, my/our proxy/proxies will vote or abstain from voting at his/their discretion, as he/they will on any other matter arising at the Meeting.

No. Resolutions For Against 1. Adoption of Directors’ Reports and Accounts. 2. Approval of Directors’ Fees. 3. Declaration of First & Final Dividend. 4. Declaration of Special Dividend. 5. Re-election of Mrs Dawn Wee Wai Ying as Director. 6. Re-election of Mr Goh Chee Wee as Director. 7. Re-appointment of Mr Chua Kim Yeow pursuant to Section 153(6) 8. Re-appointment of Auditors. 9. Authority to issue additional shares pursuant to Section 161 10. Authority to issue shares pursuant to Share Option Scheme

Dated this day of 2005

Signature(s) of Member(s)/Common Seal Total No. of Shares Held IMPORTANT: PLEASE READ NOTES OVERLEAF

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005 89 NOTES

1. A member entitled to attend and vote at the Meeting is entitled to appoint one or two proxies to attend and vote in his stead.

2. Where a member appoints more than one proxy, the appointments shall be invalid unless he speciﬁes the proportion of his holding (expressed as a percentage of the whole) to be represented by each proxy.

3. A proxy need not be a member of the Company.

4. A member should insert the total number of shares held. If the member has shares entered against his name in the Depository Register (as deﬁned in Section 130A of the Companies Act, Cap. 50 of Singapore), he should insert that number of shares. If the member has shares registered in his name in the Register of Members of the Company, he should insert that number of shares. If the member has shares entered against his name in the Depository Register and registered in his name in the Register of Members, he should insert the aggregate number of shares. If no number is inserted, this form of proxy will be deemed to relate to all shares held by the member.

5. The instrument appointing a proxy or proxies must be deposited at the Company’s registered ofﬁce at 19 Lok Yang Way Singapore 628635 not less than 48 hours before the time set for the Meeting.

6. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its common seal or under the hand of its attorney or a duly authorised ofﬁcer.

7. Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certiﬁed copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy, failing which the instrument may be treated as invalid.

GENERAL

The Company shall be entitled to reject a Proxy Form which is incomplete, improperly completed, illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor speciﬁed on the Proxy Form. In addition, in the case of shares entered in the Depository Register, the Company may reject a Proxy Form if the member, being the appointor, is not shown to have shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the Meeting, as certiﬁed by The Central Depository (Pte) Limited to the Company.

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92 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005