Contentsstraco.listedcompany.com/misc/ar2008.pdf · 2006 2007 2008 Revenue (S$’000) 32,300 18,504...

Annual Report 2008

Contents1 Financial Highlights

2 Chairman’s Statement

5 Corporate Information

6 Board of Directors

8 Senior Management

9 Operational Team

10 Operations Review

12 Group Structure

15 Corporate Governance

23 Financial Review

78 Shareholding Statistics

80 Notice of Annual General Meeting

Proxy Form

Financial Highlights

2008 2007 Change

%

Income Statement (S$’000)

Sales 32,300 24,173 33.6

Profit before tax 11,237 8,369 34.3

Attributable net profit 7,738 6,200 24.8

Balance Sheet (S$’000)

Shareholders’ equity 96,932 88,221 9.9

Total assets 104,788 102,224 2.5

Total cash 34,331 30,780 11.5

Total borrowings - 5,478 (100.0)

Financial Ratio (%)

Return on average shareholders’ equity:

- Profit before tax 12.14 9.74 24.6

- Attributable net profit 8.36 7.22 15.8

Per Share Data (cents)

Attributable net profit 0.89 0.71 25.3

Net assets 11.16 10.15 9.9

2006 2007 2008

Revenue (S$’000)

32,300

18,504

24,173

2006 2007 2008

EPS (cents)

0.39

0.71

0.89

2006 2007 2008

Net profits (S$’000)

3,378

6,200

7,738

2006 2007 2008

EBITDA (S$’000)

8,005

11,600

16,291

ANNUAL REPORT 2008 1ANNUAL REPORT 2008

2008 has been an eventful year. With the wide swing in the global economy - the high commodity prices and inflationary pressures in the 1st half of the year and the global financial crisis in the 2nd half of the year, the survival of corporate entities across all sectors has been severely challenged. Against this backdrop of economic uncertainty, I am pleased to report our financial results and describe our continuing journey to achieve and sustain high performance.

Sustainable growth, Improved profitability In 2008, Straco achieved record results since becoming a public company.

Highlights of our performance include double digit growth in visitor numbers to our premier attractions (Shanghai Ocean Aquarium; Underwater World Xiamen; and Lintong Lixing Cable Car) as well as double digit revenue growth and earnings. Combined visitor numbers to our attractions hit 1.8 million for the year. We have also improved our operating margin, with our cash flow and balance sheet remaining strong.

Once again, we are proposing dividend payouts to shareholders. I am indeed pleased to inform that your Board has, in view of the Group’s strong performance, decided to propose a first and final dividend (one-tier tax-exempt) of 0.375 cents per share, maintaining the same level as that of last year’s payout.

I want to thank all our people and business associates for their tremendous contributions to our customers and Straco. Their individual and collective efforts are extraordinary, and our results once again show it.

Chairman’s Statement

We remain committed to delivering value to our customers and shareholders and will continue to focus on delivering sustainable results for today and tomorrow.

STRACO CORPORATiON LimiTEd2

Chairman’s Statement

New Births, Fresh Accolades2008 saw the successful integration of Underwater World Xiamen Co. Ltd into the Group’s business. In July 2008, the aquarium welcomed the arrival of a new born baby dolphin, a testimony to the aquarium’s successful breeding programme. Straco Creation Pte Ltd (SCPL), our joint venture company that produced “Paris Plumes”, a musical revue chronicling the history of French Cabaret over the last century embarked on its maiden tour in the beginning of the year performing to enthusiastic audiences in the Chinese cities of Shenzhen, Guangzhou, Shanghai and Beijing.

In October 2008, SOA successfully hosted the 7th International Aquarium Congress in Shanghai. The right to host the event was won in a keenly contested bid back in 2004. The 5-day quadrennial congress was hailed as the summit meeting for key public aquarium professionals and practitioners from all over the world. More than 700 delegates representing 250 organisations, from 45 countries, including eminent Industry experts, attended this prestigious event. I am pleased to report that SOA’s modern facilities, programmes and its operational success as a public aquarium

received high commendation from industry practitioners. It was indeed a proud moment for SOA and China public aquariums on the whole. The Congress was also endorsed and co-sponsored by the Shanghai Municipal Government and had received wide media coverage.

We remain committed to delivering value to our customers and shareholders and will continue to focus on delivering sustainable results for today and tomorrow. With the current economic calamity affecting most businesses, we have to be ever vigilant as events unfold amid changing economic landscapes and be ready to respond appropriately. We are pleased with our progress thus far, and are confident that with collective resolve and consistent efforts, we will continue to achieve sustainable growth. We will also continue to strengthen the Group franchise and seize any opportunities that avail themselves.

Wu Hsioh KwangChairman


Board of DirectorsMr Wu Hsioh Kwang (Executive Chairman)Mr He PingMr Guo QiangMr Fu XuezhangDr Choong Chow SiongMr George Huang Chang YiMr Tay Siew Choon

Audit CommitteeDr Choong Chow Siong (Chairman)Mr George Huang Chang YiMr Guo Qiang

Remuneration CommitteeMr Tay Siew Choon (Chairman)Mr George Huang Chang YiMr He Ping

Nominating CommitteeMr George Huang Chang Yi (Chairman)Mr Tay Siew ChoonMr Wu Hsioh Kwang

Registered Office10 Anson Road #30-15International PlazaSingapore 079903Tel: 65 6223 3082Fax: 65 6223 3736

Company SecretaryMs Lotus Isabella Lim Mei Hua

Share Registrars and Transfer OfficeTricor Barbinder Share Registration Services(a division of Tricor Singapore Pte Ltd)

8 Cross Street #11-00PWC BuildingSingapore 048424Tel: 65 6236 3333Fax: 65 6236 3405

Principal BankersUnited Overseas Bank LimitedOversea-Chinese Banking Corporation LimitedBank of Shanghai

AuditorKPMG LLP16 Raffles Quay#22-00 Hong Leong BuildingSingapore 048581Partner-in-charge: Ms Adeline Lee Date of Appointment: 26 April 2005

Senior ManagementMr Wu Hsioh KwangExecutive Chairman

Mr Amos Ng Chiau MengChief Financial Officer

Mr Michael Chen Tse JenChief Operating Officer

Mr Zhang QuanSenior Vice President (External Affairs)

Mr Wang Liang Senior Vice President (Business Development)

Corporate information


Board of directors

Wu Hsioh Kwang was appointed as the Executive Director of the Company in March 2003, taking on responsibility for the overall strategic directions and management of the Group. As the founder of the group companies, Mr Wu has been actively involved in the projects from their inception, and is instrumental to their success. Mr Wu is a member of the Standing Committee of the Singapore Chinese Chamber of Commerce & Industry, as well as the council member of the 4th Standing Committee of Chinese Association of Enterprises with Foreign Investment. Mr Wu graduated from the Nanyang University with a Bachelor of Commerce degree in 1974.

Mr He Ping was appointed as a non-Executive Director in July 2003. Mr He is the Chairman of China Poly Group Corporation (“CPGC”), a state-owned enterprise with business portfolios straddling major cities in China as well as Hong Kong. CPGC is owned and supervised by the State-owned Assets Supervision and Administration Commission of the State Council, PRC. Mr He is also the Vice Chairman of Poly (Hong Kong) Holdings Limited, a company listed on the Hong Kong Stock Exchange. Mr He has extensive experience in managing conglomerates in China. Mr He graduated from Harbin Engineering University in 1971 with an Engineering degree.

Mr Guo Qiang was appointed as a non-Executive Director in July 2003. He is the Vice President of CPGC, where he assists the CPGC President in formulating CPGC’s development strategies and developing new businesses. Mr Guo graduated from the Northeastern University in China in 1976 with a degree in Engineering. He also has a Master’s degree in Business Administration from the National Academy of Education Administration.

Fu Xuezhang was appointed as a non-Executive Director in October 2003. Since his graduation from Beijing Foreign Studies University (then Beijing Foreign Language Institute) in 1963, he was with the Foreign Ministry of the PRC holding numerous appointments including Director General of Asian Department, Ambassador ranking Representative of the PRC to the Supreme National Council of Cambodia, and Ambassador Extraordinary and Plenipotentiary of the PRC to Thailand. He also served as the Ambassador Extraordinary and Plenipotentiary of the PRC to Singapore from 1995 to 1997. During his term as Ambassador to Singapore, he has contributed to the enhancement of bilateral political and economic relations between the two countries.


Board of directors

Dr Choong Chow Siong was appointed as an Independent Director in October 2003. He is an audit partner and has over 20 years of experience as a practicing accountant. He is the co-author of a book entitled “Revenue Accounting and the 5R Revenue Theory for Management Reporting” published in 2001. Dr Choong is a Fellow Member of the Institute of Certified Public Accountants of Singapore (FCPA), the CPA Australia (FCPA) and The Association of Chartered Certified Accountants of UK (FCCA). He is a Member of the Chartered Institute of Arbitrators (UK) and the Singapore Institute of Arbitrators. He is also a Member of the Institute of Internal Auditors (Singapore). Dr Choong graduated from Nanyang University (Singapore) in 1974 with a Bachelor of Commerce (Accountancy) degree. He obtained a Master of Arts in Finance and Accounting from Leeds Metropolitan University (UK) in 1996 and a Doctor of Philosophy in Accounting (Thesis entitled “Revenue as a sub-set of sales: with special reference to recording of sales and reporting of revenue”) from the American World University in 1999. He passed a module ‘Legal Method and Research’ of the Postgraduate LLM Programmes (Master of Commercial Law) from the School of Law, University of Northumbria at Newcastle (UK) in November 2005.

Mr George Huang Chang Yi was appointed as an Independent Director in October 2003. Mr Huang has been a director of Amoy Canning Corporation (S) Ltd since 1988 and its Managing Director since 1999. Mr Huang sits on the board of various private and public companies in Singapore and Malaysia and holds various trade and professional appointments including President of Chartered Management Institute (Singapore Branch), Vice President of Singapore Manufacturers’ Federation and a member of Singapore National Committee for Pacific Economic Cooperation. Mr Huang has been the Honorary Consul-General of The Federal Democratic Republic of Ethiopia to Singapore since 1997 and Honorary Business Ambassador, Queensland Government, Australia to Singapore since 2000. Mr Huang is a Fellow of both the Chartered Management Institute, UK and the Singapore Institute of Directors. Mr Huang graduated from University of Canterbury, New Zealand in 1971 with a Bachelor of Arts degree.

Mr Tay Siew Choon was appointed as an Independent Director in November 2003. He was Managing Director and Chief Operating Officer of Singapore Technologies Pte Ltd till 31st March 2004. He is currently holding various company directorships, including Chartered Semiconductor Manufacturing Ltd, Pan-United Corporation Ltd, and TauRx Therapeutics Ltd. Mr Tay graduated from Auckland University with a Bachelor of Engineering (Electrical) degree with Honours under a Colombo Plan Scholarship. He also holds a Master of Science in Systems Engineering degree from the former University of Singapore in 1971.


Senior management

Mr Wu Hsioh Kwang is the Executive Chairman and Chief Executive Officer of our Group. As the founder of the group companies, Mr Wu has been actively involved in the projects from their inception and is instrumental to their success. Mr Wu is a member of the Standing Committee of the Singapore Chinese Chamber of Commerce & Industry, as well as the council member of the 4th Standing Committee of Chinese Association of Enterprises with Foreign Investment. Mr Wu graduated from the Nanyang University with a Bachelor of Commerce degree in 1974.

Mr Amos Ng Chiau Meng, Chief Financial Officer and Senior Vice President (Finance & Administration), joined us in September 2000. He is responsible for the finance and accounting, human resource and administration, and statutory compliance of our Group. Prior to joining the Group, Mr Ng, a Certified Public Accountant and a member of the Institute of Certified Public Accountants of Singapore, has held many senior management positions in the industrial and commercial sectors.

Mr Michael Chen Tse Jen, Chief Operating Officer, joined us in January 2008. He has overall responsibility for the operations and management of the projects. Mr Chen has had more than 20 years of experience in the areas of finance, budgeting, and operation management in Taiwan and China. Prior to joining our Group, he was the Vice President of Trust – Mart Group in China. Mr Chen also has many years of teaching experiences in his capacity

as part-time professor at various universities in Taiwan and China. He has also published books on Tax Accounting and Zero-Base Budgeting. Mr Chen holds a Master degree Graduate School, and a Bachelor degree in Accounting, Soochow University.

Mr Zhang Quan, Senior Vice President (External Affairs), joined us in January 1997. Prior to assuming the current position, Mr Zhang was responsible for developing our Group’s businesses in Greater China. From 1988 to 1994, Mr Zhang was with the Ministry of Foreign Trade & Economic Cooperation of the PRC, where he was a section chief for the European Department. He holds a Bachelor of Arts degree from Beijing Foreign Studies University.

Mr Wang Liang, Senior Vice President (Business Development) and concurrently the General Manager of Shanghai Ocean Aquarium (SOA), joined us in January 1997. He was involved in the initial development and the operation of SOA since its inception, Mr Wang is responsible for the management and operation of SOA. Prior to joining the Group, Mr Wang was the Manager of the Shanghai office of China Poly Group Corporation. Mr Wang holds a diploma in engineering from Aeronautical Technology Institute of People’s Liberation Army (Navy).


Operational Team

Mr Lee Poh Hoon, Deputy General Manager of SOA, joined our Group in January 2000. Mr Lee has more than 25 years of experience in marketing, business development and customer service in various local, regional and multinational companies. Prior to joining the Group, Mr Lee acquired extensive senior management experience working with MNCs. He holds a Bachelor of Commerce (Honours) degree from Nanyang University of Singapore.

Ms Wu Xiuyi, Vice President of our Group and Assistant General Manager of SOA, joined us in October 2004. Since joining us, she has undergone management job rotations in marketing, human resource, operations and business development. Prior to joining the Group, Ms Wu has worked in a Singapore law firm and international audit firm. She holds a Bachelor of Arts (Psychology) Degree from the University of Sydney.

Mr Zhao Aimin, Deputy General Manager of our subsidiaries, Lintong Lixing Cable Car Co. Ltd and Xi’an Lintong Zhongxin Tourism Development Co. Ltd, joined us in March 1992 and is responsible for the management and operation of our cable car service and the development of Chao Yuan Ge. Prior to joining the Group, Mr Zhao was the Deputy Director of Lintong Cultural Heritage Bureau.

Mdm Lin Yaping, General Manager of Underwater World Xiamen Co., Ltd (UWX), joined UWX in 1996 and is responsible for the management and operation of the aquarium on Gulangyu Island, Xiamen. Prior to joining UWX, Mdm Lin worked as Deputy Director of Xiamen Entry Exit Product Inspection Bureau. Mr Carl Clerico, Executive Director of our Subsidiary Company, Straco Creation Pte Ltd, joined the Group in 2006. Mr Clerico is also the consultant to the Group and is the Executive Producer of the “Paris Plumes”, a highly acclaimed Parisian Cabaret. Prior to his current position, Mr Clerico has been working for more than a decade in various capacities at his family business, “Lido de Paris”, the world famous cabaret.


Operations ReviewOverviewThe Group achieved improved profitability for FY2008. Group turnover was $32.3 million for the year ended 31 December 2008, an improvement of 33.6% over that of FY2007. There was a 48.0% overall increase in visitor arrivals to the Group managed Attractions. In line with the improved performance, net profit before tax for FY2008 rose by 34.3% at $11.24 million. In comparison with FY2007, current year net profit registered an increase of 24.8% to $7.74 million. This has been a record performance for the Group.

Following the full integration of Underwater World Xiamen (“UWX”), acquired in the last quarter of FY 2007 and the commercial revenue contributed by Straco Creation Pte Ltd in the first quarter of FY2008, the Group had successfully broadened its earning base for the year under review. The Group’s main operating assets now include

• Shanghai Ocean Aquarium (“SOA”), a premier tourist attraction located in the Lujiazui FinancialDistrict of Pudong, Shanghai

• UnderwaterWorldXiamen(“UWX”)locatedonthescenicGulangyuIslandinXiamenCity• LintongLixingCableCaratMountLishaninXi’an• StracoCreationPteLtdwhichowns“ParisPlumes,”,anartisticshowproduction.

The Group hosted a combined 1.8 million of fee paying visitors during the year.

2008 has been an eventful year with impact from the unusual snowstorm in January and February, changes to the gazetted public holidays , and more unfortunately, the tragic Szechuan earthquake in May.

Located next to the Oriental Pearl TV Tower in Pudong Shanghai, SOA continue to generate sustainable and favorable result and has been a major contributor to the Group’s turnover. One of its key focuses, as a major attraction for the domestic tourism market, has been the creating and launching of multiple promotional and educational programmes including exciting themed campaigns. Coupled with multi dimensional marketing promotional efforts and more sales channels, the Aquarium had done well amidst the buoyant domestic tourism market. The two vehicular crossings over the Yangtze River, namely the Hangzhou Bay Bridge and the Suzhou-Nantong Bridge has benefited SOA as evidenced by the growth in the respective market segments following the commissioning of the crossings during the year.

In October 2008, the 7th International Aquarium Congress was successfully hosted by SOA in Shanghai. The 5-day quadrennial congress is a summit for key public aquarium professionals and practitioners the world over. More than 700 delegates representing 250 organizations, from 45 countries, including


Operations Review

eminent industry experts, attended this prestigious event. The event was significant for SOA and China public aquariums as a whole, as both presented the international communities with a better understanding of the efforts and responsibilities undertaken on the issues promulgated by the International Aquarium Congress. The Congress was also endorsed and co-sponsored by the Shanghai Municipal Government.

Financial CommentaryThe Group generated a net profit before tax of $11.24 million as compared to $8.37 million last year.

Full year expenses increased by $5.69 million or 32.5% when compared to 2007, largely from higher variable costs associated with the increased revenue, higher staff cost , expenses incurred in relation to the “Paris Plumes” performances, the full year impact arising from the acquired subsidiary UWX, and the one-off interest expense on the shareholders loans that were fully repaid during the year; the increase was partially offset by a higher exchange gain recorded for the year as RMB currency appreciated against SGD and USD.

Higher tax expenses resulted from the revision of tax rate from 15% to 18% under the unified PRC income tax law, as well as the deferred tax recognized

on the distributable FY2008 earnings of the China subsidiaries which are subject to withholding tax under the new China tax law which took effect from 1 January 2008.

The Group’s cash flow from operating activities amounted to $12.7 million in FY 2008. As of 31 December 2008, the Group had $34.3 million cash. During the year, $5.0 million of its internal resources were utilised to make full repayment on the outstanding shareholders loans due by the Group to the respective founding shareholders. As of the end of 2008, the Group is debt free.

Macro Environment in the PRCAs the global financial crisis deepened and spread across Asia, China’s economy began to show significant signs of slowdown in the 4th quarter of 2008, dragging down the full year growth to 9%, the lowest level since 2001.

The Chinese government has announced a 4 trillion Yuan (US$580 billion) stimulus package to boost domestic consumption. The favorable macro conditions augur well for the Group’s tourism assets.


Group Structure

100%Infotainment Development

& Management Pte Ltd

100%New Bay Holdings Pte Ltd

100%Underwater

World Xiamen Co., Ltd

51%Straco

Creation Pte Ltd

95%Lintong Lixing

Cable Car Co., Ltd

95%Xi’an Lintong

Zhongxin Tourism Development

Co., Ltd

95%Shanghai Ocean

Aquarium Co., Ltd


The details of our Group are as follows:

Name of CompanyDate and place of incorporation Principal business

Principal place of business

Effective Percentage

Owned

Straco Corporation Limited

25 April 2002Singapore

Development of tourism-related businesses

10 Anson Road, #30-15 International Plaza, Singapore 079903

-

Shanghai Ocean Aquarium Co., Ltd

18 December 1995PRC

Development and operation of aquatic-related facilities

No. 1388 Lujiazui Ring Road, Shanghai, PRC

95%

Xi’an Lintong Zhongxin Tourism Development Co., Ltd

25 December 1995PRC

Development and operation of tourism-related facilities

Middle Section, Huaqing Road, Lintong, Xi’an, PRC

95%

Lintong Lixing Cable Car Co., Ltd

31 March 1992PRC

Operation of cable car facilities

No. 25, Huaqing Road, Lintong, Xi’an, PRC

95%

Infotainment Development & Management Pte Ltd

3 February 1996Singapore

Provision of management and consulting services and overall project management for the Group and third parties


100%

Straco CreationPte Ltd

8 August 2006Singapore

Show production and management as well as creative and artistic content provider


51%

New Bay Holdings Pte Ltd 29 September 1993

Singapore

Investment Holdings 10 Anson Road #30-15 International Plaza, Singapore 079903

100%

Underwater World Xiamen Co., Ltd

11 October 1994PRC

Operation of aquatic-related facilities, Dolphin and Sealion performances

Gulangyu Park, Gulangyu, Xiamen City, PRC

100%


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Corporate GovernanceThe Board of Directors (the “Board”) of Straco Corporation Limited (“Straco”) is committed to corporate excellence through upholding a high standard of corporate governance, in accordance with the Code of Corporate Governance (the “Code”). The Board recognizes the need to keep balance with accountability, in creating and preserving shareholder value and achieving its corporate vision for the Straco Group of companies.

This Report on Corporate Governance describes the corporate governance practices of Straco, with specific references made to each of the principles set out in the Code.

A. BOARD MATTERS

Principle 1: Board Conduct of its Affairs

The Board holds meetings on a regular basis throughout the year to approve the Group’s key strategic plans as well as major investments, disposals and funding decisions. The Board is also responsible for the overall corporate governance of the Group.

The Board has delegated specific responsibilities to 3 subcommittees (Audit, Nominating and Remuneration Committees), the details of which are set out below. These committees have the authority to examine particular issues under the purview of their committee and report back to the Board with their recommendations. The ultimate responsibility for the final decision on all matters, however, lies with the entire Board.

The Board host regular scheduled meetings on a quarterly basis. When circumstances require, ad-hoc meetings are arranged. A board member contributes both at formal board meetings as well as outside of these meetings. To focus on a director’s attendances at formal meetings may not reflect the level of contributions made outside of those meetings and may lead to a narrow view of a director’s contributions. The Group is thus of the view that the reporting of director attendances at Board and Board committee meetings is unnecessary.

The matrix of Board members’ participation in the various board committees is appended below:

Audit Committee Nominating Committee Remuneration Committee

Board Member

Wu Hsioh Kwang M

He Ping M

Guo Qiang M

Fu Xuezhang

Choong Chow Siong C

George Huang Chang Yi M C M

Tay Siew Choon M C

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Corporate GovernanceAll Directors are updated regularly concerning any changes in company policies, risks management, key changes in the relevant regulatory requirements and accounting standards. The Company also provides ongoing education on Board processes, governance and best practices. Newly appointed Directors are briefed by Management on the business activities of the Group and its strategic directions. They are also provided with relevant information on the Company’s policies and procedures.

Principle 2: Board Composition and Balance

The Board comprises an Executive Chairman and six non-executive Directors. Of the six non-executive Directors, three are independent Directors making up at least one-third of the Board, in accordance with the Code. The independence of each Director will be reviewed by the Nominating Committee to ensure that the Board is capable of exercising objective judgment on corporate affairs of the Group. The appointment of each Director is based on his caliber, experience, stature and potential contribution to the Company and its businesses. Our current Directors are respected individuals with diverse expertise and good track record in their respective fields.

The Nominating Committee is of the view that the current Board is capable in providing the necessary expertise to meet the Board’s objectives and that no individual or small group of individuals dominates the Board’s decision making process.

The Board is of the view that the current board size of seven Directors is appropriate, taking into account the nature and scope of the Company’s operations.

Key information regarding the Directors can be found under “Board of Directors” section of this annual report.

Principle 3: The Role of the Executive Chairman.

The Executive Chairman of the Board is Mr Wu Hsioh Kwang. The Board is of the opinion that the present Group structure and business scope does not warrant a meaningful split of the roles of the Chairman and the Chief Executive Officer. The Board is of the view that there are sufficient safeguards and checks to ensure that the process of decision making by the Board is independent and based on collective decisions without any individual exercising any considerable concentration of power or influence.

As Executive Chairman, Mr Wu exercises control over the quality, quantity and timeliness of the flow of information between management and the Board. In addition, Mr Wu has full executive responsibilities of the overall business directions and operational decisions of the Group.

All major decisions made by the Executive Chairman are reviewed by the Board and his remuneration package is reviewed periodically by the Remuneration Committee.

Principle 4: Board Membership

The Nominating Committee comprises Mr George Huang Chang Yi, Mr Wu Hsioh Kwang and Mr Tay Siew Choon. Mr George Huang Chang Yi is the Chairman of the Nominating Committee.

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The responsibilities of the Nominating Committee include the nomination of Directors, determining the independence of a Director and deciding whether or not a Director is able to and has been adequately carrying out his duties as a Director.

We believe that Board renewal must be an ongoing process, to both ensure good governance and maintain relevance to the changing needs of the Company and business. Our Articles require at least one-third of our Directors to retire and subject themselves to re-election by shareholders at every AGM. In other words, no Director stays in office for more than three years without being re-elected by shareholders.

Principle 5: Board Performance

The Nominating Committee will use its best efforts to ensure that Directors appointed to the Board possess the necessary background, experience and knowledge to enable balanced and well-considered decisions to be made by the Board.

A review of the Board’s performance is undertaken annually by the Nominating Committee with inputs from Board members and the Executive Chairman.

Apart from the fiduciary duties (i.e. act in good faith, with due diligence and care and in the best interest of the Company and its shareholders), the Board’s key responsibilities are to set strategic directions and to ensure that the long term objective of enhancing shareholders’ value is achieved. The Board’s performance is also measured by its ability to support management especially in times of crisis and to steer the Company towards profitable directions. In doing so, the Board will take into consideration the financial indicators set out in the Code as guidelines for evaluating the Board’s performance.

Principle 6: Access to Information

In order to ensure that the Board is able to discharge its responsibilities, the management is required to provide adequate and timely information to the Board on Board affairs and issues that require the Board’s decision as well as ongoing reports relating to operational and financial performance of the Company.

The Board has separate and independent access to the senior management at all times. If the Directors, whether as a group or individually, need independent professional advice, the Company will upon directions by the Board, appoint a professional advisor selected by the group or individual to render the advice. The cost of such professional advice will be borne by the Company.

The Audit Committee meets external and internal auditors separately on a quarterly basis, without the presence of management.

The Company Secretary attends all Board meetings and is responsible to ensure that the Board procedures are followed. It is the Company Secretary’s responsibility to ensure that the Company complies with requirements of the Companies Act. Together with management, the Company Secretary is responsible for the compliance with all rules and regulations which are applicable to the Company.

Corporate Governance

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B. REMUNERATION MATTERS

Principle 7: Procedures for Developing Remuneration Policies Principle 8: Level and Mix of Remuneration

The Remuneration Committee comprises 3 non-executive directors, 2 of whom are independent directors. The members of the Remuneration Committee are Mr Tay Siew Choon, who is also the Chairman of the Remuneration Committee, Mr George Huang Chang Yi and Mr He Ping.

The key function of the Remuneration Committee is to review and recommend to the Board, in consultation with management, a framework for all aspects of remuneration. The Remuneration Committee also determines the specific remuneration packages and terms of employment for executive Director as well as senior executives.

The Remuneration Committee has access to expert professional advice on human resource matters whenever there is a need to consult externally. In its deliberations, the Remuneration Committee takes into consideration industry practices and norms in compensation in addition to the Company’s relative performance and the performance of the individual Directors. No Director will be involved in deciding his own remuneration.

The Executive Chairman does not receive director’s fee. The Executive Chairman entered into a service agreement with the Company on 7 January 2004 for a period of three years, renewable automatically thereafter. The service agreement provide for termination by either the Executive Chairman or the Company upon giving no less than three months notice. The Executive Chairman’s compensation consists of his salary, bonus and benefits.

The remuneration of non-executive directors shall be determined by his contribution to the Company, taking into account factors such as efforts and time spent as well as his responsibilities on the Board. Generally, directors who undertake additional duties as chairman and/or members of Board Committees will receive higher fees because of their additional responsibilities. The Board will recommend the remuneration of the non-executive Directors for approval at the AGM.


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Principle 9: Disclosure on Remuneration

The following table sets out the names of Directors whose remuneration fell within bands of S$250,000 for the financial year ended 31 December 2008, together with a breakdown (in percentage terms) of each directors’ remuneration earned through base/fixed salary, variable or performance related income/bonuses, and directors fees/attendance fees proposed to be paid to each Director subject to approval of shareholders at the AGM:

Below S$250,000 S$500,000 to S$750,000

Percentage (%) Percentage (%)

Remuneration earned through: Remuneration earned through:

Base/ fixed salary

Variable or performance

related income/ bonuses

Director Fees/ Attendance

FeesBase/ fixed

salary

Variable or performance

related income/ bonuses

Director Fees/ Attendance

Fees

Wu Hsioh Kwang - - - 100% - -

He Ping - - 100% - - -

Guo Qiang - - 100% - - -

Fu Xuezhang - - 100% - - -

Choong Chow Siong - - 100% - - -

George Huang Chang Yi - - 100% - - -

Tay Siew Choon - - 100% - - -

Note: Base/fixed salary includes the 13th month AWS, fixed bonus and allowances

The remunerations of the top five executives who are not directors of the Company all fall within the remuneration band of $250,000 and below. The names of these employees are not set out in the interest of maintaining confidentiality of staff remuneration matters.

Save as disclosed above, the Company does not have any employee who is an immediate family member of the directors, whose remuneration for the year ended 31 December 2008 exceeded S$150,000.


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C. ACCOUNTABILITY AND AUDIT

Principle 10: Accountability

The Board is mindful of its obligations to provide timely and fair disclosure of material information in compliance with statutory reporting requirements. Price sensitive information is first publicly released, either before the Company meets with any group of investors or analysts, or simultaneously with such meetings. As part of the Company’s commitment to regular communication with our shareholders, the Company will adopt quarterly reporting as required by the Code. Financial results and annual reports will be announced or issued within the mandatory period.

Principle 11: Audit Committee

The Audit Committee comprises two independent Directors, Dr Choong Chow Siong and Mr George Huang Chang Yi, and a non-executive Director, Mr Guo Qiang. Dr Choong Chow Siong is the Chairman of the Audit Committee.

The Audit Committee holds periodic meetings to perform the following functions:

(a) review with external auditors the audit plan, and the results of the external auditors’ examination and evaluation of the Group’s system of internal controls;

(b) review the financial statements and the external auditors’ report on those financial statements, before submission to the Board for approval;

(c) review the co-operation given by our management to our auditors;

(d) nominate the appointment and re-appointment of external auditors to the Board;

(e) review interested person transactions;

(f) review internal audit reports and internal audit plans of the Group; and

(g) review the Group’s compliance with such functions and duties as may be required under the relevant statutes or the SGX-ST Listing Manual, and by such amendments made thereto from time to time.

In addition to the above, the Audit Committee is empowered to commission and review the findings of internal investigations into matters where there is any suspected fraud or irregularity, or failure of internal controls or infringement of any Singapore law, rule or regulation which are or is likely to have a material impact on our Group’s operating results and/or financial position.


21

Each member of the Audit Committee shall abstain from voting on any resolutions and making any recommendations and/or participating in any deliberations of the Audit Committee in respect of matters in which he is interested.

The Auditors did not provide any non-audit services to the Company for the financial year ended 31 December 2008.

The Audit Committee has nominated KPMG LLP for re-appointment as Auditors of the Company at the forthcoming Annual General Meeting.

Principle 12: Internal Controls

The Board has ultimate responsibility for maintaining a sound system of internal controls to safeguard shareholders’ investment and the Group’s assets. The system of internal controls is intended to provide reasonable but not absolute assurance against material misstatement or loss, and include the safeguarding of assets, the maintenance of proper accounting records, the reliability of financial information, compliance with appropriate legislation, regulation and best practices, and the identification and containment of business risk.

Principle 13: Internal Audit

The Audit Committee’s responsibility in overseeing that the Company’s risk management system and internal controls are adequate will be complemented by the outsourced Internal Auditor, whom the Company has appointed.

The Internal Auditor will report directly to the Chairman of the Audit Committee on audit matters. The Internal Auditor will plan its audit work in consultation with, but independent of management, and its yearly plan will be submitted to the Audit Committee for approval at the beginning of the year. The Internal Auditor will report to the Audit Committee regarding its findings. The Audit Committee will meet the Internal Auditor on a quarterly basis, without the presence of management.

The Internal Auditor will adopt the Standards for the Professional Practice of Internal Auditing set by The Institute of Internal Auditors.

D. COMMUNICATION WITH SHAREHOLDERS

Principle 14: Communication with Shareholders Principle 15: Greater Shareholder Participation We believe in regular and timely communication with shareholders as part of the Group’s effort to help our shareholders understand our business better.

In line with the continuous obligations of the Company pursuant to the SGX-ST Listing Manual and the Companies Act, the Board’s policy is that all shareholders should be equally and timely informed of all major developments that impact on the Company or the Group. It is also the Board’s policy that all corporate news, strategies and announcements are promptly disseminated through SGXNET, press releases as well as various media.


22

We support the Code’s principle to encourage shareholder participation. Shareholders are encouraged to attend the AGM to ensure a high level of accountability and to stay informed of the Company’s strategy and goals. Notice of the AGM is dispatched to shareholders, together with explanatory notes or a circular on items of special business (if necessary), at least 14 days before the meeting. The Board welcomes questions from shareholders who have an opportunity to raise issues either formally or informally before or at the AGM.

E. DEALING IN SECURITIES

According to Listing Rule 1207(18) of the Listing Manual, a listed issuer and its officers are not allowed to deal in the Company’s shares, from one month before, until the release of the half year and year-end financial results, and from two weeks before the release of the 1st and 3rd quarter financial results and at any time they are in possession of unpublished material price sensitive information.

F. INTERESTED PERSON TRANSACTIONS POLICY

The Company has adopted an internal policy in respect of any transactions with interested persons and has set out the procedures for review and approval of the Company’s interested person transactions.

Details of the interested person transactions are disclosed as follows:

Name of Interested Person Aggregate value of all interested person transactions during the financial year ended 2008

(S$’000)

Shanghai Poly Technologies Co. LtdStraco Holding Pte LtdStraco (HK) Limited

583365322

G. MATERIAL CONTRACTS

There were no material contracts entered into by the Company or any of its subsidiaries involving the interest of the Chief Executive Officer, any director or controlling shareholder, either still subsisting at the end of the year or entered into since the end of the previous financial year.


Financial Review34 Income Statements

35 Statements of Changes in Equity

38 Cash Flow Statements

40 Notes to the Financial Statements

24 Directors’ Report

29 Statement by Directors

30 Independent Auditors’ Report

32 Balance Sheets

24

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

Directors

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

Wu Hsioh Kwang He Ping Guo Qiang Fu Xuezhang Choong Chow Siong George Huang Chang Yi Tay Siew Choon

Directors' Interests

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

Name of director and corporationin which interests are held

Holdings registered in the name of the director

Other holdings in which the director is

deemed to have an interestAt beginning of the year

At end of the year

At beginning of the year

At end of the year

The CompanyOrdinary shares fully paid

Wu Hsioh Kwang 3,988,000 3,988,000 469,619,980 469,619,980He Ping 200,000 200,000 - -Guo Qiang 200,000 200,000 - -Fu Xuezhang 200,000 200,000 - -Choong Chow Siong 200,000 200,000 - -George Huang Chang Yi 200,000 200,000 - -Tay Siew Choon 200,000 200,000 - -

25

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

There were no changes in any of the above mentioned interests in the Company between the end of the financial year and 21 January 2009.

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

Except for salaries, bonuses and fees and those benefits that are disclosed in this report and in note 21 to the financial statements, since the end of the last financial year, no director has received or become entitled to receive, a benefit by reason of a contract made by the Company or a related corporation with the director, or with a firm of which he is a member, or with a company in which he has a substantial financial interest.

Share Options

The Straco Share Option Scheme (the Scheme) of the Company was approved and adopted by its members at an Extraordinary General Meeting held on 12 January 2004. Details of the Scheme were described in the Prospectus dated 10 February 2004 on the Company’s initial public offer of shares. The Scheme is administered by the Company’s Remuneration Committee, comprising three directors, Tay Siew Choon, George Huang Chang Yi and He Ping.

Information regarding the Scheme are as follows:

The exercise price of the options can be set at a discount to the market price not exceeding 20% of the market price in respect of options granted at the time of grant.

The options can be exercised 1 year after the grant for market price options and 2 years for discounted options.

All options are settled by physical delivery of shares.

The options granted expire after 5 years for non-executive directors and associates’ employees and 10 years for executive directors and employees of the Company and its subsidiaries.

26

At the end of the financial year, details of the options granted under the Scheme on the unissued ordinary shares of the Company, are as follows:

Date of grant of options

Exercise price

per share $

Options outstanding

at 1 January

2008Options granted

Options exercised

Options forfeited/ expired

Options outstanding

at 31 December

2008

Number of option holders at

31 December 2008

Exercise period

22/10/2007 0.19 2,140,000 - - - 2,140,000 723/10/2008 to

22/10/2012

22/10/2007 0.19 3,240,000 - - (300,000) 2,940,000 923/10/2008 to

22/10/2017

5,380,000 - - (300,000) 5,080,000

Except as disclosed above, there were no unissued shares of the Company or its subsidiaries under options granted by the Company or its subsidiaries as at the end of the financial year.

Details of options granted to directors of the Company under the Scheme are as follows:

Name of director

Options granted in financial year ended

31 December 2008

Aggregate options granted since

commencement of Scheme to 31 December

2008

Aggregate options exercised since commencement

of Scheme to 31 December

2008

Aggregate options outstanding as at

31 December 2008

He Ping - 330,000 - 330,000Guo Qiang - 330,000 - 330,000Fu Xuezhang - 330,000 - 330,000Choong Chow Siong - 330,000 - 330,000George Huang Chang Yi - 330,000 - 330,000Tay Siew Choon - 330,000 - 330,000

- 1,980,000 - 1,980,000

Directors’ Report

27

Since the commencement of the Scheme, no options have been granted to the controlling shareholders of the Company or their associates and no participant under the Scheme has been granted 5% or more of the total options available under the Scheme.

The options granted by the Company do not entitle the holders of the options, by virtue of such holding, to any rights to participate in any share issue of any other company.

Audit Committee

The members of the Audit Committee during the year and at the date of this report are:

Choong Chow Siong (Chairman, Independent non-executive director)George Huang Chang Yi (Independent non-executive director)Guo Qiang (Non-executive director)

The Audit Committee performs the functions specified in Section 201B of the Act, the SGX Listing Manual and the Code of Corporate Governance.

The Audit Committee has held four meetings since the last directors’ report. In performing its functions, the Audit Committee met with the Company’s external and internal auditors to discuss the scope of their work, the results of their examination and evaluation of the Group’s internal accounting control system.

The Audit Committee also reviewed the following:

assistance provided by the Company’s officers to the internal and external auditors;

quarterly financial information and annual financial statements of the Group and the Company prior to their submission to the directors of the Company for adoption; and

interested person transactions (as defined in Chapter 9 of the SGX Listing Manual).

The Audit Committee has full access to management and is given the resources required for it to discharge its functions. It has full authority and the discretion to invite any director or executive officer to attend its meetings. The Audit Committee also recommends the appointment of the external auditors and reviews the level of audit and non-audit fees.

The Audit Committee is satisfied with the independence and objectivity of the external auditors and has recommended to the Board of Directors that the auditors, KPMG LLP, be nominated for re-appointment as auditors at the forthcoming Annual General Meeting of the Company.

Directors’ Report

28

Auditors

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

On behalf of the Board of Directors

Wu Hsioh KwangDirector

Choong Chow SiongDirector

18 March 2009

Directors’ Report

29

In our opinion:

(a) the financial statements set out on pages 32 to 77 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2008 and the results, changes in equity and cash flows of the Group and the changes in equity of the Company for the year ended on that date in accordance with the provisions of the Singapore Companies Act, Chapter 50 and Singapore Financial Reporting Standards; and

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

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

On behalf of the Board of Directors

Wu Hsioh KwangDirector

Choong Chow SiongDirector

18 March 2009

Statement by Directors

30

Members of the Company Straco Corporation Limited

We have audited the financial statements of Straco Corporation Limited (the Company) and its subsidiaries (the Group), which comprise the balance sheets of the Group and the Company as at 31 December 2008 and the income statement, statement of changes in equity and cash flow statement of the Group and the statement of changes in equity of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 32 to 77.

Management’s responsibility for the financial statements

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

(a) devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets;

(b) selecting and applying appropriate accounting policies; and

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

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

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

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

Independent Auditors’ Report

31

Opinion

In our opinion:

(a) the consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2008 and the results, changes in equity and cash flows of the Group and the changes in equity of the Company for the year ended on that date; and

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

KPMG LLPPublic Accountants andCertified Public Accountants

Singapore18 March 2009

Independent Auditors’ Report

32

Group CompanyNote 2008 2007 2008 2007

$ $ $ $

Non-Current AssetsProperty, plant and equipment 3 66,698,611 66,103,363 2,869,701 2,991,893Investments in subsidiaries 4 - - 55,208,688 55,350,648Long-term loans to subsidiaries 5 - - 5,198,223 2,271,187Intangible assets 6 1,723,592 1,999,503 - -Deferred tax assets 7 22,236 - - -

68,444,439 68,102,866 63,276,612 60,613,728

Current AssetsInventories 761,827 752,762 - -Trade and other receivables 8 1,250,492 2,588,938 12,836,301 9,560,887Cash and cash equivalents 12 34,331,166 30,779,719 6,922,556 17,102,765

36,343,485 34,121,419 19,758,857 26,663,652

Total Assets 104,787,924 102,224,285 83,035,469 87,277,380

Equity Attributable to Equity Holders of the CompanyShare capital 13 76,985,514 76,985,514 76,985,514 76,985,514Reserves 14 19,946,653 11,235,863 5,521,497 5,478,633

96,932,167 88,221,377 82,507,011 82,464,147Minority interest 2,459,570 2,067,514 - -Total Equity 99,391,737 90,288,891 82,507,011 82,464,147

Non-Current LiabilitiesBorrowings 16 - 1,774,900 - -Deferred income 17 98,559 102,933 - -Deferred tax liabilities 7 519,238 190,880 - -

617,797 2,068,713 - -

Balance Sheets As at 31 December

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

33


$ $ $ $Current LiabilitiesTrade and other payables 18 4,388,548 5,629,990 508,838 916,409Current tax payable 389,842 533,867 19,620 194,000Borrowings 16 - 3,702,824 - 3,702,824

4,778,390 9,866,681 528,458 4,813,233Total Liabilities 5,396,187 11,935,394 528,458 4,813,233

Total Equity and Liabilities 104,787,924 102,224,285 83,035,469 87,277,380

Balance Sheets As at 31 December


34

GroupNote 2008 2007

$ $

Revenue 19 32,300,412 24,173,387Other income 2,146,997 1,713,753Operating expenses (17,285,554) (12,976,836)Administrative expenses (5,117,025) (4,541,268)Results from operating activities 12,044,830 8,369,036Finance expenses 22 (807,465) -Profit before income tax 20 11,237,365 8,369,036Income tax expense 23 (3,020,944) (1,878,354)Profit for the year 8,216,421 6,490,682

Attributable to:Equity holders of the Company 7,737,953 6,199,773Minority interest 478,468 290,909Profit for the year 8,216,421 6,490,682

Earnings per share - Basic and fully diluted earnings per share (cents) 24 0.89 0.71

Income StatementsYear Ended 31 December


35

GroupShare

CapitalStatutory Reserve

Share Option

Reserve

Foreign Currency

Translation Reserve

Accumulated Profits

Total Attributable

to Equity Holders of

the Company

Minority Interest

Total Equity

$ $ $ $ $ $ $ $

2007At 1 January 2007 76,985,514 1,058,851 - (3,358,911) 8,875,906 83,561,360 1,889,574 85,450,934Translation differences relating to financial statements of foreign subsidiaries recognised directly in equity - - - 537,090 - 537,090 107,407 644,497Net profit for the year - - - - 6,199,773 6,199,773 290,909 6,490,682Total recognised income and expense for the year - - - 537,090 6,199,773 6,736,863 398,316 7,135,179Value of employee services received for issue of share options - - 95,478 - - 95,478 - 95,478Transfer to statutory reserve - 453,237 - - (453,237) - - -Dividend paid to minority shareholder of a subsidiary - - - - - - (220,376) (220,376)Final dividend paid of 0.25 cents per share (1-tier tax exempt) - - - - (2,172,324) (2,172,324) - (2,172,324)At 31 December 2007 76,985,514 1,512,088 95,478 (2,821,821) 12,450,118 88,221,377 2,067,514 90,288,891

Statements of Changes in Equity Year Ended 31 December


36

GroupShare

CapitalStatutory Reserve

Share Option

Reserve

Foreign Currency

Translation Reserve

Accumulated Profits

Total Attributable

to Equity Holders of

the Company

Minority Interest

Total Equity

$ $ $ $ $ $ $ $

2008At 1 January 2008 76,985,514 1,512,088 95,478 (2,821,821) 12,450,118 88,221,377 2,067,514 90,288,891Translation differences relating to financial statements of foreign subsidiaries recognised directly in equity - - - 3,753,933 - 3,753,933 134,094 3,888,027Net profit for the year - - - - 7,737,953 7,737,953 478,468 8,216,421Total recognised income and expense for the year - - - 3,753,933 7,737,953 11,491,886 612,562 12,104,448Value of employee services received for issue of share options - - 477,390 - - 477,390 - 477,390Transfer to statutory reserve - 460,743 - - (460,743) - - -Dividend paid to minority shareholder of a subsidiary - - - - - - (220,506) (220,506)Final dividend paid of 0.375 cents per share (1-tier tax exempt) - - - - (3,258,486) (3,258,486) - (3,258,486)At 31 December 2008 76,985,514 1,972,831 572,868 932,112 16,468,842 96,932,167 2,459,570 99,391,737



37

Share Capital

Share Option Reserve

Accumulated Profits

Total Equity

Company $ $ $ $

2007At 1 January 2007 76,985,514 - 4,040,293 81,025,807Value of employee services received for issue of share options - 95,478 - 95,478Net profit for the year - - 3,515,186 3,515,186Final dividend paid of 0.25 cents per share (1-tier tax exempt) - - (2,172,324) (2,172,324)At 31 December 2007 76,985,514 95,478 5,383,155 82,464,147

2008At 1 January 2008 76,985,514 95,478 5,383,155 82,464,147Value of employee services received for issue of share options - 477,390 - 477,390Net profit for the year - - 2,823,960 2,823,960Final dividend paid of 0.375 cents per share (1-tier tax exempt) - - (3,258,486) (3,258,486)At 31 December 2008 76,985,514 572,868 4,948,629 82,507,011



38

Group2008 2007

$ $

Operating ActivitiesProfit before income tax 11,237,365 8,369,036

Adjustments for:Depreciation of property, plant and equipment 4,877,371 4,003,499Amortisation of intangible assets 158,911 13,242Loss on disposal of property, plant and equipment 42,563 961Government grant utilised (10,579) -Equity-settled share-based payment transactions 477,390 95,478Impairment loss on other receivables 162,974 6,224Bad debts written off 4,137 -Interest income (789,064) (786,243)Interest expense 807,465 -Exchange gains (993,950) (212,588)Operating profit before working capital changes 15,974,583 11,489,609

Changes in working capital:Trade and other receivables 1,171,335 (1,119,129)Inventories (9,066) (153,144)Trade and other payables (1,465,777) 2,215,188Cash generated from operations 15,671,075 12,432,524Income taxes paid (2,971,049) (1,444,788)Cash flows from operating activities 12,700,026 10,987,736

Investing ActivitiesInterest received 789,064 786,243Proceeds from disposal of property, plant and equipment 4,129 79Purchase of property, plant and equipment (1,768,016) (2,326,136)Payment for intangible asset - (350,635)Acquisitions of subsidiaries (note 25) - (9,124,880)Government grant received - 102,933Cash flows from investing activities (974,823) (10,912,396)

Cash Flow StatementsYear Ended 31 December


39

Group2008 2007

$ $

Financing ActivitiesInterest paid (686,636) -Dividends paid (3,258,486) (2,172,324)Repayment of borrowings (5,027,621) -Proceeds from issue of shares - 93,100Cash flows from financing activities (8,972,743) (2,079,224)

Net increase/(decrease) in cash and cash equivalents 2,752,460 (2,003,884)Cash and cash equivalents at beginning of year 30,779,719 32,815,626Effect of exchange rate fluctuations 798,987 (32,023)Cash and cash equivalents at end of year (note 12) 34,331,166 30,779,719

Cash Flow StatementsYear Ended 31 December


40

These notes form an integral part of the financial statements.

The financial statements were authorised for issue by the directors on 18 March 2009.

1 Domicile and Activities

Straco Corporation Limited (the Company) is incorporated in the Republic of Singapore and has its registered office at 10 Anson Road #30-15, International Plaza, Singapore 079903.

The principal activities of the Company are those relating to the development of tourism-related businesses.

The consolidated financial statements relate to the Company and its subsidiaries (together referred to as the Group).

2 Summary of Significant Accounting Policies

2.1 Basis of Preparation

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

The financial statements have been prepared on the historical cost basis except for certain financial assets and financial liabilities which are measured at fair value. Non-current assets are measured at the lower of the carrying amount and fair value less costs to sell.

The financial statements are presented in Singapore dollars which is the Company’s functional currency.

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

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

Notes to the Financial Statements

41

2 Summary of Significant Accounting Policies (cont’d)

2.1 Basis of Preparation (cont’d)

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

Note 3 – Property, Plant and Equipment Note 6 – Intangible Assets Note 7 – Deferred Tax Note 8 – Trade and Other Receivables Note 15 – Straco Share Option Scheme Note 25 – Acquisitions of Subsidiaries

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

2.2 Foreign Currencies

Foreign Currency Transactions

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

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


42


2.2 Foreign Currencies (cont’d)

Foreign Operations

The assets and liabilities of foreign operations are translated to Singapore dollars at exchange rates prevailing at the reporting date. The income and expenses of foreign operations are translated to Singapore dollars at average exchange rates for the year. Goodwill and fair value adjustments arising on the acquisition of a foreign operation on or after 1 January 2006 are treated as assets and liabilities of the foreign operation and translated at the closing date. For acquisitions prior to 1 January 2006, the exchange rates at the date of acquisition were used.

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

Net Investment in a Foreign Operation

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

2.3 Consolidation

Business Combinations

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

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

Subsidiaries

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights presently exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.


43


2.3 Consolidation (cont’d)

Transactions Eliminated on Consolidation

Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

Accounting for Subsidiaries by the Company

Investments in subsidiaries are stated in the Company’s balance sheet at cost less accumulated impairment losses.

2.4 Property, Plant and Equipment

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

Construction in progress is not depreciated. Depreciation on other property, plant and equipment is recognised in the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment.

The estimated useful lives are as follows:

Leasehold land and building - 20 to 50 years Leasehold improvements - 10 years Cable car equipment - 10 to 20 years Office equipment, furniture and fittings - 3 to 5 years Motor vehicles - 5 to 8 years Machinery - 10 to 20 years Fishes and marine livestock - 5 years Show equipment - 3 years

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


44


2.5 Intangible Assets

Goodwill

Goodwill and negative goodwill arise on the acquisition of subsidiaries.

Goodwill represents the excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree. Goodwill arising on the acquisition of subsidiaries is presented in intangible assets. Goodwill is measured at cost less accumulated impairment losses. Goodwill is tested for impairment as described in note 2.7.

Negative goodwill represents the excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree over the cost of the acquisition. Negative goodwill is recognised immediately in the income statement.

Other Intangible Assets

Costs incurred in connection with the development of stage shows, costumes and other stage settings are capitalised. Such development costs are stated at cost less accumulated amortisation and impairment losses.

Development costs are amortised in the income statement on a straight-line basis over the estimated useful life of 3 years, from the date on which they are available for use.

2.6 Financial Instruments

Non-Derivative Financial Instruments

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

Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition, non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses.


45


2.6 Financial Instruments (cont’d)

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

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

Impairment of Financial Assets

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

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate.

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

All impairment losses are recognised in the income statement.

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

Share Capital

Ordinary shares are classified as equity.

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


46


2.7 Impairment – Non-Financial Assets

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

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. A cash-generating

unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. Impairment losses are recognised in the income statement. Impairment losses are recognised in the income statement unless it reverses a previous revaluation, credited to equity, in which case it is charged to equity.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit.

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

2.8 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is calculated using the first-in, first-out basis and comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

2.9 Employee Benefits

Defined Contribution Plans

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


47


2.9 Employee Benefits (cont’d)

Short-Term Benefits

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

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

Share-Based Payments

The share option programme allows Group employees to acquire shares of the Company. The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the vesting period during which the employees become unconditionally entitled to the options. At each balance sheet date, the Company revises its estimates of the number of options that are expected to become exercisable. It recognises the impact of the revision of original estimates in employee expense and in a corresponding adjustment to equity over the remaining vesting period.

The proceeds received net of any directly attributable transactions costs are credited to share capital when the options are exercised.

2.10 Revenue Recognition

Sale of Tickets

Revenue from the sale of admission tickets is recognised when tickets are utilised. Tickets sold are non-refundable.

Performance Fee

Revenue from show performance fee is recognised when the event takes place.

Sale of Goods

Revenue from the sale of goods is recognised when the Group has delivered the products to the customers, the customer has accepted the products and collectibility of the related receivables is reasonably assured.


48


2.10 Revenue Recognition (cont’d)

Government Grant

Government grants are recognised at their fair value when there is reasonable assurance that the Group complies with the conditions attached to them, and the grant will be received. The grant is presented separately in the income statement.

Income related grants are credited to the income statement over the periods necessary to match them with related expenditure.

Asset-related grants are accounted for as deferred income and recognised in the income statement on a systematic and rational basis over the useful lives of the assets.

Interest Income

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

Dividend Income

Dividend income is recognised on the date that the Group’s right to receive payment is established.

2.11 Finance Expenses

Finance expenses comprise interest expense on borrowings. All borrowing costs are recognised in the income statement using the effective interest method.

2.12 Income Tax Expense

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

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


49


2.12 Income Tax Expense (cont’d)

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

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

2.13 Leases

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


50

3 Property, Plant and Equipment

Group

Leasehold land and buildings

Leasehold improve-

mentsCable car equipment

Office equipment,

furniture and fittings

Motor vehicles Machinery

Fishes and marine

livestockShow

equipmentConstruction in progress Total

$ $ $ $ $ $ $ $ $ $

CostAt 1 January 2007 28,299,796 4,248,260 4,604,978 2,464,232 618,325 37,462,235 4,428,378 - 2,117,142 84,243,346Additions - 245,642 990 414,640 22,303 - 354,652 1,039,437 248,472 2,326,136Assets acquired in business combination (note 25) 3,670,456 57,820 - 335,055 - 2,165,357 1,419,919 - 9,630 7,658,237Reclassification - 281,404 - 32,582 - - - - (313,986) -Disposals - - - (21,496) - - - - - (21,496)Translation adjustments 323,000 33,821 37,194 34,636 4,994 426,315 45,400 - 17,290 922,650At 31 December 2007 32,293,252 4,866,947 4,643,162 3,259,649 645,622 40,053,907 6,248,349 1,039,437 2,078,548 95,128,873

At 1 January 2008 32,293,252 4,866,947 4,643,162 3,259,649 645,622 40,053,907 6,248,349 1,039,437 2,078,548 95,128,873Additions 710 782,299 2,864 389,967 - 64,584 437,443 24,571 65,578 1,768,016Reclassification 236,730 - - (347,185) - - 110,455 - - -Disposals - - - (293,604) (17,990) (164,748) - - - (476,342)Translation adjustments 1,823,714 297,315 296,675 164,354 40,620 2,467,326 331,205 - 132,809 5,554,018At 31 December 2008 34,354,406 5,946,561 4,942,701 3,173,181 668,252 42,421,069 7,127,452 1,064,008 2,276,935 101,974,565


51

3 Property, Plant and Equipment (cont’d)

Group

Leasehold land and buildings

Leasehold improve-

mentsCable car equipment

Office equipment,

furniture and fittings

Motor vehicles Machinery

Fishes and marine

livestockShow

equipmentConstruction in progress Total

$ $ $ $ $ $ $ $ $ $

Accumulated DepreciationAt 1 January 2007 4,496,526 1,953,222 4,553,811 1,536,005 175,486 8,160,700 3,831,428 - - 24,707,178Depreciation charge for the year 896,367 439,934 6,480 351,993 62,670 1,763,073 454,109 28,873 - 4,003,499Disposals - - - (20,456) - - - - - (20,456)Translation adjustments 83,743 15,647 36,778 22,450 1,396 146,229 29,046 - - 335,289At 31 December 2007 5,476,636 2,408,803 4,597,069 1,889,992 239,552 10,070,002 4,314,583 28,873 - 29,025,510

At 1 January 2008 5,476,636 2,408,803 4,597,069 1,889,992 239,552 10,070,002 4,314,583 28,873 - 29,025,510Depreciation charge for the year 1,135,589 511,535 6,835 256,394 65,329 2,051,000 495,709 354,980 - 4,877,371Reclassification 60,391 - - (89,200) - - 28,809 - - -Disposals - - - (263,387) (17,990) (148,273) - - - (429,650)Translation adjustments 329,786 169,400 293,972 96,223 16,972 624,252 272,118 - - 1,802,723At 31 December 2008 7,002,402 3,089,738 4,897,876 1,890,022 303,863 12,596,981 5,111,219 383,853 - 35,275,954

Carrying AmountAt 1 January 2007 23,803,270 2,295,038 51,167 928,227 442,839 29,301,535 596,950 - 2,117,142 59,536,168At 31 December 2007 26,816,616 2,458,144 46,093 1,369,657 406,070 29,983,905 1,933,766 1,010,564 2,078,548 66,103,363At 31 December 2008 27,352,004 2,856,823 44,825 1,283,159 364,389 29,824,088 2,016,233 680,155 2,276,935 66,698,611


52

3 Property, Plant and Equipment (cont’d)

Leaseholdbuildings

Leasehold improvements

Office equipment,

furniture and fittings Total

Company $ $ $ $

CostAt 1 January 2007 2,727,449 210,409 240,890 3,178,748Additions - 2,285 28,888 31,173Disposals - - (679) (679)At 31 December 2007 2,727,449 212,694 269,099 3,209,242

At 1 January 2008 2,727,449 212,694 269,099 3,209,242Additions - - 8,318 8,318At 31 December 2008 2,727,449 212,694 277,417 3,217,560

Accumulated DepreciationAt 1 January 2007 68,187 5,260 16,552 89,999Depreciation charge for the year 54,549 21,248 52,232 128,029Disposals - - (679) (679)At 31 December 2007 122,736 26,508 68,105 217,349

At 1 January 2008 122,736 26,508 68,105 217,349Depreciation charge for the year 54,549 21,269 54,692 130,510At 31 December 2008 177,285 47,777 122,797 347,859

Carrying AmountAt 1 January 2007 2,659,262 205,149 224,338 3,088,749At 31 December 2007 2,604,713 186,186 200,994 2,991,893At 31 December 2008 2,550,164 164,917 154,620 2,869,701

Source of estimation uncertainty

The costs of property, plant and equipment are depreciated on a straight-line basis over their useful lives. Management estimates the useful lives of these property, plant and equipment to be between 3 to 50 years. The Group reviews annually the estimated useful lives of property, plant and equipment based on the factors that include asset utilisation, internal technical evaluation, technological changes, environmental and anticipated use of the assets. It is possible that future results of operations could be materially affected by changes in these estimates brought about by changes in factors mentioned. A reduction in the estimated useful lives of property, plant and equipment would increase depreciation expense and decrease property, plant and equipment.


53

4 Investments in Subsidiaries

Company2008 2007

$ $

Equity investments, at cost 48,070,954 48,187,954Impairment losses (535,573) (535,573)

47,535,381 47,652,381Loans and advances to subsidiaries 7,673,307 7,698,267

55,208,688 55,350,648

The loans and advances to subsidiaries are non-trade in nature, unsecured and interest-free. The settlement of the amounts are neither planned nor likely to occur in the foreseeable future. As these amounts are, in substance, a part of the entity’s net investment in the subsidiaries, they are stated at cost.

Details of acquisition and additional investment in subsidiaries are set out in note 25.

Subsidiaries of the Group are as follows:-

Place of Incorporation and Business

Group’s Effective Equity Interest

Cost of Investment

Name of Subsidiary Principal Activities 2008 2007 2008 2007% % $ $

Infotainment Development & Management Pte Ltd 1

Provision of management and consulting services and overall project management to the Group and third parties

Singapore 100 100 2,535,573 2,535,573

- Straco Creation Pte Ltd 1 Show production and management as well as creative and artistic content provider

Singapore 51 51 - -

New Bay HoldingsPte Ltd 1

Investment holding Singapore 100 100 12,568,694 12,685,694


54

4 Investments in Subsidiaries (cont’d)

Place of Incorporation and Business

Group’s Effective Equity Interest

Cost of Investment

Name of Subsidiary Principal Activities 2008 2007 2008 2007% % $ $

- Underwater World Xiamen Co Ltd 3

Operation of aquarium, dolphin and sea lion performance aquarium, restaurant, supplementary retail of souvenir

The People’s Republicof China

100 100 - -

Lintong Lixing Cable Car Co Ltd 2

Operation of cable car facilities The People’s Republicof China

95 95 965,645 965,645

Shanghai Ocean Aquarium Co Ltd 2

Development and operation of aquatic related facilities


95 95 26,794,578 26,794,578

Xi’an Lintong Zhongxin Tourism Development Co Ltd 2

Development and operation of tourism-related facilities


95 95 5,206,464 5,206,464

48,070,954 48,187,954

1 Audited by KPMG Singapore 2 Audited by KPMG Huazhen 3 Audited by Zhonglei Certified Public Accountants Co. Ltd, Fujian Branch


55

5 Long-Term Loans to Subsidiaries

The long-term loans to subsidiaries are unsecured, bear interest at rates ranging from 1.97% to 5.06% (2007: 5.00% to 5.06%) per annum and are not expected to be repaid within the next 12 months.

6 Intangible Assets

Goodwill on consolidation

Development costs Total

Group $ $ $

CostAt 1 January 2007 - 126,097 126,097Acquired during the year - 350,635 350,635Acquisition of subsidiaries (note 25) 1,536,013 - 1,536,013At 31 December 2007 1,536,013 476,732 2,012,745Adjustment to goodwill recorded in prior year (note 25) (117,000) - (117,000)At 31 December 2008 1,419,013 476,732 1,895,745

Accumulated AmortisationAt 1 January 2007 - - -Amortisation charge for the year - 13,242 13,242At 31 December 2007 - 13,242 13,242Amortisation charge for the year - 158,911 158,911At 31 December 2008 - 172,153 172,153

Carrying AmountAt 1 January 2007 - 126,097 126,097At 31 December 2007 1,536,013 463,490 1,999,503At 31 December 2008 1,419,013 304,579 1,723,592


56

6 Intangible Assets (cont’d)

Impairment testing for goodwill

For the purpose of impairment testing, goodwill is allocated to the Group’s cash-generating unit (CGU) for a China subsidiary, Underwater World Xiamen Co Ltd, whose principal activity is the operation of an underwater aquarium.

The recoverable amount of this CGU is based on its value-in-use. Value-in-use is determined by discounting the future cash flows generated from the continuing use of the unit and is based on the following key assumptions:

Cash flows were projected based on actual operating results and a five-year business plan.

The anticipated annual revenue growth included in the cash flow projections ranges from 4% to 10% for the years 2009 to 2013.

A pre-tax discount rate of 12% was applied in determining the recoverable amount of the unit. The discount rate used reflects the risk-free rate and the premium for specific risks relating to the business unit.

Terminal value was not considered.

The values assigned to the key assumptions represent management’s assessment of future industry trends and are based on both external and internal sources and both past performance (historical data) and its expectations for market development.

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


57

7 Deferred Tax

Movements in deferred tax assets and liabilities of the Group and Company during the year are as follows:

At 1/1/2007

Recognised in income statement (note 23)

Acquisitions of subsidiaries

(note 25)Translation

adjustmentsAt

31/12/2007

Recognised in income statement (note 23)

Translation adjustments

At 31/12/2008

$ $ $ $ $ $ $ $Group

Deferred tax assetsTax value of loss carry-forward 84,345 (85,058) - 713 - 21,480 756 22,236

Deferred tax liabilitiesProperty, plant and equipment - - (190,880) - (190,880) - - (190,880)Withholding tax on unremitted dividends - - - - - (328,358) - (328,358)Total - - (190,880) - (190,880) (328,358) - (519,238)

At 31 December, the following temporary differences have not been recognised:

Group Company2008 2007 2008 2007

$ $ $ $

Deductible temporary differences 237,185 615,606 (108,669) 146,119Unutilised capital allowances 61,468 74,145 - -Unutilised tax losses 4,262,026 5,738,451 - -

4,560,679 6,428,202 (108,669) 146,119

The unutilised capital allowances and tax losses of the Group are available for carry forward and set-off against future taxable profits subject to agreement by the tax authorities and compliance with tax regulations in the respective countries in which the Group operates.


58

7 Deferred Tax (cont’d)

In accordance with the accounting policy of the Group as set out in note 2.12, deferred tax benefits amounting to approximately $821,000 (2007: $1,157,000) for the Group and deferred tax liabilities amounting to approximately $20,000 (2007: deferred tax benefits $26,000) for the Company arising from the above temporary differences have not been recognised in the financial statements.

8 Trade and Other Receivables


$ $ $ $

Trade receivables 9 295,709 1,089,666 - -Other receivables 10 954,783 1,499,272 40,723 10,116Amounts due from subsidiaries 11 - - 12,795,578 9,550,771

1,250,492 2,588,938 12,836,301 9,560,887

The ageing of trade and other receivables, excluding deposits and prepayments, at the reporting date is:

GrossImpairment

losses GrossImpairment

losses2008 2008 2007 2007

$ $ $ $GroupCurrent 478,328 - 1,097,430 -31 – 60 days 126,684 - 139,482 -61 – 90 days 68,656 - 150,992 -91 – 180 days 20,183 - 256,035 -181 – 365 days 39,290 - 142,277 -> 365 days 755,462 (430,190) 504,264 (352,543)

1,488,603 (430,190) 2,290,480 (352,543)


59

8 Trade and Other Receivables (cont’d)

GrossImpairment

losses GrossImpairment

losses2008 2008 2007 2007

$ $ $ $CompanyCurrent 215,661 - 39,737 -31 – 60 days 32,343 - 5,651 -61 – 90 days 22,431 - 33,518 -91 – 180 days 450,998 - 134,638 -181 – 365 days 5,271,893 - 4,894,587 -> 365 days 6,831,759 - 4,442,640 -

12,825,085 - 9,550,771 -

Credit risk relates to trade receivables due from the Group’s customers located in China as the Group primarily operates in China. The Group’s historical experience in the collection of accounts receivable falls within the recorded allowances. Management believes that no additional credit risk beyond amounts provided for collection losses is inherent in the Group’s trade receivables.

Based on historical default rates, the Group believes that no impairment allowance is necessary in respect of trade and other receivables, other than those already provided. These receivables are mainly due from customers that have a good payment record with the Group.

Source of Estimation Uncertainty

The Group maintains allowance for doubtful receivables at a level considered adequate to provide for potential uncollectible receivables. The level of this allowance is evaluated by the Group on the basis of factors that affect the collectibility of the accounts. These factors include, but are not limited to, the length of the Group’s relationship with receivables, their payment behaviour and known market factors. The Group reviews the age and status of receivables and identifies accounts which require allowance to be made on a continuous basis. The amount and timing of recorded expenses for any period would differ if the Group made different judgement or utilised different estimates. An increase in the Group’s allowance for doubtful accounts would increase the Group’s recorded operating expenses and decrease trade and other receivables.


60

9 Trade Receivables

Group2008 2007

$ $

Trade receivables 295,709 1,180,728Impairment losses - (91,062)

295,709 1,089,666

The change in impairment loss in respect of trade receivables during the year is as follows:

Group2008 2007

$ $

At 1 January 91,062 90,333Utilised during the year (96,881) -Translation adjustment 5,819 729At 31 December - 91,062

10 Other Receivables

Group Company2008 2007 2008 2007

$ $ $ $

Other receivables 1,192,894 1,109,752 29,507 -Impairment losses (430,190) (261,481) - -

762,704 848,271 29,507 -Prepayments 191,419 640,919 11,216 10,116Deposits 660 10,082 - -

954,783 1,499,272 40,723 10,116


61

10 Other Receivables (cont’d)

The change in impairment loss in respect of other receivables during the year is as follows:

Group2008 2007

$ $

At 1 January 261,481 255,257Impairment loss recognised 162,974 6,224Translation adjustment 5,735 -At 31 December 430,190 261,481

11 Amounts due from subsidiaries

Company2008 2007

$ $

Non-trade 12,445,578 6,550,771Loan/Advance 350,000 3,000,000

12,795,578 9,550,771

The non-trade amounts due from the subsidiaries are unsecured, interest-free, repayable on demand and priced on an arm’s length basis.

As at 31 December 2007, the loan of $3,000,000 due from a subsidiary was unsecured and bore interest at 3.5325% per annum. During the current year, management reassessed the repayment terms and entered into a new loan agreement with the subsidiary. The loan is now not expected to be repaid within the next 12 months. Accordingly, the loan has been reclassified to a long-term loan (note 5).

The advance of $350,000 due from a subsidiary is unsecured, interest free, and expected to be repaid within the next 12 months.

There is no allowance for doubtful debts arising from the outstanding balances with subsidiaries.


62

12 Cash and Cash Equivalents

Group Company2008 2007 2008 2007

$ $ $ $

Cash at bank and in hand 3,167,990 3,665,381 422,231 1,945,776Fixed deposits 31,163,176 27,114,338 6,500,325 15,156,989

34,331,166 30,779,719 6,922,556 17,102,765

The weighted average effective interest rates per annum relating to fixed deposits of the Group and the Company are 2.7080% (2007: 2.7294%) and 1.1746% (2007: 3.4880%) respectively. Interest rates reprice at intervals of one to six months.

13 Share Capital

Group and Company2008 2007

No. of Shares No. of SharesFully paid ordinary shares, with no par value:At 1 January and 31 December 868,929,580 868,929,580

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

At 31 December 2008, the Group has outstanding share options granted under the Straco Share Option Scheme (note 15).

Capital Management

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

The Board’s target is for employees of the Group to hold up to 10% of the Company’s ordinary shares by 2018. Assuming that all current outstanding share options vest and are exercised, present employees will hold approximately 0.58% of the Company’s share capital.


63

13 Share Capital (cont’d)

The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position. The Group’s target is to achieve a return on shareholders’ equity of between 6% and 12%; in 2008 the return was 8% (2007: 7%).

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

The Company and its subsidiaries are not subject to externally imposed capital requirements.

14 Reserves

Group Company2008 2007 2008 2007

$ $ $ $

Share option reserve 572,868 95,478 572,868 95,478Statutory reserve 1,972,831 1,512,088 - -Foreign currency translation reserve 932,112 (2,821,821) - -Accumulated profits 16,468,842 12,450,118 4,948,629 5,383,155

19,946,653 11,235,863 5,521,497 5,478,633

Movements in reserves for the Group and the Company are set out in the statements of changes in equity.

Share Option Reserve

The share option reserve comprises the cumulative value of employee services received for the issue of share options.

Statutory Reserve

The subsidiaries which are incorporated and operate in the People’s Republic of China follow the accounting principles and relevant financial regulations of the People’s Republic of China applicable to sino-foreign joint venture enterprises in the preparation of the accounting records and statutory financial statements.


64

14 Reserves (cont’d)

Certain sino-foreign joint venture subsidiaries are required by the Articles of the joint ventures, to appropriate to the statutory reserve 10% of their annual profit. Appropriation to the statutory reserve must be made before distribution of dividends to shareholders. The appropriation is required until the statutory reserve reaches 50% of the registered capital. This statutory reserve is not distributable in the form of cash dividends.

Foreign Currency Translation Reserve

The foreign currency translation reserve comprises:

(a) foreign exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from the functional currency of the Company; and

(b) the exchange differences on translation of monetary items which in substance form part of the Group’s net investment in foreign operations.

15 Straco Share Option Scheme

The Straco Share Option Scheme (the Scheme) of the Company was approved and adopted by its members at an Extraordinary General Meeting on 12 January 2004. The Scheme is administered by the Company’s Remuneration Committee comprising three directors, Tay Siew Choon, George Huang Chang Yi and He Ping.

Information regarding the Scheme are as follows:

(a) The exercise price of the options can be set at a discount to the market price not exceeding 20% of the market price in respect of options granted at the time of grant.

(b) The options can be exercised 1 year after the grant for market price options and 2 years for discounted options.

(c) All options are settled by physical delivery of shares.

(d) The options granted expire after 5 years for non-executive directors and associates’ employees and 10 years for executive directors and employees of the Company and its subsidiaries.


65

Notes to the Financial Statements15 Straco Share Option Scheme (cont’d)

In 2007, the Company granted 5,380,000 options to take up unissued shares of the Company. These options were outstanding, save for forfeiture, at the end of the year as follows:

Date of grant of options Expiry date Exercise price

Options outstanding2008 2007

$

22/10/2007 22/10/2012 0.19 2,140,000 2,140,00022/10/2007 22/10/2017 0.19 2,940,000 3,240,000

5,080,000 5,380,000

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

Fair value of share options and assumptions

Date of grant of options 22 October 2007

Fair value at measurement date $0.106481

Share price $0.19Exercise price $0.19Expected volatility 56.834%Expected option life 5 - 10 yearsExpected dividends 1.32%Risk-free interest rate 2.76%

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

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

66

16 Borrowings

Group Company2008 2007 2008 2007

$ $ $ $Current- Loans from shareholders - 3,702,824 - 3,702,824

Non-current- Loans from minority shareholders of a subsidiary - 1,774,900 - -

- 5,477,724 - 3,702,824

During the current financial year, all shareholders’ loans were fully repaid. The weighted average effective interest rate was 4.86% to 6.57% per annum.

17 Deferred Income

This represents asset-related government grants and is recognised in the income statement over the useful lives of the related assets.

18 Trade and Other Payables

Group Company2008 2007 2008 2007

$ $ $ $

Trade payables 914,618 894,487 - -Other payables 2,959,839 3,465,117 44,693 157,733Accrued expenses 514,091 1,270,386 270,301 605,247Amounts due to subsidiaries (non-trade) - - 193,844 153,429

4,388,548 5,629,990 508,838 916,409

The amounts due to subsidiaries are unsecured, interest-free, repayable on demand and priced on an arm’s length basis.


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19 Revenue

Group2008 2007

$ $

Ticketing 30,501,766 23,105,275Retail 631,423 349,023Food and beverages 616,384 559,909Show performance fee 550,839 159,180

32,300,412 24,173,387

20 Profit Before Income Tax

The following items have been included in arriving at profit before income tax:-

GroupNote 2008 2007

$ $Other IncomeInterest income 789,064 786,243Government grant 10,579 -Miscellaneous 1,347,354 927,510

2,146,997 1,713,753

Administrative and Operating ExpensesAmortisation of intangible assets 6 158,911 13,242Audit fees- auditors of the Company 68,480 68,480- other auditors 191,512 153,660Depreciation of property, plant and equipment 3 4,877,371 4,003,499Exchange gains (1,448,822) (314,395)Loss on disposal of property, plant and equipment 42,563 961Bad debts written off 4,137 -Impairment loss on other receivables 10 162,974 6,224Operating lease expenses 2,511,936 1,667,193


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20 Profit Before Income Tax (cont’d)

GroupNote 2008 2007

$ $

Staff CostsWages and salaries 5,214,203 3,935,914Contributions to defined contribution plans 694,185 546,321Value of employee services received for issue of share options 477,390 95,478

6,385,778 4,577,713

21 Key Management Personnel Compensation

Key management personnel compensation for the year are as follows:-

Group2008 2007

$ $

Wages and salaries 1,568,285 1,174,995Bonuses and variable compensation 177,176 148,000Directors’ fees 244,500 204,000

1,989,961 1,526,995

Key management personnel of the Group are those persons having the authority and responsibility for planning, directing and controlling the activities of the Group. The directors of the Company, directors of subsidiaries and members of the management team are considered as key management of the Group.

Directors also participate in the Straco Share Option Scheme. During the year, no share options (2007: 1,980,000) were granted to the directors of the Company. The share options granted are on the same terms and conditions as those offered to other employees of the Company as described in note 15.


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22 Finance Expenses

Group2008 2007

$ $Interest paid and payable- shareholders loans (note 16) 807,465 -

23 Income Tax Expense

Group2008 2007

$ $Current tax expense- current year 2,711,295 1,506,886- underprovision in prior years 2,771 286,410

2,714,066 1,793,296

Deferred tax expense- movement in temporary differences 306,878 85,058

Total income tax expense 3,020,944 1,878,354

Group2008 2007

$ $Reconciliation of effective tax rate

Profit before income tax 11,237,365 8,369,036

Income tax at 18% (2007: 18%) 2,022,726 1,506,426Effect of different tax rate in foreign jurisdiction 8,800 (318,020)Expenses not deductible for tax purposes 517,583 297,814Deferred tax benefits not recognised 290,419 123,842Tax exempt revenue (20,628) (63,864)Recognition of previously unrecognised tax losses (103,920) -Underprovision in prior years 2,771 286,410Withholding tax on unremitted dividends 328,358 -Others (25,165) 45,746

3,020,944 1,878,354


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Notes to the Financial Statements24 Earnings per Share

Group2008 2007

Basic and fully diluted earnings per share is based on:-Net profit attributable to ordinary shareholders ($) 7,737,953 6,199,773

Issued ordinary shares at beginning of the year 868,929,580 868,929,580Weighted number of shares issued during the year - -Weighted average number of ordinary shares in issue during the year 868,929,580 868,929,580

Basic and fully diluted earnings per share (cents) 0.89 0.71

Diluted earnings per share is the same as basic earnings per share because the Company’s outstanding options as described in note 15 do not have a dilutive effect at the balance sheet date.

25 Acquisitions of Subsidiaries

On 24 October 2007, the Group acquired all the shares in New Bay Holdings Pte Ltd (“New Bay”) for $12,685,694 in cash. New Bay is the investment holding company of Underwater World Xiamen Co. Ltd, which operates an underwater aquarium in Xiamen, People’s Republic of China.

In accordance with FRS 103 Business Combinations, the Group recorded in 2007 a provisional goodwill (classified under intangible assets) of $1,536,013, being the difference between the purchase price and the estimated fair values of the assets and liabilities acquired.

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Notes to the Financial Statements25 Acquisitions of Subsidiaries (cont’d)

The effect of the acquisition in 2007 was as follows:

NoteCarrying amounts

Fair value adjustments

Recognised values

2007 2007 2007$’000 $’000 $’000

Property, plant and equipment 3 6,598 1,060 7,658Inventories 93 - 93Trade and other receivables 562 - 562Cash and cash equivalents 3,561 - 3,561Trade and other payables (533) - (533)Deferred tax liabilities 7 - (191) (191)Net identifiable assets and liabilities 10,281 869 11,150Goodwill on acquisition 6 1,536Cash consideration paid, satisfied in cash* 12,686Cash acquired (3,561)Net cash outflow 9,125

* Includes acquisition related costs amounting to $359,972.

During the current financial year, arising from an agreed downward adjustment of $117,000 to the final purchase consideration, the provisional goodwill on acquisition previously recorded of $1,536,013 is adjusted to $1,419,013. The goodwill recognised on the acquisition is attributable mainly to the synergies expected to be achieved from integrating New Bay into the Group’s existing business.

In 2007, the Company also increased its investment in a wholly-owned subsidiary, Infotainment Development & Management Pte Ltd, by $2 million to provide additional working capital for the subsidiary.

There were no acquisitions in the year ended 31 December 2008.

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26 Commitments

At 31 December, the Group has commitments for future minimum lease payments under non-cancellable operating leases as follows:

Group2008 2007

$ $Payable:Within 1 year 582,574 570,598After 1 year but within 5 years 2,559,015 2,374,772After 5 years 18,241,460 17,744,713

21,383,049 20,690,083

The Group leases office premises and residential premises for its expatriate staff and various office equipment under operating leases. The leases typically run for a period of one to five years, with an option to renew the lease after that date. None of the leases include contingent rentals.

Subsidiary, Shanghai Ocean Aquarium Co Ltd, entered into an agreement for a land use right for a period of 40 years from 18 November 1997 to 17 November 2037. Rental is fixed at a percentage of its total revenue and is payable annually.

Subsidiary, Underwater World Xiamen Co Ltd, entered into an agreement for a land use right for a period of 40 years from 11 October 1994 to 10 October 2034. The annual rental shall increase 10% every 4 years until the end of the lease period.

27 Related Parties

For the purpose of these financial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

Transactions with Directors and Key Management Personnel

Total key management personnel compensation and directors’ fees are disclosed in note 21.

Other Related Party Transactions

Other than disclosed elsewhere in the financial statements, there are no other significant transactions with related parties.


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28 Financial Risk Management

Financial Risk Management Objectives and Policies

Exposure to credit, liquidity, interest rate and currency risk arises in the normal course of the Group's business. The Group has established risk management policies and guidelines which set out its overall business strategies, its tolerance of risk and its general risk management philosophy. Such established policies are reviewed annually by the Group’s management and periodic reviews are undertaken to ensure that the Group’s policy guidelines are adhered to.

Credit Risk

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount. The Company does not require collateral in respect of financial assets.

At the balance sheet date, there is no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheets.

Liquidity Risk

The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows. The Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days. Currently, the Group places excess funds in fixed deposits with banks and financial institutions which are regulated.

Interest Rate Risk

The Group’s exposure to market risk for changes in interest rates relates primarily to the cash balances placed in fixed deposits. At the balance sheet date, the Group does not have any significant interest-bearing liabilities.

A change of 100 bp in interest rate at the reporting date is not expected to have a significant impact on the consolidated financial statements. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.


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28 Financial Risk Management (cont’d)

Foreign Currency Risk

The Group is exposed to sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities. The currencies giving rise to foreign currency risk are primarily the Renminbi, Euro and US Dollar. The Group’s and the Company’s exposures to the various currencies are as follows:

Singapore dollar Renminbi US dollar Euro Total

Group $ $ $ $ $

2008Trade and other receivables - 12,655,115 82 - 12,655,197Cash and cash equivalents 21,056 2,947 761,970 - 785,973Borrowings (4,750,000) - - - (4,750,000)Trade and other payables (2,469,623) (2,989,373) (143,941) - (5,602,937)

(7,198,567) 9,668,689 618,111 - 3,088,2332007Trade and other receivables - 7,281,235 183,599 737,453 8,202,287Cash and cash equivalents 21,040 5,918 795,691 - 822,649Borrowings (4,750,000) - (3,702,824) - (8,452,824)Trade and other payables (1,289,148) (1,845,513) - (920,483) (4,055,144)

(6,018,108) 5,441,640 (2,723,534) (183,030) (3,483,032)

Company

2008Long-term loans to subsidiaries - - 6,312,255 - 6,312,255Trade and other receivables - 9,882,668 - - 9,882,668Trade and other payables - (193,594) - - (193,594)

- 9,689,074 6,312,255 - 16,001,3292007Long-term loans to subsidiaries - - 6,418,816 - 6,418,816Trade and other receivables - 4,397,644 - - 4,397,644Borrowings - - (3,702,824) - (3,702,824) Trade and other payables - (148,699) - - (148,699)

- 4,248,945 2,715,992 - 6,964,937


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28 Financial Risk Management (cont’d)

Sensitivity analysis

In managing its currency risks, the Group aims to reduce the impact of short-term fluctuations on the Group’s earnings. Over the longer term, however, any prolonged adverse changes in foreign exchange rates would have an impact on the consolidated financial statements.

A 10% strengthening of the Group’s major functional currencies against the following currencies at the reporting date would increase (decrease) equity and income statement by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.

Group CompanyIncome Income

Equity Statement Equity Statement$’000 $’000 $’000 $’000

31 December 2008Singapore dollar 175 545 - -Renminbi - (967) - (969)US dollar - (62) - (632)

31 December 2007Singapore dollar 175 427 - -Renminbi - (544) - (425)US dollar - 272 - (272)Euro - 18 - -

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

Fair Values

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


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29 Segment Reporting

Business segments

The Group is principally engaged in the development and operation of tourism-related attractions. Retail, food and beverage are auxiliary goods and services arising from the operation of the above facilities.

Geographical segments

The assets and operations of the Group are primarily located in the People’s Republic of China.

30 New Accounting Standards and Interpretations Not Yet Adopted

The Group has not applied the following accounting standards (including its consequential amendments) and interpretations that have been issued as of the balance sheet date but are not yet effective:

FRS 1 (revised 2008) Presentation of Financial StatementsFRS 23 (revised 2007) Borrowing CostsFRS 108 Operating SegmentsINT FRS 113 Customer Loyalty ProgrammesINT FRS 116 Hedges of a Net Investment in a Foreign OperationAmendments to FRS 1 (revised 2008) Presentation of Financial Statements- Puttable Financial Instruments and Obligations Arising on LiquidationAmendments to FRS 32 Financial Instruments: PresentationAmendments to FRS 39 Amendments relating to eligible hedged itemsAmendments to FRS 101 First-time Adoption of Financial Reporting Standards and FRS 27 Consolidated and Separate Financial

Statements – Costs of an Investment in a Subsidiary, Jointly Controlled Entity or AssociateAmendments to FRS 102 Amendments relating to vesting conditions and cancellationImprovements to FRSs 2008

FRS 1 (revised 2008) will become effective for the Group’s financial statements for the year ending 31 December 2009. The revised standard requires an entity to present, in a statement of changes in equity, all owner changes in equity. All non-owner changes in equity (ie comprehensive income) are required to be presented in a statement of comprehensive income. Components of comprehensive income are not permitted to be presented in the statement of changes in equity. In addition, a statement of financial position is required at the beginning of the earliest comparative period following a change in accounting policy, the correction of an error or the reclassification of items in the financial statements. FRS 1 (revised 2008) does not have any impact on the Group’s financial position or results.


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Notes to the Financial Statements30 New Accounting Standards and Interpretations Not Yet Adopted (Cont’d)

The initial application of the above standards and interpretations is not expected to have any material impact on the Group’s financial statements. The Group has not considered the impact of accounting standards issued after the balance sheet date.

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Shareholding StatisticsAs at 10 March 2009

TWENTY LARGEST SHAREHOLDERS

Class of Shares : Ordinary ShareVoting Right : One vote per share

No. Shareholder’s Name No. of Shares %

1 STRACO HOLDING PTE LTD 314,885,440 36.242 CHINA POLY GROUP CORPORATION 189,803,600 21.843 STRACO (HK) LIMITED 143,990,540 16.574 WU XIUZHUAN 25,439,000 2.935 WU XIUYI 25,054,000 2.886 UOB KAY HIAN PTE LTD 24,244,000 2.797 GOI SENG HUI 20,175,000 2.328 CHUA SOH HAR 10,744,000 1.249 UNITED OVERSEAS BANK NOMINEES PTE LTD 4,455,000 0.5110 DBS VICKERS SECS (SINGAPORE) PTE LTD 4,263,000 0.4911 LEE LIM LAM 4,219,000 0.4912 OCBC SECURITIES PRIVATE LTD 3,946,000 0.4513 YU LI PIN 3,300,000 0.3814 GU WEIWEI 2,818,000 0.3215 TEO HOON SAN 2,229,000 0.2616 LING CHUNG KHUE 1,910,000 0.2217 TAN SIANG KOON 1,700,000 0.2018 KWEK LENG JOO 1,500,000 0.1719 ZEN PROPERTY MANAGEMENT PTE LTD 1,437,000 0.1720 DBS NOMINEES PTE LTD 1,331,000 0.15

Total: 787,443,580 90.62

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Shareholding StatisticsAs at 10 March 2009

DISTRIBUTION OF SHAREHOLDINGS BY SIZE OF SHAREHOLDINGS

Size of Shareholdings

No. of Shareholders % No. of Shares %

1 - 999 - - - -

1,000 - 10,000 2,361 72.29 7,192,000 0.83

10,001 - 1,000,000 882 27.01 70,958,000 8.16

1,000,001 and above 23 0.70 790,779,580 91.01

Total 3,266 100.00 868,929,580 100.00

SUBSTANTIAL SHAREHOLDERS

No. Shareholder’s Name Direct Interest Deemed Interest

1. STRACO HOLDING PTE LTD 314,885,440 -

2. CHINA POLY GROUP CORPORATION 189,803,600 -

3. STRACO (HK) LIMITED 143,990,540 -

4. WU HSIOH KWANG 3,988,000 469,619,980 (1)

5. CHUA SOH HAR 10,744,000 458,875,980 (1)

Based on the information available to the Company as at 10 March 2009, approximately 18% of the ordinary shares of the Company is held by the public and therefore, Rule 723 of the Listing Manual is complied with.

(1) Mdm Chua Soh Har is the spouse of Mr Wu Hsioh Kwang. Pursuant to Section 164(15) of the Companies Act, Mr Wu is deemed interested in the shares in which Mdm Chua Soh Har is interested.

Note:• “SubstantialShareholders”arethoseshareholderswhoownatleast5%oftheequityofthecompany.

• “DeemedInterest”insharesarise,forexample,whenaperson(includingacompany)ownsatleast20%ofanothercompanywhichinturnownsharesinStracoCorporation Limited. The person is “deemed” to have an interest in the Straco Corporation Limited shares owned by that other company. It is, therefore, possible for several persons to be deemed interested in the same shares.

This note is merely illustrative. For full understanding of the scope of the regulations, it is necessary to refer to the Singapore Companies Act.

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Notice of Annual General MeetingNOTICE IS HEREBY GIVEN that the Annual General Meeting of the Company will be held at Amara Hotel Singapore, 165 Tanjong Pagar Road, Singapore 088539 on 24 April 2009 at 9.30 a.m. to transact the following business:-

AS ORDINARY BUSINESS

1. To receive and consider the Audited Financial Statements of the Company for the financial year ended 31 December 2008 and the Directors’ Report and the Auditors’ Report thereon. (Resolution 1)

2. To declare a first and final one-tier tax exempt dividend of 0.375 cents per share for the financial year ended 31 December 2008. (Resolution 2)

3. To approve the Directors’ fees of S$234,500 for the financial year ended 31 December 2008 (31 December 2007: S$244,500). (Resolution 3)

4. To re-elect the following Directors retiring pursuant to Article 95 of the Company’s Articles of Association:-

Mr Guo Qiang (Resolution 4)

Mr Tay Siew Choon (Resolution 5)

Mr Tay Siew Choon will, upon re-election as Director of the Company, remain as Chairman of the Remuneration Committee and a member of the Nominating Committee respectively, and will be considered independent for the purposes of Rule 704(8) of the Listing Manual of The Singapore Exchange Securities Trading Limited.

5. To re-appoint Messrs KPMG LLP as auditors of the Company to hold office until the conclusion of the next Annual General Meeting and to authorise the Directors to fix their remuneration. (Resolution 6)

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Notice of Annual General MeetingAS SPECIAL BUSINESS

To consider and, if thought fit, to pass the following ordinary resolutions with or without modifications:-

6. Authority to allot and issue shares

(a) “That, pursuant to Section 161 of the Companies Act, Chapter 50, and the listing rules of the Singapore Exchange Securities Trading Limited, approval be and is hereby given to the Directors of the Company at any time to such persons and upon such terms and for such purposes as the Directors may in their absolute discretion deem fit, to:

(i) issue shares in the capital of the Company whether by way of rights, bonus or otherwise;

(ii) make or grant offers, agreements or options that might or would require shares to be issued or other transferable rights to subscribe for or purchase shares (collectively, “Instruments”) including but not limited to the creation and issue of warrants, debentures or other instruments convertible into shares;

(iii) issue additional Instruments arising from adjustments made to the number of Instruments previously issued in the event of rights, bonus or capitalisation issues; and

(b) (Notwithstanding the authority conferred by the shareholders may have ceased to be in force) issue shares in pursuance of any Instrument made or granted by the Directors while the authority was in force,

provided always that

(i) the aggregate number of shares to be issued pursuant to this resolution (including shares to be issued in pursuance of Instruments made or granted pursuant to this resolution) does not exceed 50% of the total number of issued shares excluding treasury shares of the Company, of which the aggregate number of shares (including shares to be issued in pursuance of Instruments made or granted pursuant to this resolution) to be issued other than on a pro rata basis to shareholders of the Company does not exceed 20% of the total number of issued shares excluding treasury shares of the Company, and for the purpose of this resolution, the issued share capital shall be the Company’s total number of issued shares excluding treasury shares at the time this resolution is passed, after adjusting for;

(a) new shares arising from the conversion or exercise of convertible securities, or

(b) new shares arising from exercising share options or vesting of share awards outstanding or subsisting at the time this resolution is passed provided the options or awards were granted in compliance with Part VIII of Chapter 8 of the Listing Manual of the Singapore Exchange Securities Trading Limited, and

(c) any subsequent bonus issue, consolidation or subdivision of the Company’s shares, and

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(ii) the 50% limit in (i) above may be increased to 100% for the Company to undertake pro-rata renounceable rights issue and unless revoked or varied by the Company at a general meeting, the authority shall continue in force until the conclusion of the next Annual General Meeting or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier.” (Resolution 7)

(See Explanatory Note 1)

7. Authority to grant options and to issue shares under Straco Share Option Scheme

“That authority be and is hereby given to the Directors of the Company to offer and grant options from time to time in accordance with the provisions of the Straco Share Option Scheme (the “Scheme”), and pursuant to Section 161 of the Companies Act, Chapter 50, to allot and issue from time to time such number of shares in the capital of the Company as may be required to be issued pursuant to the exercise of options granted under the Scheme, provided that the aggregate number of shares to be issued pursuant to the Scheme shall not exceed fifteen (15) per cent of the total number of issued shares excluding treasury shares of the Company from time to time, as determined in accordance with the provisions of the Scheme.” (Resolution 8)

(See Explanatory Note 2)

8. To transact any other ordinary business which may be properly transacted at an Annual General Meeting.

BY ORDER OF THE BOARD

Lotus Isabella Lim Mei HuaCompany Secretary

1 April 2009

Notice of Annual General Meeting

83

Notes:

1) A member of the Company entitled to attend and vote at the Meeting is entitled to appoint a proxy in his stead.

2) A proxy need not be a member of the Company.

3) If the appointor is a corporation, the proxy must be executed under seal or the hand of its duly authorised officer or attorney.

4) The instrument appointing a proxy must be deposited at the registered office of the Company at 10 Anson Road, #30-15 International Plaza, Singapore 079903 not later than 48 hours before the time appointed for the Meeting.

Explanatory Notes:-

1. The ordinary resolution in item no. 6 is to authorise the Directors of the Company from the date of the above Meeting until the next Annual General Meeting to issue shares and convertible securities in the Company up to an amount not exceeding in aggregate 50 percent of total number of issued shares excluding treasury shares of the Company, of which the total number of shares and convertible securities issued other than on a pro-rata basis to existing shareholders shall not exceed 20 percent of the total number of issued shares excluding treasury shares of the Company at the time the resolution is passed, for such purposes as they consider would be in the interests of the Company. This authority will, unless revoked or varied at a general meeting, expire at the next Annual General Meeting of the Company.

2. The ordinary resolution proposed in item 7 above, if passed, will empower the Directors of the Company to offer and grant options under the Straco Share Option Scheme and to allot and issue shares pursuant to the exercise of such options under the Straco Share Option Scheme not exceeding fifteen (15) per cent of the total number of issued shares excluding treasury shares of the Company from time to time.

Notice of Annual General Meeting

84

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STRACO CORPORATION LIMITEDRegistration Number : 200203482R(Incorporated in the Republic of Singapore)

PROXY FORM

IMPORTANT

1. For investors who have used their CPF monies to buy Straco Corporation Limited shares, the Annual Report is forwarded to them at the request of their CPF Approved Nominees and is sent FOR INFORMATION ONLY.

2. This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them.

*I/We

of

being *a member/members of Straco Corporation Limited (the “Company”), hereby appoint

Name AddressNRIC/

Passport No.Proportion of shareholdings to

be represented by proxy (%)

*and/or

as *my/our *proxy/proxies to vote for *me/us on *my/our behalf and, if necessary, to demand a poll, at the Annual General Meeting of the Company to be held at Amara Hotel Singapore, 165 Tanjong Pagar Road, Singapore 088539 on 24 April 2009 at 9.30 a.m. and at any adjournment thereof.

* I/we direct *my/our *proxy/proxies to vote for or against the Ordinary Resolutions to be proposed at the Annual General Meeting as indicated with an “X” in the spaces provided hereunder. If no specified directions as to voting are given, the *proxy/proxies will vote or abstain from voting at *his/their discretion.

No. Ordinary Resolutions For Against

1. To receive and consider the Audited Financial Statements of the Company for the financial year ended 31 December 2008 and the Directors’ Report and Auditors’ Report thereon.

2. To declare a first and final one-tier tax exempt dividend of 0.375 cents per share for the financial year ended 31 December 2008.

3. To approve the Directors’ fees of S$234,500 for the financial year ended 31 December 2008.

4. To re-elect Mr Guo Qiang pursuant to Article 95 of the Company’s Articles of Association.

5. To re-elect Mr Tay Siew Choon pursuant to Article 95 of the Company’s Articles of Association.

6. To re-appoint Messrs KPMG LLP as auditors of the Company and to authorise the Directors to fix their remuneration.

7. To authorise Directors to issue shares pursuant to Section 161 of the Companies Act, Chapter 50.

8. To authorise Directors to grant options and to issue shares under Straco Share Option Scheme.

Dated this day of 2009 Total Number of Shares Held

Signature(s) of Member(s)/Common Seal* Delete accordingly IMPORTANT. Please read notes overleaf

Notes:-

1. A member of the Company entitled to attend and vote at the Annual General Meeting is entitled to appoint not more than two proxies to attend and vote in his stead. Such proxy need not be a member of the Company.

2. Where a member of the Company appoints two proxies, he shall specify the proportion of his shareholding (expressed as a percentage of the whole) to be represented by each such proxy.

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

4. A corporation which is a member of the Company may authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the Annual General Meeting, in accordance with its Articles of Association and Section 179 of the Companies Act, Chapter 50 of Singapore.

5. The instrument appointing proxy or proxies, together with the power of attorney or other authority (if any) under which it is signed, or notarially certified copy thereof, must be deposited at the registered office of the Company at 10 Anson Road, #30-15 International Plaza, Singapore 079903 not later than 48 hours before the time set for the Annual General Meeting.

6. 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, Chapter 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 the number of shares. If the member has shares entered against his name in the Depository Register and shares registered in his name in the Register of Members of the Company, he should insert the aggregate number of shares. If no number is inserted, this form of proxy will be deemed to relate to all the shares held by the member of the Company.

7. The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of members of the Company whose shares are entered against their names in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if such members are not shown to have shares entered against their names in the Depository Register 48 hours before the time appointed for holding the Annual General Meeting as certified by The Central Depository (Pte) Limited to the Company.

8. A Depositor shall not be regarded as a member of the Company entitled to attend the Annual General Meeting and to speak and vote thereat unless his name appears on the Depository Register 48 hours before the time set for the Annual General Meeting.

AFFIXSTAMP

The Company Secretary

STRACO CORPORATION LIMITED10 Anson Road, #30-15 International Plaza

Singapore 079903

(Company Registration No.20020348R)

(Incorporated in the Republic of Singapore on 25 April 2002)10 Anson Road, #30-15 International Plaza Singapore 079903Tel: (65) 6223 3082 Fax: (65) 6223 3736www.stracocorp.com

Cover Art: The Starry Heavens Above Me and The Moral Law Within Me

230cm x 190cm, Oil & Acrylic on Canvas (2009) by Tan Swie HianCollection: Straco Corporation Limited

Contentsstraco.listedcompany.com/misc/ar2008.pdf · 2006 2007 2008 Revenue (S$’000) 32,300 18,504...

Documents

Transcript of Contentsstraco.listedcompany.com/misc/ar2008.pdf · 2006 2007 2008 Revenue (S$’000) 32,300 18,504...