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                    Annual Report 2009 | Koh Brothers Group Limited
 Our Promise
 At Koh Brothers, customer satisfaction is our priority. To achieve
 this, we are committed to delivering quality in our products,
 services and solutions. With the strong support of our business
 partners and dedicated staff, we strive to value-add by adopting
 an innovative work approach. With these strengths, we are
 confident to excel, to grow our organization and to achieve
 shareholder satisfaction.




                                                                Cover image: An artist’s impression of Punggol Waterway
                                                                                                            Source: HDB

 CONTENTS
 01   Corporate Profile
 06   Executive Chairman’s Message
 10   Operations Review by the Managing Director & Group CEO
 13   Corporate Information
 14   Milestones
 16   Financial Highlights
 18   Board of Directors
 22   Senior Mangement
 24   Group Structure
 25   Report on Corporate Governance
 37   Financial Contents
104   Statistics of Shareholdings
105   Notice of Annual General Meeting
109   Appendix
      Proxy Form
                                                               Corporate Profile
Listed on the SGX Mainboard in August 1994, Koh Brothers is a well-established
construction, property development and specialist engineering solutions provider,
which was started as a sole proprietorship in 1966 by Mr Koh Tiat Meng. Today, the
Group has more than 40 subsidiaries, joint ventures and associated companies spread
over Singapore, PRC, Indonesia, Malaysia and Vietnam.

Over the years, the Group has undertaken numerous              Koh Brothers’ diversified businesses have created multiple
construction and infrastructure projects with its A1 grading   revenue streams, with operating synergies arising from three
by the Building and Construction Authority (“BCA”). It is      core areas:
currently the highest grade for contractors’ registration
in this category, and allows the Group to tender for           • Construction and Building Materials
public sector construction projects of unlimited value.        • Real Estate
In addition, the Group has developed a name for itself
as a niche real estate developer, with an established          • Leisure & Hospitality
reputation for quality and innovation.                                                                                                   1




                                                                                                                                Koh Brothers Group Limited Annual Report
                                      Our Core Values
                                                        Statement
    With knowledge and honesty, we add value to organisational excellence through commitment, teamwork,
                       continuous self-development and opportunities for innovation.




                                                                                                                                2009
K O H B R O S
Knowledge         Openness           Honesty              Bonding         Responsibility Opportunities         Standards

Our culture       We need to be      We emphasize         Our culture     Our culture      The company         We strive
of continuous     open-minded        honesty in           of teamwork     encourages       provides equal      to achieve
improvement       to adapt and       every aspect of      allows us       employees        opportunity to      organisational
allows for the    respond well       our business,        to bring        to pursue set    all individuals     excellence
developmental     to changes         resulting in a       together the    goals and        to be innovative    in whatever
opportunities     according          company that is      best thinking   work towards     so as to bring      we set out to
that are          to the             trusted by our       from our        achieving high   the company to      perform.
responsive        environment.       society at large     professionals   standards of     the next level of
to the current                       whom we work         and deliver     performance.     excellence.
and future                           with.                optimum
challenges of                                             solutions to
the company                                               our clients’
and our                                                   complex
customers.                                                needs.
                                           Construction

                                             Our Construction division leads in providing a complete and diverse range of
                                             infrastructure project management, products, services and solutions for the construction
                                             industry. Current projects include the Downtown Line 1 Bugis Station, Punggol Waterway,
                                             the Common Services Tunnel at the Business Financial Centre and public housing at
                                             Choa Chu Kang.

                                             The iconic Marina Barrage was successfully completed in October 2008.




     2
Koh Brothers Group Limited Annual Report
2009
                                 Building Materials




                                                                                                             3




                                                                                                    Koh Brothers Group Limited Annual Report
                                                                                                    2009



Our Building Materials division provides total ready-mixed concrete solutions to the construction
industry. The supply chain includes cement, ready-mixed concrete, equipment rental and various
types of products such as pre-cast elements and interlocking concrete blocks.
                                           Real Estate




     4
Koh Brothers Group Limited Annual Report
2009




                                            Our Real Estate division provides quality property developments with specialised themes
                                            at choice locations. Koh Brothers Development Pte Ltd, established in 1993, is our wholly
                                            owned flagship company for this division.
Leisure & Hospitality
This division provides ‘no-frills’ hospitality services through its
Oxford Hotel brand name with more than 130 hotel rooms.




                                                                               5




                                                                      Koh Brothers Group Limited Annual Report
                                                                      2009
                                           Executive
                                           Chairman’s Message

                                           FY2009 was a Year oF corporate
                                           resilience and achievement. amid
                                           a recovering economY, the group
                                           encountered diFFiculties but
                                           managed to turn adversities into
                                           opportunities bY riding on the
                                           vibrant construction and propertY
                                           sectors in singapore.
     6
                                                                  Notwithstanding a growing local construction sector, our
Koh Brothers Group Limited Annual Report




                                                                  Construction and Building Materials division was affected by
                                                                  issues such as increasing competition, rising operating costs and
                                                                  a shortage of skilled personnel.

                                                                  To overcome these challenges, the Group streamlined its
                                                                  operations, redeploying staff and realigning structure to improve
                                                                  competencies. Innovative work solutions were developed; training
                                                                  efforts were stepped up; and internal synergies were harnessed.
                                                                  Costs were reduced through more effective procurement policies
                                                                  in place. Prudent management measures were implemented
                                                                  allowing closer relationships to be forged with our clients,
2009




                                                                  business associates, consultants, bankers and institutions.

                                                                  In line with these mentioned measures, we are pleased to report
                                                                  that by leveraging on the robust construction and property
                                                                  sectors in Singapore, we managed to ride out the storm well to
                                                                  deliver a satisfactory set of results for FY2009.

                                                                  Group revenue grew 53% to S$330.2 million in FY2009 from
                                                                  S$215.7 million in FY2008, on the back of improved
                                                                  performance from the Group’s Construction & Building
                                                                  Materials and Real Estate divisions.




                                                                                   Koh Tiat Meng       Executive Chairman
The Group, however, experienced a decline in net profit        In FY2009, we secured S$203.5 million worth of contracts
attributable to shareholders to S$10.7 million from S$27.7     from the HDB for the construction of Part One and Part Two
million over the same period. This was mainly attributed       of the Punggol Waterway in Punggol Town. Our works on                  7
to exceptional gains in FY2008 of S$25.0 million which         the Punggol Waterway are part of a larger HDB project to




                                                                                                                             Koh Brothers Group Limited Annual Report
arose from the disposal of Changi Hotel and acquisition of     make Punggol a vibrant people-centric heartland. Riding
a subsidiary’s shares from a minority interest. There was      on our proven expertise and track record in building and
no exceptional gain in FY2009.                                 civil engineering works, our strength in drainage work
                                                               and soil improvement techniques has given us an edge in
The Group maintained a healthy balance sheet with cash         clinching this contract.
and bank balances of S$42.9 million as at 31 December
2009, compared to S$34.4 million as at 31 December             During the year, we also secured a S$51.9 million
2008.                                                          HDB contract for constructing four blocks of 16-storey
                                                               residential buildings, one substation and one multi-storey
Proposed Dividend                                              car park at Choa Chu Kang. This third consecutive contract
The Board of Directors has recommended for approval at         from the HDB in 2009 is a testament to our track record




                                                                                                                             2009
the forthcoming AGM, a first and final cash dividend of        of projects with the HDB and a reflection of our expertise
0.3 cent per ordinary share to be paid out for FY2009.         and commitment to delivering quality works.
Upon approval at the AGM to be held on 29 April 2010,
the proposed dividend will be paid on 18 May 2010.             As a result of these contracts secured, the Construction
                                                               and Building Materials division ended the financial year
Key Developments in FY 2009                                    with a strong order book of S$485.0 million.
Clinching Construction Contracts
Despite an overall dip in the first half of FY2009, our        Resilient Property Market
Construction and Building Materials division had a fruitful    The Singapore residential property was buoyant in 2009
year, securing contracts of significant value. Together with   with a total of 14,725 units sold – about 3.5 times the
our joint venture partner Soletanche Bachy, we secured         number of units sold in 2008.
LTA Contract 903 worth S$582.0 million for the Downtown
Line 1 Bugis Station towards the end of FY2008. This is the    The upside of the property market in FY2009 provided
Group’s single largest contract ever clinched. It maintained   a window of opportunity for the Real Estate division to
Koh Brothers’ reliable track record and reputation as a        launch our two residential projects. The first was Fiorenza
quality home-grown infrastructure and civil engineering        at Florence Road, a 5-storey, 28-unit freehold residential
specialist in constructing mega projects including the         development inspired by Italian culture. This residential
iconic Marina Barrage.                                         development is the first to introduce “Glass Jacuzzi on all
                                                               balconies” and “Wi-Fi multi-room digital music system”.
                                           Executive
                                           Chairman’s Message
                                           The second residential project launched was the high-end
                                           development Lincoln Suites, a joint project together with
                                           three other consortium partners - Heeton Holdings Ltd,
                                           KSH Holdings Ltd and Lian Beng Group Ltd. Strategically
                                           located along Khiang Guan Avenue off Newton Road,
                                           Lincoln Suites is a 175-unit, 30-storey luxury twin tower
                                           condominium which boasts of a “Sky-Gym”, four different
                                           ‘wings’ of facilities and a wireless multi-room music
                                           system.

                                           The Group is encouraged by the positive responses
                                           through sales generated by the two property residential
                                           projects.

                                           Enhancing Our Talent
     8
                                           Our people play an instrumental role in making the Group
                                           a leading player in its key businesses. During the course
Koh Brothers Group Limited Annual Report




                                           of the year, we stepped up our efforts to cultivate people
                                           by honing talents in their field of expertise. In addition
                                           to skills development, training courses for technical,
                                           safety and site for relevant personnel were conducted.
                                           Programmes for engineers were also implemented, with
                                           the aim of skills upgrading and improving competence.
                                                                                                         We are encouraged by the government’s decision to
                                           In promoting cohesiveness and esprit de corps amongst         invest more on infrastructure works. Being an established
                                           our staff, Senior Management led a ‘Strategic Review’         infrastructure specialist with a proven track record in
                                           exercise to help individuals better understand the            collaborating with all government agencies, the Group is
                                           importance of teamwork and the pivotal roles they play        well positioned to participate more in this area. Securing
2009




                                           towards the Group’s progress.                                 more public infrastructure projects would also mean
                                                                                                         a spillover of activities which will benefit our building
                                           Improving Business Outlook                                    materials unit.
                                           For 2010, the Ministry of Trade and Industry expects the
                                           Singapore economy to grow between 4.5% and 6.5%.              On the back of a sustained economic recovery in
                                           Against this positive scenario, the Singapore Building        Singapore together with an active property market in
                                           and Construction Authority has projected the construction     2010, we believe our Real Estate division will continue to
                                           demand in 2010 to reach S$21 - S$27 billion in terms of       perform well. We will continue to expand our land bank
                                           contractual value, and around S$18 - S$25 billion per         by identifying locations that will cater to the lifestyle
                                           year in 2011 – 2012.                                          needs of the home buyers.

                                           Around 65% of the construction demand in 2010 is              Due to the financial turmoil and H1N1 flu epidemic in
                                           expected to come from public sector infrastructure projects   2009, our Leisure & Hospitality division took a beating
                                           such as the MRT Downtown Line Stage 3, the makeover of        in terms of declining average occupancy rates (“AOR”)
                                           Victoria Theatre/Concert Hall, the conversion of the former   and average room rates (“ARR”). However, in the current
                                           Supreme Court building and City Hall to the National Art      financial year, the business outlook for this division is
                                           Gallery, industrial facilities at Seletar Aerospace Park,     positive, as we believe that the improving global economy
                                           Fusionopolis 2A, other home improvement and estate            will have a positive impact on tourism and tourist arrivals
                                           renewal programmes by the HDB and other institutions.         in Singapore.
This positive trend, coupled with the opening of the two        Alocassia, we are optimistic that FY2010 will be a better
Integrated Resorts, the increasing number of international      year for the Leisure & Hospitality division.
conventions lined up, and the expected opening of the
Bras Basah MRT Station which is located close to our            We will continue to strengthen our human resource
Oxford Hotel, will augur well for our Leisure & Hospitality     management through improved training programmes.
division in 2010. Currently, our serviced apartments,           More importantly, having a management structure that is
Alocassia, is undergoing a makeover and rebranding              lean, flexible and prudent will help us to respond quickly
exercise. It will eventually be rebranded under the Oxford      to the changing economic environment. The Group will
Hotel brand name, which we believe will improve our             also look out for opportunities that will enable us to
AOR and ARR.                                                    diversify our earnings base by branching out overseas
                                                                through strategic alliances.
The Road Ahead
The Group has weathered several crises in the past, and         With a strong balance sheet, and a healthy order book,
each time we have come out leaner and stronger. Moving          the Group expects to continue to do well in the upcoming
forward, there is still a need to exercise constant vigilance   financial year.
to keep our cost structure tight, and at the same time                                                                                  9
offer high quality services and timely work deliveries. We      Good Corporate Citizen




                                                                                                                               Koh Brothers Group Limited Annual Report
are also conscious of the impending increase in foreign         During the year under review, the Group continued to fulfill
workers’ levy. We will continue to stay focused on our          its part in corporate social responsibility. We participated
costs, quality and delivery services as we navigate through     and donated towards a few projects including the Lunar
these challenges. For our medium and long term growth,          New Year River Hong Bao Show. We remain committed to
we will have to formulate our business strategies to            do our part as a good corporate citizen.
align ourselves with the Economic Strategies Committee’s
blueprint whose key thrust is on higher productivity and        Acknowledgements
innovation.                                                     On behalf of the Board of Directors, I wish to take this
                                                                opportunity to record our sincere appreciation to our
Mapping Our Future Growth                                       customers and business partners for their support.
For the Construction and Building Materials division, we        Kudos also goes to the management and our employees




                                                                                                                               2009
will continue to enhance our technical expertise and track      for their unwavering commitment and hard work. The
record, leverage on our internal synergies to develop           Group would not have been able to deliver a good
innovative work solutions with improved design and              performance during this period of economic uncertainty
quality, and invest in better machinery and equipment to        without the invaluable contribution and dedicated
increase productivity.                                          efforts of both the management and the staff. Thank
                                                                you for the great work done, and let’s continue to work
As for our Real Estate division, we will monitor the market     together towards greater success in the next financial
closely and market our residential units for sale at an         year.
appropriate time. In addition, we can continue to expect
stable, recurring income streams from our investment            Koh Tiat Meng
properties.                                                     Executive Chairman

Given the upturn in the tourism sector, coupled with            25 March 2010
improvements made to our serviced apartments,
                                           Operations Review by
                                           the Managing Director
                                           & Group CEO
                                           FY2009 started on a weak note
                                           with singapore in the midst oF a
                                           recession. there was a general sense
                                           oF pessimism, with the government
                                           introducing various measures to
                                           boost the economY. FortunatelY,
                                           this has had a positive impact as the
                                           government steered the economY
10
                                           out oF recession in a progressive
                                           manner.
Koh Brothers Group Limited Annual Report




                                                                 For the Koh Brothers Group, the Construction and Building Materials
                                                                 division had to cope with increased competition and falling margins.
                                                                 In the midst of this challenging period, the Group was able to secure
                                                                 contracts of fairly significant value and scope. Seizing the opportunity
                                                                 created by the recovering property market in 2009, our Real Estate
                                                                 division successfully launched two property projects. Amidst a
                                                                 tourism downturn, our Leisure & Hospitality division underwent a
                                                                 realignment through a revamp of its serviced apartments, with the
                                                                 aim of positioning itself for future growth.
2009




                                                                 Despite the challenging market conditions, the Group performed well,
                                                                 buoyed by good results from our Construction and Building Materials
                                                                 division and the Real Estate division.

                                                                 Construction and Building Materials Division
                                                                 The global financial crisis and recession in Singapore affected the
                                                                 construction industry in 2009 even though it is one of the few




                                                                                  Koh Keng Siang       Managing Director & Group CEO
sectors that registered growth. The value of construction
contracts awarded in 2009 amounted to S$21.0 billion
and was largely underpinned by public sector works.
While construction of HDB flats slowed down in 2009,
civil engineering works reached a historical high of
S$8.0 billion.

The Construction and Building Materials division recorded
a turnover of S$292.0 million in FY2009 compared
to S$186.6 million achieved in FY2008. This division
accounted for 88% of the Group’s turnover. With the
increase in turnover, profitability of this division increased
to S$8.7 million from S$2.2 million last year.

Construction Segment
Projects clinched during FY2009 include:                                                                                      11




                                                                                                                              Koh Brothers Group Limited Annual Report
• S$203.5 million worth of contracts from the HDB for the
  construction of Part One and Part Two of the Punggol
  Waterway in Punggol Town. The HDB has slated
  Punggol to become a vibrant new township. Part One
  of the project is expected to be completed by the end
  of 2010.
                                                                 works with emphasis on the Fiorenza and Choa Chu Kang
• a S$51.9 million HDB contract for constructing four            projects.
  blocks of 16-storey residential buildings, one substation
  and one multi-storey car park at Choa Chu Kang. Work           Building Materials Segment
  commenced last year and is progressing well.                   The performance of the Building Materials segment in




                                                                                                                              2009
                                                                 FY2009 had improved over FY2008. This was largely
During the year under review, we also completed                  attributted to an increase in business by our Precast arm.
construction of the River Valley High School and Hostel.         However, pricing of other building materials remained
The project is worth approximately S$80.0 million.               competitive during the year.

We commenced construction works of the Fiorenza                  Real Estate Division
project in August 2009 after the successful launch of            Amidst the recession in 2009, a vibrant residential
the condominium earlier in the year. We are targeting to         property market prevailed. This is reflected by the
complete the construction of this project by 2011.               strong showing of the mass market and mid-tier property
                                                                 segments. The launch of these projects in the first half
We also commenced work at the Downtown Line 1 Bugis              of 2009 at attractive prices, coupled with the stock
Station in 2009. This project will be ongoing for the next       market rally, brought about the return of home buyers.
few years.                                                       The strong take-up then filtered upwards to the prime
                                                                 segment by the second half of 2009, underpinned by the
During FY2009, a Quality Department was set up to                improving business fundamentals that further boosted
review and improve our processes and procedures                  market confidence. Another interesting property trend
so as to increase our capabilities. Moving forward, we           in 2009 was the increase in the number of small-format
are concentrating on the public sector housing and               apartments sold. A number of these apartments were fully
institutional building projects. One of our main foci this       sold within a few days of their launch primarily because
year is to enhance our quality expertise of our building         of their relative affordability to homebuyers.
                                           Operations Review
                                           by the Managing
                                           Director & Group
                                           CEO

                                           Given the buoyant market conditions, it is small wonder
                                           then that the Real Estate division performed much
                                           better than was initially feared at the start of the year.
                                           Turnover for this division, which came from the sale of
                                           our residential apartments and rental income from our
                                           investment properties, amounted to S$34.8 million
                                           in FY2009, an increase of 59% over S$21.9 million in
                                           FY2008. Proceeds from the sale of units in the Fiorenza
                                           and the Lumos contributed to the turnover. Profit for this
                                           division increased by 62% to S$8.4 million in FY2009.
12
                                           For 2010, Singapore’s GDP growth has been forecast at
Koh Brothers Group Limited Annual Report




                                           between 4.5% and 6.5%. With the world economy slowly         brandname. The new Serviced Suites & Residences,
                                           coming out of the woods and Singapore’s continued            when completed, will be supported by an exclusive mall
                                           economic recovery, we expect the property market to          comprising a French restaurant, Italian restaurant and
                                           hold its own. We expect that the first half of 2010 will     an Italian Ice-Cream and Café. We have also targeted a
                                           see a wider spread of project launches for the mass          fast-food chain, convenience store and a lifestyle beauty
                                           market segment as well as those in city fringe and           salon and spa as additional tenants.
                                           prime locations. For mass market and city fringe 99-year
                                           leasehold projects, prices are likely to cross the S$1,000   With the upturn in the regional tourism industry, and the
                                           psf barrier because of their near-city location or their     opening of the Integrated Resorts, we expect Singapore’s
                                           proximity to an MRT station. We anticipate a moderate        hospitality industry to benefit from the anticipated
                                           take-up in 2010. Given this scenario, we expect to sell      increase in tourist arrivals. We are optimistic that the
2009




                                           more units of the Fiorenza and Lincoln Suites this year.     business outlook for the Leisure & Hospitality division
                                                                                                        will improve in the current financial year.

                                           Leisure & Hospitality Division                               ‘Bouquet’ of Appreciation
                                           This division operated under tough conditions that           Judging by the business indicators to date, FY2010
                                           prevailed in 2009 – the global financial crisis and credit   promises to be a better year for Koh Brothers. However,
                                           crunch, the H1N1 swine flu outbreak coupled with the         we will not rest on our laurels but will continue to give
                                           ‘loss’ of revenue from Changi Hotel and Asian Hotel which    our best efforts. Building on our track record, we are well
                                           were sold in FY2008. Nevertheless, the average occupancy     positioned to take advantage of the improving market
                                           rate was a respectable 70%. Revenue for the division was     conditions to deliver a better performance. The support
                                           S$3.3 million, down 54% from the preceding financial         of our customers and business partners has been vital
                                           year. Profit for the year was consequently reduced.          to us. Credit must also be given to the management and
                                                                                                        staff bound by a strong esprit de corps and concerted
                                           In FY2010, we will include our Alocassia Serviced            efforts. Barring unforeseen circumstances, we look
                                           Apartments with 45 units of Suites into this division.       forward to another year of growth in FY2010.
                                           Capitalising on our Oxford brandname, we will rebrand
                                           the apartments as part of the Oxford Group of Hotels         Koh Keng Siang
                                           and Serviced Suites. Located in the prime district along     Managing Director & Group CEO
                                           Bukit Timah Road, the Alocassia Serviced Apartments
                                           is currently undergoing upgrading to reflect its new         25 March 2010
                                        Corporate Information


Registered Office                                    Remuneration Committee
11 Lorong Pendek                                     Lai Mun Onn (Chairman)
Koh Brothers Building                                Lee Khoon Choy
Singapore 348639                                     Ling Teck Luke
Tel: (65) 6289 8889                                  Gn Hiang Meng
Fax: (65) 6841 5400
Website: www.kohbrothers.com                         Auditors
                                                     PricewaterhouseCoopers LLP
Board of Directors                                   (Certified Public Accountants)
Koh Tiat Meng (Executive Chairman)                   8 Cross Street
Koh Teak Huat (Executive Deputy Chairman)            #17-00 PWC Building
Koh Keng Siang (Managing Director & Group CEO)       Singapore 048424
Koh Keng Hiong (Executive Director & Deputy CEO,     Partner-in-charge: Lee Kok Hooi (appointed since
  Leisure & Hospitality and Real Estate Divisions)    financial year ended 31 December 2005)
Quek Chee Nee (Non-Executive Director)                                                                  13
Lee Khoon Choy (Independent Director)                Company Secretary




                                                                                                        Koh Brothers Group Limited Annual Report
Ling Teck Luke (Independent Director)                Kem Huey Lee Sharon
Lai Mun Onn (Independent Director)
Gn Hiang Meng (Independent Director)                 Share Registrar
                                                     Tricor Barbinder Share Registration Services
Audit Committee                                      (A division of Tricor Singapore Pte. Ltd.)
Lee Khoon Choy (Chairman)                            8 Cross Street
Ling Teck Luke                                       #11-00 PWC Building
Lai Mun Onn                                          Singapore 048424
Gn Hiang Meng

Nominating Committee
Ling Teck Luke (Chairman)




                                                                                                        2009
Lai Mun Onn
Gn Hiang Meng
Koh Keng Siang
                                           Milestones
                                                                                                           1990, 1991, 1992,
                                                                                                           1993, 1994
                                           Building and supporting                                         Registered with the CIDB
                                           Singapore’s infrastructure for                                  as G8 Building and Civil
                                                                                                           Engineering Contractor
                                           more than 40 years                                              Bukit Timah Flood Alleviation
                                                                                                           Scheme Project

                                                                                                           Refurbished and renovated
                                                                                                           Asian Hotel in Vietnam and
                                                                                                           Changi Hotel in Singapore

                                                                                                           New Hall of Residence for NTU
                                               1966

                                           Founded and
                                           established by
                                           Mr Koh Tiat Meng
14
Koh Brothers Group Limited Annual Report




                                           1960s                 1970s                    1980s                      1990s
2009




                                                                                  1982, 1983,              Set up Automated
                                                                                  1987, 1988               Batching Plants
                                                              1974, 1977,                                  First City Complex Project
                                                              1979                G & W began              in Batam, Indonesia
                                                                                  equipment sale and
                                                                                  rental operations        Development of HDB
                                                              Rochor Canal
                                                              Flood Alleviation                            Flats in Jurong West
                                                                                  Production of concrete
                                                              Project
                                                                                  products by G & W        Holland Road/Farrer
                                                                                                           Road/Queensway
                                                              Sungei Ulu                                   Interchange Project
                                                                                  Established PT. Koh
                                                              Drainage Project
                                                                                  Brothers Indonesia
                                                                                  and ventured into real   SASCO Hanger Complex
                                                              Set-up G & W                                 Project
                                                                                  estate development in
                                                              Ready-Mix Pte Ltd
                                                                                  Indonesia
                                                              providing ready-                             Substructures and
                                                              mixed concrete                               Civil Works for NUH

                                                                                                           Listed on the Mainboard
                                                                                                           of SGX
                                                                               2007, 2008,
                                                                               2009, 2010
                          2000, 2001,
                          2002
                                                                              The Lumos
1995, 1996, 1997                                                              (Real Estate Project)
                          Building & Electrical
1998, 1999
                          Works at Jurong West
                                                                              Bungalows @
Improvements to           Neighbourhood 6
                                                                              Caldecott
Kallang River (from                                                           (Real Estate Project)
Braddell Road to Jalan    Received two
Toa Payoh)                BCA awards for
                                                                              Construction of
                          Construction
Awarded by CIDB for                                                           River Valley High
                          Excellence 2000 (Civil
Construction Excellence                                                       School & Hostel
                          Engineering) and for
of Reconstruction of      Construction of Holland
Geylang River
                          Road/Farrer Road/
                                                                              Upgrading of Vehicular
                          Queensway Interchange
Land Reclamation                                                              Bridges Project
Phase 1 Project at
Xinjin River Mouth,       Ranked amongst the
                                                                              Fiorenza
Shantou, China            top companies in
                                                                              (Real Estate Project)
                          Singapore 1000
G & W Ready-Mix
and G & W Concrete
awarded ISO 9002
certification
                                                                                                        15




                                                                                                        Koh Brothers Group Limited Annual Report
                                                          2000s




                                                                                                        2009
Opening of the Group’s                               2003, 2004,              Construction of
Oxford Hotel              Extension/Addition &       2005, 2006               Bugis Station and its
                          Alteration to existing                              Associated Tunnels for
Building works at         Singapore Conference                                Downtown Line Stage 1
Choa Chu Kang             Hall                      Starville (Construction
Neighbourhood 4                                     and Real Estate           Construction of Punggol
                          Construction of SAF       Project)                  Waterway Part One
Construction of Civil
Defence Academy at        Warrant Officers &                                  Project
                          Specialists Club          Construction of
Jalan Bahar                                         Common Services           Construction of Punggol
                          Design & Build for        Tunnel Project in         Waterway Part Two
Construction of
Container Stacking Yard   Provost & Armour          Marina South              Project
for Container Terminal    Clusters in Kranji Camp
at Pasir Panjang Road                               Changi Water              Construction of HDB
                          Singapore Civil Defence   Treatment Plants          flats in
Sun Plaza                 Force HQ complex          Project                   Choa Chu Kang
(Construction and Real
Estate Project)           The Sierra                Marina Barrage Project    Lincoln Suite
                          (Real Estate Project)                               (Real Estate Project)
The Capri
(Real Estate Project)
                          The Montana
                          (Real Estate Project)
                                           Financial Highlights

                                            Results of operations for the year ended 31 December

                                            S$’000                                                          2005               2006              2007         2008        2009
                                            Sales*                                                        315,856          259,561            285,797      215,674     330,162
                                            Profit before income tax                                        8,650            7,162             52,103 *1    26,922      10,629 *1
                                            Income tax expense                                             (4,598)          (1,464)            (8,655)        (219)       (501)
                                            Profit after income tax                                         4,052            5,698             43,448       26,703      10,128

                                            Attributable to:
                                            Equity holders of the Company                                     339              4,063           39,694 *1    27,710      10,688 *1
                                            Minority interests                                              3,713              1,635            3,754       (1,007)       (560)
                                                                                                            4,052              5,698           43,448       26,703      10,128
                                            *
                                                included discontinued operations for 2005
                                            *1
                                                 included fair value gain/loss on investment properties




16                                          Earnings per share (in cents)

                                            Basic                                                            0.07               0.85              8.28         5.78        2.23
Koh Brothers Group Limited Annual Report




                                            Diluted                                                          0.07               0.85              8.28         5.78        2.23

                                            Financial position as at 31 December

                                            S$’000                                                          2005               2006              2007         2008        2009
                                            Property, plant and equipment                                  73,839           74,819              77,916       58,319      66,080
                                            Intangible asset                                                    -                -                 145          182           -
                                            Associated companies                                             (292)            (352)               (393)         500         581
                                            Other long-term assets                                         83,973          115,079             204,688      204,287     202,605
                                            Net current assets                                             17,395           47,016              39,409       90,077     107,487
                                            Deferred income tax liabilities                                (3,222)          (1,345)            (16,801)     (17,203)    (16,323)
2009




                                            Finance leases                                                 (2,853)          (3,931)             (2,980)      (3,239)     (6,274)
                                            Bank term loans                                               (84,588)        (139,335)           (147,345)    (176,613)   (186,874)
                                            Other long-term liabilities                                    (4,772)          (9,212)                  -       (2,365)     (4,228)
                                                                                                           79,480           82,739             154,639      153,945     163,054

                                            Share capital                                                  47,961            47,966            47,966       47,966      47,966
                                            Share premium                                                       5                 -                 -            -           -
                                            Capital reserves                                                5,886             5,886             5,886        5,886       1,411
                                            Revenue reserve                                                 5,705             9,288            77,077      103,348     117,362
                                            Currency translation reserve                                   (6,950)           (8,041)           (7,618)      (6,541)     (5,920)
                                            Share capital and reserves                                     52,607            55,099           123,311      150,659     160,819
                                            Minority interests                                             26,873            27,640            31,328        3,286       2,235
                                            Total equity                                                   79,480            82,739           154,639      153,945     163,054

                                            Net tangible assets
                                             per share (in cents)*                                          10.97              11.49             25.71        31.41       33.53

                                            * The net tangible assets per share is based on the issued share capital of 479,613,400 shares.
                Revenue                                        Gearing Ratio                     Profit After Income Tax
                ($’000)                                          (Times)                                 ($’000)



350                                                     4.5                                      50
                                              330,162




                                                                     4.28

300                                                      4
      315,856




                                                                                                                      43,448
                                                                                                 40
                          285,797




250                                                     3.5
                259,561




                                                              3.57




                                                                                                 30                                              17
200                                                      3
                                    215,674




                                                                                                                                                 Koh Brothers Group Limited Annual Report
                                                                                                                               26,703
150                                                     2.5
                                                                                                 20

100                                                      2
                                                                            2.06

                                                                                   1.97




                                                                                                 10




                                                                                                                                        10,128
 50                                                     1.5
                                                                                          1.61




                                                                                                              5,698
                                                                                                      4,052




 0                                                       1                                        0
      05         06       07        08         09              05     06      07    08     09         05       06       07     08        09




                                                                                                                                                 2009
                                                  18
2009   Koh Brothers Group Limited Annual Report




                                                       Board of Directors
Koh Tiat Meng
Executive Chairman

Mr Koh is an executive and non-independent Director of Koh Brothers Group Limited. He was appointed
a Director on 2 February 1994 and was last re-elected on 23 April 2009. He is Chairman of the Board of
Directors and Executive Committee.

He founded the Group in 1966 and has more than 40 years of experience in the construction industry. He
was the driving force in charting the strategic expansion of the Group’s businesses in real estate, leisure &
hospitality, construction and building materials as well as spearheading its activities into China, Malaysia,
Indonesia and Vietnam.

In 2009, he was awarded the Public Service Medal (PBM) by the President of Singapore for his contributions
to social and community services.


Koh Teak Huat
Executive Deputy Chairman
                                                                                                                19
Mr Koh is an executive and non-independent Director of Koh Brothers Group Limited. He was appointed
a Director on 2 February 1994 and was last re-elected on 23 April 2009. He is Deputy Chairman of the




                                                                                                                Koh Brothers Group Limited Annual Report
Board of Directors and Executive Committee.

He joined the Group in 1970 and was a major contributor to the growth of the Group’s core businesses.
He has more than 30 years of experience in the construction industry, with in-depth expertise in managing
drainage, excavation and reclamation projects.

He was conferred the title of Dato’ Paduka Mahkota Terengganu Yang Kehormet, D.P.M.T. by the Sultan of
Terengganu, Malaysia on 29 April 1994.

He is also a Director of Brothers (Holdings) Limited.


Koh Keng Siang (Francis)




                                                                                                                2009
Managing Director & Group Chief Executive Officer

Mr Koh is an executive and non-independent Director of Koh Brothers Group Limited. He was appointed
a Director on 5 May 1994 and was last re-elected on 29 April 2005. He is a member of the Executive
Committee and Nominating Committee.

He has been with the Group since 1987 and held various positions in administration, finance and project
management. He has been the main driving force in implementing the Group’s business expansion into
real estate, and leisure & hospitality. He was responsible for the formulation and implementation of
strategic plans to achieve the Group’s goal of establishing its brand name in Singapore as a builder of
quality homes.

He holds a Master degree in Business Administration from the National University of Singapore and
a Bachelor degree with Honours in Engineering from the University of Birmingham. He was conferred
the Best Executive Award 1997-1998 by His Excellency, The State Minister of Industry and Trade of
the Republic of Indonesia, Mr Ir T Airwibowo in 1997. He is an Hononary Treasurer of the Singapore
Badminton Association.
                                           Board of Directors



                                                Koh Keng Hiong (Joseph)
                                                Executive Director and Deputy Chief Executive Officer (Real Estate and Leisure & Hospitality divisions)

                                                Mr Koh is an executive and non-independent Director of Koh Brothers Group Limited. He was appointed
                                                a Director on 7 February 2007 and was last re-elected on 23 April 2009. He is a member of the Executive
                                                Committee.

                                                He began his career with the Group in 1991 and has been involved in many key business development
                                                projects in the Group’s core businesses in Vietnam and Singapore. With 18 years of experience, Mr Koh has
                                                amassed an extensive portfolio of skills and capabilities spanning across a broad spectrum of businesses
                                                in hospitality and property. His vast array of expertise has seen him engaged in key corporate and
                                                operations functions such as strategic business management, corporate planning, sales and marketing,
                                                finance and human resource, information technology, as well as business development.

                                                In recognition of his contributions to the Group, he was promoted to Deputy Chief Executive Officer of the
                                                Real Estate and Leisure & Hospitality divisions in 2010.

                                                He holds a Bachelor of Science degree with Honours in Business Administration, majoring in Finance, from
20                                              the San Francisco State University, California, USA.
Koh Brothers Group Limited Annual Report




                                                Quek Chee Nee
                                                Non-Executive Director

                                                Madam Quek is a non-executive and non-independent Director of Koh Brothers Group Limited. She was
                                                appointed a Director on 2 February 1994 and was last re-elected on 25 April 2008.

                                                She joined the Group in 1969 and assisted the Chairman in running the Group’s construction activities
                                                when it was still undertaken as a sole proprietorship. She played a pivotal role in helping the Group
                                                corporatise its businesses and achieve major success before relinquishing her executive duties.

                                                She has more than 30 years of experience in the Construction industry and contributed significantly to
                                                the growth of the Group’s businesses.
2009




                                                Lee Khoon Choy
                                                Independent Director

                                                Mr Lee is a non-executive and independent Director of Koh Brothers Group Limited. He was appointed a
                                                Director on 30 July 1994 and was last re-elected on 23 April 2009. He is Chairman of the Audit Committee
                                                and a member of the Remuneration Committee.

                                                He is Chairman of Eng Lee Investments Consultants Pte Ltd. From 1959 to 1984, he held key appointments
                                                in the Singapore Parliament. He was the Minister of State for the Ministry of Culture from 1965 to 1968,
                                                Minister of State for the Prime Minister’s office from 1968 to 1970 and Senior Minister of State for Foreign
                                                Affairs between 1974 and 1978. Between the period from 1978 to 1984, he was also the Senior Minister
                                                of State for Prime Minister’s office and Deputy Chairman for People’s Association. He was the Ambassador
                                                to Egypt, Ethiopia, Lebanon and Yugoslavia and High Commissioner to Pakistan from 1968 to 1970,
                                                Ambassador to the Republic of Indonesia from 1970 to 1974, and Ambassador to Japan and the Republic
                                                of Korea from 1984 to 1988.

                                                He was awarded the Meritorious Service Star (Bintang Bakti Utama, B.B.U.) by President Suharto of
                                                Indonesia in 1974 for his services rendered in promoting relations between Indonesia and Singapore. He
                                                was also awarded a Scholarly Achievement Award by the Japan Institute of Oriental Philosophy in 1986
                                                for his dedicated and outstanding achievements in the research and development of eastern philosophy,
                                                thought and culture.
In 1988, he was further awarded the Meritorious Diplomatic Service Star (O.D.S.M.) by President Roh
Tae-Woo of the Republic of Korea (“ROK”) for his contributions towards promoting relations between
ROK and Singapore. In recognition of his contribution towards the establishment of Singapore, he was
awarded the Distinguished Service Order (Darjah Utama Bakti Cemerlang, (D.U.B.C.)) by the Singapore
Government in 1990.

He is a former Director of Metro Holdings Ltd and L&M Group Investments Ltd.


Ling Teck Luke
Independent Director

Mr Ling is a non-executive and independent Director of Koh Brothers Group Limited. He was appointed
a Director on 28 May 2003 and was last re-elected on 23 April 2009. He is Chairman of the Nominating
Committee and a member of the Audit Committee and Remuneration Committee.

He holds a Bachelor of Science degree in Engineering from Bristol University, United Kingdom.
                                                                                                           21
He has also attained other professional qualifications such as MIE (S), MIE (M) and PE (Civil). In 1966,
he was awarded a post-graduate training on flood alleviation works in the United Kingdom and in 1969,




                                                                                                           Koh Brothers Group Limited Annual Report
a scholarship to do a general course at the Asian Institute of Economic Development & Planning in
Bangkok.


Lai Mun Onn
Independent Director

Mr Lai is a non-executive and independent Director of Koh Brothers Group Limited. He was appointed a
Director on 30 July 1994 and was last re-elected on 25 April 2008. He is Chairman of the Remuneration
Committee and a member of the Audit Committee and Nominating Committee.

He is the Managing Partner of Lai Mun Onn & Co., a law firm in Singapore.




                                                                                                           2009
He graduated from the University of London with a Bachelor of Law degree with Honours and obtained
his Barrister at Laws from Lincoln’s Inn. In 1982, he was admitted as an Advocate and Solicitor of the
Supreme Court of Singapore. He is presently a Notary Public and Commissioner for Oaths, and a member
of the Singapore Institute of Arbitration.

He is also a Director of Super Coffeemix Manufacturing Ltd.


Gn Hiang Meng
Independent Director

Mr Gn is a non-executive and independent Director of Koh Brothers Group Limited. He was appointed
a Director on 16 August 2007 and was last re-elected on 25 April 2008. He is a member of the Audit
Committee, Remuneration Committee and Nominating Committee.

He was with the United Overseas Bank Group for 28 years and prior to his resignation in 2001, was the
Senior Executive Vice President in charge of investment banking and stock-broking businesses. He was
the Deputy President of UOL Group prior to his retirement in 2007.

He graduated with a Bachelor degree with Honours in Business Administration from the then University
of Singapore.

He is also a Director of SM Summit Holdings Limited and a former director of Singapore Land Limited and
United Industrial Corporation Limited.
                                           Senior Management

                                           John Lee                                                      He has over 30 years of experience in the property and
                                           Chief Financial Officer                                       building & civil engineering industries and held many
                                                                                                         senior positions in both private and listed companies
                                           Mr Lee joined the Group in 2008 as Chief Financial Officer    prior to joining the Group.
                                           overseeing the Group’s finance function. He is responsible
                                           for financial planning and management, treasury and           He graduated from Singapore Polytechnic with a diploma
                                           corporate finance investment activities as well as risk       in Building. He has completed an Executive Management
                                           management.                                                   course conducted by UCLA-USA and obtained a post
                                                                                                         graduate diploma in Financial Management from the
                                           He has extensive experience in management, corporate,         Singapore Institute of Management.
                                           accounting and finance functions in various industries.

                                           He is a Certified Public Accountant, and a Fellow of the      Goh Poh Khim
                                           Institute of Certified Public Accountants of Singapore        Executive Director, Construction unit
                                           and the Association of Chartered Certified Accountants.
                                           He is also an Associate of the Chartered Institute of         Mr Goh joined the Group’s Construction unit as an As-
22                                         Management Accountants and the Institute of Chartered         sistant General Manager (Projects) in 2002. He managed
                                           Secretaries and Administrators.                               the Group’s various mega projects such as Marina Barrage
                                                                                                         and River Valley High School. In recognition of his contri-
Koh Brothers Group Limited Annual Report




                                                                                                         butions and dedication, he was promoted to a director of
                                           Loh Seak Yau                                                  the Construction unit in 2008 overseeing all its building
                                           Group Operations Officer                                      related projects. He is responsible for the performance
                                                                                                         and growth of the building section within the Construc-
                                           Mr Loh joined the Group in 2008 as a Group Operations         tion unit.
                                           Officer. He assists the Managing Director & Group Chief
                                           Executive Officer in overseeing the Group’s operations.       He has more than 25 years of project management
                                                                                                         experience in the construction industry and held senior
                                           He has more than 20 years of extensive experience in          positions in various construction companies prior to
                                           the construction industry in building (both residential and   joining the Group.
                                           institutional), civil engineering and infrastructure works.
                                                                                                         He holds a Bachelor degree in Business from the Royal
2009




                                           Prior to joining the Group, he held senior positions in
                                           various construction and engineering companies.               Melbourne Institute of Technology, Australia.


                                           He holds a Master degree in Business Administration as
                                           well as a Bachelor degree in Civil Engineering from the       Tham Kok Peng
                                           National University of Singapore.                             Executive Director, Construction unit

                                                                                                         Mr Tham joined the Group in 2006 overseeing the Changi
                                           Sim Cheng Chye (Samuel)                                       Water Reclamation Plant project. He was promoted to a
                                           Chief Executive Officer,                                      director of the Construction unit in 2009 responsible for
                                           Construction and Building Materials division                  tendering and overseeing infrastructure projects such as
                                                                                                         the Downtown Line 1 Bugis Station and its Associated
                                           Mr Sim joined the Group in 2010 as the Chief Executive        Tunnels, and Punggol Waterway.
                                           Officer of Construction Consortium Pte. Ltd., the flagship
                                           company for the Group’s construction and building             He has over 23 years of experience in the construction
                                           material division. He oversees and is responsible for the     industry and eight years of experience as a consultant.
                                           overall management and performance of this division.          His portfolio includes the successful completion of Mass
Rapid Transit, Light Rail Transit, Deep Tunnel Sewerage       Koh Siew Kiang
System, Industrial Parks and Water Works projects.            Operations Director, Building Materials unit

He has been a Professional Engineer since 1983 and is a       Ms Koh was transferred from the Group’s Construction
senior member of the Institute of Engineers, Singapore        unit to the Building Materials unit in 1994 and was
(SMIES).                                                      subsequently promoted to General Manager for its ready-
                                                              mixed concrete and equipment operations. She was
                                                              appointed Operations Director of the Building Materials
Koh Keng Seng                                                 unit in 2006.
Executive Director, Construction unit
                                                              She has more than 20 years of experience in the
Mr Koh joined the Group in 1992 and has grown with the        construction industry and holds a Bachelor of Civil
Construction unit. He now heads the Machinery/Equipment/      Engineering degree from the University of Glasgow, United
Logistics department of the division. He is responsible for   Kingdom.
and oversees the management of site workers, logistics,
workshop, machinery and equipment function.
                                                              Chong Teck Kuan (Norman)                                     23
He has more than 20 years of experience in the                Director, Real Estate division
construction industry and is involved in various projects




                                                                                                                           Koh Brothers Group Limited Annual Report
under the unit.                                               Mr Chong assumed the role of Director, Real Estate
                                                              division in 2008 and is responsible for overseeing the
                                                              overall operations, business performance and growth of
Tan Soon Pow (Alan)                                           the Real Estate division.
Deputy Chief Executive Officer,
Building Materials unit                                       He has in-depth knowledge of project development through
                                                              his 20 over years of extensive working experience with
Mr Tan joined the Building Materials unit as a Group          several major developers in Singapore. Prior to joining
General Manager in 1995. He was the driving force in          the Group, he held senior positions in several major
expanding the unit. In recognition of his contributions       property companies and consultancy firm in Singapore,
and expertise, he was promoted to Deputy Chief Executive      and involved in handling development of sizable retail,
Officer of the Building Materials unit in 2006, responsible




                                                                                                                           2009
                                                              residential and office projects in Singapore as well as in
for the strategic business development and planning, and      China.
overall performance of the unit.
                                                              He holds a degree in Bachelor of Science in Building from
He has extensive experience in the construction industry      the National University of Singapore.
for more than 25 years. He was responsible for setting-
up Sembawang Construction Pte Ltd in 1984 and was
promoted to its General Manager in 1989.
                                           Group Structure

                                                   Construction and                                          Leisure &
                                                  Building Materials                                         Hospitality
                                           Asta-Profits Investments Pte Ltd                     Batam Vision Pte Ltd
                                           Beijing G & W Cement Products Co., Ltd               Changi Hotel Pte Ltd
                                           Bellwood Investments Pte Ltd                         Clareville Investments Pte Ltd
                                           Building & Construction Resources Pte. Ltd.          Koh Brothers Investment Pte Ltd
                                           Construction Consortium Pte. Ltd.                    Oxford Hotel Pte Ltd
                                           Dalian Megacity Trading Co., Ltd                     PT. Batam Vision Indonesia
                                           Eminent Capital Investments Pte Ltd                  Vina Viet-Sing Ltd (“In liquidation”)
                                           G & W Concrete Products Pte Ltd                      VNT Travel Pte Ltd
                                           G & W Industrial Corporation Pte Ltd
                                           G & W Industries (M) Sdn. Bhd.
                                           G & W Industries Pte Ltd
                                           G & W Precast Pte Ltd
                                           G & W Ready-Mix Pte Ltd
                                           Hi Con (S) Pte. Ltd.
24                                         Koh Brothers Building & Civil Engineering
                                            Contractor (Pte.) Ltd.
Koh Brothers Group Limited Annual Report




                                           Megacity Investment Pte Ltd
                                           Megaplus Investments Pte Ltd
                                           Meng Wah High Technology Pte Ltd
                                           PT. Gunanusa Wiratama
                                           PT. KB Marinindo
                                           PT. Pulau Pisang Granitindo
                                           Scenic City Investment Pte Ltd
                                           Shantou Scenic Bay Property
                                            Development Co., Ltd
                                           Shantou Scenic View Property
                                            Development Co., Ltd
                                           USL Asia Pacific (M) Sdn. Bhd.
2009




                                           USL Asia Pacific Pte Ltd
                                           Wealthplus Pte Ltd


                                                            Real
                                                           Estate

                                           Buildhome Pte. Ltd.
                                           Canberra Development Pte Ltd
                                           KBD Caldecott Development Pte. Ltd.
                                           KBD Kosdale Pte. Ltd.
                                           Koh Brothers Development Pte Ltd
                                           Koh Brothers Holdings Pte Ltd
                                           Koh Brothers Project Management Pte Ltd
                                           Kosland Pte. Ltd.
                                           Phileap Pte. Ltd.
                                           PT. Koh Brothers Indonesia
                                           Shantou SEZ Jia Xin Real Estate
                                             Development Co., Ltd.
                                           The Montana Development Pte Ltd (“In liquidation”)
Report on Corporate Governance

The Board of Directors (the “Board”) of Koh Brothers Group Limited (the “Company”) is committed to ensuring a high
standard of corporate governance is practised throughout the Company and its subsidiaries (the “Group”).

The Board believes that good corporate governance enhances shareholder value, corporate performance and
accountability.

This report discloses the corporate governance framework and practices that the Group has adopted, with specific
reference to the principles and guidelines of the Code of Corporate Governance 2005 (the “Code”).

1.   BOARD MATTERS                                                                                        Guideline
                                                                                                             (“GL”)


     The Board’s Conduct of Affairs

     Principle 1      Every company should be headed by an effective Board to lead and control
                      the company. The Board is collectively responsible for the success of
                      the company. The Board works with Management to achieve this and
                      Management remains accountable to the Board.

     The Board comprises the following nine (9) Directors, four (4) of whom are executive, one (1) of       GL 1.1
     whom is non-executive and the rest are independent.                                                              25




                                                                                                                      Koh Brothers Group Limited Annual Report
     Mr Koh Tiat Meng (Executive Chairman);
     Mr Koh Teak Huat (Executive Deputy Chairman);
     Mr Koh Keng Siang (Managing Director & Group Chief Executive Officer);
     Mr Koh Keng Hiong (Executive Director & Deputy Chief Executive Officer, Real Estate and Leisure
     & Hospitality Divisions);
     Madam Quek Chee Nee (Non-Executive Director);
     Mr Lee Khoon Choy (Independent Director);
     Mr Ling Teck Luke (Independent Director);
     Mr Lai Mun Onn (Independent Director); and
     Mr Gn Hiang Meng (Independent Director).

     The Board assumes responsibility for stewardship of the Group. Its primary objective is to protect




                                                                                                                      2009
     and enhance shareholder value. The Board’s role is to:

     (1)    lead and set overall business directions and objectives of the Group;
     (2)    oversee the process of evaluating the adequacy of internal controls, risk management,
            financial reporting and compliance;
     (3)    approve major investment and funding decisions;
     (4)    monitor financial performance of the Group;
     (5)    review and evaluate Management’s performance; and
     (6)    assume responsibility for corporate governance.

     Every Director is expected, in the course of carrying out his duties, to act in good faith and         GL 1.2
     consider at all times the interests of the Company.

     The Board has established the following committees to assist in discharging its responsibilities       GL 1.3
     and duties:

     (a)    Executive Committee (“EC”);
     (b)    Audit Committee (“AC”);
     (c)    Nominating Committee (“NC”); and
     (d)    Remuneration Committee (“RC”).
                                           Report on Corporate Governance (cont’d)


                                             The EC comprises four (4) executive Directors and is responsible for the supervision and
                                             management of the Group’s core businesses. The EC reviews and monitors the budgets
                                             and management reports relating to the financial performance, position and prospects of the
                                             Group.

                                             The Board delegates the formulation of business policies and day-to-day management to
                                             the Managing Director & Group Chief Executive Officer (“MD & Group CEO”) and executive
                                             Directors.

                                             The Board meets at least four (4) times a year and convenes additional meetings when warranted      GL 1.4
                                             by circumstances.

                                             The number of Board and Board committee meetings held in 2009, as well as the attendance
                                             of each Director at these meetings is set out below:

                                                                             BOARD           EC           AC           RC            NC
                                                 No. of meetings held in       4              5            4            1             1
                                                 2009
                                                                             No. of       No. of       No. of        No. of       No. of
26                                                                          meetings     meetings     meetings      meetings     meetings
                                                 Director                   attended     attended     attended      attended     attended
Koh Brothers Group Limited Annual Report




                                                 Koh Tiat Meng                 4/4           4/5         NA           NA             NA
                                                 Koh Teak Huat                 3/4           5/5         NA           NA             NA
                                                 Koh Keng Siang                4/4           5/5         4/4*         1/1*           1/1
                                                 Koh Keng Hiong                4/4           5/5         NA           NA             NA
                                                 Quek Chee Nee                 2/4           NA          NA           NA             NA
                                                 Lee Khoon Choy                3/4           NA          3/4          0/1            NA
                                                 Ling Teck Luke                4/4           NA          4/4          1/1            1/1
                                                 Lai Mun Onn                   4/4           NA          4/4          1/1            1/1
                                                 Gn Hiang Meng                 4/4           NA          4/4          1/1            1/1

                                             *
                                                 By invitation
2009




                                             The Board is of the view that the contributions of each Director should not be based only on his
                                             attendance at Board and/or Board committee meetings. A Director’s contributions may also
                                             extend beyond the confines of the formal environment of Board meetings, through the sharing
                                             of views, advice, experience and strategic networking relationships which would further the
                                             interests of the Group.

                                             The Articles of Association of the Company allow the Directors to consider and approve
                                             resolutions by written means.

                                             The Company has adopted internal guidelines setting forth matters that require the Board’s          GL 1.5
                                             approval. These matters relate, among other things, to:

                                             (1)        corporate or financial restructurings;
                                             (2)        material acquisitions and disposals of assets which are outside the ordinary course of
                                                        business;
                                             (3)        dividend payments;
                                             (4)        financial results announcements; and
                                             (5)        bank borrowings and provision of corporate guarantees.
Report on Corporate Governance (cont’d)


  The Company has in place an orientation program for all newly appointed Directors. This is to       GLs 1.6, 1.7
  ensure that they are familiar with the Group’s structure, business and operations, and corporate        and 1.8
  governance practices.

  Each Director has received a formal letter, setting out among other things, his duties and
  obligations, upon his appointment.

  The Board is updated on any relevant key changes to legislation and the listing rules of the
  Singapore Exchange Securities Trading Limited (“SGX-ST”).

  Directors are encouraged to attend seminars, which are useful and relevant to them in discharging
  their duties.

  Board Composition and Guidance

  Principle 2      There should be a strong and independent element on the Board, which is
                   able to exercise objective judgement on corporate affairs independently, in
                   particular, from Management. No individual or small group of individuals
                   should be allowed to dominate the Board’s decision making.
                                                                                                                     27
  The current Board comprises nine (9) members, four (4) of whom are non-executive and                   GLs 2.1




                                                                                                                     Koh Brothers Group Limited Annual Report
  independent Directors. The NC ensures that at least one third of the Board is made up of               and 2.2
  independent Directors.

  The NC reviews the independence of each Director annually based on the guidelines set out in
  the Code.

  The Board is of the view that its current size is appropriate and allows for effective decision          GL 2.3
  making, taking into account the nature and scope of the Group’s operations.

  The Board comprises members with diverse expertise and experience in business and                        GL 2.4
  management, law, engineering, banking, accounting and finance.




                                                                                                                     2009
  The role of the independent Directors is particularly important in ensuring that the strategies          GL 2.5
  proposed by Management are constructively challenged, fully discussed and examined. They
  play an important part in reviewing the performance of Management in meeting agreed goals
  and objectives and in monitoring the reporting of performance.

  Each Director is provided with the contact numbers and email addresses of all the Board                  GL 2.6
  members. Where necessary, the independent Directors will meet or discuss (either through
  phone or email) without the presence of Management.

  Chairman and Chief Executive Officer

  Principle 3      There should be a clear division of responsibilities at the top of the company
                   – the working of the Board and the executive responsibility of the company’s
                   business – which will ensure a balance of power and authority, such that no
                   one individual represents a considerable concentration of power.

  Mr Koh Tiat Meng is the Executive Chairman of the Board. The Board has appointed Mr Koh             GLs 3.1, 3.2
  Keng Siang, who is a son of Mr Koh Tiat Meng, as MD & Group CEO.                                        and 3.3
                                           Report on Corporate Governance (cont’d)


                                             The Executive Chairman is responsible for the Board’s proceedings. He facilitates effective
                                             communication between the Board and Management, engaging them in important matters
                                             relating to strategic issues and business planning processes. With the assistance of the
                                             Company Secretary, he ensures that the Board members are provided with adequate and
                                             timely information.

                                             The MD & Group CEO, assisted by the executive Directors and Management, oversees the
                                             daily running of the Group’s operations and execution of strategies and polices adopted by
                                             the Board.

                                             Taking into account the current corporate structure and the scope of the Group’s operations,
                                             the Board is of the view that there is no necessity in appointing a lead independent Director as
                                             there is adequate accountability and transparency within the Group.

                                             Board Membership

                                             Principle 4      There should be a formal and transparent process for the appointment of
                                                              new directors to the Board.

28                                           The NC comprises the following members, the majority of whom, including the Chairman, are             GL 4.1
                                             non-executive and independent.
Koh Brothers Group Limited Annual Report




                                             Mr Ling Teck Luke (Chairman);
                                             Mr Lai Mun Onn;
                                             Mr Gn Hiang Meng; and
                                             Mr Koh Keng Siang.

                                             The role of the NC is to:                                                                             GL 4.2


                                             -      review the structure, size and composition of the Board and make recommendations to
                                                    the Board to be in line with the Code;
                                             -      identify candidates and review all nominations for appointments or re-appointments of
                                                    Directors, taking into account the Directors’ past contributions and performance in the
2009




                                                    case of re-appointments;
                                             -      determine annually the independence of the Directors in accordance with the guidelines
                                                    set forth in the Code;
                                             -      decide how the Board’s performance may be evaluated and to propose objective
                                                    performance criteria for the Board’s approval; and
                                             -      assess the effectiveness of the Board as a whole, as well as the contribution by each
                                                    member.

                                             Pursuant to Article 109 of the Company’s Articles of Association, one-third of the Directors (other
                                             than the MD) shall retire from office at every Annual General Meeting (“AGM”) provided always
                                             that each Director (except the MD) is required to retire from office at least once in every three
                                             years. A retiring Director is eligible to offer himself for re-election.

                                             Article 119 provides that a newly appointed Director is required to retire and submit himself for
                                             re-election at the AGM following his appointment. Thereafter, he is subject to re-election at least
                                             once every three years.

                                             Directors of over 70 years of age are required to be re-elected every year at the AGM under
                                             Section 153(6) of the Companies Act before they can continue to act as a Director.

                                             The NC assesses annually whether or not a Director is independent based on the guidelines set         GL 4.3
                                             out in the Code. The NC has considered Mr Lee Khoon Choy, Mr Ling Teck Luke, Mr Lai Mun
                                             Onn and Mr Gn Hiang Meng as independent.
Report on Corporate Governance (cont’d)


  The Board is of the view that Directors who have multiple board representations have devoted         GL 4.4
  sufficient time and attention to the affairs of the Company. Their multiple board representations
  do not hinder their abilities to carry out their duties as Directors of the Company. Such multiple
  board representations of the Directors benefit the Company, as the Directors are able to bring
  with them the experience and knowledge obtained from such board representations in other
  companies.

  The process for the selection and appointment of new Directors to the Board will be through          GL 4.5
  contacts and recommendations. The NC may engage recruitment consultants to undertake
  research on, or assess, candidates for new positions on the Board, or to engage such other
  independent experts as the NC considers necessary to carry out its duties and responsibilities.

  It is also the Company’s policy for the purpose of self-renewal, to promote suitable key
  Management staff to the Board in recognition of their achievements and past contributions to the
  Company. Upon identifying such candidates, Board members are welcome to make a proposal
  to the NC for its members’ consideration.

  In appointing Directors, the Board considers the range of skills and experience required in the
  light of:
                                                                                                                29
  -	     the   geographical spread and diversity of the Group’s business;




                                                                                                                Koh Brothers Group Limited Annual Report
  -	     the   strategic direction and progress of the Group;
  -	     the   current composition of the Board; and
  -	     the   need for independence.

  Final approval of a candidate is determined by the Board.

  The following Directors are due for retirement at the forthcoming AGM:                               GL 4.6


  -      Mr Koh Tiat Meng;
  -      Madam Quek Chee Nee;
  -      Mr Lee Khoon Choy;
  -      Mr Ling Teck Luke; and




                                                                                                                2009
  -      Mr Gn Hiang Meng

  All of them offer themselves for re-election at the forthcoming AGM.

  Key information on the Directors is set out under the “Board of Directors” section of the Annual
  Report.

  Board Performance

  Principle 5       There should be a formal assessment of the effectiveness of the Board as
                    a whole and the contribution by each director to the effectiveness of the
                    Board.

  The Board has implemented a process for assessing its effectiveness as a whole and for               GL 5.1
  assessing the contribution by each Director to the effectiveness of the Board.

  The NC reviews appraisal forms as part of the process adopted to assess the effectiveness of the
  Board. The results of the appraisal exercise are presented to the Board for its evaluation with a
  view to enhance the effectiveness of the Board.

  Each member of the NC shall abstain from voting on the resolution in respect of the assessment
  of his performance or re-nomination as a Director.
                                           Report on Corporate Governance (cont’d)


                                                The Company holds the belief that the Group’s performance and that of the Board are directly           GLs 5.2, 5.3,
                                                related.                                                                                                5.4 and 5.5


                                                The criteria for assessment include:

                                                -      delivery on executive duties (for executive Directors);
                                                -      attendance at Board meetings and committee meetings;
                                                -      maintenance of independence;
                                                -      disclosure of related party transactions; and
                                                -      areas of value added to the Group.

                                                The Company assesses the Board’s performance through its ability to steer the Group in the
                                                right direction and the support it renders to Management.

                                                Access to Information

                                                Principle 6      In order to fulfill their responsibilities, Board members should be provided
                                                                 with complete, adequate and timely information prior to board meetings
                                                                 and on an on-going basis.
30
                                                The members of the Board have access to complete information in a timely manner and on GLs 6.1 and 6.2
Koh Brothers Group Limited Annual Report




                                                an on-going basis in the form and quality necessary for the discharge of their duties and
                                                responsibilities.

                                                Meeting papers setting out the relevant background and information are sent to the Directors
                                                prior to the meetings in order for them to have a comprehensive understanding of the issues
                                                to be deliberated upon to facilitate informed decision-making.

                                                All members of the Board have separate and independent access to Management.

                                                Directors have separate and independent access to the Company Secretary. The Company                         GL 6.3
                                                Secretary attends all Board and committee meetings and is responsible for ensuring that the
                                                meeting procedures are followed and the applicable rules and regulations are complied with.
2009




                                                Under the direction of the Chairman, the Company Secretary is responsible for ensuring an
                                                effective flow of information within the Board and its committees and between Management.
                                                The Company Secretary also facilitates orientation and assists with professional development
                                                as required.

                                                The appointment and the removal of the Company Secretary is a matter taken by the Board as                   GL 6.4
                                                a whole.

                                                In the event that the Directors, either individually or as a group, require independent professional         GL 6.5
                                                advice, the Company Secretary will, upon approval by the Board, appoint a professional advisor
                                                to render such service. The cost of the service will be borne by the Company.

                                           2.   REMUNERATION MATTERS

                                                Procedures for Developing Remuneration Policies

                                                Principle 7      There should be a formal and transparent procedure for developing policy
                                                                 on executive remuneration and for fixing the remuneration packages of
                                                                 individual directors. No director should be involved in deciding his own
                                                                 remuneration.
Report on Corporate Governance (cont’d)


  The RC comprises the following Directors, all of whom are non-executive and independent.            GL 7.1


  Mr Lai Mun Onn (Chairman);
  Mr Lee Khoon Choy;
  Mr Ling Teck Luke; and
  Mr Gn Hiang Meng.

  The principal responsibilities of the RC are:                                                       GL 7.2


  -      to recommend to the Board for endorsement a framework of remuneration for the
         Board and the remuneration package for each executive Director;
  -      to review and recommend to the Board for endorsement the terms of the executive
         Directors’ service contracts; and
  -      to ensure that there is an adequate disclosure on Directors’ remuneration.

  The RC covers all aspects of remuneration including but not limited to Directors’ fees, salaries,
  allowances, bonuses, options and benefits-in-kind.

  The RC members are familiar with executive compensation matters as they either manage their         GL 7.3
  own businesses or are holding directorships in other listed companies. In discharging its duties,            31
  the RC has the assistance of the Group Human Resources Manager or external consultancy firm




                                                                                                               Koh Brothers Group Limited Annual Report
  as it deems necessary.

  No individual Director is involved in deciding his own remuneration.

  Level and Mix of Remuneration

  Principle 8      The level of remuneration should be appropriate to attract, retain and
                   motivate the directors needed to run the company successfully but
                   companies should avoid paying more than is necessary for this purpose.
                   A significant proportion of executive directors’ remuneration should be
                   structured so as to link rewards to corporate and individual performance.




                                                                                                               2009
  The RC ensures that executive Directors are adequately but not excessively remunerated.             GL 8.1
  The remuneration packages for the executive Directors and key executives consist of a fixed
  component and a variable component. The variable component is linked to the Group’s and the
  individual’s performance.

  All non-executive Directors are paid with a basic Director’s fee. Additional fee is payable for     GL 8.2
  appointment as a chairperson or member of a particular Board committee. The recommendations
  made by the RC in relation to such fees are subject to approval by shareholders at the AGM.

  The service contracts for executive Directors are for fixed appointment periods which are not       GL 8.3
  excessively long. These contracts do not contain onerous removal clauses. Their contract
  renewals and revisions are subject to approval of the Board on the review and recommendation
  of the RC.

  The Executives’ Share Option Scheme approved by the members of the Company at the                   GL 8.4
  Extraordinary General Meeting held on 28 June 1996 expired in 2006.

  In setting the remuneration packages, the RC takes into consideration the pay and employment        GL 8.5
  conditions within the industry and in comparable companies as well as the Group’s and
  individual’s performance.
                                           Report on Corporate Governance (cont’d)


                                             Notice periods are 6 months or less in the service contracts for the executive Directors.               GL 8.6


                                             Disclosure on Remuneration

                                             Principle 9          Each company should provide clear disclosure of its remuneration policy,
                                                                  level and mix of remuneration, and the procedure for setting remuneration
                                                                  in the company’s annual report. It should provide disclosure in relation to
                                                                  its remuneration policies to enable investors to understand the link between
                                                                  remuneration paid to directors and key executives, and performance.

                                             A breakdown of remuneration of each Director of the Company by percentage for the financial            GLs 9.1
                                             year ended 31 December 2009 is set out below:                                                          and 9.2


                                                                                                                Bonuses and
                                                                                                                other variable Allowances
                                                 Remuneration                                                   performance and other
                                                 band                Director             Fees       Salary      components     benefits    Total
                                                 S$1,000,000 to Koh Tiat Meng             15.5%      44.3%          32.6%          7.6%     100%
                                                 S$1,249,999    Koh Keng Siang             8.9%      37.2%          49.2%          4.7%     100%
32
                                                 S$500,000 to      Koh Teak Huat           6.6%      61.1%             28.0%     4.3%       100%
Koh Brothers Group Limited Annual Report




                                                 S$749,999

                                                 S$250,000 to      Koh Keng Hiong         10.2%      48.0%             36.8%     5.0%       100%
                                                 S$499,999

                                                 Below             Quek Chee Nee           100%         -                -         -        100%
                                                 S$250,000         Lee Khoon Choy          100%         -                -         -        100%
                                                                   Ling Teck Luke          100%         -                -         -        100%
                                                                   Lai Mun Onn             100%         -                -         -        100%
                                                                   Gn Hiang Meng           100%         -                -         -        100%

                                             A breakdown of remuneration of each of the Group’s top five executives (who are not Directors of
2009




                                             the Company) by percentage for the financial year ended 31 December 2009 is set out below:

                                                                                                                Bonuses and
                                                                                                                other variable Allowances
                                                 Remuneration       Top five                                    performance and other
                                                 band             executives*              Fees      Salary      components     benefits    Total
                                                 S$250,000 to First Executive                -       68.3%          19.9%         11.8%     100%
                                                 S$499,999
                                                 Below        Second Executive               -       77.4%             15.8%     6.8%       100%
                                                 S$250,000    Third Executive                -       80.4%             12.7%     6.9%       100%
                                                              Fourth Executive               -       85.2%             14.8%       -        100%
                                                              Fifth Executive                -       75.8%             24.2%       -        100%

                                             *
                                                 Their names are not disclosed in order to maintain confidentiality.


                                             Save as disclosed, there was no immediate family member of a Director or the Chief Executive            GL 9.3
                                             Officer whose remuneration exceeded S$150,000 during the financial year ended 31 December
                                             2009.

                                             The Company currently does not have any employee share option scheme.                                   GL 9.4
Report on Corporate Governance (cont’d)


3.   ACCOUNTABILITY AND AUDIT

     Accountability

     Principle 10     The board should present a balanced and understandable assessment of
                      the company’s performance, position and prospects.

     The Board is responsible for providing a balanced and understandable assessment of the                GL 10.1
     Group’s performance, position and prospects when presenting interim and other price sensitive
     public reports and reports to regulators (if required).

     Management provides Directors, on a quarterly basis, financial reports with adequate information      GL 10.2
     on the Group’s performance, position and prospects for their effective monitoring and decision-
     making.

     Audit Committee

     Principle 11     The Board should establish an Audit Committee (“AC”) with written terms
                      of reference which clearly set out its authority and duties.
                                                                                                                     33

     The AC comprises the following Directors, all of whom are non-executive and independent.              GL 11.1




                                                                                                                     Koh Brothers Group Limited Annual Report
     Mr Lee Khoon Choy (Chairman);
     Mr Ling Teck Luke;
     Mr Lai Mun Onn; and
     Mr Gn Hiang Meng.

     The Board is of the view that the members of the AC, collectively, have the requisite accounting      GL 11.2
     and related financial management expertise and experience to discharge their duties.

     The AC is empowered to investigate any matter within its terms of reference. It has full access       GL 11.3
     to and co-operation from Management, and unfettered discretion to invite any Director or
     executive officer to attend its meetings. The AC has been given adequate resources to enable it




                                                                                                                     2009
     to discharge its duties and responsibilities properly.

     The AC carries out its functions in accordance with the Code and the Companies Act. The duties        GL 11.4
     of the AC include:

     -   reviewing the scope and results of the audit and its cost effectiveness, the independence and
         objectivity of the external auditors, and their volume of non-audit services to the Group;
     -   reviewing with the auditors and reporting to the Board 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 has or is likely to have material
         impact on the Group’s results from operations and/or financial position;
     -   reviewing the effectiveness of the Company’s material internal controls, including financial,
         operational and compliance controls, and risk management carried out by internal/external
         auditors;
     -   reviewing the consolidated financial statements with the external auditors before submitting
         them to the Board;
     -   recommending to the Board the appointment, re-appointment and removal of the external
         auditors; and
     -   reviewing and approving interested person transactions under the general mandate.

     The AC meets with the external and internal auditors at least once a year without the presence        GL 11.5
     of Management.
                                           Report on Corporate Governance (cont’d)


                                             The AC has reviewed all the non-audit services provided by the external auditors and is satisfied     GL 11.6
                                             that such services would not, in the AC’s opinion, affect the independence of the external
                                             auditors.

                                             The Company has put in place a whistle-blowing policy, reviewed by the AC, of which the               GL 11.7
                                             employees of the Company may, in confidence, raise or report genuine concerns about possible
                                             improprieties in matters of business activities, financial reporting or other matters they may
                                             encounter without fear of retaliatory action. Details of such policy and arrangements have been
                                             made available to all employees. The Executive Deputy Chairman of the Company has been
                                             appointed to review and carry out investigation on all such complaints and/or concerns raised.

                                             The AC held four (4) meetings during the financial year ended 31 December 2009 and performed          GL 11.8
                                             its functions and responsibilities as set out in its terms of reference.

                                             Internal Controls

                                             Principle 12     The Board should ensure that Management maintains a sound system
                                                              of internal controls to safeguard the shareholders’ investments and the
                                                              company’s assets.
34
                                             The AC ensures that a review of the effectiveness of the Company’s internal controls, including       GL 12.1
Koh Brothers Group Limited Annual Report




                                             financial and operational controls, and risk assessment is conducted at least annually. This review
                                             is conducted by the Company’s internal auditors, who present their findings to Management and
                                             the AC. The AC considers the internal control findings reported by the auditors, if any, as part
                                             of its review.

                                             The Board acknowledges that it is responsible for maintaining a sound system of internal controls     GL 12.2
                                             to safeguard shareholders’ investments and the Company’s assets. While no cost-effective
                                             internal control and system can provide absolute assurance against loss or misstatement, the
                                             Group’s internal controls and systems have been designed to provide reasonable assurance that
                                             assets are safeguarded, operational controls are in place, business risks are suitably mitigated,
                                             proper accounting records are maintained and financial information used within the business
                                             and for publication are reasonable and accurate.
2009




                                             Internal Audit

                                             Principle 13     The company should establish an internal audit function that is independent
                                                              of the activities it audits.

                                             The Company has out-sourced its internal audit function to a certified public accounting firm.        GL 13.1
                                             The internal auditors report to the Chairman of the AC.

                                             The internal auditors carry out their work based on the standards for the Professional Practice of    GL 13.2
                                             Internal Auditing set by the Institute of Internal Auditors.

                                             Management assists the Board in monitoring and managing risks and internal controls of the            GL 13.3
                                             Group.

                                             The AC reviews the reports by the internal auditors on a half-yearly basis. It reviews the audit      GL 13.4
                                             plan and activities of the internal auditors so as to ensure the adequacy of the internal audit
                                             function.
Report on Corporate Governance (cont’d)


4.   COMMUNICATION WITH SHAREHOLDERS

     Principle 14     Companies should engage in regular, effective and fair communication
                      with shareholders.

     The Board believes in regular, effective and timely communication with its shareholders. The         GLs 14.1
     Company does not practise selective disclosure of price-sensitive information.                       and 14.2


     Information is communicated to shareholders on a timely basis through:

     -   annual reports;
     -   announcements released through SGXNET;
     -   press releases;
     -   press and analysts’ briefings; and
     -   the Company’s website (www.kohbrothers.com).

     Principle 15     Companies should encourage greater shareholder participation at AGMs,
                      and allow shareholders the opportunity to communicate their views on
                      various matters affecting the company.
                                                                                                                     35
     The Annual General Meeting (“AGM”) is the principal forum for dialogue with shareholders. The         GL 15.1




                                                                                                                     Koh Brothers Group Limited Annual Report
     Company invites and encourages all registered shareholders to participate in the Company’s
     general meetings. There is an open question and answer session at which shareholders may
     raise questions or share their views regarding the proposed resolutions and the Group’s business
     and affairs.

     Separate resolutions are proposed for substantially separate issues at the general meetings.          GL 15.2


     The Executive Chairman of the Board, the Directors and the external auditors are present at the       GL 15.3
     general meetings.

     Each shareholder is allowed to appoint up to two proxies to vote on his/her behalf at each            GL 15.4
     general meeting and issue instructions to accept, reject or abstain on each individual item on the




                                                                                                                     2009
     meeting agenda by giving instructions to his/her proxy(ies).

     The Company also allows CPF investors to attend general meetings as observers.

     A copy of the minutes of each of the AGMs is available to shareholders upon request.                  GL 15.5


5.   INTERESTED PERSON TRANSACTIONS

     The Company has established internal control policies to ensure that transactions with interested
     persons are properly reviewed, approved and conducted on an arm’s length basis.

     The Company seeks annual renewal of general mandate from its shareholders for those recurring
     transactions of revenue or trading nature or those necessary for its day-to-day operations.
                                           Report on Corporate Governance (cont’d)


                                                Information required to be disclosed in respect of the financial year ended 31 December 2009 is
                                                set out below:

                                                                                           Aggregate value of           Aggregate value of
                                                                                          all interested person        all interested person
                                                                                        transactions (excluding      transactions conducted
                                                                                            transactions less          under shareholders’
                                                                                          than S$100,000 and           mandate pursuant to
                                                                                        transactions conducted        Rule 920 of the Listing
                                                                                          under shareholders’           Manual (excluding
                                                                                       mandate pursuant to Rule       transactions less than
                                                 Name of interested person             920 of the Listing Manual)            S$100,000)
                                                 Quek Chee Nee                                   S$946,000                        -

                                           6.   RISK MANAGEMENT AND PROCESSES

                                                Information relating to risk management policies and processes are set out in the Notes to the
                                                Financial Statements for the year ended 31 December 2009.

36                                         7.   DEALINGS IN SECURITIES
Koh Brothers Group Limited Annual Report




                                                The Company has adopted an internal compliance code on dealings in the Company’s
                                                securities.

                                                The Company has issued share trading guidelines to all Directors, employees of executive level
                                                and above, and personal assistants. They are advised not to deal in the Company’s securities
                                                during the period commencing two weeks before the announcement of the Company’s financial
                                                statements for each of the first three quarters of the Company’s financial year, and one month
                                                before the announcement of the Company’s full year financial statements, ending on the date of
                                                announcement.

                                                In addition, they are prohibited from dealing in the Company’s securities while in possession of
                                                price sensitive information and on short-term considerations.
2009




                                           On behalf of the Board of Directors




                                           Koh Keng Siang                                                                 Koh Keng Hiong
                                           Director                                                                       Director


                                           25 March 2010
                                                    37




                                                    Koh Brothers Group Limited Annual Report
                                                    2009
FINANCIAL
CONTENTS

38 Directors’ Report

40 Statement by Directors

41 Independent Auditor’s Report

42 Consolidated Statement of Comprehensive Income

43 Balance Sheets

45 Consolidated Statement of Changes in Equity

46 Consolidated Statement of Cash Flows

49 Notes to the Financial Statements
                                           Directors’ Report
                                           for the financial year ended 31 December 2009

                                           The directors present their report to the members together with the audited financial statements of the Group for the
                                           financial year ended 31 December 2009 and the balance sheet of the Company as at 31 December 2009.

                                           1.     Directors

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

                                                  Koh Tiat Meng                       Lee Khoon Choy
                                                  Koh Teak Huat                       Lai Mun Onn
                                                  Koh Keng Siang                      Ling Teck Luke
                                                  Koh Keng Hiong                      Gn Hiang Meng
                                                  Quek Chee Nee

                                           2.     Arrangements to enable directors to acquire shares and debentures

                                                  Neither at the end of nor at any time during the financial year was the Company a party to any arrangement
                                                  whose object was 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, other than as disclosed in paragraph
                                                  3 of this report.
38
                                           3.     Directors’ interests in shares or debentures
Koh Brothers Group Limited Annual Report




                                                  According to the register of directors’ shareholdings, none of the directors holding office at the end of the
                                                  financial year and as at 21 January 2010 had any interest in the shares or debentures of the Company or its
                                                  related corporations, except as follows:
                                                                               Holdings registered in name of            Holdings in which a director is deemed
                                                                                    director or nominee                            to have an interest
                                                                         At 21.1.2010 At 31.12.2009     At 1.1.2009   At 21.1.2010 At 31.12.2009     At 1.1.2009
                                                  Company
                                                  (Ordinary shares)
                                                  Koh Tiat Meng          61,308,654      61,308,654     61,148,654             –               –             –
                                                  Koh Teak Huat          32,213,088      32,213,088     32,213,088      325,000          325,000      525,000
2009




                                                  Koh Keng Siang         61,463,535      61,463,535     61,463,535        20,000          20,000        20,000
                                                  Koh Keng Hiong         30,260,100      30,260,100     30,260,100        10,000          10,000        10,000
                                                  Quek Chee Nee          25,896,814      25,896,814     25,896,814             –               –             –
                                                  Ling Teck Luke            200,000         200,000        200,000             –               –             –
                                                  Lai Mun Onn               100,000         100,000        100,000             –               –             –

                                           4.     Directors’ contractual benefits

                                                  Since the end of the previous financial year, no director has received or become entitled to receive a benefit
                                                  (other than as disclosed in the accompanying financial statements) by reason of a contract made by the
                                                  Company or a related corporation with the director or with a firm of which he is a member or with a company
                                                  in which he has a substantial financial interest, except that certain directors have employment relationships
                                                  with related corporations and have received remuneration in those capacities.

                                           5.     Share options

                                                  There were no options granted during the financial year to subscribe for unissued shares of the Company.

                                                  No shares have been issued during the financial year by virtue of the exercise of options to take up unissued
                                                  shares of the Company.

                                                  There were no unissued shares of the Company under option at the end of the financial year.
Directors’ Report (cont’d)
for the financial year ended 31 December 2009

6.     Audit Committee

       The members of the Audit Committee at the end of the financial year were as follows:

       Mr   Lee Khoon Choy (Chairman)
       Mr   Lai Mun Onn
       Mr   Ling Teck Luke
       Mr   Gn Hiang Meng

       All members of the Audit Committee were independent non-executive directors.

       The Audit Committee carried out its functions in accordance with Section 201B(5) of the Singapore
       Companies Act. In performing those functions, the Committee reviewed:

       l       the scope and the results of internal audit procedures with the internal auditor;

       l	      the audit plan of the Company’s independent auditor and its report on the weaknesses of internal
               accounting controls arising from the statutory audit;

       l       the assistance given by the Company’s management to the independent auditor; and                     39

               the balance sheet of the Company as at 31 December 2009 and the consolidated financial statements




                                                                                                                    Koh Brothers Group Limited Annual Report
       l
               of the Group for the financial year ended 31 December 2009 before their submission to the Board of
               Directors, as well as the independent auditor’s report on the balance sheet of the Company and the
               consolidated financial statements of the Group.

       The Audit Committee has recommended to the Board that the independent auditor, PricewaterhouseCoopers
       LLP, be nominated for re-appointment at the forthcoming Annual General Meeting of the Company.

7.     Independent Auditor

       The independent auditor, PricewaterhouseCoopers LLP, has expressed its willingness to accept
       re-appointment.




                                                                                                                    2009
On behalf of the directors




Koh Keng Siang                                                   Koh Keng Hiong
Director                                                         Director

Singapore
25 March 2010
                                           Statement by Directors
                                           for the financial year ended 31 December 2009

                                           In the opinion of the directors,

                                           (a)    the balance sheet of the Company and the consolidated financial statements of the Group as set out on
                                                  pages 42 to 103 are drawn up so as to give a true and fair view of the state of affairs of the Company and of
                                                  the Group as at 31 December 2009 and of the results of the business, changes in equity and cash flows of
                                                  the Group for the financial year then ended; and

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




                                           On behalf of the directors




                                           Koh Keng Siang                                                 Koh Keng Hiong
40                                         Director                                                       Director

                                           Singapore
Koh Brothers Group Limited Annual Report




                                           25 March 2010
2009
Independent Auditor’s Report
to the Members of Koh Brothers Group Limited

We have audited the accompanying financial statements of Koh Brothers Group Limited (the “Company”) and its
subsidiaries (the “Group”) set out on pages 42 to 103, which comprise the balance sheets of the Company and
of the Group as at 31 December 2009, the consolidated statement of comprehensive income, the consolidated
statement of changes in equity and the consolidated cash flow statement of the Group for the financial year then
ended, and a summary of significant accounting policies and other explanatory notes.

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 (Cap. 50) (the “Act”) and Singapore Financial Reporting
Standards. This responsibility includes:

(a)    devising and maintaining a system of internal accounting control 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.

Auditor’s Responsibility                                                                                               41




                                                                                                                       Koh Brothers Group Limited Annual Report
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 as to 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.




                                                                                                                       2009
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.

Opinion

In our opinion,

(a)    the balance sheet of the Company and the consolidated financial statements of the Group are properly
       drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as
       to give a true and fair view of the state of affairs of the Company and of the Group as at 31 December 2009,
       and the results, changes in equity and cash flows of the Group for the financial year ended on that date; and

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


PricewaterhouseCoopers LLP
Public Accountants and Certified Public Accountants

Singapore
25 March 2010
                                           Consolidated Statement of Comprehensive Income
                                           For the financial year ended 31 December 2009

                                                                                                                                                 Group
                                                                                                                                          2009           2008
                                                                                                                              Note       S$’000       S$’000


                                           Sales                                                                                4       330,162      215,674
                                           Cost of sales                                                                               (290,504)     (186,935)
                                           Gross profit                                                                                  39,658          28,739
                                           Other (losses)/ gains - net                                                          5         (1,747)         3,060
                                           Exceptional items                                                                    6                –       25,003
                                           Expenses
                                           - Distribution and marketing                                                                   (4,569)        (4,422)
                                           - Administrative                                                                             (16,168)      (17,065)
                                           - Finance                                                                            9         (6,100)        (5,432)
                                           - Other                                                                                         (526)         (3,035)
                                           Share of profit of an associated company                                                             81          74
                                           Profit before income tax                                                                      10,629          26,922
42                                         Income tax expense                                                                 10(a)        (501)           (219)
                                           Profit after income tax                                                                       10,128          26,703
Koh Brothers Group Limited Annual Report




                                           Other comprehensive income, net of tax:
                                           Exchange differences on translating foreign operations                             32(d)         601           1,223
                                           Realisation of capital reserve on liquidation of subsidiaries/ subsidiary
                                            in the process of liquidation                                                                   319                 –
                                           Total comprehensive income                                                                    11,048          27,926
                                           Profit attributable to:
                                           Equity holders of the Company                                                                 10,688          27,710
                                           Minority interests                                                                              (560)         (1,007)
                                                                                                                                         10,128          26,703
                                           Total comprehensive income attributable to:
2009




                                           Equity holders of the Company                                                                 11,599          28,787
                                           Minority interests                                                                              (551)           (861)
                                                                                                                                         11,048          27,926
                                           Earnings per share for profit attributable to equity holders
                                            of the Company:
                                           - Basic (in cents)                                                                   11          2.23           5.78
                                           - Diluted (in cents)                                                                 11          2.23           5.78




                                                                  The accompanying notes form an integral part of these financial statements.
Balance Sheets
as at 31 December 2009

                                                                          Group                     Company
                                                                   2009           2008        2009        2008
                                                        Note      S$’000        S$’000       S$’000      S$’000


ASSETS
Current assets
Cash and bank balances                                   12        42,974         34,372       238            140
Financial assets at fair value through profit or loss    13           658           462             4           3
Trade receivables                                        14        57,891         57,914             –          –
Due from customers on construction contracts             15        38,131         45,218             –          –
Amounts due from subsidiaries (non-trade)                16               –              –    5,883       5,569
Amounts due from an associated company (trade)           17            84            58              –          –
Inventories                                              18        10,606         12,907             –          –
Tax recoverable                                         10(g)       1,156          1,390             –        234
Other assets                                             19         7,485          9,072            22         34
Development properties                                   20       124,281      123,682               –          –
Properties held for sale                                 21            94           264              –          –   43

                                                                  283,360      285,339        6,147       5,980




                                                                                                                    Koh Brothers Group Limited Annual Report
Non-current assets
Amounts due from subsidiaries (non-trade)                16               –              –    8,571       9,136
Trade receivables                                        14           469                –           –          –
Investment in an associated company                      22           581           500              –          –
Investment in subsidiaries                               16               –              –   75,723      74,106
Investment properties                                    24       202,136      204,287               –          –
Property, plant and equipment                            25        66,080         58,319             –          –
Intangible asset                                         26               –         182              –        182
                                                                  269,266      263,288       84,294      83,424




                                                                                                                    2009
Total assets                                                      552,626      548,627       90,441      89,404


LIABILITIES
Current liabilities
Trade payables                                           27        56,035         47,288             –          –
Other liabilities                                        28        30,745         27,580       986            801
Due to customers on construction contracts               15        21,023           720              –          –
Amounts due to subsidiaries (non-trade)                  16               –              –    7,814      15,952
Amounts due to an associated company (trade)             17           686           642              –          –
Current income tax liabilities                          10(c)       2,246          1,806       179            179
Short-term borrowings                                    29        65,138      117,226               –          –
                                                                  175,873      195,262        8,979      16,932




                      The accompanying notes form an integral part of these financial statements.
                                           Balance Sheets (cont’d)
                                           as at 31 December 2009

                                                                                                                     Group                    Company
                                                                                                              2009           2008        2009       2008
                                                                                                  Note       S$’000       S$’000        S$’000     S$’000


                                           Non-current liabilities
                                           Amounts due to subsidiaries (non-trade)                  16               –              –    7,529      7,154
                                           Trade payables                                           27        4,228           2,365           –           –
                                           Finance leases                                           30        6,274           3,239           –           –
                                           Bank term loans                                          31      186,874      176,613              –           –
                                           Other liabilities                                        28               –              –     610           660
                                           Deferred income tax liabilities                        10(d)      16,323          17,203           –           –
                                                                                                            213,699      199,420         8,139      7,814
                                           Total liabilities                                                389,572      394,682        17,118     24,746
                                           NET ASSETS                                                       163,054      153,945        73,323     64,658


                                           EQUITY
44                                         Capital and reserves attributable to
                                            equity holders of the Company
Koh Brothers Group Limited Annual Report




                                           Share capital                                          32(a)      47,966          47,966     47,966     47,966
                                           Capital reserves                                       32(b)       1,411           5,886           –           –
                                           Revenue reserve                                        32(c)     117,362      103,348        25,357     16,692
                                           Currency translation reserve                           32(d)       (5,920)        (6,541)          –           –
                                                                                                            160,819      150,659        73,323     64,658
                                           Minority interests                                                 2,235           3,286           –           –
                                           Total equity                                                     163,054      153,945        73,323     64,658
2009




                                                                The accompanying notes form an integral part of these financial statements.
Consolidated Statement of Changes in Equity
for the financial year ended 31 December 2009

                                        <– Attributable to equity holders of the Company –>
                                                                    Currency
                                        Share      Capital Revenue translation                    Minority     Total
                                Note    capital   reserves reserve   reserve          Total       interests    equity


Group (S$’000)
Balance at 1.1.2009                     47,966     5,886     103,348      (6,541)    150,659        3,286     153,945
Total comprehensive
  income for the year                        –       319      10,688         592      11,599         (551)     11,048
Transfer within reserve         32(b)        –    (4,794)      4,765          29              –         –           –
Dividend paid relating to
  2008                           33          –         –      (1,439)          –      (1,439)        (500)     (1,939)
Balance at 31.12.2009                   47,966     1,411     117,362      (5,920)    160,819        2,235     163,054


Balance at 1.1.2008                     47,966     5,886      77,077      (7,618)    123,311       31,328     154,639
Total comprehensive
  income for the year                        –         –      27,710       1,077      28,787         (861)     27,926
                                                                                                                         45
Subsidiary in the process of
 liquidation                                 –         –           –           –              –      (679)       (679)




                                                                                                                         Koh Brothers Group Limited Annual Report
Acquisition of subsidiary’s
 shares from a minority
 interest                                    –         –           –           –              –   (26,427)    (26,427)
Dividend paid relating to
  2007                           33          –         –      (1,439)          –      (1,439)         (75)     (1,514)
Balance at 31.12.2008                   47,966     5,886     103,348      (6,541)    150,659        3,286     153,945




                                                                                                                         2009




                      The accompanying notes form an integral part of these financial statements.
                                           Consolidated Statement of Cash Flows
                                           for the financial year ended 31 December 2009

                                                                                                                                                  Group
                                                                                                                                        2009              2008
                                                                                                                                       S$’000         S$’000


                                           Cash flows from operating activities
                                           Total profit                                                                                10,128         26,703
                                           Adjustments for:
                                           - Income tax expense                                                                           501               219
                                           - Depreciation of property, plant and equipment                                              3,875             3,524
                                           - Property, plant and equipment written off                                                    103               349
                                           - Amortisation of intangible asset                                                             182                  –
                                           - Gain on acquisition of subsidiary’s shares from a minority interest                              –           (3,654)
                                           - Loss/ (Gain) on disposal of property, plant and equipment                                    179         (22,832)
                                           - Gain on disposal of an associated company                                                        –            (819)
                                           - Gain on liquidation/ disposal of joint ventures                                              (21)                (6)
                                           - Gain on disposal of property held for sale                                                       –            (195)
46                                         - Fair value gain on long-term financial assets and financial liabilities                     (336)                 –
                                           - Loss on liquidation of subsidiaries/ subsidiary in the process of liquidation              1,401                  –
Koh Brothers Group Limited Annual Report




                                           - Fair value (gain)/ loss on financial assets at fair value through profit or loss            (196)            1,016
                                           - Fair value loss on investment property                                                     2,637                  –
                                           - Dividend income                                                                              (39)               (47)
                                           - Share of profit of an associated company                                                     (81)               (74)
                                           - Interest expense                                                                           6,100             5,432
                                           - Interest income                                                                             (280)             (457)
                                           - Unrealised translation differences                                                           151             1,021
                                           Operating cash flow before working capital changes                                          24,304         10,180
                                           Working capital changes:
                                           - Receivables                                                                                 (326)        11,334
2009




                                           - Inventories                                                                                2,301             1,760
                                           - Due from/ to customers on construction contracts                                          30,027         (19,105)
                                           - Development properties                                                                           5       (71,296)
                                           - Properties held for sale                                                                     195             1,571
                                           - Payables                                                                                  14,832             (6,735)
                                           Cash generated from/ (used in) operations                                                   71,338         (72,291)
                                           Income tax (paid)/ refund (net)                                                               (893)               16
                                           Interest paid                                                                               (7,546)            (8,986)
                                           Net cash generated from/ (used in) operating activities                                     62,899         (81,261)




                                                                The accompanying notes form an integral part of these financial statements.
Consolidated Statement of Cash Flows (cont’d)
for the financial year ended 31 December 2009

                                                                                                       Group
                                                                                            2009               2008
                                                                                           S$’000           S$’000


Cash flows from investing activities
Acquisition of subsidiary’s shares from a minority interest                                        –           (6,570)
Purchase of intangible asset                                                                       –              (37)
Purchase of property, plant and equipment (Note (b))                                       (5,087)             (1,378)
Proceeds from disposal of property, plant and equipment                                    1,326           42,766
Proceeds from disposal of a joint venture, net of cash disposed                                    –              58
Net cash inflow from liquidation of a joint venture                                          542                    –
Net cash outflow on liquidation of subsidiaries                                                   (5)               –
Dividend received                                                                                 39              47
Interest received                                                                            280                 457
Net cash (used in)/ generated from investing activities                                    (2,905)         35,343


Cash flows from financing activities                                                                                     47

Proceeds from bank borrowings                                                             15,100           85,892




                                                                                                                         Koh Brothers Group Limited Annual Report
Repayment of bank borrowings                                                             (45,251)          (40,448)
Repayment of finance lease liabilities                                                     (6,034)             (2,942)
Deposits pledged                                                                           1,050               (1,600)
Dividends paid to equity holders of the Company                                            (1,439)             (1,439)
Dividend paid to a minority shareholder                                                      (500)                (75)
Net cash (used in)/ generated from financing activities                                  (37,074)          39,388


Net increase/ (decrease) in cash and cash equivalents                                     22,920               (6,530)
Cash and cash equivalents at beginning of financial year (Note (a))                       18,036           23,955
Effect of currency translation on cash and cash equivalents                                  (104)               611




                                                                                                                         2009
Cash and cash equivalents at end of financial year (Note (a))                             40,852           18,036




                    The accompanying notes form an integral part of these financial statements.
                                           Consolidated Statement of Cash Flows (cont’d)
                                           for the financial year ended 31 December 2009

                                           (a)   Cash and cash equivalents

                                                 For the purpose of presenting the consolidated statement of cash flows, cash and cash equivalents comprise
                                                 cash on hand and balances with banks net of bank overdrafts as follows:


                                                                                                                                               Group
                                                                                                                                       2009            2008
                                                                                                                            Note      S$’000        S$’000


                                                 Cash and bank balances                                                      12       42,974        34,372
                                                 Restricted cash                                                           12(iv)       (750)          (1,800)
                                                 Bank overdrafts                                                             29       (1,372)      (14,536)
                                                                                                                                      40,852        18,036

                                                 At 31 December 2009, fixed deposits of S$750,000 (2008: S$1,800,000) were pledged with banks by the
                                                 Group as security for credit facilities granted. Accordingly, these have been presented as restricted cash and
                                                 excluded from the Group’s cash and cash equivalents.

48                                         (b)   Purchase of property, plant and equipment
Koh Brothers Group Limited Annual Report




                                                 During the financial year, the Group acquired property, plant and equipment with an aggregate cost of
                                                 S$15,800,000 (2008: S$5,490,000) of which S$10,557,000 (2008: S$3,698,000) was acquired by means
                                                 of finance lease and S$156,000 (2008: S$414,000) on credit terms. Cash payments of S$5,087,000
                                                 (2008: S$1,378,000) were made to purchase property, plant and equipment.
2009




                                                             The accompanying notes form an integral part of these financial statements.
Notes to the Financial Statements
for the financial year ended 31 December 2009

1.    General information

      The Company is listed on the Singapore Exchange Securities Trading Limited (“SGX-ST”) and incorporated
      and domiciled in Singapore. The address of its registered office is 11 Lorong Pendek, Koh Brothers Building,
      Singapore 348639.

      The principal activities of the Company are investment holding and provision of management services.

      The principal activities of the subsidiaries, joint ventures and associated companies are set out in Note 38 of
      the financial statements.

2.    Significant accounting policies

2.1   Basis of preparation

      These financial statements have been prepared in accordance with Singapore Financial Reporting Standards
      (“FRS”). The financial statements have been prepared under the historical cost convention, except as
      disclosed in the accounting policies below.

      The preparation of financial statements in conformity with FRS requires management to exercise its
      judgement in the process of applying the Group’s accounting policies. It also requires the use of certain         49
      critical accounting estimates and assumptions. Areas involving a higher degree of judgement or complexity,




                                                                                                                        Koh Brothers Group Limited Annual Report
      or areas where assumptions and estimates are significant to the financial statements, are disclosed in
      Note 3.

      Interpretations and amendments to published standards effective in 2009

      On 1 January 2009, the Group adopted the new or amended FRS that are mandatory for application from
      that date. Changes to the Group’s accounting policies have been made as required, in accordance with the
      transitional provisions in the respective FRS.

      The following are the new or revised FRS that are relevant to the Group:

      l      FRS 1 (revised) Presentation of financial statements (effective from 1 January 2009). The revised




                                                                                                                        2009
             standard prohibits the presentation of items of income and expenses (that is, ‘non-owner changes
             in equity’) in the statement of changes in equity. All non-owner changes in equity are shown in a
             performance statement, but entities can choose whether to present one performance statement (the
             statement of comprehensive income) or two statements (the income statement and statement of
             comprehensive income). The Group has chosen to adopt the former alternative. Where comparative
             information is restated or reclassified, a restated balance sheet is required to be presented as at the
             beginning comparative period. There is no restatement of the balance sheet as at 1 January 2008 in
             the current financial year.

      l      FRS 108 Operating segments (effective from 1 January 2009) replaces FRS 14 Segment reporting,
             and requires a ‘management approach’, under which segment information is presented on the same
             basis as that used for internal reporting purposes. This has resulted in an increase in the number
             of reportable segments presented. Segment revenue, segment profits and segment assets are also
             measured on a basis that is consistent with internal reporting.
                                           Notes to the Financial Statements (cont’d)
                                           for the financial year ended 31 December 2009

                                           2.    Significant accounting policies (cont’d)

                                           2.1   Basis of preparation (cont’d)

                                                 l	     Amendment to FRS 107 Improving disclosures about financial statements (effective from 1 January 2009).
                                                        The amendment required enhanced disclosures about fair value measurement and liquidity risk. In
                                                        particular, the amendment requires disclosure of fair value measurements by level of a fair value
                                                        measurement hierarchy (see Note 36(e)). The adoption of the amendment results in additional
                                                        disclosures but does not have an impact on the accounting policies and measurement bases adopted
                                                        by the Group.

                                           2.2   Subsidiaries

                                                 Subsidiaries are entities over which the Group has power to govern the financial and operating policies,
                                                 generally accompanied by a shareholding giving rise to a majority of the voting rights. The existence and
                                                 effect of potential voting rights that are currently exercisable or convertible are considered when assessing
                                                 whether the Group controls another entity.

                                                 The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of an
50                                               acquisition is measured as the fair value of the assets given, equity instruments issued or liabilities incurred
                                                 or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets
                                                 acquired and liabilities and contingent liabilities assumed in a business combination are measured initially
Koh Brothers Group Limited Annual Report




                                                 at their fair values on the date of acquisition, irrespective of the extent of any non-controlling interest. Please
                                                 refer to Note 2.5(a) “Goodwill on acquisitions” for the accounting policy on goodwill.

                                                 Subsidiaries are consolidated from the date on which control is transferred to the Group. They are
                                                 de-consolidated from the date on which control ceases.

                                                 In preparing the consolidated financial statements, transactions, balances and unrealised gains on
                                                 transactions between group entities are eliminated. Unrealised losses are also eliminated but are considered
                                                 an impairment indicator of the assets transferred. Accounting policies of subsidiaries have been changed
                                                 where necessary to ensure consistency with the policies adopted by the Group.

                                                 Minority interests are that part of the net results of operations and of net assets of a subsidiary attributable to
2009




                                                 the interests which are not owned directly or indirectly by the Group. They are measured at the minorities’
                                                 share of fair value of the subsidiaries’ identifiable assets and liabilities at the date of acquisition by the Group
                                                 and the minorities’ share of changes in equity since the date of acquisition, except when the minorities’
                                                 share of losses in a subsidiary exceeds its interests in the equity of that subsidiary. In such cases, the
                                                 excess and further losses applicable to the minorities are attributed to the equity holders of the Company,
                                                 unless the minorities have a binding obligation to, and are able to, make good the losses. When that
                                                 subsidiary subsequently report profits, the profits applicable to the minorities interest are attributed to the
                                                 equity holders of the Company until the minorities’ share of losses previously absorbed by the equity holders
                                                 of the Company are fully recovered.

                                                 The Group applies a policy of treating transactions with minority interests as transactions with parties
                                                 external to the Group. Purchases from minority interests result in goodwill, being the difference between
                                                 any consideration paid and the Group’s incremental share of carrying value of identifiable net assets of the
                                                 subsidiary. Negative goodwill is recognised as a gain in profit or loss immediately.

                                                 Please refer to Note 2.6 “Investments in subsidiaries, joint ventures and associated companies” for the
                                                 accounting policy on investments in subsidiaries in the separate financial statements of the Company.
Notes to the Financial Statements (cont’d)
for the financial year ended 31 December 2009

2.    Significant accounting policies (cont’d)

2.3   Joint ventures

      The Group’s joint ventures are entities over which the Group has contractual arrangements to jointly share
      the control over the economic activity of the entities with one or more parties. The Group’s interest in joint
      ventures is accounted for in the consolidated financial statements using proportionate consolidation.

      Proportionate consolidation involves combining the Group’s share of joint ventures’ income and expenses,
      assets and liabilities and cash flows of the jointly-controlled entities on a line-by-line basis with similar items
      in the Group’s financial statements.

      When the Group sells assets to a joint venture, the Group recognises only the portion of gains or losses
      on the sale of assets that is attributable to the interest of the other venturers. The Group recognises the
      full amount of any loss when the sale provides evidence of a reduction in the net realisable value of current
      assets or an impairment loss.

      When the Group purchases assets from a joint venture, it does not recognise its share of the profits of the
      joint ventures arising from the Group’s purchase of assets until it resells the assets to an independent party.
      However, a loss on the transaction is recognised immediately if the loss provides evidence of a reduction in          51
      the net realisable value of current assets or an impairment loss.




                                                                                                                            Koh Brothers Group Limited Annual Report
      Accounting policies of joint ventures have been changed where necessary to ensure consistency with the
      accounting policies adopted by the Group.

      Please refer to Note 2.6 “Investments in subsidiaries, joint ventures and associated companies” for the
      accounting policy on investments in joint ventures in the separate financial statements of the Company.

2.4   Associated companies

      Associated companies are entities over which the Group has significant influence, but not control, and
      generally accompanied by a shareholding giving rise to between and including 20% and 50% of the voting
      rights. Investments in associated companies are accounted for in the consolidated financial statements
      using the equity method of accounting less impairment losses. Please refer to Note 2.5(a) “Goodwill on




                                                                                                                            2009
      acquisitions” for the Group’s accounting policy on goodwill.

      Investments in associated companies are initially recognised at cost. The cost of an acquisition is measured
      at the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of
      exchange, plus costs directly attributable to the acquisition.

      In applying the equity method of accounting, the Group’s share of its associated companies’ post-acquisition
      profits or losses is recognised in profit or loss and its share of post-acquisition movements in reserves is
      recognised in equity directly. These post-acquisition movements are adjusted against the carrying amount
      of the investment. When the Group’s share of losses in an associated company equals or exceeds its
      interest in the associated company, including any other unsecured non-current receivables, the Group does
      not recognise further losses, unless it has obligations or has made payments on behalf of the associated
      company. Such obligations are recognised as liabilities on the balance sheet.

      Unrealised gains on transactions between the Group and its associated companies are eliminated to the
      extent of the Group’s interest in the associated companies. Unrealised losses are also eliminated unless the
      transaction provides evidence of an impairment of the asset transferred. Accounting policies of associated
      companies have been changed where necessary to ensure consistency with the accounting policies
      adopted by the Group.
                                           Notes to the Financial Statements (cont’d)
                                           for the financial year ended 31 December 2009

                                           2.    Significant accounting policies (cont’d)

                                           2.4   Associated companies (cont’d)

                                                 Please refer to Note 2.6 “Investments in subsidiaries, joint ventures and associated companies” for the
                                                 accounting policy on investments in associated companies in the separate financial statements of the
                                                 Company.

                                           2.5   Intangible assets

                                                 (a)   Goodwill on acquisitions

                                                       Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share
                                                       of the identifiable net assets and contingent liabilities of the acquired subsidiaries, joint ventures
                                                       and associated companies at the date of acquisition. Goodwill on subsidiaries and joint ventures is
                                                       recognised separately as intangible assets and carried at cost less accumulated impairment losses.

                                                       Goodwill on associated companies is included in the carrying amount of the investments.


52                                                     Negative goodwill represents the excess of the fair value of the Group’s share of the net assets
                                                       acquired over the cost of acquisition. Negative goodwill arising on acquisition of a subsidiary, joint
                                                       venture and/ or associated company is taken immediately to profit or loss.
Koh Brothers Group Limited Annual Report




                                                       Goodwill recognised as intangible assets is tested annually for impairment whenever there is
                                                       indication that the goodwill may be impaired and carried at cost less accumulated impairment losses.

                                                       Gains and losses on disposal of subsidiaries, joint ventures and associated companies include the
                                                       carrying amount of goodwill relating to the entity disposed of, except for the entities acquired prior to
                                                       1 January 2001. Such goodwill was previously taken to capital reserve and is not recognised in profit
                                                       or loss on disposal of the entities.

                                                 (b)   Acquired computer software licenses

                                                       Acquired computer software licenses are initially capitalised at cost which includes the purchase
2009




                                                       price (net of any discounts and rebates) and other directly attributable cost of preparing the asset
                                                       for its intended use. Direct expenditure including employee costs, which enhances or extends the
                                                       performance of computer software beyond its specifications and which can be reliably measured, is
                                                       added to the original cost of the software. Costs associated with maintaining the computer software
                                                       are recognised as expenses when incurred. Computer software licenses are subsequently carried at
                                                       cost less accumulated amortisation and accumulated impairment losses. These costs are amortised
                                                       to profit or loss using the straight-line method over their estimated useful lives of 2 years. The
                                                       amortisation method and period are reviewed at each balance sheet date. The effects of any revision
                                                       are recognised in profit or loss when the changes arise.

                                           2.6   Investments in subsidiaries, joint ventures and associated companies

                                                 Investments in subsidiaries, joint ventures and associated companies are stated at cost less accumulated
                                                 impairment losses in the Company’s balance sheet. On disposal of investments in subsidiaries, joint ventures
                                                 and associated companies, the difference between the net disposal proceeds and the carrying amounts of
                                                 the investments are recognised in profit or loss.
Notes to the Financial Statements (cont’d)
for the financial year ended 31 December 2009

2.    Significant accounting policies (cont’d)

2.7   Property, plant and equipment

      Property, plant and equipment are recognised at cost less accumulated depreciation and accumulated
      impairment losses except for certain buildings and leasehold premises, which are subsequently carried
      at revalued amount less accumulated depreciation and accumulated impairment losses. Freehold land is
      subsequently carried at the revalued amount less accumulated impairment losses.

      The cost of an item of property, plant and equipment initially recognised includes its purchase price and
      any cost that is directly attributable to bringing the asset to the location and condition necessary for it to
      be capable of operating in the manner intended by management. Increases in carrying amounts arising
      from revaluation are recognised in an asset revaluation reserve, unless they offset previous decreases in
      the carrying amounts of the same asset, in which case, they are recognised in profit or loss. Decreases
      in carrying amounts that offset previous increases of the same asset are recognised against the asset
      revaluation reserve. All other decreases in carrying amounts are recognised in profit or loss.

      The revaluation on certain freehold and leasehold properties was done in connection with the listing of the
      Company in 1993. The increase in carrying amount arising from the revaluation was taken to capital reserve.
      The Group does not have a policy of revaluing its property, plant and equipment periodically.                      53

      Subsequent expenditure relating to property, plant and equipment that has already been recognised is




                                                                                                                         Koh Brothers Group Limited Annual Report
      added to the carrying amount of the asset only when it is probable that future economic benefits associated
      with the item, will flow to the Group and the cost of the item can be measured reliably. All other repair and
      maintenance expenses are recognised in profit or loss when incurred.

      On disposal of an item of property, plant and equipment, the difference between the net disposal proceeds
      and its carrying amount is recognised in profit or loss. Any amount in capital reserve relating to that asset is
      transferred to revenue reserve directly.

2.8   Depreciation

      Freehold land is not depreciated. Depreciation on other items of property, plant and equipment is calculated
      using the straight-line method to allocate their depreciable amounts over their estimated useful lives as




                                                                                                                         2009
      follows:


                                                                                 Useful lives


      Buildings                                                                20 - 50 years
      Leasehold premises                                                       20 - 99 years
      Land-use rights                                                          15 - 50 years
      Plant and machinery                                                       1 - 20 years
      Motor vehicles and trucks                                                 1 - 10 years
      Furniture, fittings, office equipment and computers                       1 - 10 years
      Hotel equipment                                                           5 - 10 years

      The residual values, estimated useful lives and depreciation method of property, plant and equipment
      are reviewed, and adjusted as appropriate, at each balance sheet date. The effects of any revision are
      recognised in profit or loss when the changes arise.
                                           Notes to the Financial Statements (cont’d)
                                           for the financial year ended 31 December 2009

                                           2.     Significant accounting policies (cont’d)

                                           2.9    Investment properties

                                                  Investment properties include office buildings and land under operating leases that are held for
                                                  long-term rental yields and are not occupied by the Group. Completed investment properties are classified as
                                                  non-current assets.

                                                  Investment properties are initially recognised at cost and subsequently carried at fair value, determined
                                                  annually by management on the recommendation of independent professional valuers on the
                                                  highest-and-best-use basis. Changes in fair values are recognised in profit or loss. On disposal of an
                                                  investment property, the difference between the net disposal proceeds and the carrying amount is taken to
                                                  profit or loss.

                                           2.10   Financial assets

                                                  (a)   Classification

                                                        The Group classifies its financial assets in the following categories: at fair value through profit or loss
54                                                      and loans and receivables. The classification depends on the nature of the asset and purpose for
                                                        which the assets were acquired. Management determines the classification of its financial assets at
                                                        initial recognition.
Koh Brothers Group Limited Annual Report




                                                        i.     Financial assets at fair value through profit or loss

                                                               Financial assets at fair value through profit or loss are financial assets classified as held for
                                                               trading. A financial asset is classified as held for trading if it is acquired principally for the
                                                               purpose of selling in the short term. Assets in this category are presented as current assets
                                                               if they are either held for trading or are expected to be realised within 12 months after the
                                                               balance sheet date.

                                                        ii.    Loans and receivables

                                                               Loans and receivables are non-derivative financial assets with fixed or determinable payments
2009




                                                               that are not quoted in an active market. They are presented as current assets, except for
                                                               those maturing later than 12 months after the balance sheet date which are presented as
                                                               non-current assets. Loans and receivables are presented as “trade receivables”, “amounts due
                                                               from subsidiaries (non-trade)”, “amount due from an associated company (trade)” and “cash
                                                               and bank balances” on the balance sheet.

                                                  (b)   Recognition and derecognition

                                                        Regular way purchases and sales of financial assets are recognised on trade-date – the date on
                                                        which the Group commits to purchase or sell the asset.

                                                        Financial assets are derecognised when the rights to receive cash flows from the financial assets have
                                                        expired or have been transferred and the Group has transferred substantially all risks and rewards of
                                                        ownership. On disposal of a financial asset, the difference between the carrying amount and the sale
                                                        proceeds is recognised in profit or loss.
Notes to the Financial Statements (cont’d)
for the financial year ended 31 December 2009

2.     Significant accounting policies (cont’d)

2.10   Financial assets (cont’d)

       (c)    Initial measurement

              Financial assets at fair value through profit or loss are recognised at fair value on initial recognition.
              Transaction costs for financial assets at fair value through profit or loss are recognised immediately
              as expenses.

              Loans and receivables are initially recognised at fair value plus transaction costs.

       (d)    Subsequent measurement

              Financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and
              receivables are subsequently carried at amortised cost less allowance for impairment (Note 2.10(e)).

              Changes in the fair value of “financial assets at fair value through profit or loss”, are recognised in
              profit or loss within “other gains” in the financial year in which the changes in fair values arise.
                                                                                                                           55
       (e)    Impairment




                                                                                                                           Koh Brothers Group Limited Annual Report
              The Group assesses at each balance sheet date whether there is objective evidence that a financial
              asset or a group of financial assets is impaired and recognises an allowance for impairment when
              such evidence exists.

              Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy, and
              default or significant delay in payments are objective evidence that these financial assets are impaired.
              The amount of the allowance for impairment is recognised in profit or loss within “distribution and
              marketing expenses and other expenses”. When the asset becomes uncollectible, it is written off
              against the allowance account. The allowance for impairment loss account is reduced through profit
              or loss in a subsequent period when the amount of impairment loss decreases and the related
              decrease can be objectively measured. Subsequent recoveries of amounts previously written off are
              recognised against the same line item in profit or loss within “distribution and marketing expenses




                                                                                                                           2009
              and other expenses”.

2.11   Inventories

       Inventories are carried at the lower of cost and net realisable value. Cost is determined using either the first-
       in, first-out basis or the weighted average basis. The cost of finished goods and work-in-progress comprises
       raw materials, direct labour, other direct costs and related production overheads (based on normal operating
       capacity) but excludes borrowing costs. The net realisable value is the estimated selling price in the ordinary
       course of business, less the costs of completion and variable selling expenses.

2.12   Construction contract work-in-progress

       A construction contract is a contract specifically negotiated for the construction of an asset or a combination
       of assets that are closely interrelated or interdependent in terms of their design, technology and functions or
       their ultimate purpose or use.

       Contract costs are recognised when incurred.
                                           Notes to the Financial Statements (cont’d)
                                           for the financial year ended 31 December 2009

                                           2.     Significant accounting policies (cont’d)

                                           2.12   Construction contract work-in-progress (cont’d)

                                                  When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs
                                                  are recognised as revenue and expenses respectively by reference to the stage of completion of the contract
                                                  activity at the balance sheet date (percentage-of-completion method). When the outcome of a construction
                                                  contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred
                                                  that are likely to be recoverable. When it is probable that total contract costs will exceed total contract
                                                  revenue, the expected loss is recognised as an expense immediately.

                                                  Contract revenue comprises the initial amount of revenue agreed in the contract and variations in the
                                                  contract work and claims that can be measured reliably. A variation or a claim is recognised as contract
                                                  revenue when it is probable that the customer will approve the variation or negotiations have reached an
                                                  advanced stage such that it is probable that the customer will accept the claim.

                                                  The stage of completion is measured by reference to the professional’s certification of value of work done
                                                  to-date. Costs incurred during the financial year in connection with future activity on a contract are excluded
                                                  from costs incurred to-date when determining the stage of completion of a contract. Such costs are shown
56                                                as construction contract work-in-progress on the balance sheet unless it is not probable that such contract
                                                  costs are recoverable from the customers, in which case, such costs are recognised as an expense
                                                  immediately.
Koh Brothers Group Limited Annual Report




                                                  At the balance sheet date, the aggregated costs incurred plus recognised profit (less recognised loss)
                                                  on each contract is compared against the progress billings. Where costs incurred plus the recognised
                                                  profits (less recognised losses) exceed progress billings, the balance is presented as due from customers
                                                  on construction contracts, within “current assets”. Where progress billings exceed costs incurred plus
                                                  recognised profits (less recognised losses), the balance is presented as due to customers on construction
                                                  contracts within “current liabilities”.

                                                  Progress billing not yet paid by customers and retentions are included within “trade receivables”.

                                           2.13   Development properties
2009




                                                  Development properties are properties being constructed or developed for future sale.

                                                  Development properties that are unsold are carried at the lower of cost and net realisable value. Cost
                                                  capitalised include cost of land and other directly related development expenditure, including borrowing
                                                  costs incurred in developing the properties up to issuance of the temporary occupation permit. Net realisable
                                                  value is the estimated selling price in the ordinary course of business less cost to complete the development
                                                  and selling expenses.

                                                  Revenue and cost on development properties that have been sold are recognised using the percentage of
                                                  completion method. The stage of completion is measured by reference to the professional’s certification
                                                  of value of work done to-date. When it is probable that the total development costs will exceed the total
                                                  revenue, the expected loss is recognised as an expense immediately.

                                                  The aggregated costs incurred and the profit/ loss recognised in each development property that has
                                                  been sold are compared against progress billings up to the financial year-end. Where costs incurred and
                                                  recognised profits (less recognised losses) exceed progress billings, the balance is shown as development
                                                  properties, under “current assets”. Where progress billings exceed costs incurred plus recognised profits
                                                  (less recognised losses), the balance is shown as development properties, under “current liabilities”.
Notes to the Financial Statements (cont’d)
for the financial year ended 31 December 2009

2.     Significant accounting policies (cont’d)

2.14   Properties held for sale

       Properties held for sale are stated at the lower of cost and net realisable value and comprise developed
       properties and trading properties.

       Cost of developed properties comprises the cost of land, construction and direct overhead expenditure and
       borrowing costs incurred during the period of development. Development is considered to be completed
       upon the issue of the Temporary Occupation Permit or relevant documentation in respect of overseas
       properties.

       Cost of trading properties comprises the cost of purchase.

2.15   Leases

       (a)   When the group is the lessee:

             Finance leases
                                                                                                                         57
             Leases where the Group assumes substantially all risks and rewards incidental to ownership of the
             leased assets are classified as finance leases.




                                                                                                                         Koh Brothers Group Limited Annual Report
             The leased assets and the corresponding lease liabilities (net of finance charges) under finance
             leases are recognised on the balance sheet as assets and liabilities respectively, at the inception
             of the leases based on the lower of the fair values of the leased assets and the present value of the
             minimum lease payments.

             Each lease payment is apportioned between the finance expense and the reduction of the
             outstanding lease liability. The finance expense is recognised in profit or loss on a basis that reflects
             a constant periodic rate of interest on the finance lease liability.

             Operating leases




                                                                                                                         2009
             Leases of assets where substantially all risks and rewards incidental to ownership are retained by the
             lessors are classified as operating leases. Payments made under operating leases are recognised in
             profit or loss on a straight-line basis over the period of the lease.

             Contingent rents are recognised as an expense in profit or loss when incurred.

             When an operating lease is terminated before the lease period has expired, any payment required to
             be made to the lessor by way of penalty is recognised as an expense in the financial year in which
             termination takes place.
                                           Notes to the Financial Statements (cont’d)
                                           for the financial year ended 31 December 2009

                                           2.     Significant accounting policies (cont’d)

                                           2.15   Leases (cont’d)

                                                  (b)   When the group is the lessor:

                                                        Operating leases

                                                        Leases of investment properties and property, plant and equipment where the Group retains
                                                        substantially all risks and rewards incidental to ownership are classified as operating leases.

                                                        Rental income from investment properties is recognised in profit or loss on a straight-line basis over
                                                        the lease term. Income from leasing of equipment is recognised on its utilisation basis.

                                                        Initial direct costs incurred by the Group in negotiating and arranging an operating lease are added
                                                        to the carrying amount of the leased asset and recognised as an expense in profit or loss over the
                                                        lease term on the same basis as the lease income.

                                                        Contingent rents are recognised as income in profit or loss when earned.
58
                                           2.16   Currency translation
Koh Brothers Group Limited Annual Report




                                                  (a)   Functional and presentation currency

                                                        Items included in the financial statements of each entity in the Group are measured using the
                                                        currency of the primary economic environment in which the entity operates (“functional currency”).
                                                        The financial statements are presented in Singapore Dollars, which is the Company’s functional
                                                        currency.

                                                  (b)   Transactions and balances

                                                        Transactions in a currency other than the functional currency (“foreign currency”) are translated into
                                                        the functional currency using the exchange rates prevailing at the dates of the transactions. Currency
                                                        translation differences from the settlement of such transactions and from the translation of monetary
2009




                                                        assets and liabilities denominated in foreign currencies at the closing rates at the balance sheet date
                                                        are recognised in profit or loss.

                                                  (c)   Translation of Group entities’ financial statements

                                                        The results and financial position of group entities (none of which has the currency of a
                                                        hyperinflationary economy) that have functional currencies different from the presentation currency
                                                        are translated into presentation currency as follows:

                                                        i.     Assets and liabilities are translated at the closing exchange rates at the date of the balance
                                                               sheet;

                                                        ii.    Income and expenses are translated at average exchange rates (unless the average is not a
                                                               reasonable approximation of the cumulative effect of the rates prevailing on the transaction
                                                               dates, in which case, income and expenses are translated using the exchange rates at the
                                                               dates of the transactions); and
Notes to the Financial Statements (cont’d)
for the financial year ended 31 December 2009

2.     Significant accounting policies (cont’d)

2.16   Currency translation (cont’d)

       (c)    Translation of Group entities’ financial statements (cont’d)

              iii.   All resulting exchange differences are recognised in the currency translation reserve.

              On consolidation, currency translation differences arising from the net investment in foreign
              operations are taken to currency translation reserve. When a foreign operation is disposed of, such
              currency translation differences recorded in the currency translation reserve are taken to profit or loss
              as part of the gain or loss on disposal.

2.17   Revenue recognition

       Revenue of the Company comprises dividend and interest income.

       Revenue of the Group comprises the fair value of the consideration received or receivable for the sale of
       goods and rendering of services, the work done on construction projects undertaken by the Group, the sale
       of development properties and properties held for sale, rental and related income from investment properties          59
       and leasing of equipment, commission income, dividend and interest income in the ordinary course of
       the Group’s activities. The Group’s revenue is presented net of value-added tax and discounts, and after




                                                                                                                             Koh Brothers Group Limited Annual Report
       eliminating sales within the Group.

       The Group recognises revenue when the amount of the revenue and related cost can be reliably measured,
       it is probable that future economic benefits will flow to the entity and when the specific criteria for each of the
       Group’s activities are met as follows:

       (a)    Sale of products

              Revenue is recognised when a Group entity has delivered the products to the customer, the customer
              has accepted the products and the collectibility of the related receivables is reasonably assured.

       (b)    Rendering of services




                                                                                                                             2009
              Revenue from services is recognised over the period in which the services are rendered.

       (c)    Contracts revenue

              Revenue from construction contracts is recognised as disclosed in Note 2.12 “Construction contract
              work-in-progress”.

       (d)    Revenue from property development

              Revenue from development properties is recognised as disclosed in Note 2.13 “Development
              properties”.

       (e)    Rental income

              Rental income is recognised as disclosed in Note 2.15(b) “Leases - when the group is the lessor”.
                                           Notes to the Financial Statements (cont’d)
                                           for the financial year ended 31 December 2009

                                           2.     Significant accounting policies (cont’d)

                                           2.17   Revenue recognition (cont’d)

                                                  (f)    Dividend income

                                                         Dividend income is recognised when the right to receive payment is established.

                                                  (g)    Interest income

                                                         Interest income is recognised using the effective interest method.

                                           2.18   Income taxes

                                                  Current income tax for current and prior periods is recognised at the amounts expected to be paid to or
                                                  recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively
                                                  enacted by the balance sheet date.

                                                  Deferred income tax is recognised for all temporary differences arising between the tax bases of assets and
60                                                liabilities and their carrying amounts in the financial statements except when the deferred income tax arises
                                                  from the initial recognition of an asset or liability in a transaction that is not a business combination and
                                                  affects neither accounting nor taxable profit or loss at the time of the transaction.
Koh Brothers Group Limited Annual Report




                                                  A deferred income tax liability is recognised on temporary differences arising on investments in subsidiaries,
                                                  joint ventures and associated companies, except where the Group is able to control the timing of the
                                                  reversal of the temporary differences and it is probable that the temporary differences will not reverse in the
                                                  foreseeable future.

                                                  A deferred income tax asset is recognised to the extent that it is probable that future taxable profit will be
                                                  available against which the temporary differences and tax losses can be utilised.

                                                  Deferred income tax is measured:

                                                  i.     at the tax rates that are expected to apply when the related deferred income tax asset is realised or
2009




                                                         the deferred income tax liability is settled, based on tax rates and tax laws that have been enacted or
                                                         substantively enacted by the balance sheet date; and

                                                  ii.    based on the tax consequence that will follow from the manner in which the Group expects, at the
                                                         balance sheet date, to recover or settle the carrying amounts of its assets and liabilities.

                                                  Current and deferred income taxes are recognised as income or expenses in profit or loss, except to the
                                                  extent that the tax arises from a transaction which is recognised directly in equity.
Notes to the Financial Statements (cont’d)
for the financial year ended 31 December 2009

2.     Significant accounting policies (cont’d)

2.19   Employee compensation

       Defined contribution plans

       Defined contribution plans are post-employment benefit plans under which the Group pays fixed
       contributions into separate entities such as the Central Provident Fund on a mandatory, contractual or
       voluntary basis. The Group has no further payment obligations once the contributions have been paid. The
       Group’s contributions are recognised as employee compensation expense when they are due, unless they
       can be capitalised as an asset.

       Employee leave entitlement

       Employee entitlements to annual leave is recognised when they accrue to employees. A provision is made
       for the estimated liability for annual leave as a result of services rendered by employees up to the balance
       sheet date.

2.20   Segment reporting
                                                                                                                           61
       Operating segments are reported in a manner consistent with the internal reporting provided to the executive
       committee whose members are responsible for allocating resources and assessing performance of the




                                                                                                                           Koh Brothers Group Limited Annual Report
       operating segments.

2.21   Cash and cash equivalents

       For the purpose of presentation in the consolidated cash flow statement, cash and cash equivalents include
       cash on hand, deposits with financial institutions which are subject to an insignificant risk of change in value,
       and bank overdrafts. Bank overdrafts are presented as borrowings under current liabilities on the balance
       sheet.

2.22   Dividend to Company’s shareholders

       Dividend to Company’s shareholders are recognised when the dividends are approved for payments.




                                                                                                                           2009
2.23   Impairment of non-financial assets

       (a)    Goodwill

              Goodwill is tested annually for impairment and whenever there is indication that the goodwill may be
              impaired. Goodwill included in the carrying amount of an investment in associated company is tested
              for impairment as part of the investment, rather than separately.

              For the purpose of impairment testing of goodwill, goodwill is allocated to each of the Group’s cash-
              generating-units (CGU) expected to benefit from synergies arising from the business combination.

              An impairment loss is recognised when the carrying amount of a CGU, including the goodwill,
              exceeds the recoverable amount of the CGU. Recoverable amount of a CGU is the higher of the
              CGU’s fair value less cost to sell and value-in-use.
                                           Notes to the Financial Statements (cont’d)
                                           for the financial year ended 31 December 2009

                                           2.     Significant accounting policies (cont’d)

                                           2.23   Impairment of non-financial assets (cont’d)

                                                  (a)   Goodwill (cont’d)

                                                        The total impairment loss of a CGU is allocated first to reduce the carrying amount of goodwill
                                                        allocated to the CGU and then to the other assets of the CGU pro-rata on the basis of the carrying
                                                        amount of each asset in the CGU.

                                                        An impairment loss on goodwill is recognised in profit or loss and is not reversed in a subsequent
                                                        period.

                                                  (b)   Intangible asset, property, plant and equipment, investments in subsidiaries, joint ventures and
                                                        associated companies

                                                        Intangible asset, property, plant and equipment, investments in subsidiaries, joint ventures and
                                                        associated companies are tested for impairment whenever there is any objective evidence or
                                                        indication that these assets may be impaired.
62
                                                        For the purpose of impairment testing, the recoverable amount (the higher of the fair value less cost
                                                        to sell and the value-in-use) is determined on an individual asset basis unless the asset does not
Koh Brothers Group Limited Annual Report




                                                        generate cash flows that are largely independent of those from other assets. If this is the case, the
                                                        recoverable amount is determined for the CGU to which the asset belongs.

                                                        If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the
                                                        carrying amount of the asset (or CGU) is reduced to its recoverable amount.

                                                        The difference between the carrying amount and the recoverable amount is recognised as an
                                                        impairment loss in profit or loss, unless the asset is carried at revalued amount, in which case, such
                                                        impairment loss is treated as a revaluation decrease. Please refer to Note 2.7 “Property, plant and
                                                        equipment” for the treatment of revaluation decrease.

                                                        An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a
2009




                                                        change in the estimates used to determine the asset’s recoverable amount since the last impairment
                                                        loss was recognised. The carrying amount of an asset other than goodwill is increased to its revised
                                                        recoverable amount, provided that this amount does not exceed the carrying amount that would have
                                                        been determined (net of accumulated amortisation or depreciation) had no impairment loss been
                                                        recognised for the asset in prior years. A reversal of impairment loss for an asset other than goodwill
                                                        is recognised in profit or loss, unless the asset is carried at revalued amount in which case, such
                                                        reversal is treated as a revaluation increase. However, to the extent that an impairment loss on the
                                                        same revalued assets was previously recognised in profit or loss, a reversal of that impairment is also
                                                        recognised in profit or loss.

                                           2.24   Borrowing costs

                                                  Borrowing costs incurred to finance contract work-in-progress and development of properties are capitalised
                                                  during the period of time that is required to complete and prepare the asset for its intended use. The cost
                                                  capitalised is the actual borrowing costs incurred during the period. Other borrowing costs are recognised
                                                  on a time-proportion basis in profit or loss using the effective interest method.
Notes to the Financial Statements (cont’d)
for the financial year ended 31 December 2009

2.     Significant accounting policies (cont’d)

2.25   Fair value estimation of financial assets and liabilities

       The fair values of the financial instruments traded in active markets are based on quoted market prices at the
       balance sheet date. The quoted market prices used for financial assets are the current bid prices. The fair
       values of current financial assets and liabilities carried at amortised cost approximate their carrying amounts.

2.26   Borrowings

       Borrowings are initially recognised at fair value (net of transaction costs) and subsequently carried at
       amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is
       recognised in profit or loss over the period of the borrowings using the effective interest method.

       Borrowings which are due to be settled within twelve months after the balance sheet date are presented
       as current borrowings even though the original term was for a period longer than twelve months and an
       agreement to refinance, or to reschedule payments, on a long-term basis is completed after the balance
       sheet date and before the financial statements are authorised for issue. Other borrowings due to be settled
       more than twelve months after the balance sheet date are presented as non-current borrowings in the
       balance sheet.                                                                                                       63

2.27   Provisions




                                                                                                                            Koh Brothers Group Limited Annual Report
       Provisions are recognised when the Group and the Company has a present legal or constructive obligation
       as a result of past events, it is more likely than not that an outflow of resources will be required to settle the
       obligation and a reliable estimate of the amount can be made.

2.28   Share capital

       Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new
       ordinary shares are deducted against the share capital account.

2.29   Government grants




                                                                                                                            2009
       Grants from the government are recognised as a receivable at fair value when there is reasonable assurance
       that the grant will be received and the Group will comply with all the attached conditions. Government grants
       relating to expenses are net off against the related expenses. Government grants are recognised over the
       period necessary to match them with related costs which they are intended to compensate, on a systematic
       basis.

2.30   Financial guarantees

       The Company has issued corporate guarantees to banks for bank borrowings of its subsidiaries. These
       guarantees are financial guarantees as they require the Company to reimburse the banks if the subsidiaries
       fail to make principal or interest payments when due in accordance with the terms of their borrowings.
       Financial guarantees are initially recognised at their fair values plus transaction costs in the Company’s
       balance sheet. Financial guarantees are subsequently amortised to profit or loss over the period of the
       subsidiaries’ borrowings.

2.31   Trade and other payables

       Trade and other payables are initially recognised at fair value, and subsequently carried at amortised cost
       using the effective interest method.
                                           Notes to the Financial Statements (cont’d)
                                           for the financial year ended 31 December 2009

                                           3.   Critical accounting estimates, assumptions and judgements

                                                Estimates, assumptions and judgements are continually evaluated and are based on historical experience
                                                and other factors, including expectations of future events that are believed to be reasonable under the
                                                circumstances.

                                                (a)   Income taxes

                                                      The Group is subject to income taxes in several tax jurisdictions. Significant judgement is required in
                                                      determining the capital allowances and deductibility of certain expenses during the estimation of the
                                                      provision for income taxes. There are many transactions and calculations for which the ultimate tax
                                                      determination is uncertain during the ordinary course of business. The Group recognises liabilities
                                                      for anticipated tax issues based on estimates of whether additional taxes will be due. Where the
                                                      final tax outcome of these matters is different from the amounts that were initially recorded, such
                                                      differences will impact the income tax and deferred income tax provisions in the period in which such
                                                      determination is made.

                                                (b)   Construction contracts


64                                                    The Group recognises contract revenue and contract costs using the percentage of completion
                                                      method. The stage of completion is measured by reference to the professional’s certification of
                                                      value of work done to-date. Please refer to Note 2.12 “Construction contract work-in-progress” for the
Koh Brothers Group Limited Annual Report




                                                      Company’s accounting policy on construction contract work-in-progress.

                                                      Significant assumptions are required to estimate the total contract costs which affect the contract cost
                                                      recognised to-date based on the percentage of completion. Total contract revenue also includes
                                                      estimation of the variation works that are recoverable from customers. In making these estimates,
                                                      management has relied on past experience and the work of specialists. If the remaining estimated
                                                      contract costs increase/ decrease by 5% (2008: 5%) from management estimates, the Group’s profit
                                                      before income tax will decrease/ increase by approximately S$3,825,000 (2008: S$2,958,000).

                                                (c)   Valuation of properties

                                                      Investment properties are stated at fair value based on valuations performed by management on the
2009




                                                      recommendation of independent professional valuers. In determining fair value, the valuers have
                                                      used valuation methods which involve certain estimates.

                                                      The fair values are determined using the income method and direct comparison method. The
                                                      income method involves the estimation of income and expenses, taking into account expected
                                                      future changes in economic and social conditions, which may affect the value of the properties. The
                                                      direct comparison method involves the comparison of recent sales transactions of similar properties.
                                                      Management is of the view that the valuation methods and estimates are reflective of the current
                                                      market condition.
Notes to the Financial Statements (cont’d)
for the financial year ended 31 December 2009

4.   Revenue

                                                                                              Group
                                                                                         2009       2008
                                                                                        S$’000     S$’000

     Revenue from sale of products                                                     102,336       79,164
     Revenue from services rendered                                                      3,372        7,372
     Revenue from property development                                                  24,639       10,918
     Rental income from investment properties (Note 24)                                 10,165       10,774
     Contract revenue                                                                  189,650      107,446
     Total revenue                                                                     330,162      215,674

5.   Other (losses)/ gains – net


     Dividend income                                                                        39           47
     (Loss)/ Gain on disposal of property, plant and equipment                            (179)       1,483
     Gain on liquidation/ disposal of joint ventures                                        21            6
     Gain on disposal of an associated company                                               –          819        65
     Gain on disposal of property held for sale                                              –          195




                                                                                                                   Koh Brothers Group Limited Annual Report
     Interest income from bank deposits                                                    280          257
     Other interest income                                                                   –          200
     Fair value gain on long-term financial assets and financial liabilities               336            –
     Rental income                                                                         742          276
     Fair value gain/ (loss) on financial assets at fair value through profit
       or loss (Note 13)                                                                   196        (1,016)
     Fair value loss on investment property (Note 24)                                   (2,637)            –
     Loss on liquidation of subsidiaries/ subsidiary in the process of
       liquidation (Note 16(ii))                                                        (1,401)           –
     Other income                                                                          856          793
                                                                                        (1,747)       3,060




                                                                                                                   2009
6.   Exceptional items


     Gain on disposal of a property, plant and equipment (Note (a))                        –         21,349
     Gain on acquisition of subsidiary’s shares from a minority interest (Note (b))        –          3,654
                                                                                           –         25,003

     (a)    On 15 February 2008, the Company’s wholly owned subsidiary, Koh Brothers Investment Pte Ltd
            (“KBI”), disposed of its property situated at 80 Changi Road, Singapore 419715 to an unrelated party
            at a consideration of S$42 million. The disposal was completed on 18 August 2008.

     (b)    On 31 July 2008, the Company completed its acquisition of the remaining equity interest of 46.58%,
            representing an aggregate of 18,731,283 ordinary shares, in the share capital of Construction
            Consortium Pte. Ltd. (“CCPL”) from Brothers (Holdings) Limited (“BHL”) for a total consideration
            including transaction costs, of S$22,773,000. The total consideration was satisfied in part by a
            settlement of amounts owing by BHL and its subsidiaries to the CCPL group of S$16,203,000 and by
            cash of S$6,570,000.
                                           Notes to the Financial Statements (cont’d)
                                           for the financial year ended 31 December 2009

                                           7.   Expenses by nature
                                                                                                                                            Group
                                                                                                                                       2009       2008
                                                                                                                                      S$’000     S$’000

                                                Cost of inventories recognised as an expense (included in cost of sales)              73,624     65,197
                                                Contractor and material costs net of changes in work-in-progress
                                                  (included in cost of sales)                                                        177,301     90,401
                                                Depreciation of property, plant and equipment (Note 25(i))                             3,875      3,524
                                                Employee compensation (Note 8)                                                        25,112     21,347
                                                Property, plant and equipment written off                                                103        349
                                                Allowance for impairment of non-trade receivables                                        128        716
                                                Allowance for impairment of trade receivables                                          1,493      2,766
                                                Bad debts written off                                                                    194        172
                                                Amortisation of intangible asset (Note 26)                                               182          –
                                                Net foreign exchange (gain)/ loss                                                       (711)       908
                                                Repair and maintenance expenses                                                        5,689      6,668
                                                Rental expenses                                                                        6,311      5,184
66
                                                Freight, shipping, transport and travelling expenses                                   2,834      1,663
                                                Advertisement and promotions                                                           2,954        305
Koh Brothers Group Limited Annual Report




                                                Property tax                                                                           1,251      1,433
                                                Utilities                                                                              3,590      4,554
                                                Other expenses                                                                         7,837      6,270
                                                Total cost of sales, distribution and marketing, administrative and other expenses   311,767    211,457

                                           8.   Employee compensation


                                                Wages and salaries                                                                   21,960     18,480
                                                Employer’s contribution to defined contribution plans
                                                 including Central Provident Fund                                                     2,195      1,234
                                                Other staff benefits                                                                  2,309      1,633
2009




                                                Government Grant – Jobs credit scheme                                                (1,352)         –
                                                                                                                                     25,112     21,347

                                                i.     Included in the cost of sales are employee compensation amounting to S$13,885,000
                                                       (2008: S$11,216,000). Compensation to key management personnel including directors’ remuneration
                                                       is separately disclosed in Note 35(b) to the financial statements.

                                                ii.    The Jobs credit scheme is a cash grant introduced in the Singapore Budget 2009 to help businesses
                                                       preserve jobs in the economic downturn. The Jobs Credit will be paid to eligible employers in 2009
                                                       in four payments and the amount an employer can receive would depend on the fulfilment of the
                                                       conditions as stated in the scheme.
Notes to the Financial Statements (cont’d)
for the financial year ended 31 December 2009

9.    Finance expenses
                                                                                              Group
                                                                                         2009       2008
                                                                                        S$’000     S$’000

      Interest expenses on banking facilities                                            5,583        4,812
      Interest expenses on finance lease and others                                        517          620
                                                                                         6,100        5,432

10.   Income taxes

      (a)   Income tax expense


            Tax expense attributable to profit is made up of:
             Current income tax (Note 10(c))                                             1,994          404
             Deferred income tax (Note 10(d))                                              861          496
                                                                                         2,855          900
              Over provision in preceding financial years
              – current income tax (Note 10(c))                                         (1,292)        (585)       67
              – deferred income tax (Note 10(d))                                        (1,062)         (96)




                                                                                                                   Koh Brothers Group Limited Annual Report
                                                                                           501          219

      (b)   Tax reconciliation

            The tax expense on profit differs from the amount that would arise using the Singapore standard rate
            of income tax as explained below:

                                                                                              Group
                                                                                         2009       2008
                                                                                        S$’000     S$’000




                                                                                                                   2009
            Profit before income tax                                                    10,629       26,922

            Tax calculated at a tax rate of 17% (2008: 18%)                              1,807         4,846
            Change in Singapore tax rate (Note 10(d))                                     (712)            –
            Expenses not deductible for tax purposes                                       942         1,702
            Income not subject to tax                                                      (89)       (4,660)
            Tax benefits not recognised                                                  1,678           241
            Tax incentives                                                                 (52)          (58)
            Utilisation of previously unrecognised:
            – Tax losses                                                                  (572)         (799)
            – Capital allowances                                                          (147)         (421)
            Effect of different tax rates in other countries                                 –            66
            Others                                                                           –           (17)
            Over provision in preceding financial years                                 (2,354)         (681)
            Tax charge                                                                     501           219

            During the financial year, the Singapore corporate tax rate was reduced from 18% to 17% for the year
            of assessment 2010 and onwards.
                                           Notes to the Financial Statements (cont’d)
                                           for the financial year ended 31 December 2009

                                           10.   Income taxes (cont’d)

                                                 (c)   Movements in current income tax liabilities
                                                                                                                                     2009         2008
                                                                                                                                    S$’000       S$’000
                                                       Group
                                                       Balance at 1 January                                                          1,806        2,854
                                                       Subsidiaries and joint venture company in process of liquidation                  –         (855)
                                                       Income tax paid                                                                (893)        (343)
                                                       Refund of tax dedcuted at source                                                  –          359
                                                       Current financial year’s income tax (Note 10(a))                              1,994          404
                                                       Over provision in preceding financial years (Note 10(a))                     (1,292)        (585)
                                                       Currency translation differences                                                (23)         (28)
                                                       Transfer from deferred income tax                                               654            –
                                                       Balance at 31 December                                                        2,246        1,806

                                                       Company
                                                       Balance at 1 January and 31 December                                           179           179
68
                                                 (d)   Deferred income tax
Koh Brothers Group Limited Annual Report




                                                       The movement in the Group’s deferred income tax is as follows:


                                                       Balance at 1 January                                                         17,203       16,801
                                                       Effect on change in Singapore tax rate (Note 10(a)&(b))                        (712)           –
                                                       Current financial year’s tax (Note 10(a))                                     1,573          496
                                                       Over provision in preceding financial years (Note 10(a))                     (1,062)         (96)
                                                       Transfer to current income tax liabilities                                     (654)           –
                                                       Currency translation differences                                                (25)           2
                                                       Balance at 31 December                                                       16,323       17,203

                                                 (e)   Movements in deferred income tax
2009




                                                       The movements in the Group’s deferred income tax liabilities and assets during the financial year are
                                                       as follows:
                                                                                                                 Fair value         Income
                                                                                                                adjustment         taxed on
                                                                                       Accelerated                   on           completion
                                                                                           tax      Revaluation investment         basis and
                                                                                       depreciation   reserve    properties          others       Total
                                                       Deferred income tax liabilities   S$’000       S$’000       S$’000            S$’000      S$’000

                                                       Balance at 1 January 2009          978            374        14,775         1,110       17,237
                                                       Effect of change in Singapore
                                                         tax rate                          (22)          (10)             (658)      (22)         (712)
                                                       Current financial year’s tax         21             –                 –     1,552         1,573
                                                       Over provision in preceding
                                                         financial years                  (360)            –              (738)       (4)       (1,102)
                                                       Transfer to current income tax
                                                         liabilities                        –              –             –          (654)        (654)
                                                                                          617            364        13,379         1,982       16,342
Notes to the Financial Statements (cont’d)
for the financial year ended 31 December 2009

10.   Income taxes (cont’d)

      (e)   Movements in deferred income tax (cont’d)
                                                                                      Unabsorbed
                                                                                         capital
                                                                           Provisions allowances           Total
            Deferred income tax assets                                       S$’000      S$’000           S$’000

            Balance at 1 January 2009                                            (28)            (6)          (34)
            Currency translation differences                                     (25)             -           (25)
            Over provision in preceding financial years                           40              -            40
            Balance at 31 December 2009                                          (13)            (6)          (19)

                                                                      Fair value            Income
                                                                     adjustment            taxed on
                                            Accelerated                   on              completion
                                                tax      Revaluation investment            basis and
                                            depreciation   reserve    properties             others         Total
            Deferred income tax liabilities   S$’000       S$’000       S$’000               S$’000        S$’000
                                                                                                                         69

            Balance at 1 January 2008             1,059           374        14,773            646         16,852




                                                                                                                         Koh Brothers Group Limited Annual Report
            Current financial year’s tax              –             –             2            497            499
            Over provision in preceding
             financial years                       (81)             –             –            (33)          (114)
            Balance at 31 December 2008            978            374        14,775          1,110         17,237

                                                                                      Unabsorbed
                                                                                         capital
                                                                           Provisions allowances           Total
            Deferred income tax assets                                       S$’000      S$’000           S$’000

            Balance at 1 January 2008                                            (45)            (6)          (51)




                                                                                                                         2009
            Current financial year’s tax                                          (3)             –            (3)
            Over provision in preceding financial years                           18              –            18
            Currency translation differences                                       2              –             2
            Balance at 31 December 2008                                          (28)            (6)          (34)

            Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off
            current income tax assets against current income tax liabilities and when the deferred income taxes
            relate to the same fiscal authority.

            The following amounts, determined after appropriate offsetting, are shown on the balance sheets:

                                                                                                   Group
                                                                                              2009       2008
                                                                                             S$’000     S$’000

            Deferred income tax liabilities                                                 16,342        17,237
            Deferred income tax assets                                                         (19)          (34)
                                                                                            16,323        17,203

            The deferred income tax assets and liabilities are not intended to be settled within the next
            twelve-month period.
                                           Notes to the Financial Statements (cont’d)
                                           for the financial year ended 31 December 2009

                                           10.   Income taxes (cont’d)

                                                 (f)   Unutilised tax losses and capital allowances

                                                       As at 31 December 2009, the Group has unutilised tax losses of approximately S$13,021,000
                                                       (2008: S$6,702,000) and unabsorbed capital allowances of S$1,244,000 (2008: S$1,824,000) which
                                                       can, subject to meeting certain statutory requirements by those companies with unrecognised tax
                                                       losses and capital allowances in their respective countries of incorporation, be carried forward and
                                                       utilised against future taxable profits. Unabsorbed tax losses and capital allowances do not have
                                                       expiry dates. The deferred tax benefits on certain tax losses and capital allowances of subsidiaries
                                                       have not been recognised in the financial statements because of the uncertainty of future utilisation.

                                                 (g)   Tax recoverable

                                                       The tax recoverable of the Group and Company of S$1,156,000 (2008: S$1,390,000) and S$NIL
                                                       (2008: S$234,000) respectively are receivable from the tax authority arises from the tax deducted at
                                                       source from the franked dividend declared in accordance to section 44 of the Income Tax Act in prior
                                                       years.


70                                         11.   Earnings per share

                                                 (a)   Basic earnings per share
Koh Brothers Group Limited Annual Report




                                                       Basic earnings per share is calculated by dividing the net profit attributable to equity holders of the
                                                       Company by the weighted average number of ordinary shares outstanding during the financial year.

                                                                                                                                              Group
                                                                                                                                       2009           2008

                                                       Net profit attributable to equity holders of the Company (S$’000)             10,688        27,710
                                                       Weighted average number of ordinary shares in issue for
                                                        computation of basic earnings per share (’000)                              479,613       479,613
                                                       Basic earnings per share (in cents)                                             2.23          5.78
2009




                                                 (b)   Diluted earnings per share

                                                       There is no dilution of earnings per share for the financial years ended 2009 and 2008.

                                           12.   Cash and bank balances
                                                                                                                 Group                    Company
                                                                                                            2009       2008            2009      2008
                                                                                                           S$’000     S$’000          S$’000    S$’000

                                                 Fixed deposits                                            15,250          21,753        –              –
                                                 Cash and bank balances                                    27,724          12,619      238            140
                                                                                                           42,974          34,372      238            140

                                                 i.    The weighted average effective interest rate of fixed deposits at the balance sheet date is 1.24%
                                                       (2008: 1.58%).

                                                 ii.   The carrying amounts of fixed deposits approximate their fair values, as the fixed deposits bear
                                                       interest at variable rates, which are re-priced within a period of up to 12 months at the option of the
                                                       Group.
Notes to the Financial Statements (cont’d)
for the financial year ended 31 December 2009

12.   Cash and bank balances (cont’d)

      iii.   Included in the fixed deposits and cash and bank balances of the Group are amounts held under
             the Housing Developers’ (Project Account) Rules 1985, totalling S$3,038,000 (2008: S$5,258,000),
             withdrawals from which are restricted to payments for expenditure incurred on specified projects.

      iv.    Included in the fixed deposits of the Group is an amount of S$750,000 (2008: S$1,800,000) pledged
             to banks for credit facilities granted.

13.   Financial assets at fair value through profit or loss
                                                                       Group                 Company
                                                                  2009       2008         2009      2008
                                                                 S$’000     S$’000       S$’000    S$’000

      Quoted equity shares, at cost                               1,911     1,911          11           11
      Fair value (loss)/ gain recognised:
       Balance at 1 January                                      (1,449)     (433)         (8)           –
       Fair value gain/ (loss) during
         financial year (Note 5)                                    196     (1,016)         1           (8)
                                                                                                                   71
       Balance at 31 December                                    (1,253)    (1,449)        (7)          (8)




                                                                                                                   Koh Brothers Group Limited Annual Report
      Quoted equity shares, at fair value                           658       462           4            3

14.   Trade receivables
                                                                                              Group
                                                                                         2009       2008
                                                                                        S$’000     S$’000
      Current
      Due from third parties                                                            63,045       64,343
      Due from related parties                                                              25          446
                                                                                        63,070       64,789
      Less: Allowance for impairment of trade receivables – third parties               (5,179)      (6,875)




                                                                                                                   2009
                                                                                        57,891       57,914
      Non-current
      Due from third parties                                                               469               –

      i.     The amount due from related parties include amounts due from a minority shareholder of S$NIL
             (2008: S$391,000) and the companies which are controlled or significantly influenced by the Group’s
             key management personnel and their close family member of S$25,000 (2008: S$55,000).

      ii.    Impairment loss on trade receivables amounted to S$1,493,000 (2008: S$2,766,000) is recognised as
             an expense and included in “distribution and marketing expenses”.

      iii.   Included in non-current trade receivables are retentions on construction contracts of S$469,000
             (2008: S$NIL) (Note 15).

      iv.    The non-current trade receivables due from third parties are presented at amortised costs and
             computed based on cashflows discounted at market borrowing rates. The market borrowing rates
             used is 5% (2008: 5%).
                                           Notes to the Financial Statements (cont’d)
                                           for the financial year ended 31 December 2009

                                           15.   Due from/ (to) customers on construction contracts
                                                                                                                                         Group
                                                                                                                                    2009       2008
                                                                                                                                   S$’000     S$’000

                                                 Construction contract work-in-progress, at cost                               555,876        417,483
                                                 Attributable profit recognised                                                 14,172          5,677
                                                                                                                               570,048        423,160
                                                 Less: Progress billings                                                      (552,940)      (378,662)
                                                                                                                                17,108         44,498
                                                 Classified as:
                                                 Current asset
                                                 – Due from customers on construction contracts                                    38,131     45,218
                                                 Current liability
                                                 – Due to customers on construction contracts                                     (21,023)       (720)

                                                 Construction contract work-in-progress includes the following:
                                                 Depreciation of property, plant and equipment:
72
                                                  Balance at 1 January                                                              1,439       1,120
                                                  Capitalised during financial year (Note 25(i))                                    2,495       1,369
Koh Brothers Group Limited Annual Report




                                                  Less: Recognised on projects during financial year                               (1,921)     (1,050)
                                                  Balance at 31 December                                                            2,013       1,439

                                                 Advances received on construction contracts (Note 27(ii))                          6,548           –
                                                 Retentions on construction contracts
                                                 – Trade receivables (Note 14(iii))                                                   469          –
                                                 – Trade payables (Note 27(iii))                                                   12,862     10,162

                                           16.   Investment in subsidiaries and amounts due from/ (to) subsidiaries (non-trade)
                                                                                                                                       Company
                                                                                                                                    2009      2008
2009




                                                                                                                                   S$’000    S$’000
                                                 Investment in subsidiaries
                                                   Balance at 1 January
                                                   – Unquoted equity shares, at cost                                              68,068      45,295
                                                   – Financial guarantee contracts                                                 6,038       4,208
                                                                                                                                  74,106      49,503
                                                   Acquisition of subsidiary’s shares from a minority interest (Note 6(b))             –      22,773
                                                   Increase in financial guarantee contracts                                       1,617       1,830
                                                   Balance at 31 December                                                         75,723      74,106

                                                 Amounts due from subsidiaries (non-trade) (Note 16(i)&(ii))
                                                 – Current                                                                         5,883       5,569
                                                 – Non-current                                                                     8,571       9,136
                                                                                                                                  14,454      14,705

                                                 Amounts due to subsidiaries (non-trade) (Note 16(i)&(ii))
                                                 – Current                                                                         (7,814)   (15,952)
                                                 – Non-current                                                                     (7,529)    (7,154)
                                                                                                                                  (15,343)   (23,106)
Notes to the Financial Statements (cont’d)
for the financial year ended 31 December 2009

16.   Investment in subsidiaries and amounts due from/ (to) subsidiaries (non-trade) (cont’d)

      i.     The current and non-current amounts due from and to subsidiaries are unsecured and interest-free,
             except for a current amount due from a subsidiary of S$750,000 (2008: S$750,000) which bears
             interest at 1.6% (2008: 1.6%) per annum and a current amount due to a subsidiary of S$7,812,998
             (2008: S$13,400,000) which bears interest at NIL% (2008: 4.55%) per annum. The current amounts
             due from and to subsidiaries are repayable on demand. The non-current amounts due from and to
             subsidiaries are not expected to be repaid within 12 months from the balance sheet date and their
             fair values approximate to their carrying amounts.

      ii.    In 2008, the Group had four subsidiaries which were in the process of liquidation. Subsequently,
             two subsidiaries have completed the liquidation in 2009. The details of the subsidiaries are set
             out in Note 38. The fair values of identifiable net assets of these subsidiaries are S$4,437,000
             (2008: S$4,193,000). Details of the identifiable net assets of these subsidiaries are as follows:

                                                                                         2009         2008
                                                                                        S$’000       S$’000
             Identifiable assets and liabilities
             Cash and cash equivalents                                                   1,733        1,733
             Trade and other receivables                                                 3,743        3,499        73
             Inventories                                                                     5            5




                                                                                                                   Koh Brothers Group Limited Annual Report
             Total assets                                                                5,481        5,237

             Trade and other payables                                                     (223)        (223)
             Current income tax liabilities                                               (821)        (821)
             Total liabilities                                                          (1,044)      (1,044)

             Identifiable net assets of subsidiaries in liquidation                      4,437        4,193
             Increase in sundry receivables (Note 19(ii))                               (3,041)      (4,193)
             Loss on liquidation of subsidiaries/ subsidiaries in the process
               of liquidation (Note 5)                                                  (1,401)           –
             Cash outflows from liquidation                                                 (5)           –




                                                                                                                   2009
      iii.   On 2 April 2009, the Company’s wholly owned subsidiary, Koh Brothers Holdings Pte Ltd (“KBH”),
             acquired the remaining 40% interest in VNT Travel Pte Ltd (“VNT”) for a total cash consideration of
             S$1.00. As a result of the acquisition, VNT became a wholly owned subsidiary of KBH. The Group’s
             effective shareholding in VNT has thus increase from 60% to 100%. The acquisition has no material
             impact on the results and net tangible assets of the Group.

17.   Amounts due from/ (to) an associated company (trade)

      The carrying amounts of trade amounts due from/ (to) an associated company approximate their fair values.

18.   Inventories
                                                                                              Group
                                                                                         2009       2008
                                                                                        S$’000     S$’000

      Raw materials                                                                      5,230        7,219
      Work-in-progress                                                                      34           63
      Finished goods                                                                     5,342        5,625
                                                                                        10,606       12,907
                                           Notes to the Financial Statements (cont’d)
                                           for the financial year ended 31 December 2009

                                           19.   Other assets
                                                                                                                   Group                  Company
                                                                                                              2009       2008          2009      2008
                                                                                                             S$’000     S$’000        S$’000    S$’000

                                                 Deposits                                                      909        1,044          –            –
                                                 Prepayments                                                   541          877          –           11
                                                 Staff advances                                                 19           12          –            –
                                                 Sundry receivables                                          7,400        8,441         22           23
                                                 Amounts due from related parties
                                                  (non-trade) (Note 19(i))                                      67           96          –            –
                                                                                                             8,936       10,470         22           34
                                                 Less: Allowance for impairment of sundry
                                                        receivables – third parties                          (1,451)      (1,398)        –            –
                                                                                                              7,485        9,072        22           34

                                                 i.       The non-trade amounts due from related parties relate to amounts owing by the companies which
                                                          are controlled or significantly influenced by the Group’s key management personnel and their close
74                                                        family members. The amounts are interest-free, unsecured and are repayable on demand.
Koh Brothers Group Limited Annual Report




                                                 ii.      Included in the sundry receivables of the Group are amounts expected to be received from the
                                                          liquidators upon the complete liquidation of subsidiaries and a joint venture company of S$3,041,000
                                                          (2008: S$4,193,000) and S$NIL (2008: S$521,000) respectively.



                                           20.   Development properties
                                                                                                                                             Group
                                                                                                                                       2009         2008
                                                                                                                                      S$’000       S$’000

                                                 Cost of land                                                                        118,456      118,456
                                                 Development cost                                                                     38,905       28,576
2009




                                                 Add: Attributable profits recognised                                                 17,617        8,264
                                                 Less: Progress billings                                                             (50,697)     (31,614)
                                                                                                                                     124,281      123,682

                                                 Interest capitalised during the financial year                                        3,256         3,621

                                                 Details of development properties are set out in Note 40.

                                                 i.    At 31 December 2009, development properties with a carrying value of S$124,281,000
                                                       (2008: S$123,682,000) are mortgaged to banks for credit facilities granted (Notes 29 and 31).
Notes to the Financial Statements (cont’d)
for the financial year ended 31 December 2009

20.   Development properties (cont’d)

      ii. As stated in Note 2.13, the Group recognised profits from the sale of development properties using
          the percentage of completion method. Had the completion of construction method been adopted, the
          financial effects as required under Recommended Accounting Practice 11, Pre-completion Contracts for
          the Sale of Development Property, are as follows:
                                                                                             Group
                                                                                        2009       2008
                                                                                       S$’000     S$’000

          Decrease   in   revenue reserve at 1 January                                  (6,770)     (4,537)
          Decrease   in   revenue for the financial year                               (24,498)    (10,605)
          Decrease   in   profit after income tax for the financial year                (7,763)     (2,233)
          Decrease   in   development properties at 1 January                           (8,264)     (5,541)
          Decrease   in   development properties at 31 December                        (17,617)     (8,264)

21.   Properties held for sale


      At net realisable value                                                                                    75
      Cost of land                                                                       45           45




                                                                                                                 Koh Brothers Group Limited Annual Report
      Development cost                                                                   59          254
      Interest                                                                           15           15
      Currency translation differences                                                  (25)         (50)
                                                                                         94          264

      Details of properties held for sale are set out in Note 41.

22.   Investment in an associated company


      Equity investment in an associated company
       Balance at 1 January                                                             500         (393)




                                                                                                                 2009
       Share of profit of an associated company                                          81           74
       Disposal of an associated company                                                  –          819
       Balance at 31 December                                                           581          500

      The summarised financial information of the associated company are as follows:

      Sales                                                                            3,413        3,511
      Profit after income tax                                                            231          272

      Assets                                                                           2,303        2,054
      Liabilities                                                                        647          629

      Details of the associated company are set out in Note 38.
                                           Notes to the Financial Statements (cont’d)
                                           for the financial year ended 31 December 2009

                                           23.   Interest in joint venture companies

                                                 The Group has included in its profit or loss and consolidated balance sheet its share of the results, assets
                                                 and liabilities of the joint venture companies, as follows:

                                                                                                                                             Group
                                                                                                                                        2009       2008
                                                                                                                                       S$’000     S$’000

                                                 Sales                                                                                  39,731     12,253
                                                 Other operating income                                                                  1,331      1,353
                                                 Expenses                                                                              (27,624)    (8,495)
                                                 Profit before income tax                                                               13,438      5,111

                                                 Non-current assets                                                                   122,785     122,509
                                                 Current assets                                                                       145,618     125,912
                                                 Current liabilities                                                                   43,122      28,047
                                                 Non-current liabilities                                                              173,891     173,540
76
                                                 i.   The Group has no commitments relating to joint venture companies except as disclosed in Note 34(c).
Koh Brothers Group Limited Annual Report




                                                 ii. During the financial year, a 50% share joint venture, Pencroft Investments Pte Ltd has been liquidated.
                                                     The Group’s share of identifiable net assets amounting to S$521,000. The liquidation has generated a
                                                     net cash inflow of S$542,000 which resulted a gain of S$21,000 recognised in profit or loss.

                                                 iii. Details of the joint venture companies are set out in Note 38.

                                           24.   Investment properties
                                                                                                                                             Group
                                                                                                                                        2009       2008
                                                                                                                                       S$’000     S$’000
2009




                                                 Balance at 1 January                                                                 204,287     204,688
                                                 Fair value loss recognised in profit or loss (Note 5)                                 (2,637)          –
                                                 Currency translation differences                                                         486        (401)
                                                 Balance at 31 December                                                               202,136     204,287

                                                 The following amounts are recognised in profit or loss:

                                                 Rental income (Note 4)                                                                10,165     10,774
                                                 Direct operating expenses arising from investment properties that
                                                  generated rental income                                                              (5,642)     (6,221)

                                                 i.   Investment properties are carried at fair values at the balance sheet date as determined by management
                                                      on the recommendation of independent professional valuers. Valuations are made annually based on
                                                      the properties’ highest-and-best-use using the direct market comparison and income methods.

                                                 ii. Investment properties are leased to third parties under operating leases (Note 34(b)).

                                                 iii. Investment properties with carrying values totalling S$193,000,000 (2008: S$193,000,000) are mortgaged
                                                      to banks for credit facilities granted (Notes 29 and 31).

                                                 iv. Details of the investment properties are set out in Note 39.
Notes to the Financial Statements (cont’d)
for the financial year ended 31 December 2009

25.   Property, plant and equipment
                                                                                              Furniture,
                                                                                               fittings,
                                                                                                office
                                                                           Plant     Motor    equipment
                                         Freehold               Leasehold   and     vehicles      and     Hotel
                                           land     Buildings   premises machinery and trucks computers equipment    Total
      Group                              S$’000      S$’000      S$’000    S$’000    S$’000     S$’000    S$’000     S$’000


      Cost or Valuation
      At 1 January 2009
      Cost                                     –     15,798       8,199    51,299    17,036      7,277     1,418    101,027
      Independent valuation in 1993
        (Note 25(iii))                   16,250       6,487       7,386         –         –          –         –     30,123
                                         16,250      22,285      15,585    51,299    17,036      7,277     1,418    131,150
      Currency translation differences         –           –         59       (66)      (11)         8         –        (10)
      Additions                                –           –          –    12,455     2,554        789         2     15,800
      Disposals                                –           –          –    (2,367)     (469)      (179)        –     (3,015)
      Written off                              –           –          –       (13)      (15)      (137)      (38)      (203)
      At 31 December 2009                16,250      22,285      15,644    61,308    19,095      7,758     1,382    143,722
      Represented by:                                                                                                          77
      Cost                                     –     15,798       8,258    61,308    19,095      7,758     1,382    113,599




                                                                                                                               Koh Brothers Group Limited Annual Report
      Independent valuation in 1993
        (Note 25(iii))                   16,250       6,487       7,386         –         –          –         –     30,123
                                         16,250      22,285      15,644    61,308    19,095      7,758     1,382    143,722


      Accumulated Depreciation
        and Impairment Loss
      At 1 January 2009                        –      6,099       7,455    40,749    11,051      6,199     1,278     72,831
      Currency translation differences         –           –         45       (30)        (2)       38         –         51
      Disposals                                –           –          –      (959)     (361)      (190)        –     (1,510)
      Written off                              –           –          –       (13)      (15)       (41)      (31)      (100)
      Depreciation charge (Note 25(i))         –        429         472     3,458     1,509        494         8      6,370
      At 31 December 2009                      –      6,528       7,972    43,205    12,182      6,500     1,255     77,642




                                                                                                                               2009
      Net book value at
       31 December 2009                  16,250     15,757        7,672    18,103     6,913      1,258      127     66,080
                                           Notes to the Financial Statements (cont’d)
                                           for the financial year ended 31 December 2009

                                           25.   Property, plant and equipment (cont’d)
                                                                                                                                             Furniture,
                                                                                                                                              fittings,
                                                                                                                                               office
                                                                                                                          Plant     Motor    equipment
                                                                            Freehold               Leasehold   Land–use    and     vehicles      and     Hotel
                                                                              land     Buildings   premises      rights machinery and trucks computers equipment    Total
                                                 Group                      S$’000      S$’000      S$’000      S$’000    S$’000    S$’000     S$’000    S$’000    S$’000


                                                 Cost or Valuation
                                                 At 1 January 2008
                                                 Cost                         6,991     15,798       9,307         111    50,334    17,644      7,978     1,857    110,020
                                                 Independent valuation
                                                   in 1993 (Note 25(iii))    23,137     12,811       7,386           –         –          –         –         –     43,334
                                                                             30,128     28,609      16,693         111    50,334    17,644      7,978     1,857    153,354
                                                 Subsidiaries in
                                                  the process of
                                                  liquidation                     –           –           –       (111)        –      (406)       (91)     (374)      (982)
                                                 Currency translation
                                                  differences                     –           –          53          –      (123)       60        (48)        1        (57)
                                                 Additions                        –           –           –          –     1,919     3,144        423         4      5,490
78                                               Disposals                  (13,878)    (6,324)        (685)         –      (816)    (3,406)      (17)        –    (25,126)
                                                 Written off                      –           –        (476)         –       (15)         –      (968)      (70)    (1,529)
Koh Brothers Group Limited Annual Report




                                                 At 31 December 2008         16,250     22,285      15,585           –    51,299    17,036      7,277     1,418    131,150
                                                 Represented by:
                                                 Cost                             –     15,798       8,199           –    51,299    17,036      7,277     1,418    101,027
                                                 Independent valuation
                                                   in 1993 (Note 25(iii))    16,250      6,487       7,386           –         –          –         –         –     30,123
                                                                             16,250     22,285      15,585           –    51,299    17,036      7,277     1,418    131,150


                                                 Accumulated Depreciation
                                                  and Impairment Loss
                                                 At 1 January 2008                –      6,909       7,920         104    39,404    12,952      6,474     1,675     75,438
                                                 Subsidiaries in
                                                  the process of
                                                  liquidation                     –           –           –       (111)        –      (406)       (91)     (374)      (982)
2009




                                                 Currency translation
                                                  differences                     –           –          50          –      (189)       33        (40)        –       (146)
                                                 Disposals                        –     (1,355)        (639)         –      (311)    (2,881)       (6)        –     (5,192)
                                                 Written off                      –           –        (348)         –       (15)         –      (782)      (35)    (1,180)
                                                 Depreciation charge
                                                  (Note 25(i))                    –        545         472           7     1,860     1,353        644        12      4,893
                                                 At 31 December 2008              –      6,099       7,455           –    40,749    11,051      6,199     1,278     72,831


                                                 Net book value at
                                                  31 December 2008           16,250     16,186       8,130           –    10,550     5,985      1,078       140     58,319
Notes to the Financial Statements (cont’d)
for the financial year ended 31 December 2009

25.   Property, plant and equipment (cont’d)
                                                                                                Group
                                                                                           2009       2008
                                                                                          S$’000     S$’000

      i.   Depreciation capitalised in construction contract work-in-progress
            (Note 15)                                                                      2,495        1,369
           Depreciation charged to profit or loss (Note 7)                                 3,875        3,524
           Total depreciation                                                              6,370        4,893

      ii. The carrying amounts of property, plant and equipment acquired under finance leases are as follows:

                                                                                                Group
                                                                                           2009       2008
                                                                                          S$’000     S$’000

           Plant and machinery                                                            13,166        5,286
           Motor vehicles and trucks                                                       6,130        4,891
           Furniture, fittings, office equipment and computers                                 2            6        79
                                                                                          19,298       10,183




                                                                                                                     Koh Brothers Group Limited Annual Report
      iii. The valuation made in 1993, in connection with the listing of the Company, was performed by Messrs
           Knight Frank, Cheong Hock Chye & Baillieu (Property Consultants) Pte Ltd, a firm of independent valuers
           based on an open market existing use basis as at 31 December 1993.

      iv. If the revalued property, plant and equipment had been included in the financial statements at cost less
          accumulated depreciation, their net book values would be as follows:

                                                                                                Group
                                                                                           2009       2008
                                                                                          S$’000     S$’000




                                                                                                                     2009
           Freehold land                                                                  15,293       15,293
           Buildings                                                                       4,340        4,465
           Leasehold premises                                                              1,561        1,748

      v. At 31 December 2009, freehold and leasehold premises with a carrying value of S$36,589,000
         (2008: S$37,175,000) are mortgaged to banks for credit facilities granted (Notes 29 and 31).
                                           Notes to the Financial Statements (cont’d)
                                           for the financial year ended 31 December 2009

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

                                                 vi. The Group’s major properties are as follows:


                                                                                                                 Land     Built–up
                                                                                                                 Area       Area
                                                            Name and location         Description               (Sq ft)    (Sq ft)   Tenure

                                                      (a)   16 Gul Avenue             Office building-cum-       79,230   21,894     30 years lease from
                                                            Singapore 629659          workshop                                       21 September 1984
                                                      (b)   Koh Brothers Building     7-storey industrial        12,002   23,835     Freehold
                                                            11 Lorong Pendek          building
                                                            Singapore 348639
                                                      (c)   Oxford Hotel              135-room hotel              8,049   52,890     Freehold
                                                            218 Queen Street
                                                            Singapore 188549
                                                      (d)   65 Sungei Kadut Drive     Factory-cum-office         94,399   48,594     30 years lease from
80                                                          Singapore 729564          building                                       16 December 1990
                                                      (e)   32 Gul Road               Factory-cum-office         34,380    2,093     35 years lease from
Koh Brothers Group Limited Annual Report




                                                            Singapore 629349          building                                       16 June 1980
                                                      (f)   50 Tuas Crescent          Factory-cum-office        234,625   89,716     60 years lease from
                                                            Singapore 638730          building                                       16 July 1982
                                                      (g)   Jalan Letjen Soeprapto,   Batching plant            215,278         –    30 years lease from
                                                            Kelurahan Tanjung         premise                                        10 June 1997
                                                            Uncang, Kota Batam,
                                                            Indonesia
                                                      (h)   Komplek Villa Marina      1 unit of single storey       936      484     30 years lease from
                                                            Batam, Indonesia          terrace house                                  13 March 1989

                                           26.   Intangible asset
2009




                                                 The intangible asset for the Group and the Company represents the costs of computer software acquired.
                                                 The amount was fully amortised during the financial year.

                                           27.   Trade payables

                                                 i.   Included in trade payables is an amount of S$90,000 (2008: S$238,000) due to minority shareholders.

                                                 ii. Included in current trade payables is an advance received from construction contracts of S$6,548,000
                                                     (2008: S$NIL) (Note 15).

                                                 iii. Included in current and non-current trade payables are retentions on construction contracts of
                                                      S$12,862,000 (2008: S$10,162,000) (Note 15).

                                                 iv. The non-current trade payables due from third parties are presented at amortised costs and computed
                                                     based on cashflows discounted at market borrowing rate. The market borrowing rated used is 5%
                                                     (2008: 5%).
Notes to the Financial Statements (cont’d)
for the financial year ended 31 December 2009

28.   Other liabilities
                                                                    Group                    Company
                                                               2009       2008           2009       2008
                                                              S$’000     S$’000         S$’000     S$’000
      Current
      Accruals for operating expenses                         17,262       17,228          181         143
      Sundry payables                                          5,327        2,409            7          15
      Deposits and advances received                           3,650        4,005            –           –
      Due to directors (Note 28(ii))                             531          562          250         256
      Indirect taxes payable                                   2,081        1,661            –           –
      Due to related parties (Note 28(i))                      1,894        1,715            –           –
      Financial guarantee contracts due within one year            –            –          548         387
                                                              30,745       27,580          986         801

      Non-current
      Financial guarantee contracts due within
       two to five years                                            –            –         610         660

      i.   The amounts due to related parties as at 31 December 2009 are non-trade, unsecured, interest-free     81
           and include amounts due to minority shareholders of S$1,852,000 (2008: S$1,675,000) and amounts




                                                                                                                 Koh Brothers Group Limited Annual Report
           due to the companies which are controlled or significantly influenced by the Group’s key management
           personnel and their close family member of S$42,000 (2008: S$40,000). The amounts are repayable on
           demand.

      ii. The amounts due to directors are unsecured, interest-free and are repayable on demand.

29.   Short-term borrowings
                                                                                              Group
                                                                                         2009       2008
                                                                                        S$’000     S$’000
      Bank overdrafts
       Secured (Note 29(ii))                                                                 –          448




                                                                                                                 2009
       Unsecured                                                                         1,372       14,088
                                                                                         1,372       14,536
      Bills payable
       Secured (Note 29(iii))                                                            3,223        4,591
       Unsecured                                                                             –        3,600
                                                                                         3,223        8,191
      Short-term bank loans
       Secured (Note 29(iv))                                                            28,800       20,800
       Unsecured                                                                        20,900       37,900
                                                                                        49,700       58,700
      Term loans payable within one year (Note 31)
       Secured                                                                           6,730       33,174

      Finance lease payables within one year (Note 30)                                   4,113       2,625
                                                                                        65,138     117,226
                                           Notes to the Financial Statements (cont’d)
                                           for the financial year ended 31 December 2009

                                           29.   Short-term borrowings (cont’d)

                                                 i.   Effective interest rates

                                                      The bills payable are interest-bearing at rates ranging from 2.71% to 2.78% (2008: 1.89% to 7.72%) per
                                                      annum.

                                                      Weighted average effective interest rates at the balance sheet date are as follows:

                                                                                                                                                    Group
                                                                                                                                            2009            2008

                                                      Bank overdrafts                                                                       5.01%           5.27%
                                                      Short-term bank loans                                                                 2.57%           3.29%

                                                 ii. The bank overdrafts are secured on the following assets:
                                                                                                                                                    Group
                                                                                                                                             2009        2008
82                                                                                                                                          S$’000      S$’000
Koh Brothers Group Limited Annual Report




                                                      Investment property (Note 24(iii))                                                      –              448

                                                 iii. The bills payable are secured as follows:


                                                      Leasehold premises (Note 25(v))                                                       3,223           4,591

                                                 iv. The short-term bank loans are secured as follows:


                                                      Freehold land and buildings (Note 25(v))                                           2,300             300
                                                      Leasehold premises (Note 25(v))                                                      500             500
                                                      Investment property (Note 24(iii))                                                26,000          20,000
                                                                                                                                        28,800          20,800
2009




                                           30.   Finance leases


                                                 Minimum lease payments due:
                                                 – Not later than one year                                                               4,517          2,844
                                                 – Between two and five years                                                            6,622          3,517
                                                                                                                                        11,139          6,361
                                                 Less: Future finance charges                                                             (752)          (497)
                                                 Present value of finance lease liabilities                                             10,387          5,864

                                                 The present value of finance lease liabilities is analysed as follows:


                                                 Current liabilities
                                                 – Not later than one year (Note 29)                                                        4,113           2,625
                                                 Non-current liabilities
                                                 – Between two and five years                                                            6,274              3,239
                                                                                                                                        10,387              5,864

                                                 The weighted average effective interest rate of finance leases at the balance sheet date is 4.73%
                                                 (2008: 5.19%).
Notes to the Financial Statements (cont’d)
for the financial year ended 31 December 2009

31.   Bank term loans
                                                                   Due within one year          Due after one year
                                                                    2009        2008             2009        2008
                                                                   S$’000      S$’000           S$’000      S$’000

      Group
      Secured                                                       6,730      33,174          186,874       176,613
                                                                        (Note 29)

      Details of the secured term loans are as follows:

      i.   A term loan of S$15,756,000 (2008: S$16,836,000) is secured by way of a first legal mortgage on a
           freehold property (Note 25(v)). It is repayable over a period of 83 monthly instalments commencing from
           1 August 2005 and a final principal repayment of S$2,525,550 upon maturity of the loan on 1 July 2012.

      ii. A term loan of S$93,000,000 (2008: S$95,000,000) is utilised by a joint venture company, in which the
          Group has a 50% interest. The term loan is secured by way of a first legal mortgage on a completed
          leasehold investment property and an assignment of the rental proceeds and fire insurance policy of
          the joint venture company (Note 24(iii)). It is repayable in 5 annual instalments of S$2,000,000 each,
          commencing from 30 June 2006 and a final principal repayment of S$91,000,000 upon maturity of the                 83
          loan on 28 February 2011.




                                                                                                                            Koh Brothers Group Limited Annual Report
      iii. A term loan of S$NIL (2008: S$1,240,000) is secured by means of a first legal mortgage on a leasehold
           premise of a subsidiary (Note 25(v)). The term loan was fully paid during the financial year.

      iv. A term loan of S$NIL (2008: S$2,400,000) is secured by way of a first legal mortgage on a freehold
          development property (Note 20(i)) and an assignment of all its rights, title and interest in contracts in
          connection with the proposed development. The term loan was fully paid during the financial year.

      v. Term loans of S$63,360,000 (2008: S$63,360,000) and S$12,200,000 (2008: S$16,200,000) are utilised
         by a joint venture company, in which the Group has 50% interest. The term loans are secured by way
         of a first legal mortgage on a freehold development property (Note 20(i)) and an assignment of all rights
         and benefits under the sale and purchase agreements, tenancy, rental lease or licence agreement,




                                                                                                                            2009
         construction contracts, performance bonds and all insurance policies in connection with the property
         project. The term loan of S$63,360,000 is fully repayable on December 2011 and the term loan of
         S$12,200,000 is repayable by May 2012.

      vi. A term loan of S$18,145,000 (2008: S$18,145,000) is secured by way of first legal and collateral
          mortgage on freehold investment properties (Note 24(iii)). It is also secured by way of an assignment of
          rental and sale proceeds, all rights, titles and interests in contracts in connection with the properties. The
          term loan is fully repayable on 31 August 2011.

      vii. A term loan of S$19,854,000 (2008: S$19,854,000) is secured by way of first legal and collateral
           mortgage on freehold investment properties (Note 24(iii)). It is also secured by way of an assignment of
           rental and sale proceeds, all rights, titles and interests in contracts in connection with the properties. The
           term loan is fully repayable on 31 August 2011.

      viii. A term loan of S$8,174,000 (2008: S$8,174,000) is secured by way of first legal mortgage on
            development properties of a subsidiary (Note 20(i)). It is also secured by way of an assignment of all
            rights and benefits under the sale and purchase agreements in connection with the properties. The
            term loan is fully repayable on 30 October 2011 or 12 months after the date of issuance of Temporary
            Occupation Permit, whichever is earlier.
                                           Notes to the Financial Statements (cont’d)
                                           for the financial year ended 31 December 2009

                                           31.   Bank term loans (cont’d)

                                                 ix. A term loan of S$5,500,000 (2008: S$12,000,000) is secured by way of first legal mortgage on a freehold
                                                     property held by a subsidiary (Note 25(v)). The term loan is fully repayable on 31 December 2013.

                                                 x. A term loan of S$167,580,000 (2008: S$175,433,000) is utilised by a joint venture company, in which
                                                    the Group has 25% interest. The term loan is secured by way of a first legal mortgage on a freehold
                                                    development property (Note 20(i)) and an assignment of all rights and benefits under any construction
                                                    contract(s) and performance, an assignment of all rights and benefits under the sale and purchase
                                                    agreement, tenancy, rental lease or licence agreement, construction contracts, performance bonds and
                                                    all insurance policies in connection with the property project. The loan is also secured on a fixed deposit
                                                    of S$2,200,000 (2008: S$6,400,000). The term loan is fully repayable on January 2012.

                                                 xi. The weighted average effective interest rate at the balance sheet date is 2.27% (2008: 2.75%).

                                                 xii. The carrying amounts of the term loans approximate their fair values, as the term loans bear interest
                                                      at variable rates, which are re-priced within a period of up to six months. These term loans can be
                                                      contractually re-priced at 1,2,3 or 6 monthly intervals at the option of the Group.


84                                         32.   Share capital and other reserves

                                                 (a)    Share capital
Koh Brothers Group Limited Annual Report




                                                                                                             Number of shares             Share capital
                                                                                                             2009       2008            2009        2008
                                                        Group and Company                                    ’000        ’000          S$’000      S$’000
                                                        Issued and fully paid:
                                                        Balance at 1 January and 31 December                479,613       479,613      47,966         47,966

                                                 (b)    Capital reserves

                                                        i.   At 31 December 2008, the capital reserves of the Group mainly comprises capitalisation of
                                                             revenue reserve of a subsidiary of S$4,808,000 to meet “A1” status accreditation from the Building
                                                             and Construction Authority. This reserve is no longer required and had been transferred to
2009




                                                             revenue reserve in 2009.

                                                        ii. Included in capital reserves are negative goodwill relating to subsidiaries acquired prior to
                                                            1 January 2001. All capital reserves are not available for dividend distribution.

                                                 (c)    Retained profits

                                                        Retained profits of the Group and the Company are fully distributable.

                                                 (d)    Currency translation reserve
                                                                                                                                                Group
                                                                                                                                        2009           2008
                                                                                                                                       S$’000         S$’000

                                                        Balance at 1 January                                                          (6,541)         (7,618)
                                                        Reclassification                                                                  29               –
                                                        Net currency translation differences of financial statements of
                                                         foreign subsidiaries                                                            601           1,223
                                                        Less: Minority interests                                                          (9)           (146)
                                                        Balance at 31 December                                                        (5,920)         (6,541)
Notes to the Financial Statements (cont’d)
for the financial year ended 31 December 2009

33.   Dividend
                                                                                               Group
                                                                                          2009       2008
                                                                                         S$’000     S$’000

      Final one-tier exempt dividend of 0.30 cent per ordinary share,
       paid in respect of the financial year ended 31 December 2007                           –        1,439
      Special one-tier tax exempt dividend of 0.10 cent and final one-tier
       exempt dividend of 0.20 cent per ordinary share, paid in respect
       of the financial year ended 31 December 2008                                       1,439            –
                                                                                          1,439        1,439

      At the forthcoming Annual General Meeting on 29 April 2010, a final one-tier exempt dividend of 0.30 cent
      per share amounting to a total of S$1,439,000 will be recommended. These financial statements do not
      reflect these dividends, which will be accounted for in shareholders’ equity as an appropriation of revenue
      reserve in the financial year ending 31 December 2010.

34.   Commitments and contingent liabilities

                                                                                                                    85
      (a)    Operating lease commitments – where a group company is a lessee




                                                                                                                    Koh Brothers Group Limited Annual Report
             The Group leases various premises under non-cancellable operating lease agreements. The leases
             have varying terms, escalation clauses and renewal rights.

             The future aggregate minimum lease payables under non-cancellable operating leases contracted for
             at the balance sheet date but not recognised as liabilities, are analysed as follows:

                                                                                               Group
                                                                                          2009       2008
                                                                                         S$’000     S$’000

             Not later than one year                                                      1,283        1,222




                                                                                                                    2009
             Between two and five years                                                   4,218        3,978
             Later than five years                                                       12,283        9,810
                                                                                         17,784       15,010

      (b)    Operating lease commitments – where a group company is a lessor

             The future minimum lease receivables under non-cancellable operating leases contracted for at the
             balance sheet date but not recognised as receivables, are analysed as follows:

                                                                                               Group
                                                                                          2009       2008
                                                                                         S$’000     S$’000

             Not later than one year                                                      6,814        6,613
             Between two and five years                                                   6,718        9,022
                                                                                         13,532       15,635
                                           Notes to the Financial Statements (cont’d)
                                           for the financial year ended 31 December 2009

                                           34.   Commitments and contingent liabilities (cont’d)

                                                 (c)   Contingent liabilities

                                                       i.   At 31 December 2009, the Company furnished banks and financial institutions guarantees for
                                                            facilities extended to subsidiaries and joint venture companies amounting to S$540,026,000
                                                            (2008: S$558,990,000) of which the amount utilised at 31 December 2009 was S$325,896,000
                                                            (2008: S$345,882,000).

                                                       ii. The Company has agreed to provide continuing financial support to certain subsidiaries,
                                                           which have a combined net liabilities at 31 December 2009 of approximately S$2,618,000
                                                           (2008: S$2,660,000).

                                           35.   Related party transactions

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

                                                                                                                                             Group
86                                                                                                                                  2009          2008
                                                                                                                                   S$’000        S$’000
Koh Brothers Group Limited Annual Report




                                                 (a)   Sales and purchases of goods and services
                                                       i.   Sub-contract works performed by a company, namely Ah Boon
                                                              Civil Engineering & Contractor Pte Ltd, which is owned by a
                                                              brother of certain directors, namely Mr Koh Tiat Meng and
                                                              Mr Koh Teak Huat, of the Company.                                       (26)           (441)
                                                       ii.  Provision of transportation services by a company, namely
                                                              KGH Transportation & Trading Pte Ltd, which is owned by
                                                              a brother of certain directors, namely Mr Koh Tiat Meng and
                                                              Mr Koh Teak Huat, of the Company.                                      (202)           (376)
                                                       iii. Provision of legal services by a company, namely Lai Mun Onn &
                                                              Co, which is owned by a director, namely Mr Lai Mun Onn, of
2009




                                                              the Company.                                                            (58)             (45)
                                                       iv.  Progessive revenue recognised from sale of one unit residential
                                                              property in a residential project known as “Fiorenza” to
                                                              Madam Quek Chee Nee, a director of the Company.                         191                –

                                                 (b)   Key management personnel compensation

                                                       Key management personnel compensation is analysed as follows:

                                                       Salaries and other short-term employee benefits                              4,691            5,675
                                                       Post-employment benefits – contribution to Central Provident Fund              116               92
                                                                                                                                    4,807            5,767

                                                       Included in the above was total compensation to directors of the Company amounting to S$3,451,000
                                                       (2008: S$4,893,000).
Notes to the Financial Statements (cont’d)
for the financial year ended 31 December 2009

36.   Financial risk management

      Financial risk management objectives and policies

      The Group’s activities expose it to market risk, (including currency risk, interest rate risk and price risk),
      credit risk and liquidity risk.

      The Group’s overall risk management strategy seeks to minimise adverse effects from unpredictability of
      financial markets on the Group’s financial performance. The Group has adopted natural hedging policy by
      matching assets and liabilities of the same currency. Derivative financial instruments are only used where
      necessary to reduce exposure to fluctuation in foreign exchange rates and interest rates.

      (a)    Market risk

      i.     Currency risk

             The Group operates in Singapore and Asia and is exposed to foreign currency risk arising from
             various currency exposures. Entities in the Group transact predominantly in their functional
             currencies, except for balances between entities in the Group.

             The Group monitors the foreign currency exchange rate movements closely to ensure that its
             exposures are minimised. The Group has investments in foreign subsidiaries and is exposed to
             currency translation risk.                                                                                87




                                                                                                                       Koh Brothers Group Limited Annual Report
             The Group’s currency exposure is as follows:

                                                          SGD        USD         RMB         Others        Total
             FY2009                                      S$’000     S$’000      S$’000       S$’000       S$’000
             Financial assets
             Cash and cash equivalents and
               financial assets at fair value through
               profit or loss                            33,384         71        9,940          237      43,632
             Trade and other receivables                 57,349         68        7,778          193      65,388
             Inter-company balances                       1,416          –       21,240        2,186      24,842
                                                         92,149        139       38,958        2,616     133,862
             Financial liabilities




                                                                                                                       2009
             Borrowings                                 (255,063)   (3,223)           –            –    (258,286)
             Trade and other payables                    (79,176)      (98)     (11,770)        (650)    (91,694)
             Inter-company balances                       (1,416)        –      (21,240)      (2,186)    (24,842)
                                                        (335,655)   (3,321)     (33,010)      (2,836)   (374,822)
             Net financial (liabilities)/ assets        (243,506)   (3,182)       5,948         (220)   (240,960)
             Add: Net financial liabilities
              denominated in the respective
              entities’ functional currency             242,826          –        3,819          129     246,774
             Net currency exposure                         (680)    (3,182)       9,767          (91)      5,814
                                           Notes to the Financial Statements (cont’d)
                                           for the financial year ended 31 December 2009

                                           36.   Financial risk management (cont’d)

                                                 (a)   Market risk (cont’d)

                                                 i.    Currency risk (cont’d)

                                                                                                     SGD        USD       RMB       Others       Total
                                                       FY2008                                       S$’000     S$’000    S$’000     S$’000      S$’000
                                                       Financial assets
                                                       Cash and cash equivalents and
                                                          financial assets at fair value through
                                                          profit or loss                            23,538        184    10,500        612      34,834
                                                       Trade and other receivables                  57,036        128     8,554        449      66,167
                                                       Inter-company balances                        1,105        152    14,844         12      16,113
                                                                                                    81,679        464    33,898      1,073     117,114
                                                       Financial liabilities
                                                       Borrowings                                  (292,486)   (4,592)         –         –     (297,078)
                                                       Trade and other payables                     (66,592)     (199)   (10,560)     (524)     (77,875)
88                                                     Inter-company balances                        (1,105)     (152)   (14,844)      (12)     (16,113)
                                                                                                   (360,183)   (4,943)   (25,404)     (536)    (391,066)
Koh Brothers Group Limited Annual Report




                                                       Net financial (liabilities)/ assets         (278,504)   (4,479)     8,494       537     (273,952)
                                                       Add: Net financial liabilities/ (assets)
                                                         denominated in the respective
                                                         entities’ functional currency             278,536          –     (7,999)     (124)    270,413
                                                       Net currency exposure                            32     (4,479)       495       413      (3,539)

                                                       The Company’s currency exposure is as follows:

                                                                                                                          SGD        RMB         Total
                                                       FY2009                                                            S$’000     S$’000      S$’000
                                                       Financial assets
                                                       Cash and cash equivalents and financial assets
2009




                                                         at fair value through profit or loss                               242           –        242
                                                       Other receivables                                                     22           –         22
                                                       Inter-company balances                                            14,454           –     14,454
                                                                                                                         14,718           –     14,718
                                                       Financial liabilities
                                                       Inter-company balances                                             (8,058)    (7,285)    (15,343)
                                                       Other payables                                                     (1,596)         –      (1,596)
                                                                                                                          (9,654)    (7,285)    (16,939)
                                                       Net financial assets/ (liabilities)                                 5,064     (7,285)     (2,221)
                                                       Add: Net financial assets denominated in
                                                        the Company’s functional currency                                 (5,064)        –       (5,064)
                                                       Net currency exposure                                                   –    (7,285)      (7,285)
Notes to the Financial Statements (cont’d)
for the financial year ended 31 December 2009

36.   Financial risk management (cont’d)

      (a)   Market risk (cont’d)

      i.    Currency risk (cont’d)


                                                                      SGD           USD          RMB            Total
            FY2008                                                   S$’000        S$’000       S$’000         S$’000
            Financial assets
            Cash and cash equivalents and financial
             assets at fair value through profit or loss                 143            –                 –       143
            Other receivables                                             23            –                 –           23
            Inter-company balances                                    14,705            –                 –    14,705
                                                                      14,871            –                 –    14,871

            Financial liabilities
            Inter-company balances                                   (15,952)           –            (7,154)   (23,106)
            Other payables                                            (1,452)          (9)                –     (1,461)
                                                                                                                           89
                                                                     (17,404)          (9)           (7,154)   (24,567)




                                                                                                                           Koh Brothers Group Limited Annual Report
            Net financial liabilities                                 (2,533)          (9)           (7,154)    (9,696)
            Add: Net financial liabilities denominated
             in the Company’s functional currency                      2,533            –                 –     2,533
            Net currency exposure                                          –           (9)           (7,154)    (7,163)

            If the USD and RMB changes against the SGD by 5% (2008: 5%) respectively with all other variables
            including tax rate being held constant, the effects arising from the net financial assets and liabilities
            on profit after tax and equity will be as follows:

                                                                   2009                            2008
                                                    <–––––––––––––––– Increase / (Decrease) ––––––––––––––––>




                                                                                                                           2009
                                                    Profit after tax    Equity      Profit after tax    Equity
                                                       S$’000           S$’000         S$’000           S$’000

            Group
            USD against SGD
            – strengthened                                 (159)               –             (224)                –
            – weakened                                      159                –              224                 –

            RMB against SGD
            – strengthened                                  488           867                  25               955
            – weakened                                     (488)         (867)                (25)             (955)
                                           Notes to the Financial Statements (cont’d)
                                           for the financial year ended 31 December 2009

                                           36.   Financial risk management (cont’d)

                                                 (a)    Market risk (cont’d)

                                                 i.     Currency risk (cont’d)

                                                        If the RMB changes against the SGD by 5% (2008: 5%) with all other variables including tax rate
                                                        being held constant, the effects arising from the net financial assets and liabilities position will be as
                                                        follows:
                                                                                                            2009                            2008
                                                                                             <–––––––––––––––– Increase / (Decrease) ––––––––––––––––>
                                                                                             Profit after tax    Equity      Profit after tax    Equity
                                                                                                S$’000           S$’000         S$’000           S$’000
                                                        Company
                                                        RMB against SGD
                                                        – strengthened                             (364)              –                (358)               –
                                                        – weakened                                  364               –                 358                –

                                                 ii.    Interest rate risk
90
                                                        Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate
Koh Brothers Group Limited Annual Report




                                                        because of changes in market interest rates. Fair value interest rate risk is the risk that the fair value
                                                        of a financial instrument will fluctuate due to changes in market interest rates. The Group has no
                                                        significant interest-bearing assets. The Group’s exposure to cash flow interest rate risks arises mainly
                                                        from the Group’s debt obligations. The Group manages its cash flow interest rate risks by adopting a
                                                        preference for fixed rate instruments over variable-rate instruments.

                                                        The Group’s borrowings at variable rates on which effective hedges have not been entered into, are
                                                        denominated mainly in SGD. If the SGD interest rates increase/ decrease by 1% (2008: 1%) with
                                                        all other variables including tax rate being held constant, the profit after tax will be lower/ higher by
                                                        S$1,225,000 (2008: S$1,394,000) as a result of higher/ lower interest expense on these borrowings.

                                                 iii.   Price risk
2009




                                                        The Group is exposed to equity securities price risk arsing from the investments held by the Group
                                                        which are classified on the consolidated balance sheets as financial assets at fair value through profit
                                                        or loss. These securities are listed in Singapore. The Group is not exposed to commodity price risk.

                                                        If prices for equity securities listed in Singapore change by 10% (2008: 10%) with all other variables
                                                        including tax rate being held constant, the profit after tax and equity will be:

                                                                                                            2009                            2008
                                                                                             <–––––––––––––––– Increase / (Decrease) ––––––––––––––––>
                                                                                             Profit after tax    Equity      Profit after tax    Equity
                                                                                                S$’000           S$’000         S$’000           S$’000
                                                        Group
                                                        – increased by 10%                            55              –                   38               –
                                                        – decreased by 10%                           (55)             –                  (38)              –

                                                        Company
                                                        – increased by 10%                             *              –                    *               –
                                                        – decreased by 10%                             *              –                    *               –

                                                        * less than S$1,000
Notes to the Financial Statements (cont’d)
for the financial year ended 31 December 2009

36.   Financial risk management (cont’d)

      (b)   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 who require credit over a certain amount.
            Where appropriate, the Company or its subsidiaries obtain bankers’ guarantee or performance bond
            from the customer or arrange for master netting agreement. Cash term, advance payments, bankers’
            guarantees and performance bonds are required for customers of lower credit standing. The Group
            has no significant concentrations of credit risk due to its large number of customers and cover a large
            spectrum of activities and markets in which they operate.

            As the Group and the Company do not hold any collateral, the maximum exposure to credit risk
            for each class of financial instruments is the carrying amount of that class of financial instruments
            presented on the balance sheet, except that the Company had provided corporate guarantees to
            banks on subsidiaries’ loans, the details of which are shown in Note 34(c)(i).

            The Group’s and Company’s major classes of financial assets are bank deposits and receivables.

            The credit risk for receivables based on the information provided to key management is as follows:         91




                                                                                                                       Koh Brothers Group Limited Annual Report
                                                                       Group                    Company
                                                                  2009       2008            2009      2008
                                                                 S$’000     S$’000          S$’000    S$’000

            By geographical areas
            Singapore                                            57,243       57,099       14,476        14,728
            People’s Republic of China                            7,780        8,493            –             –
            The rest of Asia                                        365          575            –             –
                                                                 65,388       66,167       14,476        14,728

            By types of customers




                                                                                                                       2009
            Related companies                                         –            –       14,454        14,705
            Associated companies                                     84           58            –             –
            Related parties                                          92          542            –             –
            Non-related parties
            – Other companies                                    47,768       40,411           22            23
            – Government-related                                 17,444       25,156            –             –
                                                                 65,388       66,167       14,476        14,728

            i.   Financial assets that are neither past due nor impaired

                 All bank deposits are neither past due nor impaired, and are mainly placed with banks with high
                 credit ratings. Receivables that are neither past due nor impaired are substantially companies with
                 a good collection track record with the Group.

                 The Group’s receivables not past due include receivables amounting to S$1,084,607
                 (2008: S$928,000) that would have been past due or impaired if the terms were not re-negotiated
                 during the financial year.
                                           Notes to the Financial Statements (cont’d)
                                           for the financial year ended 31 December 2009

                                           36.   Financial risk management (cont’d)

                                                 (b)   Credit risk (cont’d)

                                                       ii. Financial assets that are past due and/ or impaired

                                                          There is no other class of financial assets that is past due and/ or impaired except for receivables.

                                                          The age analysis of receivables past due but not impaired is as follows:

                                                                                                                       Group                 Company
                                                                                                               2009          2008         2009     2008
                                                                                                              S$’000        S$’000       S$’000   S$’000

                                                          Past due 0 to 3 months                               6,341       10,399           –            –
                                                          Past due 3 to 6 months                               1,561        1,099           –            –
                                                          Past due over 6 months                              12,655       19,595           –            –
                                                                                                              20,557       31,093           –            –

92                                                        The carrying amount of receivables individually determined to be impaired and the movement in
                                                          the related allowance for impairment are as follows:
Koh Brothers Group Limited Annual Report




                                                                                                                    Group                    Company
                                                                                                               2009       2008            2009     2008
                                                                                                              S$’000     S$’000          S$’000   S$’000

                                                          Gross Amount
                                                          – Past over 6 months                                 6,630         8,273          –            –
                                                          Less: Allowance for impairment                      (6,630)       (8,273)         –            –
                                                                                                                   –             –          –            –

                                                          Balance at 1 January                                (8,273)       (4,940)         –            –
2009




                                                          Currency translation difference                       (321)         (146)         –            –
                                                          Allowance made                                      (1,621)       (3,482)         –            –
                                                          Allowance written back                               2,263             –          –            –
                                                          Allowance utilised                                   1,322           295          –            –
                                                          Balance at 31 December                              (6,630)       (8,273)         –            –

                                                          The impaired trade receivables arise mainly from debtors that are in significant financial difficulties
                                                          and have defaulted on payments.
Notes to the Financial Statements (cont’d)
for the financial year ended 31 December 2009

36.   Financial risk management (cont’d)

      (c)   Liquidity risk

            The table below analyses the maturity profile of the Group’s and Company’s financial liabilities based
            on contractual undiscounted cash flows.

                                                                 Less than     Between 1 and Between 2 and
                                                                  1 year          2 years       5 years
                                                                  S$’000          S$’000        S$’000

            Group
            At 31 December 2009
            Payables                                              87,464             1,695            2,973
            Borrowings                                            66,594            97,523          103,158
                                                                 154,058            99,218          106,131

            At 31 December 2008
            Payables                                              75,510                 –            2,760          93
            Borrowings                                           121,396            41,260          151,739




                                                                                                                     Koh Brothers Group Limited Annual Report
                                                                 196,906            41,260          154,499


            Company
            At 31 December 2009
            Other payables                                            986              264               346
            Amount due to subsidiaries                              7,814            7,529                 –
                                                                    8,800            7,793               346

            At 31 December 2008
            Other payables                                            801              272               388
            Amount due to subsidiaries                             15,952            7,154                 –




                                                                                                                     2009
                                                                   16,753            7,426               388

            The Group and Company manage the liquidity risk by maintaining sufficient cash and marketable
            securities to enable them to meet their normal operating commitments and having an adequate
            amount of committed credit facilities.

      (d)   Capital risk

            The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as
            a going concern and to maintain an optimal capital structure so as to maximise shareholder value.
            In order to maintain or achieve an optimal capital structure, the Group may adjust the amount of
            dividend payment, issue new shares, obtain new borrowings or sell assets to reduce borrowings.

            The gearing ratio is calculated as total borrowings divided by shareholders funds.
                                           Notes to the Financial Statements (cont’d)
                                           for the financial year ended 31 December 2009

                                           36.   Financial risk management (cont’d)

                                                 (d)   Capital risk (cont’d)
                                                                                                                                                 Group
                                                                                                                                            2009       2008
                                                                                                                                           S$’000     S$’000

                                                       Total borrowings                                                                   258,286          297,078
                                                       Shareholders funds                                                                 160,819          150,659

                                                       Gearing ratio (times)                                                                  1.61            1.97

                                                       The Group and the Company are in compliance with all externally imposed capital requirements for
                                                       the financial years ended 31 December 2009 and 2008.

                                                 (e)   Fair value measurements

                                                       Effective 1 January 2009, the Group adopted the amendment to FRS107 which requires disclosure of
                                                       fair value measurements by level of the following fair value measurement hierarchy:
94
                                                       i.     quoted price (unadjusted) in active markets for identical assets or liabilities (Level 1);
Koh Brothers Group Limited Annual Report




                                                       ii.    inputs other than quoted prices included within Level 1 that are observable for the asset or
                                                              liability, either directly (is as prices) or indirectly (i.e. derived from prices) (Level 2); and

                                                       iii.   inputs for the asset or liability that are not based on observable market data (unobservable
                                                              inputs) (Level 3).

                                                       The assets measured at fair value are the financial assets at fair value through profit or loss. The fair
                                                       value of this instrument traded in active markets is based on quoted market prices at the balance
                                                       sheet date. The quoted market price used for financial assets held by the Group and the Company is
                                                       the current bid price. This instrument is included in Level 1. The amounts of the assets measured at
                                                       fair value under Level 1 as at 31 December 2009 for the Group and the Company are S$658,000 and
2009




                                                       S$4,000 respectively.

                                                       The carrying value less impairment provision of receivables and payables are assumed to
                                                       approximate their fair value. The fair value of borrowings approximates their carrying value.

                                           37.   Segment information

                                                 Management has determined the operating segments based on the reports reviewed by the Executive
                                                 Committee (“Exco”) that are used to make strategic decisions. The Exco mainly comprises of the Chief
                                                 Executive Officer and the Executive Directors.

                                                 The Exco considers the business from business segment perspective. Management manages and monitors
                                                 the business in three main business segments. There are construction and building materials, real estate
                                                 and leisure and hospitality. The Exco assesses the performance of the business segments based on sales,
                                                 segment results, segment assets and segment liabilities.
Notes to the Financial Statements (cont’d)
for the financial year ended 31 December 2009

37.   Segment information (cont’d)

      The segment information for the year ended 31 December 2009 and the reconciliations of segment results to
      profit before tax and segment assets and liabilities to total assets and liabilities are as follows:

                                                                             Construction
                                                              Leisure &       & Building
      Group (S$’000)                              Real Estate Hospitality     Materials       Others       Total
      2009
      Sales
      – External                                    34,831          3,345      291,986              –     330,162
      – Inter-segment                                  872             13       18,238              –      19,123
                                                    35,703          3,358      310,224              –     349,285
      Elimination                                                                                         (19,123)
                                                                                                          330,162

      Results
      Segment results                                8,358            709        8,719           (252)     17,534
      Net investment (loss)/gain                         –         (1,300)         133              1      (1,166)   95
      Interest income                                                                                         280




                                                                                                                     Koh Brothers Group Limited Annual Report
      Finance expenses (Note 9)                                                                            (6,100)
      Share of profit of an associated company           –              –           81              –          81
      Profit before income tax                                                                             10,629

      Other information
      Capital expenditure                              114            446       15,240              –      15,800
      Depreciation                                     193            462        3,220              –       3,875

                                                                Construction
                                          Real    Leisure &      & Building
      Group (S$’000)                     Estate   Hospitality    Materials      Others      Elimination    Total




                                                                                                                     2009
      Segment assets                    351,169     29,995        200,109         7,993        (54,285)   534,981
      Associated companies                    –           –           581             –              –        581
      Unallocated assets:
      Short-term bank deposits                                                                             15,250
      Financial assets at fair value
        through profit or loss                                                                                658
      Tax recoverable                                                                                       1,156
      Consolidated total assets                                                                           552,626

      Segment liabilities                36,592       2,115       113,597        15,782       (55,369)    112,717
      Unallocated liabilities:
      Current income tax liabilities                                                                        2,246
      Deferred income tax liabilities                                                                      16,323
      Borrowings                                                                                          258,286
      Consolidated total liabilities                                                                      389,572
                                           Notes to the Financial Statements (cont’d)
                                           for the financial year ended 31 December 2009

                                           37.   Segment information (cont’d)

                                                 The segment information for the year ended 31 December 2008 and the reconciliations of segment results to
                                                 profit before tax and segment assets and liabilities to total assets and liabilities are as follows:

                                                                                                                       Construction
                                                                                                         Leisure &      & Building
                                                 Group (S$’000)                              Real Estate Hospitality    Materials       Others       Total
                                                 2008
                                                 Sales
                                                 – External                                     21,859         7,205      186,610             –     215,674
                                                 – Inter-segment                                   838            66          210             –       1,114
                                                                                                22,697         7,271      186,820             –     216,788
                                                 Elimination                                                                                         (1,114)
                                                                                                                                                    215,674

                                                 Results
                                                 Segment results                                 5,160         1,895        2,233        (1,499)      7,789
96                                               Exceptional items                                   –        21,349            –         3,654      25,003
                                                 Net investment loss                                 –             –         (961)           (8)       (969)
Koh Brothers Group Limited Annual Report




                                                 Interest income                                                                                        457
                                                 Finance expenses (Note 9)                                                                           (5,432)
                                                 Share of profit of an associated company            –             –          74              –          74
                                                 Profit before income tax                                                                            26,922

                                                 Other information
                                                 Capital expenditure                               210            34        5,246             –       5,490
                                                 Depreciation                                      182           630        2,712             –       3,524

                                                                                                           Construction
                                                                                     Real    Leisure &      & Building
2009




                                                 Group (S$’000)                     Estate   Hospitality    Materials     Others      Elimination    Total
                                                 Segment assets                    347,795     30,488        187,043       10,262        (51,066)   524,522
                                                 Associated companies                    –           –           500            –              –        500
                                                 Unallocated assets:
                                                 Short-term bank deposits                                                                            21,753
                                                 Financial assets at fair value
                                                   through profit or loss                                                                               462
                                                 Tax recoverable                                                                                      1,390
                                                 Consolidated total assets                                                                          548,627

                                                 Segment liabilities                23,706       2,747        80,078       23,548       (51,484)     78,595
                                                 Unallocated liabilities:
                                                 Current income tax liabilities                                                                       1,806
                                                 Deferred income tax liabilities                                                                     17,203
                                                 Borrowings                                                                                         297,078
                                                 Consolidated total liabilities                                                                     394,682
Notes to the Financial Statements (cont’d)
for the financial year ended 31 December 2009

37.   Segment information (cont’d)

      The measurement of segment sales, results, assets and liabilities are as follows:

      i.      Inter-segment transactions are determined on an arm’s length basis. The sales from external
              parties reported to the Exco are measured in a manner consistent with that in the statement of
              comprehensive income.

      ii.     The Exco assesses the performance of the operating segments based on a measure of segment
              results. This measurement excludes the income or expenses that are not expected to recur regularly
              in every period. Interest income and finance expenses are not allocated to segments, as this type of
              activity is driven by the Group Treasury, which manages the cash performance of the Group.

              (a)   The amounts provided to the Exco with respect to total assets are measured in a manner
                    consistent with that of the financial statements. All assets are allocated to reportable segments
                    other than short-term bank deposits, financial assets at fair value through profit or loss and tax
                    recoverable.

              (b)   The amounts provided to the Exco with respect to total liabilities are measured in a manner
                    consistent with that of the financial statements. These liabilities are allocated based on the       97
                    operations of the segments. All liabilities are allocated to the reportable segments other than
                    current income tax liabilities, deferred income tax liabilities and borrowings.




                                                                                                                         Koh Brothers Group Limited Annual Report
      Geographical segments

      The Group’s three business segments operate in three main geographical areas: Singapore, People’s
      Republic of China and the rest of Asia.

      The following table presents sales and non-current assets information regarding geographical segments for
      the financial years ended 31 December 2009 and 2008.

                                                                                                Total sales
                                                                                            2009           2008




                                                                                                                         2009
      Group                                                                                S$’000         S$’000

      Singapore                                                                           315,335        200,534
      People’s Republic of China                                                           10,725          8,578
      The rest of Asia                                                                      4,102          6,562
                                                                                          330,162        215,674

                                                                                          Total non-current assets
                                                                                            2009           2008
      Group                                                                                S$’000         S$’000

      Singapore                                                                           257,747        249,611
      People’s Republic of China                                                            2,171          2,207
      The rest of Asia                                                                      9,348         11,470
                                                                                          269,266        263,288
                                           Notes to the Financial Statements (cont’d)
                                           for the financial year ended 31 December 2009

                                           38.   Group companies

                                                 The subsidiaries, joint ventures and associated company at 31 December 2009 are:

                                                                                           Country of                                   Effective holding
                                                                                         incorporation                                      by Group
                                                 Name of company                         and business Principal activities               2009       2008

                                                 SUBSIDIARIES
                                                 Held by the Company:

                                                 Changi Hotel Pte Ltd*                    Singapore     Dormant                          100%      100%

                                                 Construction Consortium Pte. Ltd.*       Singapore     Investment holding               100%      100%

                                                 Koh Brothers Development Pte Ltd*        Singapore     Property development and         100%      100%
                                                                                                        provision of management
                                                                                                        services
                                                 Koh Brothers Holdings Pte Ltd*           Singapore     Investment holding               100%      100%
                                                                                                        and property investment
98
Koh Brothers Group Limited Annual Report




                                                 Koh Brothers Investment Pte Ltd*         Singapore     Hotel investment                 100%      100%
                                                 Oxford Hotel Pte Ltd*                    Singapore     Hotel management                 100%      100%


                                                 Held by subsidiaries:
                                                 Asta-Profits Investments Pte Ltd*        Singapore     Investment holding                90%        90%
                                                 Batam Vision Pte Ltd*                    Singapore     Investment holding               100%      100%
                                                 Bellwood Investments Pte Ltd*            Singapore     Investment holding                90%        90%
                                                 Building & Construction Resources        Singapore     General wholesale trading        100%      100%
                                                  Pte. Ltd. f                                           and building services
2009




                                                 KBD Caldecott Development Pte. Ltd.*     Singapore     Property development             100%      100%
                                                 KBD Kosdale Pte. Ltd.*                   Singapore     Property investment              100%      100%
                                                 Kosland Pte. Ltd.*                       Singapore     Property investment              100%      100%
                                                 Koh Brothers Building & Civil            Singapore     Building and civil               100%      100%
                                                  Engineering Contractor (Pte.) Ltd.*                   engineering contracting
                                                 Eminent Capital Investments Pte Ltd*     Singapore     Investment holding                90%        90%
                                                 G & W Concrete Products Pte Ltd*         Singapore     Manufacturing and sale of        100%      100%
                                                                                                        concrete products
                                                 G & W Industries Pte Ltd*                 Singapore    Manufacturing and sale of        100%       100%
                                                                                                        cement
                                                 G & W Industrial Corporation Pte Ltd*     Singapore    Investment holding               100%       100%
                                                 G & W Precast Pte Ltd*                    Singapore    Manufacturing and sale of        100%       100%
                                                                                                        precast concrete products
                                                 G & W Ready-Mix Pte Ltd*                  Singapore    Manufacturing and sale of        100%       100%
                                                                                                        building materials and rental
                                                                                                        of construction equipment
Notes to the Financial Statements (cont’d)
for the financial year ended 31 December 2009

38.   Group companies (cont’d)

                                            Country of                              Effective holding
                                          incorporation                                 by Group
      Name of company                     and business Principal activities          2009       2008


      Held by subsidiaries:
      Megacity Investment Pte Ltd*          Singapore   Investment holding           100%       100%

      Koh Brothers Project Management       Singapore   Project management and       100%       100%
        Pte Ltd*                                        building contracting

      Megaplus Investments Pte Ltd*         Singapore   Investment holding            90%        90%

      Meng Wah High Technology Pte Ltd*     Singapore   Mechanical and electrical    100%       100%
                                                        works contracting

      Scenic City Investment Pte Ltd*       Singapore   Investment holding            90%        90%

      The Montana Development Pte Ltd       Singapore   In liquidation               100%       100%

      VNT Travel Pte Ltd*                   Singapore   Dormant                      100%        60%    99

      Wealthplus Pte Ltd*                   Singapore   Investment holding            90%        90%




                                                                                                        Koh Brothers Group Limited Annual Report
      Beijing G & W Cement Products         People’s    Manufacturing and sale of     55%        55%
       Co., Ltd**                           Republic    building materials
                                            of China

      USL Asia Pacific Pte Ltd*             Singapore   Manufacturing and sale of     75%        75%
                                                        asphaltic products and
                                                        construction chemicals

      Koh Brothers Infrastructure           Singapore   Liquidated                         –    100%
        (Overseas) Pte Ltd

      KB Security Services Pte Ltd          Singapore   Liquidated                         –    100%




                                                                                                        2009
      USL Asia Pacific (M) Sdn. Bhd.d       Malaysia    Manufacturing and sale of   68.25%     68.25%
                                                        asphaltic products and
                                                        construction chemicals

      Shantou SEZ Jia Xin Real Estate       People’s    Dormant                       70%        70%
       Development Co., Ltda                Republic
                                            of China

      Shantou Scenic Bay Property           People’s    Dormant                      90%        90%
       Development Co., Ltda                Republic
                                            of China

      Shantou Scenic View Property          People’s    Dormant                      90%        90%
       Development Co., Ltda                Republic
                                            of China

      Dalian Megacity Trading Co., Ltdg     People’s    Dormant                     100%       100%
                                            Republic
                                            of China
                                           Notes to the Financial Statements (cont’d)
                                           for the financial year ended 31 December 2009

                                           38.   Group companies (cont’d)

                                                                                              Country of                                 Effective holding
                                                                                            incorporation                                    by Group
                                                 Name of company                            and business Principal activities             2009       2008


                                                 Held by subsidiaries:
                                                 PT. Batam Vision Indonesiab                   Indonesia     Dormant                     100%       100%
                                                 PT. Gunanusa Wiratama       b
                                                                                               Indonesia     Manufacturing and sale of   100%       100%
                                                                                                             building materials
                                                 PT. Koh Brothers Indonesiab                   Indonesia     Property investment,        100%       100%
                                                                                                             dealing and development
                                                 PT. KB Marinindob                             Indonesia     Dormant                     100%       100%
                                                 PT. Pulau Pisang Granitindob                  Indonesia     Dormant                     100%       100%
                                                 G & W Industries (M) Sdn. Bhd.d               Malaysia      Equipment rental and sale   100%       100%
                                                 Vina Viet-Sing Ltd                            Socialist     In liquidation               70%       70%
                                                                                               Republic
100
                                                                                               of Vietnam
Koh Brothers Group Limited Annual Report




                                                 JOINT VENTURE COMPANIES
                                                 Held by subsidiaries:
                                                 Canberra Development Pte Ltde                 Singapore     Property investment          50%       50%
                                                 Clareville Investments Pte Ltd  c
                                                                                               Singapore     Dormant                      50%       50%
                                                 Buildhome Pte. Ltd.     e
                                                                                               Singapore     Property development         50%       50%
                                                 Phileap Pte. Ltd.   e
                                                                                               Singapore     Property development         25%       25%
                                                 Pencroft Investments Pte Ltd                  Singapore     Liquidated                    –        50%


                                                 JOINT VENTURE ENTITY
                                                 Held by subsidiary:
2009




                                                 Soletanche Bachy – Koh Brothers               Singapore     Civil engineering            45%         –
                                                  Joint Venture*


                                                 ASSOCIATED COMPANY
                                                 Held by subsidiary:
                                                 Hi Con (S) Pte. Ltd.*                         Singapore     Manufacturing and sale of    35%       35%
                                                                                                              chemicals

                                                 * Audited by PricewaterhouseCoopers LLP, Singapore.
                                                 ** Audited by a PricewaterhouseCoopers network firm outside Singapore.
                                                 a
                                                    Audited by Si Wei Certified Public Accountants.
                                                 b
                                                    Audited by Charles and Nurlena Registered Public Accountants.
                                                 c
                                                    Audited by SP Ng & Co., Certified Public Accountants.
                                                 d
                                                    Audited by Roger Yue, Tan and Associates.
                                                 e
                                                    Audited by Ernst & Young LLP, Singapore.
                                                 f
                                                    Audited by Tan, Chan & Partners Certified Public Accountants.
                                                 g
                                                    Audited by Liao Ning Hao Da Certified Public Accountants.
Notes to the Financial Statements (cont’d)
for the financial year ended 31 December 2009

39.   Investment properties

                                                                                                           Site area/gross
      Property                                                             Title                          floor area (sq ft)

      i.     The Sun Plaza, a 5-storey commercial &                        99 years                            92,570
               entertainment complex at Sembawang,                         lease from 26 June 1996            235,484
               Singapore
      ii.    The First City Complex comprising a bowling                   Right of use                       189,787
               alley, a supermarket, department stores,                    for 30 years from                  200,458
               food outlets, shops, office units and service               October 1988 to
               apartments in Pulau Batam, Indonesia                        September 2018*
      iii.   8 shop units at Alocassia Apartments at 383                   Freehold                             44,863**
                Bukit Timah Road, Singapore                                                                     22,895
      iv.    45 apartment units at Alocassia Apartments at                 Freehold                             44,863**
               383 Bukit Timah Road, Singapore                                                                  35,166

      * The land used right may be extended for another 20 years.
      ** The 8 shop units and 45 apartment units are located within the same building.                                         101




                                                                                                                               Koh Brothers Group Limited Annual Report
40.   Development properties
                                                                          Percentage of
                                                                          completion at                         Group’s
                                                                           31.12.2009/          Site area/      effective
                                                                          expected date        gross floor     interest in
      Property                                            Title           of completion        area (sq ft)     property

      i.     Site for proposed residential
                development at Florence Road,             Freehold           20.2% /              22,067           100%
                Singapore                                                 December 2012           30,894
      ii.    Site for proposed residential                Freehold            45% /               34,793            50%




                                                                                                                               2009
                development at 9 Leonie Hill,                             December 2011           97,404
                Singapore
      iii.   Site for proposed development of             Freehold            100% /              26,102           100%
                4 units of 3-storey bungalows each                         January 2009           23,857
                at 531, 533, 535 Thomson Road and
                80 Andrew Road, Singapore
      iv.    Site for proposed residential                Freehold            0% /                59,984            25%
                development at 1 & 3 Khiang Guan                          December 2014          167,955
                Avenue, Singapore

41.   Properties held for sale
                                                                                                                Group’s
                                                                          Percentage of                         effective
                                                                          completion at        Gross floor     interest in
      Property                                            Title            31.12.2009          area (sq ft)     property

      5 units of 2-storey terrace                Land-use right for            100%               8,170          100%
        houses at Jodoh Permai,                 30 years with effect
        Pulau Batam, Indonesia                   from March 1988
                                           Notes to the Financial Statements (cont’d)
                                           for the financial year ended 31 December 2009

                                           42.   Events occurring after balance sheet date

                                                 Proposed disposal of an investment property known as Sun Plaza

                                                 The Group has intention to dispose of an investment property known as 30 Sembawang Drive, Sun Plaza
                                                 Singapore 757713 (the “Property”). The Property is registered in the name of Canberra Development Pte
                                                 Ltd, which is a 50% share joint venture company held by Koh Brothers Development Pte Ltd, a wholly owned
                                                 subsidiary of the Company. The joint venture company is included within the real estate segment.

                                           43.   New or revised accounting standards and FRS interpretations

                                                 Certain new standards, amendments and interpretations to existing standards have been published and
                                                 they are mandatory for the Group’s accounting periods beginning on or after 1 January 2010 or later
                                                 periods which the Group has not early adopted. The Group’s assessment of the impact of adopting those
                                                 standards, amendments and interpretations that are relevant to the Group is set out below:

                                                 (a)   Amendments to FRS 39 Financial Instruments: Recognition and Measurement- Eligible Hedged
                                                       Items (effective for annual periods beginning on or after 1 July 2009)


102                                                    This amendment clarifies how the principles that determine whether a hedged risk or portion of cash
                                                       flows is eligible for designation should be applied in particular situations. The Group will apply this
                                                       amendment from 1 January 2010, but it is not expected to have a material impact on the financial
Koh Brothers Group Limited Annual Report




                                                       statements.

                                                 (b)   FRS 27 (revised) Consolidated and Separate Financial Statements (effective for annual periods
                                                       beginning on or after 1 July 2009)

                                                       FRS 27 (revised) requires the effects of all transactions with non-controlling interests to be recorded in
                                                       equity if there is no change in control and these transactions will no longer result in goodwill or gains
                                                       and losses. The standard also specifies the accounting when control is lost. Any remaining interest in
                                                       the entity is re-measured to fair value, and a gain or loss is recognised in profit or loss. The Group will
                                                       apply FRS 27 (revised) prospectively to transactions with minority interests from 1 January 2010.

                                                 (c)   INT FRS 117 Distribution of Non-Cash Assets to Owners (effective for annual periods beginning
2009




                                                       on or after 1 July 2009)

                                                       INT FRS 117 clarifies how the Group should measure distributions of assets, other than cash, to its
                                                       owner. INT FRS 117 specifies that such a distribution should only be recognised when appropriately
                                                       authorised, and that the dividend should be measured at the fair value of the assets to be distributed.
                                                       The difference between the fair value and the carrying amount of the assets distributed should be
                                                       recognised in profit or loss. INT FRS 117 applies to pro rata distributions of non-cash assets except
                                                       for distributions to a party or parties under common control. The Group will apply INT FRS 117 from
                                                       1 January 2010.

                                                 (d)   FRS 103 (revised) Business Combinations (effective for annual periods beginning on or after
                                                       1 July 2009)

                                                       FRS 103 (revised) continues to apply the acquisition method to business combinations, with some
                                                       significant changes. For example, all payments to purchase a business are to be recorded at
                                                       fair value at the acquisition date, with purchase a business are to be recorded at fair value at the
                                                       acquisition date, with contingent payments classifies as debt subsequently re-measured through
                                                       profit or loss. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling
                                                       interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of
                                                       the acquiree’s net assets. All acquisition-related costs should be expensed. The Group will apply FRS
                                                       103 (revised) prospectively to all business combinations from 1 January 2010.
Notes to the Financial Statements (cont’d)
for the financial year ended 31 December 2009

44.   Authorisation of financial statements

      These financial statements were authorised for issue in accordance with a resolution of the Board of
      Directors of Koh Brothers Group Limited on 25 March 2010.




                                                                                                             103




                                                                                                             Koh Brothers Group Limited Annual Report
                                                                                                             2009
                                           Statistics of Shareholdings
                                           as at 10 March 2010

                                           SHARE CAPITAL AND VOTING RIGHTS
                                           Paid-up capital                                  :    S$47,966,802
                                           Number of issued and paid-up shares              :    479,613,400
                                           Class of shares                                  :    Ordinary shares
                                           Voting rights                                    :    One vote per share


                                           DISTRIBUTION OF SHAREHOLDINGS
                                           Size of Shareholdings                       No. of Shareholders             %        Number of Shares          %
                                           1 - 999                                                      26           0.20                  6,710        0.00
                                           1,000 - 10,000                                            9,583          74.19             45,560,126        9.50
                                           10,001 - 1,000,000                                        3,283          25.42            150,847,989       31.45
                                           1,000,001 and above                                          24           0.19            283,198,575       59.05
                                           Total                                                        12,916     100.00             479,613,400    100.00

                                           Based on the information available to the Company as at 10 March 2010, approximately 51.02% of the issued ordinary
                                           shares of the Company is held by the public and therefore, Rule 723 of the Listing Manual issued by the Singapore
                                           Exchange Securities Trading Limited is complied with.
104

                                           TWENTY LARGEST SHAREHOLDERS
Koh Brothers Group Limited Annual Report




                                           No.     Name                                                                     Number of Shares Held        %
                                           1       Koh Keng Siang                                                                      61,263,535     12.77
                                           2       Koh Teak Huat                                                                       32,213,088      6.72
                                           3       Koh Keng Hiong                                                                      30,260,100      6.31
                                           4       Singapore Nominees Pte Ltd                                                          27,576,000      5.75
                                           5       Quek Chee Nee                                                                       25,896,814      5.40
                                           6       Mayban Nominees (Singapore) Pte Ltd                                                 25,815,000      5.38
                                           7       Koh Kheng How                                                                       16,595,000      3.46
                                           8       Koh Tiat Meng                                                                        8,908,654      1.86
                                           9       United Overseas Bank Nominees Pte Ltd                                                7,572,000      1.58
                                           10      Koh Tiak Chye                                                                        6,806,000      1.42
                                           11      UOB Kay Hian Pte Ltd                                                                 5,981,000      1.25
2009




                                           12      DBS Nominees Pte Ltd                                                                 5,020,000      1.05
                                           13      Phillip Securities Pte Ltd                                                           4,815,000      1.00
                                           14      Kim Eng Securities Pte. Ltd.                                                         4,795,000      1.00
                                           15      OCBC Securities Private Ltd                                                          4,220,384      0.88
                                           16      OCBC Nominees Singapore Pte Ltd                                                      2,910,000      0.61
                                           17      Tan Noi Soon                                                                         2,200,000      0.46
                                           18      Citibank Nominees Singapore Pte Ltd                                                  1,879,000      0.39
                                           19      DBS Vickers Securities (Singapore) Pte Ltd                                           1,780,000      0.37
                                           20      Morgan Stanley Asia (Singapore) Securities Pte Ltd                                   1,600,000      0.33
                                                   Total                                                                              278,106,575     57.99


                                           SUBSTANTIAL SHAREHOLDERS
                                                                                          Direct Interest                             Deemed Interest*
                                                                                 No. of               % of Total                 No. of           % of Total
                                           Name                                 Shares            Issued Shares                 Shares       Issued Shares
                                           Koh Keng Siang                    61,463,535                   12.815                 20,000                0.004
                                           Koh Tiat Meng                     61,308,654                   12.783                       -                   -
                                           Koh Teak Huat                     32,213,088                    6.716                325,000                0.068
                                           Koh Keng Hiong                    30,260,100                    6.309                 10,000                0.002
                                           Quek Chee Nee                     25,896,814                    5.400                       -                   -

                                           * Shares held by spouse.
Notice of Annual General Meeting


KOH BROTHERS GROUP LIMITED
(Unique Entity Number 199400775D)
(Incorporated in the Republic of Singapore)


NOTICE IS HEREBY GIVEN that the 16th Annual General Meeting of Koh Brothers Group Limited (the “Company”) will
be held at Oxford Hotel, 218 Queen Street, Singapore 188549 on Thursday, 29 April 2010 at 2.00 pm for the following
purposes:


ORDINARY BUSINESS


1.     To receive and adopt the Directors’ Report and the Audited Financial Statements for the year       (Resolution 1)
       ended 31 December 2009 together with the Auditors’ Report thereon.


2.     To declare a first and final dividend of 0.3 cent per share (one-tier tax exempt) for the year     (Resolution 2)
       ended 31 December 2009.


3.     To re-elect the following Directors, who are retiring by rotation pursuant to Article 109 of the
       Company’s Articles of Association and who, being eligible, offer themselves for re-election:                        105




                                                                                                                           Koh Brothers Group Limited Annual Report
       (a)    Madam Quek Chee Nee                                                                         (Resolution 3)
       (b)    Mr Gn Hiang Meng                                                                            (Resolution 4)


4.     To re-appoint the following Directors, who are retiring under Section 153(6) of the Companies
       Act, Chapter 50 of Singapore, to hold office from the date of this Annual General Meeting until
       the next Annual General Meeting:

       (a)    Mr Koh Tiat Meng                                                                            (Resolution 5)
       (b)    Mr Lee Khoon Choy                                                                           (Resolution 6)
       (c)    Mr Ling Teck Luke                                                                           (Resolution 7)




                                                                                                                           2009
5.     To approve the sum of S$250,000 as Directors’ fees for the year ended 31 December 2009             (Resolution 8)
       (FY2008: S$250,000).


6.     To re-appoint PricewaterhouseCoopers LLP as Auditors of the Company and to authorise the           (Resolution 9)
       Directors to fix their remuneration.


SPECIAL BUSINESS


To consider and, if thought fit, to pass with or without modifications, the following resolutions as
Ordinary Resolutions:


7.     “That pursuant to Section 161 of the Companies Act, Chapter 50 of Singapore, authority be (Resolution 10)
       and is hereby given to the Directors of the Company to:


       (a)    (i)    issue shares in the capital of the Company (“shares”) whether by way of rights,
                     bonus or otherwise; and/or
                                           Notice of Annual General Meeting (cont’d)


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


                                                     at any time and upon such terms and conditions and for such purposes and to such
                                                     persons as the Directors may in their absolute discretion deem fit; and


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


                                              provided that:


                                              (1)    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 per cent of the total number of issued shares
                                                     (excluding treasury shares) in the capital of the Company (as calculated in accordance
106
                                                     with sub-paragraph (2) below), of which the aggregate number of shares to be issued
                                                     other than on a pro rata basis to shareholders of the Company (including shares to
Koh Brothers Group Limited Annual Report




                                                     be issued in pursuance of Instruments made or granted pursuant to this Resolution)
                                                     does not exceed 20 per cent of the total number of issued shares (excluding treasury
                                                     shares) in the capital of the Company (as calculated in accordance with sub-paragraph
                                                     (2) below);


                                              (2)    (subject to such manner of calculation as may be prescribed by the Singapore
                                                     Exchange Securities Trading Limited (“SGX-ST”)) for the purpose of determining the
                                                     aggregate number of shares that may be issued under sub-paragraph (1) above, the
                                                     percentage of issued shares shall be based on the total number of issued shares
                                                     (excluding treasury shares) in the capital of the Company at the time this Resolution
                                                     is passed, after adjusting for:
2009




                                                     (i)       new shares arising from the conversion or exercise of any convertible securities
                                                               or share options or vesting of share awards which are outstanding or subsisting
                                                               at the time this Resolution is passed; and


                                                     (ii)      any subsequent bonus issue, consolidation or subdivision of shares;


                                              (3)    in exercising the authority conferred by this Resolution, the Company shall comply with
                                                     the provisions of the Listing Manual of the SGX-ST for the time being in force (unless
                                                     such compliance has been waived by the SGX-ST) and the Articles of Association for
                                                     the time being of the Company; and


                                              (4)    (unless revoked or varied by the Company in a general meeting) the authority
                                                     conferred by this Resolution shall continue in force until the conclusion of the next
                                                     Annual General Meeting of the Company or the date by which the next Annual General
                                                     Meeting of the Company is required by law to be held, whichever is the earlier.”
Notice of Annual General Meeting (cont’d)


8.     “That:                                                                                                (Resolution 11)


       (a)      approval be and is hereby given for the purposes of Chapter 9 of the Listing Manual of
                the Singapore Exchange Securities Trading Limited for the Company, its subsidiaries
                and associated companies (the “Group”) or any of them to enter into any of the
                transactions falling within the categories of interested person transactions (as described
                in the Appendix to the Annual Report 2009 of the Company (the “Appendix”)) with any
                party, who falls within the class of interested persons referred to in the Appendix,
                provided that such transactions are carried out in the normal course of business, at
                arm’s length and on normal commercial terms and not prejudicial to the interests of
                the Company and its minority shareholders, and in accordance with the guidelines of
                the Company for interested person transactions as set out in the Appendix;


       (b)      such approval shall, unless revoked or varied by the Company in a general meeting,
                continue in force until the next Annual General Meeting of the Company; and


       (c)      the Directors of the Company be and are hereby authorized to complete and do all
                such acts and things (including executing all such documents as may be required)
                as they may consider expedient or necessary or in the interests of the Company to                              107
                give effect to the Shareholders’ Mandate and/or this Ordinary Resolution.”




                                                                                                                               Koh Brothers Group Limited Annual Report
ANY OTHER BUSINESS


9.     To transact any other business which may be properly conducted at an Annual General
       Meeting.


BY ORDER OF THE BOARD



Kem Huey Lee Sharon
Company Secretary




                                                                                                                               2009
5 April 2010



EXPLANATORY NOTES:

Resolution 4:         Mr Gn Hiang Meng will, upon re-election as a Director of the Company, remain as a member of
                      the Audit Committee, Nominating Committee and Remuneration Committee. He is considered
                      independent for the purposes of Rule 704(8) of the Lisintg Manual of the Singapore Exchange
                      Securities Trading Limited (“SGX-ST”).

Resolution 6:         Mr Lee Khoon Choy will, upon re-appointment as a Director of the Company, remain as Chairman
                      of the Audit Committee and a member of the Remuneration Committee. He is considered
                      independent for the purposes of Rule 704(8) of the Listing Manual of the SGX-ST.

Resolution 7:         Mr Ling Teck Luke will, upon re-appointment as a Director of the Company, remain as Chairman of
                      the Nominating Committee and a member of the Audit Committee and Remuneration Committee.
                      He is considered independent for the purposes of Rule 704(8) of the Listing Manual of the SGX-
                      ST.
                                           Notice of Annual General Meeting (cont’d)

                                           Resolution 11:     The Ordinary Resolution, if passed, will renew the Shareholders’ Mandate to allow the Company,
                                                              its subsidiaries and associated companies or any of them to enter into certain interested person
                                                              transactions with Ah Boon Civil Engineering & Building Contractor Pte Ltd and its associates.

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

                                           (2)      The instrument appointing a proxy must be deposited at the registered office of the Company at 11 Lorong
                                                    Pendek, Koh Brothers Building, Singapore 348639, not less than 48 hours before the time appointed for
                                                    holding the Annual General Meeting.



                                           BOOKS CLOSURE AND DIVIDEND PAYMENT DATES

                                           NOTICE IS HEREBY GIVEN THAT the Transfer Books and Register of Members of Koh Brothers Group Limited (the
                                           “Company”) will be closed on 5 May 2010 for the purposes of determining shareholders’ entitlements to the proposed
                                           first and final dividend of 0.3 cent per share (one-tier tax exempt) for the year ended 31 December 2009.
108
                                           Duly completed registrable transfers received by the Company’s Share Registrar, Tricor Barbinder Share Registration
                                           Services (a division of Tricor Singapore Pte. Ltd.) at 8 Cross Street #11-00, PWC Building, Singapore 048424 up to
Koh Brothers Group Limited Annual Report




                                           5.00 pm on 4 May 2010 will be registered to determine shareholders’ entitlements to the proposed dividend.

                                           Shareholders (being depositors) whose securities accounts with The Central Depository (Pte) Limited (“CDP”) are
                                           credited with shares as at 5.00 pm on 4 May 2010 will be entitled to the proposed dividend.

                                           The proposed dividend, if approved by shareholders at the 16th Annual General Meeting of the Company to be held
                                           on 29 April 2010, will be paid on 18 May 2010.



                                           BY ORDER OF THE BOARD
2009




                                           Kem Huey Lee Sharon
                                           Company Secretary

                                           5 April 2010
Appendix
Dated 25 March 2010




THE PROPOSED RENEWAL OF THE SHAREHOLDERS’
                                                                                                                   109
MANDATE FOR INTERESTED PERSON TRANSACTIONS




                                                                                                                   Koh Brothers Group Limited Annual Report
The purpose of this Appendix is to provide information and explain to shareholders of Koh Brothers Group Limited
(the “Company”) the rationale for the proposed renewal of the Interested Person Transactions Mandate to be
tabled at the Company’s Annual General Meeting to be held on Thursday, 29 April 2010 at 2.00 pm at Oxford
Hotel, 218 Queen Street, Singapore 188549.

The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of any of the
statements made, reports contained or opinions expressed in this Appendix.




                                                                                                                   2009
                                           Appendix
                                           Dated 25 March 2010

                                           DEFINITIONS

                                           The following definitions apply throughout this Appendix unless the context otherwise requires:

                                           “Act”                                :   The Companies Act, Chapter 50 of Singapore, as amended or modified
                                                                                    up to the date of this Appendix

                                           “AGM”                                :   The Annual General Meeting of the Company to be convened on 29
                                                                                    April 2010, notice of which is set out in the Annual Report 2009

                                           “Appendix”                           :   This appendix dated 25 March 2010 to the Annual Report 2009

                                           “Annual Report 2008”                 :   Annual report for the financial year ended 31 December 2008

                                           “Annual Report 2009”                 :   Annual report for the financial year ended 31 December 2009

                                           “CDP”                                :   The Central Depository (Pte) Limited

                                           “Company” or “Koh Brothers”          :   Koh Brothers Group Limited
110

                                           “Directors”                          :   The directors of the Company for the time being as at the date of this
Koh Brothers Group Limited Annual Report




                                                                                    Appendix

                                           “Group”                              :   The Group refers to the Company, its subsidiaries and associated
                                                                                    companies

                                           “Independent Directors”              :   Messrs Lee Khoon Choy, Ling Teck Luke, Lai Mun Onn and Gn Hiang
                                                                                    Meng

                                           “Latest Practicable Date”            :   The latest practicable date prior to the printing of this Appendix, being
                                                                                    10 March 2010
2009




                                           “Listing Manual”                     :   The listing manual of the SGX-ST

                                           “NTA”                                :   Net tangible assets

                                           “SGX-ST”                             :   Singapore Exchange Securities Trading Limited

                                           “Securities Account”                 :   A securities account maintained by a Depositor with CDP, but does not
                                                                                    include a securities sub-account maintained with a Depository Agent

                                           “Shares”                             :   Ordinary shares in the capital of the Company

                                           “Shareholders”                       :   Registered holders of Shares, except that where the registered holder
                                                                                    is CDP, the term “Shareholders” shall, in relation to such Shares, mean
                                                                                    the Depositors whose Securities Accounts are credited with Shares

                                           “$” and “Cent”                       :   Singapore dollars and cents, respectively

                                           “%” or “per cent.”                   :   Per centum or percentage
Appendix
Dated 25 March 2010

The terms “Depositor” and “Depository Agent” shall have the meanings ascribed to them respectively in Section 130A
of the Act.

Words importing the singular shall, where applicable, include the plural and vice versa. Words importing the masculine
gender shall, where applicable, include the feminine and neuter genders. References to persons shall, where
applicable, include corporations.

Any reference in this Appendix to any statue or enactment is a reference to that statute or enactment as for the time
being amended or re-enacted. Any word defined under the Act or the Listing Manual or any modification thereof
and used in the Appendix shall, where applicable, have the same meaning ascribed to it under the Act or the Listing
Manual or any modification thereof, as the case may be, unless otherwise provided.

Any reference to a time of day in this Appendix is made by reference to Singapore time unless otherwise stated.

Any discrepancies in figures included in this Appendix between the amounts listed and the totals thereof are due to
rounding. Accordingly, figures shown as totals in this Appendix may not be an arithmetic aggregation of the figures
which precede them.



                                                                                                                         111




                                                                                                                         Koh Brothers Group Limited Annual Report
                                                                                                                         2009
                                           Appendix
                                           Dated 25 March 2010

                                           1.    INTRODUCTION

                                                 Pursuant to Chapter 9 of the Listing Manual, the general mandate (“Shareholders’ Mandate”) in relation to
                                                 certain interested person transactions, which was adopted at the annual general meeting held on 23 April
                                                 2009, will continue in force until the forthcoming AGM.

                                                 Accordingly, the Directors propose that the Shareholders’ Mandate be renewed at the forthcoming AGM to
                                                 be held on 29 April 2010, to take effect until the next annual general meeting of the Company.

                                                 The purpose of this Appendix is to provide Shareholders with information pertaining to, and to seek the
                                                 approval of Shareholders at the AGM for the renewal of the Shareholders’ Mandate that will enable the
                                                 Group to enter into transactions with the Interested Persons (as defined below) in compliance with Chapter
                                                 9 of the Listing Manual.

                                                 The rationale of the Shareholders’ Mandate, the scope of the Shareholders’ Mandate, the benefit to
                                                 Shareholders, the classes of Interested Persons, the particulars of the Interested Person Transactions and
                                                 the review procedures for Interested Person Transactions in respect of which the Shareholders’ Mandate is
                                                 sought to be renewed remain unchanged from the Shareholders’ Mandate approved by Shareholders at the
                                                 previous general meeting on 23 April 2009.
112

                                           2.    THE PROPOSED RENEWAL OF THE SHAREHOLDERS’ MANDATE FOR INTERESTED PERSON
Koh Brothers Group Limited Annual Report




                                                 TRANSACTIONS

                                           2.1   Chapter 9 of the Listing Manual

                                                 Chapter 9 (“Chapter 9”) of the Listing Manual deals with transactions in which a listed company or any
                                                 of its subsidiaries or associated companies (that are not listed on the SGX-ST or an approved exchange,
                                                 provided that the listed group, or the listed group and its interested person(s) has control over) proposes
                                                 to enter into with a party who is an interested person (as defined below and construed under Chapter 9)
                                                 of the listed company.

                                                 Save for transactions which are not considered to put the listed company at risk and which are therefore
                                                 excluded from the ambit of Chapter 9, shareholders’ approval and/or an immediate announcement is
2009




                                                 required in respect of a transaction with an interested person if the value of the transaction is equal to or
                                                 exceeds certain financial thresholds. Specifically, an immediate announcement is required for the following
                                                 transactions of certain materiality thresholds where:

                                                 (a)    the value of a proposed transaction is equal to or exceeds 3% of the group’s latest audited NTA;
                                                        or

                                                 (b)    the aggregate value of all transactions (including the subject transaction) entered into with the same
                                                        interested person during the same financial year, is equal to or more than 3% of the group’s latest
                                                        audited NTA. An announcement, will have to be made immediately of the latest transaction and all
                                                        future transactions entered into with that same interested person during the financial year;
Appendix
Dated 25 March 2010

    and shareholders’ approval (in addition to an immediate announcement) is required where:

    (c)     the value of a proposed transaction is equal to or exceeds 5% of the group’s latest audited NTA; or

    (d)     the aggregate value of all transactions (including the subject transaction) entered into with the same
            interested person during the same financial year, is equal to or more than 5% of the group’s latest
            audited NTA. The aggregation will exclude any transaction that has been approved by shareholders
            previously, or is the subject of aggregation with another transaction that has been previously
            approved by shareholders.

    For the purposes of aggregation, interested person transactions below $100,000 each are to be
    excluded.

    For illustration purposes, based on the Group’s audited accounts for the financial year ended 31 December
    2009, the Group’s audited NTA as at 31 December 2009 was approximately $160,819,000. Accordingly,
    in relation to the Group, for the purposes of Chapter 9 in the current financial year, approval from the
    Shareholders would be required where:

    (a)     the transaction is of a value equal to, or more than, $8,040,950, being 5% of the Group’s latest
            audited NTA; or                                                                                               113

    (b)     the transaction, when aggregated with other transactions entered into with the same interested




                                                                                                                          Koh Brothers Group Limited Annual Report
            person during the same financial year, is of a value equal to, or more than, $8,040,950. The
            aggregation will exclude any transaction that has been approved by Shareholders previously, or is
            the subject of aggregation with another transaction that has been approved by Shareholders.

    Rule 920 of Chapter 9 allows for a listed company to seek a general mandate from its shareholders for
    recurrent transactions of a revenue or trading nature, or those necessary for its day-to-day operations such
    as the purchase and sale of supplies and materials (but not in respect of the purchase or sale of assets,
    undertakings or businesses) that may be carried out with the listed company’s interested persons. Such a
    general mandate must be disclosed in the annual report and is subject to annual renewal.

    For the purposes of Chapter 9:




                                                                                                                          2009
    (i)     an “interested person” means a director, chief executive officer or controlling shareholder of the listed
            company, or an associate of any such director, chief executive officer or controlling shareholder;

    (ii)    a “controlling shareholder” is a person who holds directly or indirectly 15% or more of the nominal
            amount of all voting shares in the listed company (unless otherwise excepted by SGX-ST) or in fact
            exercises control over a company;

    (iii)   an “associate” in relation to any director, chief executive officer, substantial shareholder or controlling
            shareholder (being an individual) means his immediate family (i.e. spouse, child, adopted child, step-
            child, sibling and parent), the trustees of any trust of which he or his immediate family is a beneficiary
            or, in the case of a discretionary trust, is a discretionary object, and any company in which he and his
            immediate family together (directly or indirectly) have an interest of 30% or more. An “associate” in
            relation to a substantial shareholder or a controlling shareholder (being a company) means any other
            company which is its subsidiary or holding company or is a subsidiary of such holding company or one
            in the equity of which it and/or such other company or companies taken together (directly or indirectly)
            have an interest of 30% or more; and
                                           Appendix
                                           Dated 25 March 2010

                                                  (iv)    a “transaction” includes the provision or receipt of financial assistance, the acquisition, disposal or
                                                          leasing of assets, the provision or receipt of services, the issuance or subscription of securities, the
                                                          granting of or being granted options, and the establishment of joint ventures or joint investments,
                                                          whether or not in the ordinary course of business, and whether or not entered into directly or
                                                          indirectly.

                                           2.2   Nature and Scope of the Interested Person Transactions and Class of Interested Persons contemplated
                                                 under the Shareholders’ Mandate

                                                 The Group is engaged in the following core business activities:

                                                 •	      real estate;
                                                 •	      leisure & hospitality; and
                                                 •	      construction (comprising building and civil engineering activities) and construction-related (building
                                                         materials and equipment services).

                                                 It is envisaged that in the normal course of business of the Group, transactions involving the sale and
                                                 purchase of services and/or products between the Group and interested persons will occur from time to
                                                 time. Such transactions include, but are not limited to, procuring civil engineering services from interested
114                                              persons.

                                                 The Directors are seeking the approval from Shareholders for the proposed renewal of Shareholders’
Koh Brothers Group Limited Annual Report




                                                 Mandate for the Group, in its normal course of business, to enter into the transactions pertaining to the
                                                 provision of civil engineering services (the “Interested Person Transactions”) by Ah Boon Civil Engineering
                                                 & Building Contractor Pte Ltd (“Ah Boon”) and its associates (the “Interested Persons”), provided that such
                                                 transactions are carried out at arm’s length and on normal commercial terms and are not prejudicial to the
                                                 interests of the Company and its minority Shareholders. The civil engineering services provided by Ah Boon
                                                 include, but are not limited to, piling, drainage and road works.

                                                 Mr Koh Tiak Boon has a 65.67% direct interest and a 6% indirect interest (held by his wife, Madam Teo Guek
                                                 Keow) in Ah Boon. Mr Koh Tiak Boon is a brother of Mr Koh Tiat Meng and Mr Koh Teak Huat, brother-in-
                                                 law of Madam Quek Chee Nee and uncle of Mr Koh Keng Siang and Mr Koh Keng Hiong. In addition, Mr
                                                 Koh Keng Long (a son of Mr Koh Tiak Boon and Madam Teo Guek Keow) holds 5% in Ah Boon. Mr Koh
                                                 Tiat Meng, Mr Koh Teak Huat, Madam Quek Chee Nee, Mr Koh Keng Siang and Mr Koh Keng Hiong are
2009




                                                 Directors and substantial Shareholders of the Company.

                                                 Transactions with Interested Persons which do not fall within the ambit of the Shareholders’ Mandate shall
                                                 be subject to the relevant provisions of Chapter 9 of the Listing Manual and/or other applicable provisions of
                                                 the Listing Manual.

                                           2.3   Review Procedures for Interested Person Transactions

                                                 To ensure that the Interested Person Transactions arising in the normal course of business of the Group
                                                 are carried out at arm’s length and on normal commercial terms, and will not be prejudicial to the interests
                                                 of the Company and its minority Shareholders, the guidelines below which have been established by the
                                                 Company will continue to apply for the review and approval of Interested Person Transactions under the
                                                 proposed renewal of the Shareholders’ Mandate.
Appendix
Dated 25 March 2010

      The provision of civil engineering services by Ah Boon shall not be approved unless the terms offered by
      Ah Boon for the provision of such services are no less favourable than those offered by unrelated third
      party suppliers. Where the Group requires civil engineering services, the Group will obtain at least two other
      quotations (wherever possible or available) from unrelated third party suppliers. The selection of the service
      provider will be awarded based on the lowest quotation after considering factors such as, but not limited
      to, delivery schedules, previous supply of services and pricing, credit terms, profit margins and quality. The
      transaction will be reviewed and approved by a Director who is not interested, directly or indirectly, in the
      transaction.

      In the event that no quotation from unrelated third party suppliers is available, the transaction will be
      reviewed and approved by a Director who is not interested, directly or indirectly, in the transaction, after
      taking into account factors such as, but not limited to, delivery schedules, previous supply of services and
      pricing, credit terms, profit margins and quality.

      Each Interested Person Transaction will be properly documented and submitted to the Audit Committee
      which will review all Interested Person Transactions on a quarterly basis to ensure that they are carried out
      at arm’s length and on normal commercial terms. If a member of the Audit Committee has an interest in an
      Interested Person Transaction to be reviewed by the Audit Committee, he will abstain from any decision
      making in respect of that transaction and the review and approval of that transaction will be undertaken by
      the remaining members of the Audit Committee.
                                                                                                                       115

      Furthermore, if during the period of review, the Audit Committee believes that the established guidelines and




                                                                                                                       Koh Brothers Group Limited Annual Report
      procedures as stated above have become inappropriate or are not sufficient to ensure that the transactions
      will be on normal commercial terms and will not be prejudicial to the interests of the Company and its
      minority Shareholders, the Audit Committee will require the Company to implement new guidelines and
      procedures as it deems appropriate and the Company will seek a fresh mandate from Shareholders based
      on new guidelines and procedures at the next annual general meeting.

      Disclosure will be made in the annual report of the Company of the aggregate value of Interested Person
      Transactions entered into during the financial year under review, and in the annual reports for the subsequent
      financial years during which the Shareholders’ Mandate is in force, as required by the relevant provisions
      of the Listing Manual.

2.4   Rationale and Benefit




                                                                                                                       2009
      The Shareholders’ Mandate will enhance the ability of companies in the Group to pursue business
      opportunities which are time-sensitive in nature, and will eliminate the need for Koh Brothers to announce,
      or to announce and convene separate general meeting on each occasion to seek Shareholders’ prior
      approval for such Interested Person Transactions, provided that such Interested Person Transactions
      are made on normal commercial terms. This will substantially reduce the expenses associated with the
      convening of general meetings on an ad hoc basis, improve administrative efficacy considerably, and allow
      manpower resources and time to be channelled towards attaining other corporate objectives.
                                           Appendix
                                           Dated 25 March 2010

                                           3.    STATEMENT OF THE AUDIT COMMITTEE

                                                 The Audit Committee of the Company (currently comprising Messrs Lee Khoon Choy (Chairman), Ling Teck
                                                 Luke, Lai Mun Onn and Gn Hiang Meng) has reviewed the terms of the proposed renewal of Shareholders’
                                                 Mandate and is of the view that the methods or procedures for the review and approval of the Interested
                                                 Person Transactions and the transaction prices have not changed since the last adoption of the Shareholders’
                                                 Mandate on 23 April 2009. The Audit Committee is also of the view that the procedures for the review and
                                                 approval of the Interested Person Transactions as set out above, as well as the periodic reviews to be made
                                                 by the Audit Committee in relation thereto, are sufficient to ensure that the Interested Person Transactions will
                                                 be carried out at arm’s length and on normal commercial terms, and will not be prejudicial to the interests of
                                                 the Company and its minority Shareholders. However, should the Audit Committee subsequently no longer
                                                 be of this opinion, the Company will revert to Shareholders for a fresh mandate based on new guidelines
                                                 and procedures for transactions with Interested Persons.



                                           4.    INTERESTS OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS

                                           4.1   Directors


116                                              As at the Latest Practicable Date, the direct and indirect interests of each of the Directors in the Shares of
                                                 the Company are as follows:
Koh Brothers Group Limited Annual Report




                                                 4.1.1 Interests of Directors in the Shares of the Company


                                                                                                         Direct Interest                     Deemed Interest
                                                                                                    No. of                               No. of
                                                         Name                                      Shares               % (1)            Shares               % (1)
                                                         Koh Tiat Meng(2)                         61,308,654           12.783                  Nil               Nil
                                                         Koh Teak Huat(2)                         32,213,088            6.716            325,000(4)           0.068
                                                         Kok Keng Siang(3)                        61,463,535           12.815             20,000(5)           0.004
                                                         Koh Keng Hiong(3)                        30,260,100            6.309             10,000(6)           0.002
                                                         Quek Chee Nee                            25,896,814            5.400                  Nil               Nil
                                                         Lee Khoon Choy                                   Nil              Nil                 Nil               Nil
2009




                                                         Ling Teck Luke                              200,000            0.042                  Nil               Nil
                                                         Lai Mun Onn                                 100,000            0.021                  Nil               Nil
                                                         Gn Hiang Meng                                    Nil              Nil                 Nil               Nil

                                                        Notes:

                                                        (1)      Based on the total issued and fully paid-up ordinary share capital of 479,613,400 Shares as at the Latest
                                                                 Practicable Date.
                                                        (2)      Mr Koh Tiat Meng and Mr Koh Teak Huat are brothers.
                                                        (3)      Mr Koh Keng Siang and Mr Koh Keng Hiong are the sons of Mr Koh Tiat Meng and Madam Quek Chee Nee,
                                                                 and the nephews of Mr Koh Teak Huat.
                                                        (4)      Mr Koh Teak Huat is deemed interested in the Shares held by his wife, Madam Quek Siew Lang.
                                                        (5)      Mr Koh Keng Siang is deemed interested in the Shares held by his wife, Madam Phua Siew Gaik.
                                                        (6)      Mr Koh Keng Hiong is deemed interested in the Shares held by his wife, Madam Erliana Sutadi.
Appendix
Dated 25 March 2010

4.2   Substantial Shareholders

      As at the Latest Practicable Date, the direct and indirect interests of the substantial Shareholders of the
      Company are as follows:


                                                        Direct Interest                  Deemed Interest
                                                     No. of                            No. of
       Name                                         Shares             %               Shares         %
       Koh Tiat Meng                               61,308,654       12.783                   Nil         Nil
       Koh Teak Huat                               32,213,088        6.716              325,000      0.068
       Kok Keng Siang                              61,463,535       12.815               20,000      0.004
       Koh Keng Hiong                              30,260,100        6.309               10,000      0.002
       Quek Chee Nee                               25,896,814        5.400                   Nil         Nil

4.3   Mr Koh Tiat Meng, Mr Koh Teak Huat, Mr Koh Keng Siang, Mr Koh Keng Hiong and Madam Quek Chee Nee
      will abstain, and have undertaken to ensure that their associates will abstain, from voting at the forthcoming
      AGM in respect of the Shares held by them respectively on Ordinary Resolution 11 relating to the proposed
      renewal of the Shareholders’ Mandate.

                                                                                                                        117
5.    ANNUAL GENERAL MEETING




                                                                                                                        Koh Brothers Group Limited Annual Report
      The AGM, notice of which is set out in the Annual Report 2009 of the Company, will be held on
      Thursday, 29 April 2010 at Oxford Hotel, 218 Queen Street, Singapore 188549 at 2.00 pm, for the purpose of
      considering and, if thought fit, passing with or without modifications, among other resolutions, Ordinary
      Resolution 11 relating to the renewal of the Shareholders’ Mandate at the AGM as set out in the Notice
      of AGM.

      A Depositor shall not be regarded as a Shareholder entitled to attend the AGM and to speak and vote
      thereat unless he is shown to have Shares entered against his name in the Depository Register as at 48
      hours before the AGM, as certified by CDP to the Company.




                                                                                                                        2009
6.    ACTION TO BE TAKEN BY SHAREHOLDERS

      If a Shareholder is unable to attend the AGM and wishes to appoint a proxy to attend and vote on his behalf,
       he should complete, sign and return the Proxy Form (enclosed in the Annual Report 2009) in accordance
       with the instructions printed thereon as soon as possible and, in any event, so as to arrive at the registered
       office of the Company at 11 Lorong Pendek, Koh Brothers Building, Singapore 348639 not later than 48
       hours before the time fixed for the AGM. Completion and return of the Proxy Form by a Shareholder does
       not preclude him from attending and voting at the AGM if he so wishes.
                                           Appendix
                                           Dated 25 March 2010

                                           7.   DIRECTORS’ RECOMMENDATION

                                                The Directors who are considered independent for the purpose of the proposed renewal of the Shareholders’
                                                Mandate are Messrs Lee Khoon Choy, Ling Teck Luke, Lai Mun Onn and Gn Hiang Meng. These Directors
                                                are of the opinion that it is in the interests of the Group to be permitted to enter into the transactions in
                                                its normal course of business with the class of Interested Persons described in paragraph 2.2 above
                                                provided that such transactions are carried out at arm’s length and on normal commercial terms and
                                                will not be prejudicial to the interests of the Company and its minority Shareholders, and in accordance
                                                with the guidelines set out in paragraph 2.3 above. For the reasons set out in paragraph 2.4 above, the
                                                Independent Directors recommend that Shareholders vote in favour of Ordinary Resolution 11 relating to
                                                the proposed renewal of the Shareholders’ Mandate set out in the Notice of AGM.



                                           8.   DIRECTORS’ RESPONSIBILITY STATEMENT

                                                The Directors collectively and individually accept responsibility for the accuracy of the information given in
                                                this Appendix and confirm, having made all reasonable enquiries, that to the best of their knowledge and
                                                belief, the facts stated and the opinions expressed in this Appendix are fair and accurate in all material
                                                respects as at the date hereof and that there are no other material facts the omission of which would make
                                                any statement in this Appendix misleading.
118
Koh Brothers Group Limited Annual Report




                                           9.   DOCUMENTS FOR INSPECTION

                                                The following documents may be inspected at the registered office of the Company during normal business
                                                hours from the date hereof up to and including the date of the AGM:

                                                (a)    the Memorandum and Articles of Association of the Company;
                                                (b)    the Annual Report 2008; and
                                                (c)    the Annual Report 2009.
2009
                                                                       IMPORTANT

                                                                       1.   For investors who have used their CPF monies to buy shares
                                                                            in the capital of KOH BROTHERS GROUP LIMITED, this
                                                                            Annual Report is forwarded to them at the request of their CPF
                                                                            Approved Nominees and is sent FOR INFORMATION ONLY.
KOH BROTHERS GROUP LIMITED                                             2.   This Proxy Form is not valid for use by CPF Investors and shall
(Unique Entity Number 199400775D)                                           be ineffective for all intents and purposes if used or purported
(Incorporated in the Republic of Singapore)                                 to be used by them.




PROXY FORM
I/We ____________________________________________________________________________________________ (Name)
of _____________________________________________________________________________________________(Address)
being a member/members of Koh Brothers Group Limited (the “Company”) hereby appoint:


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




and/or (delete as appropriate)




as my/our proxy/proxies to attend and vote for me/us on my/our behalf and, if necessary, to demand a poll, at the 16th
Annual General Meeting (the “Meeting”) of the Company to be held on Thursday, 29 April 2010 at Oxford Hotel, 218
Queen Street, Singapore 188549 at 2.00 pm and at any adjournment thereof.

I/We direct my/our proxy/proxies to vote for or against the Resolutions to be proposed at the Meeting as indicated
hereunder. If no specific direction as to voting is given, the proxy/proxies will vote or abstain from voting at his/their
discretion, as he/they will on any other matter arising at the Meeting.


 NO. ORDINARY RESOLUTION                                                                                     FOR*            AGAINST*
  1  To receive and adopt the Directors’ Report, Audited Financial Statements and
     Auditors’ Report
  2  To declare a first and final dividend of 0.3 cent per share
  3  To re-elect Madam Quek Chee Nee as Director
  4  To re-elect Mr Gn Hiang Meng as Director
  5  To re-appoint Mr Koh Tiat Meng as Director
  6  To re-appoint Mr Lee Khoon Choy as Director
  7  To re-appoint Mr Ling Teck Luke as Director
  8  To approve the sum of S$250,000 as Directors’ fees
  9  To re-appoint PricewaterhouseCoopers LLP as Auditors and to authorise the
     Directors to fix their remuneration
 10 To authorise Directors to issue shares and to make or grant instruments pursuant
     to Section 161 of the Companies Act, Chapter 50 of Singapore
 11 To approve the proposed renewal of shareholders’ mandate for interested person
     transactions

* Please indicate your vote “For” or “Against” with a “” within the box provided.


Dated this ___________ day of ___________________ 2010.
                                                                                                Total Number of Shares Held




_____________________________________
Signature(s)/Common Seal of Member(s)

(Please read notes overleaf before completing this Form.)
Notes:

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

2.       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 that number of shares. If the member has shares
         entered against his name in the Depository Register as well as shares registered in his name in the Register
         of Members, he should insert the aggregate number of shares. If no number is inserted, the instrument of
         proxy will be deemed to relate to all the shares held by the member.

3.       Where a member of the Company appoints two proxies, the appointments shall be invalid unless he
         specifies the proportion of his shareholding (expressed as a percentage of the whole) to be represented by
         each proxy.

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

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

6.       The instrument appointing a proxy or proxies must be deposited at the registered office of the Company
         at 11 Lorong Pendek, Koh Brothers Building, Singapore 348639, not less than 48 hours before the time
         appointed for holding the Meeting.

7.       A corporation which is a member may appoint an authorised representative or representatives in accordance
         with Section 179 of the Companies Act, Chapter 50 of Singapore to attend and vote for and on behalf of
         such body corporate.

8.       The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete,
         improperly completed, 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 a member whose shares are entered in the Depository Register, the Company may reject any
         instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have
         shares entered against his name in the Depository Register as at 48 hours before the time appointed for
         holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.
KOH BROTHERS GROUP LIMITED
(Unique Entity Number 199400775D)
(Incorporated in the Republic of Singapore)
11 Lorong Pendek, Koh Brothers Building
Singapore 348639
Tel: (65) 6289 8889
Fax: (65) 6841 5400
Website: www.kohbrothers.com

				
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