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GAINING GROUNDS THROUGH REALIZED

VALUESDesign Studio Furniture Manufacturer Ltd

A N N U A L R E P O R T 2 0 09

“Whatever the mind of man can conceive and believe, it can achieve”

Through strategic foresight and steadfast determination, the time has arrived for Design Studio to steadily gain firmer grounds through realized values. To have realized true value and derived real gains from the seeds sowed in yesteryears, during a time when economic forces created one of the most challenging business backdrops, was a difficult achievement to say the least. However, with a clear sense of identity and purpose, we proved resilient, and held fast to our vision of a better future.

In Design Studio, this shared characteristic of the ability to work with adversity in a way that one comes through it intact or even better for the experience, has not only allowed us to weather the economic storm of 2009, it has also showcased our prudency to have put strategic sound fundamentals in place as well as our unwavering focus and fortitude to deliver our promises despite all odds. The result ?

We have gained firmer grounds in spite of uncompromising conditions and have proved to ourselves and others, that we are relevant and adaptable to emerge all the stronger.

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0608

1011

2022

FinancialHighlights

Operations Review

GroupStructure

Financial Summary

Chairman’sStatement

CorporateProfile

Business Segments

16

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38

44

Associate

Corporate Information

46Manufacturing

40

OverseasOffices &

Showrooms

Brands

28

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CorporateGovernance

48

FinancialContents

56

DISTINGUISHINGOPPORTUNITIES AMIDST ADVERSITY

FINANCIAL highlights

Revenue

1st quarter

2nd quarter

3rd quarter

4th quarter

Total

2009

22,667

35,672

30,889

24,707

113,935

2008

13,412

16,344

16,748

27,852

74,356

Variance

9,255

19,328

14,141

(3,145)

39,579

% Change

69.0

118.3

84.4

(11.3)

53.2

Profit from operations

1st quarter

2nd quarter

3rd quarter

4th quarter

Total

2009

4,987

7,971

7,419

5,574

25,951

2008

1,960

3,162

3,325

7,249

15,696

Variance

3,027

4,809

4,094

(1,675)

10,255

% Change

154.4

152.1

123.1

(23.1)

65.3

Net profit attributable to shareholders

1st quarter

2nd quarter

3rd quarter

4th quarter

Total

2009

4,279

7,102

7,293

6,703

25,377

2008

1,690

2,439

2,431

6,222

12,782

Variance

2,589

4,663

4,862

481

12,595

% Change

153.2

191.2

200.0

7.7

98.5

Dividends

Interim dividend

Proposed/Final dividend

Total

2009

3,189

3,189

6,378

2008

-

2,551

2,551

Variance

3,189

638

3,827

% Change

N.M.

25.0

150.0

FOR THE YEAR (in S$’000)

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Share capital

Reserves

Total equity

2009

30,111

41,180

71,291

2008

30,111

21,501

51,612

Variance

-

19,679

19,679

% Change

N.M.

91.5

38.1

FOR THE YEAR

Per share (in S$cents)

Earnings

Net asset value

Interim dividend

Proposed/Final dividend

2009

9.95

27.94

1.25

1.25

2008

5.01

20.23

-

1

Variance

4.94

7.71

1.25

0.25

% Change

98.6

38.1

N.M.

25.0

Financial ratios (%)

Return on assets

Return on equity

2009

25.1

35.6

2008

14.8

24.8

Variance

10.3

10.8

% Change

69.6

43.5

Order Book on Hand By Business Segments (in $’000)

Residential property projects - Local

Residential property projects - Export

Hospitality and commercial projects - Local

Hospitality and commercial projects - Export

Distribution projects - Local

Equity (in $’000)

25,314[13%]

21,126[11%]

19,703[10%]

31,710[16%]

98,446[50%]

23,417[14%]1,179

[1%]

11,905[7%]

28,795[17%]

100,701[61%]

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�� OPERATIONS review

S$113, 900,000Financial Review

The Group posted a record performance for the full year ending 31 December 2009, with revenue of S$113.9 million, an increment of more than 53.2% of FY2008. The group also recorded a net profit after tax of S$25.4 million for FY2009, a surge of 98.5% over FY2008.

On a year-to-date basis, marketing and distribution expenses decreased by 16.2% to S$2.9 million for FY2009 as compared with S$3.5 million in FY2008. General and administrative expenses increased by 26.9% from S$4.5 million in FY2008 to S$5.7 million in FY2009. As a result of foreign exchange loss (net) of S$1.3 million, the net general and administrative expenses increased to S$7.0 million in FY2009.

In spite of a fiscal year that presented a challenging backdrop amid one of the worst economic crisis of all times, the Group’s performance was spurred by growth across key business segments through the realization of revenue.

The revenue from the residential property projects segment remained strong and bolstered the Group’s strength amidst weak market sentiments. Encompassing projects from Singapore and overseas, the revenue recorded an increase of 23.9% to S$57.1 million in FY2009 as compared with S$46.1 million for FY2008. Hospitality and commercial projects segment also showed positive signs with revenue increasing from S$26.2 million in FY2008 to S$52.0 million for FY2009. The increment in revenue was due to the completion of hotel projects in Abu Dhabi and Dubai, UAE. Revenue from distribution projects segment contributed mainly by imported SieMatic system kitchens which are fitted into high end luxury residential projects. It has increased by S$2.8 million to S$4.8 million for FY2009 compared with S$2.0 million for FY2008.

Profit from the 45% owned associate company, DDS Asia Holdings Pte Ltd in its first year of operations has turned around from a loss of S$0.4 million in FY2008 to a gain of S$4.0 million in FY2009, due to the completion of work on Singapore’s first integrated resort project - Casino at Resorts World Sentosa and Mandarin Orchard Singapore.

The Group’s financial position as at 31 December 2009 was bolstered with total cash and cash equivalents increasing from S$31.1 million as at 31 December 2008 to S$35.7 million as at 31 December 2009, an important asset to have amidst the worst financial crisis in decades.

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S$113, 900,000Operating Review

The Group’s strong order book in FY2008 translated into realized values as some of the projects were completed in FY2009. This has contributed positively to Design Studio’s financial performance in FY2009.

FY2009’s net profit after tax was contributed largely by both Design Studio and the 45% owned associate company DDS Asia Holdings Pte Ltd (DDS). DDS has completed work on some of Singapore’s most prestigious integrated and hospitality projects, such as the Casino at Resorts World Sentosa and Mandarin Orchard Singapore and are moving forward to complete the ID fit-out works in the Marina Bay Sands® project.

The potential of DDS remains high in capitalizing increasing demands of work for the commercial and hospitality markets in South East Asia. DDS Malaysia was set up and in operations since late FY2009, actively pursuing hospitality and commercial projects in both East and West Malaysia. DDS Group is expected to embark on continuing its expansion with offices into Thailand and Vietnam in 2010 and Indonesia thereafter.

Design Studio continued to maintain a strong foothold in the residential and hospitality projects in Singapore and overseas, with the completion of some projects such as Rivergate, City Square Residences, The Esta, Burj Khalifa, and The Yas Hotel and Crowne Plaza Hotel on Yas Island, Abu Dhabi and Ritz Carlton Hotel & Service Apartments in Dubai. New project achievements in FY2009 include local and overseas residential projects such as The Quayside, The Estuary, Beacon Heights, 38 Martin, Livia and Rihan Heights in Abu Dhabi. This is expected to place the Group in good stead into 2010 and beyond.

The Group persists to build on its strong reputation of innovation excellence, and pursue deeper into feasible analysis for improvements. We will review and improve the way we design and manufacture our products to reflect the fast changing market trends, as well as assess ways of better serving our panel of local and overseas clients and consultants.

A high concentration of new products and product features development efforts have been centered on re-energizing PANELZ as the Group recognizes the potential of growth for the highly regarded in-house brand. Product enhancements aligned with new technology and application methodologies excellence have proved successful and will lead to new plans in FY2010.

The overall successful performance of FY2009 has placed the Group in a firmer position. In affirming the relevance and steady sustainability of the Group’s products and services, the order book stands at a healthy S$166.0 million as at 31 December 2009, coming from the attainment of new and current projects respectively.

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GROUP structure

DS Furniture Manufacturer Sdn. Bhd.(Malaysia)

[100% wholly-owned Subsidiary]

DS Interior Contracts & Renovation(Shanghai) Co., Ltd.

(People’s Republic of China)[100% wholly-owned Subsidiary]

DSI (Middle East) Pte. Ltd.(Singapore)

[100% wholly-owned Subsidiary]

D S Interior Decoration (Middle East) LLC

(United Arab Emirates)(49%)

Design Studio Furniture (Shanghai) Co., Ltd

(People’s Republic of China)[100% wholly-owned Subsidiary

DESIGN STUDIO FURNITURE MANUFACTURER LTD(Singapore)

[Holding Company]

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FINANCIAL summary

Shareholders’ equity (in S$millions)

80706050403020100

11.216.8

41.451.6

71.3

2005 2006 2007 2008 2009

Earnings per share (in S$cents)

121086420

-2-4

-1.41

2.654.03 5.01

9.95

2005 2006 2007 2008 2009

Net asset value per share (in S$cents)

302520151050

5.338.00

16.2220.23

27.94

2005 2006 2007 2008 2009

Revenue (in S$millions)

120100

806040200

38.1

59.7

76.4 74.4113.9

2005 2006 2007 2008 2009

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Income statement (in S$’000)

2005

38,148

2,228

(1,678)

(2,569)

(2,953)

2006

59,651

11,029

5,695

4,967

5,573

2007

76,424

19,526

11,267

11,043

8,755

2008

74,356

23,999

15,696

15,258

12,782

2009

113,935

35,611

25,951

29,961

25,377

Balance sheet (in S$’000)

Property, plant and equipment

Inventories

Construction work-in-progress

Trade receivables

Cash and fixed deposits

Trade payables

Accrued operating expenses

Deposits received

Bank loan

Shareholders’ equity

2005

10,480

3,310

6,317

7,291

3,599

4,202

1,128

393

4,433

11,198

2006

9,580

3,768

2,903

12,198

5,421

4,553

5,311

1,898

3,930

16,795

2007

10,424

5,454

5,150

22,567

24,341

5,345

13,289

3,640

3,452

41,388

2008

9,302

10,484

3,362

26,738

31,159

5,644

16,081

5,868

2,984

51,612

2009

9,845

6,890

6,381

33,002

36,359

5,120

19,925

592

-

71,291

Cash flow (in S$’000)

Operating activities

Investing activities

Financing activities

Net movement

2005

4,485

(720)

(1,720)

2,045

2006

7,107

(160)

(3,644)

3,303

2007

7,008

(2,616)

14,770

19,162

2008

13,451

(3,509)

(845)

9,097

2009

18,603

(4,385)

(9,578)

4,640

Financial ratios

Earnings per share (S$cents)

Net asset value per share (S$cents)

Dividend per share (S$cents)

Return on equity (%)

Return on asset (%)

Current ratio

2005

(1.41)

5.33

-

(26.4)

(9.1)

1.0

2006

2.65

8.00

-

33.2

15.0

1.6

2007

4.03

16.22

1.50

21.2

12.3

2.3

2008

5.01

20.23

1.00

24.8

14.8

2.3

2009

9.95

27.94

2.50

35.6

25.1

2.9

Revenue

Gross profit

Profit from operations

Profit/(loss) before tax

Net profit

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120,000

100,000

80,000

60,000

40,000

20,000

0

Group revenue by business segments (in S$’000)

2005 2006 2007 2008 2009

27,944

5,5364,668

7,381959

33,224

3,373

51,311

39,827

26,208

2,020

46,128

51,963

4,836

57,136

Residential property projects Hospitality and commercial projects Distribution projects

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STAYINGfOcUSEDYET ADAPTAblE

CHAIRMAN’S statement

On behalf of the Board of Directors of Design Studio Furniture Manufacturer Ltd (Design Studio), it gives me great pleasure to present to you our annual report for the year ended 31 December 2009.

Overall, FY2009 has been a positive year for Design Studio, despite it being a year that saw one of the worst economic crises of all times. Operating against this challenging financial and economic backdrop was no mean feat, hence I am heartened to say that we have done exceptionally well, in spite of the uncompromising external environment.

We have not only managed to remain profitable, we have gained tangible grounds in realized revenues. It is largely supported by the strength of the Group’s order book that we had consistently invested efforts to build up from previous years and our steadfast commitment in delivering them. With foresight, the strong order book of projects clinched in the past years was executed with most projects being completed in accordance to the construction schedule. At the same time, the difficult market conditions have steered us to keep our eye on development and operational costs which has served our bottom line well.

Business Performance RevenueThe strong closure of every quarter by each business segment consistently contributed to the overall fiscal FY2009 performance. The Group delivered an outstanding performance with revenue of S$113.9 million, an increment of more than 53.2% that of FY2008.

On a year-to-date basis, total revenue from residential property projects segment increased by 23.9% to S$57.1 million for FY2009 as compared with S$46.1 million for FY2008. Revenue from the hospitality and commercial projects segment increased from S$26.2 million for FY2008 to S$52.0 million for FY2009.

Revenue from distribution projects segment increased by S$2.8 million to S$4.8 million for FY2009 compared with S$2.0 million for FY2008.

ProfitabilityThe Group recorded a net profit after tax of S$25.4 million for FY2009, a surge of 98.5% over FY2008.

Cashflow and DividendsThe Group’s financial position as at 31 December 2009 was also bolstered. Total cash and cash equivalents increased from S$31.1 million as at 31 December 2008 to S$35.7 million as at 31 December 2009.

Dear Shareholders

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Strategy and Plans Renewed Rigour in Product Designs and InnovationWhile the sterling performance of FY2009 has validated the Group’s sound position, consistent strategies and abilities in maintaining a steady relationship with our global and local base of current and new customers, it does not give us a basis to rest on our laurels. On the contrary, it drives us to constantly review and improvise the ways we manage and operate our business with renewed rigour and vigour. We are now further entrenched in our strong culture of innovation excellence, having validated that our current suite of products and services are indeed relevant to the changing times. We will pursue deeper analysis for improvements in the way we design and manufacture our products, as well as assess ways of better serving our panel of local and overseas clients and consultants. This ensures that we build on our competitive positioning of being a value creator, offering customer-centric products and services that continue to meet the demands and needs of an evolving global marketplace of various sectors to suit different lifestyles. To this end, we will relook product designs at all touch points - from products, to solutions, to customer services, and critically into our thinking, all in the continued quest of our commitment for viability and sustainable growth.

Focused Cost ManagementThe difficult market conditions have steered us to keep our eye on development and operational costs which has served our bottom line well. We must continue to maintain this quality characteristic of acknowledging our constraints to keep ourselves grounded whilst having the quiet determination and ambition of not limiting our mindset with the constraints. We will equip our cost sensitive workforce with the right resources and creative thinking skills to allow us to do more with less.

Expanding a Wider and Deeper Customer BaseDesign Studio is ready to make a step change

transformation by expanding into newer territories, having already gained grounds with FY2009’s efforts. There are firm plans to revitalize our in-house brand PANELZ with its clear potential in penetrating mass and luxury residential markets within Asia.

The Group has also charted expansion plans for DDS Asia Holdings Pte Ltd, the 45% associate owned company responsible for hospitality, lifestyle and commercial projects. The potential to capture these projects in Singapore, Malaysia, Thailand, Vietnam and Indonesia remain high.

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Achievements The Group’s FY2009 performance by itself is a commendable accomplishment that is noteworthy and highly gratifying given that we were operating in a very challenging economic and financial environment.

The Group’s performance, as a result of an overall growth across all business segments through the realization of revenue projects shows that our business models which offer a wide range of products and services continue to be relevant to changing times; with strong, sound fundamentals in place that can see us through cycles in the markets.

The total combination of our committed and focused efforts has not only helped offset the impact from the economic downturn, it has shown that Design Studio is capable of adapting to the various external upheavals and emerge all the stronger.

Outlook Going forward, market sentiments are expected to stay gradually positive, and we would expect the momentum of work across targeted markets to increase. Our FY2009 results have given the Group a sturdy platform to take advantage of the increasingly positive market sentiments and execute our expansion strategy plans for FY2010 and beyond with stronger confidence. With Asia taking the lead, we remain optimistic of Design Studio’s future prospects.

We aim to maintain healthy order levels to ensure a continued revenue stream with prospects for growth expansion in emerging markets. Given our core competencies and excellent track records in Asia and the Middle East, the Group’s various business units are poised for both strategic and organic growth in existing and new markets.

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Acknowledgementsand Thanks

It leaves me now to extend my heartfelt thanks to the Board of Directors, for their insightful advice and unrelenting commitment to the Group’s success. I also thank our business associates, partners and clients for their unwavering support in the work that we do. To our staff, I applaud their dedication, loyalty and time invested to deliver, year after year, what we promise to our stakeholders. Finally and certainly not least of all, I would like to thank you, our shareholders, for your steadfast belief in Design Studio and your continued trust in the Group.

Bernard Lim Leng FooExecutive Chairman & CEO

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�� CORPORATE profile

1994

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Listed on the Singapore Exchange Securities Trading Limited,Design Studio enjoys a commanding lead as the country’s foremost specialist in the manufacturing, distribution and installation of furniture products. On the back of a strong positioning of renowned quality and innovation excellence, Design Studio is today an international enterprise with a growing global business reaching countries as far as Japan, Middle East and the United States.

Established since 1994, Design Studio continues to grow its strength and presence in three closely related and complementary core businesses:

n Manufacture, supply and installation of paneling products to residential property projects

n Interior fitting-out services to hospitality and commercial projects (outside Singapore, Malaysia, Indonesia, Vietnam and Thailand)

n Local distribution of imported brands

As with the reputation it has carved out for its products, the Design Studio Group continues to stand out from the competition because it holds fast to its entrenched corporate values since its inception. These include a relentless belief in impeccable product quality and professional services; an emphasis on cutting edge product designs and innovative methodologies; a commitment to harnessing the latest technologies, and an unwavering quest to achieve fine workmanship at all times.

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Residential Property Projects Residential property projects represent one of the pillars of Design Studio’s business. Over the years, we have assumed a convincing leadership status in the domestic market and garnered an extensive list of projects to our credit. As we continue to gain firmer grounds in the Singapore market, we are simultaneously aggressive in our expansion plans in the regional markets and beyond. We are now present in major cities across the world, having being engaged for a formidable list of high

profile developments in Kuala Lumpur, Bangkok, Dubai and New York, amongst many others. Our product quality, innovative approaches, dedicated service and timely delivery are the strengths that have made us a familiar brand name and partner as we continue to grow in this important sector.

OVERSEAS PROJECTSImages (artist’s impression) on this page are courtesy of: 1. Burj Khalifa - Emaar Properties PJSC2. 59 Heritage - Thai Factory Development PCL

BUSINESS segments

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SINGAPORE PROJECTS Images (artist’s impression) on this page are courtesy of: 1. Livia - City Developments Ltd2. The Estuary - MCL Land Ltd3. Reflections at Keppel Bay - Keppel Land Ltd4. Sky@eleven - Times Development Pte Ltd

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Hospitality and Commercial Projects

Entrenched as one of the market leaders in the interior fitting out business, Design Studio is a name synonymous with professional management skills, expertise, quality products and well-timed completion. It is a reputation we have carved out by our insistence on perfection down to the last detail, from every project from simple to the most complex. Backed by an impressive portfolio featuring some of Singapore’s most notable hospitality

and commercial projects where we manufacture, supply and install joinery products, we have also expanded our comprehensive interior suite of products and services solutions to the Gulf region and other emerging markets. With our experience and expertise, we are confident we will keep our lead as an interior fitting out specialist overseas.

SINGAPORE PROJECTSImages on this page are courtesy of: 1.Marina Bay Sands Pte Ltd - Marina Bay Sands®2.Mandarin Orchard Singapore

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OVERSEAS PROJECTS Images on this page are courtesy of: 1.The Yas Hotel on Yas Island, Abu Dhabi - Aldar Laing O’Rourke Joint Venture2.Crowne Plaza Hotel on Yas Island, Abu Dhabi - Aldar Laing O’Rourke Joint Venture

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Distribution Projects Testimony to Design Studio’s reputation in the global market is the long established distributor partnerships it continues to share with world renowned brands. On the back of a solid track record and steadfast aligned ambition to grow the business, Design Studio’s exclusive distributorship deals were created before the start of the decade and continues to thrive with aligned interests.

They cover brands that are historically renowned in each home country and in the global arena - SieMatic

kitchens from Germany and Corian® solid surfaces from USA. Such strategic partnerships compress the marketing process, enabling our principles to establish a foothold in the local market and ourselves to elevate our brand name. And they have served all parties well – these brands have been successfully promoted both through brand presence and usage in Singapore, offering the ultimate benefit to our clients with a full gamut of quality products to choose from.

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Images (artist’s impression) on this page are courtesy of: 1.Scotts Square - Wheelock Properties (Singapore) Limited2.The Trillium - Lippo Group3.Belle Vue Residences - WingTai Asia

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In-house Brands PANELZ is the region’s leading manufacturer, Design Studio’s in-house brand, offering discerning clients and consultants across Asia, USA and the Middle East a selection of premium quality customized furniture including doors and door frames, kitchen and vanity cabinets and wardrobe systems.

Completely versatile for customization in any fashion, it offers complete freedom and reassurance in product design for a full-scale development projects from the luxury market to the broad mass, without compromising on quality, workmanship, value and aesthetics.

Flexible in structure and nature, these high quality products are specially designed and created to meet

varying discerning needs, through evolving state of the art technology that result in visually arresting products that bespeak of performance and fine workmanship.

Since its inception, PANELZ has graced several award winning residential projects within and beyond Asia. True to Design Studio’s innovative spirit, existing product changes are continually improved as new ones emerge. The latest addition to the PANELZ range is the Glitz series of products, with a greatly enhanced aesthetic appeal that evokes a clean, modern lifestyle.

BRANDS

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System Kitchens

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System Wardrobes

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Poles System System Doors & Frames

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In-house Brands i.FORMZ brings a whole new dimension to the art of interior architecture, offering unprecedented creative possibilities by turning inspiration into reality. Made with the revolutionary Corian® solid surfaces materials by Dupont USA, i.FORMZ’s unique nature allow it to be thermoformed and moulded into any shape, size or texture. i.FORMZ has the unique ability to bring even the most inspirational design to life, allowing for curves and other dynamic shapes never before possible, opening up a whole new world of possibilities in an equally unmatched new range of textures and shades in endless hues. When complemented with wood,

metal and stone, the end product is stunning. And the results show. It has gained tremendous following as it has become one of the more popular choices for commercial, hospitality and residential developments. Coupled with its affordable pricing structure, it has rapidly gained an international following.

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Imported Brands SieMatic kitchens celebrate personal taste in every culinary sense with inspirational and individual ideas that appeal to both functional and aesthetic aspects.

Founded in 1929 in Germany, SieMatic has built a sterling reputation of delivering exemplary kitchens that are perfected in distinct quality standards, yet are constantly expanding in the repertoire of design possibilities. This has resulted in even more individualized kitchen solutions, augmented with finely crafted details and innovative features that make every SieMatic kitchen unique and timeless.

DuPont™ Corian® solid surfaces is one of the most versatile materials in the global market place today. Consumers and professionals from all over the world are increasingly discovering that Corian® is a material with endless potential.

DuPont™ surfaces come in hundreds of colours and installed for limitless design possibilities, all of which are backed by the DuPont limited warranty. Corian® has cut its teeth as the industry standard for style and can be designed to create unique and seamless surfaces, intricate inlays and trivets giving consumers the freedom and flexibility to create every space as individual as unique as one wants it to be.

Images courtesy of SieMatic & DupontTM Corian®

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cREATING AND bUIlDINGfUNDAMENTAlVAlUES

MANUFACTURING

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ManufacturingDesign Studio has established a solid foothold in this line of business and works in close partnerships with developers, architects, interior designers, quantity surveyors and main contractors. The scope of services includes the provision of sound professional advice on materials to products, methods and costs prior to project commencement.

Design Studio currently operates four production facilities in Singapore and Malaysia that are engaged in manufacturing joinery and panelling products. Each represents its commitment to provide our customers with quality products and services that go beyond the ordinary. This is a value proven in the development of our two in-house brands, PANELZ and i.FORMZ which have won widespread international recognition. They attest to the innovative spirit that drives the company as it prepares to step up onto the bigger global stage.

Manufacturing is the principle activity of Design Studio and covers a wide range of paneling products including kitchens and vanity cabinets, wardrobes, doors and doorframes that have graced many prestigious residential and hotel property developments.

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As we embark on our next phase of growth to extend our business worldwide, our services and products have won a new-found following in foreign markets. PANELZ and i.FORMZ have been quick to win acceptance overseas due to their high degree of adaptability, allowing their product features to be customized to suit each localized environment. To consolidate and further develop in new markets, we have opened offices and showrooms in key cities around the world.

With the Design Studio label now entrenched in Thailand, Japan, Middle East and USA, we are poised to advance our frontline into other overseas markets. We will continue to identify and seek alliances with strong strategic partners who share our aspirations for globalisation.

OVERSEAS OFFICES & showrooms

Shanghai, China

Manhattan, New York

40

Bangkok, Thailand

Dubai, UAE

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Forging Into The Global Arena

Design Studio has long enjoyed a convincing lead in the Singapore market, with a list of renowned projects located all over the island that clearly demonstrates its success in the niche residential and hotel property sectors. But other than our home city, a whole world of opportunities awaits. Even though the global market has been affected by new economic realities, Design Studio will continue to seize any opening to establish footholds in worthwhile markets overseas.

Our expansion on both the regional and global basis will be guided by a prudent and mindful approach as we continue to seek viable projects in new and existing markets. Currently we are putting our focus on the Gulf Region encompassing countries such as Abu Dhabi, Saudi Arabia and Bahrain. While global market conditions are a challenge for now, we enjoy a confidence that is built on long term approaches to widen our lead against competitions; develop and create new value-added products and services offering efficient pricing structures and finally pressing on to widen market shares from local and global levels.

UNITED STATESOF AMERICA

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MIDDLE EAST

ASIA

SINGAPORE

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ASSOCIATE

THAILAND

VIETNAM

MALAYSIA

SINGAPORE

INDONESIA

Design Studio’s most recent strategic initiative has borne fruit within a year of its incorporation. The Group’s strategic partnership with the world’s largest interior fit-out contractor, Dubai-based Depa United Group resulted in the joint venture company, DDS Asia Holdings Pte Ltd (DDS Asia).

Design Studio could have found no better partner to complement its strengths and well-honed capabilities in the interior fitting out industry. Depa United Group enjoys international recognition as the largest interior contractor in the Middle East and North Africa. Its excellent track record, sterling portfolio and extensive assets have taken to public listing on the NASDAQ Dubai and Global Depositary Receipts on the regulated market for listed securities of the London Stock Exchange.

DDS Asia focuses on securing interior contracts in the hospitality and commercial segments within Singapore, Malaysia, Thailand, Indonesia and Vietnam. The wholly owned subsidiary, DDS Contracts & Interior Solutions Pte Ltd (DDS Singapore) was proud and privileged to have been awarded work for the two mega project developments being the two integrated resorts, Resorts World Singapore and Marina Bay Sands® in Singapore in 2009. DDS Asia is poised to continue its aggressive expansion plans in developing the potential of the hospitality and commercial markets in South East Asia.

44

Design Studio has established a solid foothold in this line of business and works in close partnerships with developers, architects, interior designers, quantity surveyors and main contractors. The scope of services includes the provision of sound professional advice on materials to products, methods and costs prior to project commencement.

Design Studio currently operates four production facilities in Singapore and Malaysia that are engaged in manufacturing joinery and panelling products. Each represents its commitment to provide our customers with quality products and services that go beyond the ordinary. This is a value proven in the development of our two in-house brands, PANELZ and i.FORMZ which have won widespread international recognition. They attest to the innovative spirit that drives the company as it prepares to step up onto the bigger global stage.

SINGAPORE PROJECTSImages on this page are courtesy of:1. Mandarin Orchard Singapore2. Resorts World Sentosa - Resorts World at Sentosa Pte Ltd 3. Marina Bay Sands® - Marina Bay Sands Pte Ltd

1

2

3

45

Board of DirectorsBernard Lim Leng Foo Executive Chairman & CEO Elin Wong Hong Keow Executive DirectorKelly Ng Chai Choey Executive DirectorWong Chee Herng Non-executive DirectorMohannad Izzat Sweid Non-executive Director Seah Hou Kee Independent Director Tan Siok Chin Independent Director Ong Tiew Siam Independent Director

Audit CommitteeSeah Hou Kee (Chairman)Wong Chee HerngOng Tiew Siam

Remuneration Committee Tan Siok Chin (Chairman)Seah Hou KeeOng Tiew Siam

Nominating Committee Ong Tiew Siam (Chairman) Tan Siok ChinSeah Hou KeeBernard Lim Leng Foo

CORPORATE information

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Management TeamBernard Lim Leng Foo Executive Chairman & CEOElin Wong Hong Keow Executive DirectorKelly Ng Chai Choey Executive DirectorJeremy Koh Kah Liam DirectorMichael Leong Ting Boon Project Director (Dubai)Edward Ho Kai Hon Admin Director (Dubai)Lim Thiam Hock Logistic ManagerSee Beng Koon Factory ManagerBJ Chan Pheng Chun Senior Project Manager

Registered Office8 Sungei Kadut Crescent Singapore 728682Tel: (65) 63670133 Fax: (65) 63662612Website:www.designstudio.com.sgEmail: [email protected]

Share RegistrarBoardroom Corporate & Advisory Services Pte.Ltd50 Raffles Place Singapore Land Tower #32-01 Singapore 048623Tel:65365355Fax: (65) 65361360

Company SecretariesEliza Lim Bee LianKelly Ng Chai Choey

Principal BankersOverseas-Chinese Banking CorporationCitibank N.A. Singapore BranchUnited Overseas Bank

AuditorsErnst & YoungPartner: Teo Li Ling (since financial year ended 31 December 2005)

Bernard Lim Leng Foo Executive Chairman & CEO

Bernard Lim is an Executive Director since 5 March 1994. Presently, as the Executive Chairman & CEO of the Group, he is responsible for the operations, research & product developments and business developments divisions. He has over 28 years of experience in the furniture industry and has been instrumental in the establishment and development of the Group’s business.

Elin Wong Hong KeowExecutive Director

Elin Wong came on board as Executive Director on 15 August 2006. Armed with over 23 years of experience in the fields of sales & marketing, branding communications, advertising and public relations, Elin brings a wealth of knowledge and expertise to the Group. Her key responsibilities include Export Sales & Marketing; Business Developments, Corporate Communications and Investor Relations. She graduated with a Diploma in Sales & Marketing in 1989 from the Chartered Institute of Marketing UK.

Kelly Ng Chai ChoeyExecutive Director

Kelly Ng Chai Choey was appointed as Executive Director on 15 September 2008. She has more than 18 years working experience in tax, finance and accounting field with big four accounting firm and various companies in construction, pulp & paper and shipping industries. She is a fellow member of the Institute of Certified Public Accountants of Singapore and Association of Chartered Certified Accountants.

Wong Chee HerngNon-Executive Director

Wong Chee Herng was appointed as Non-Executive Director on 5 October 1999. He has more than a decade of experience in the real estate industry and construction industry for both private and public projects. Currently he is the managing director of Straits Construction Group Pte Ltd. He graduated from the National University of Singapore with a Bachelor Degree of Business Administration in 1994.

Mohannad Izzat Sweid Non-Executive Director

Mohannad Izzat Sweid was appointed as our Non-Executive Director on 13 August 2007. He is Chief Executive Officer of Depa United Group, the Middle East’s premier interior contracting company and a global top-five industry leader. Mr Sweid began his career over 28 years ago, leading and managing top interior consulting and interior contracting companies in the United States and Middle East. Mr Sweid founded Depa Interiors in 1996, a company that, through numerous acquisitions and partnerships, became part of Depa United Group, formed in 2006.

Seah Hou Kee Independent Director

Seah Hou Kee was appointed as Independent Director on 20 December 2002. He has more than 28 years experience in finance, accounting, auditing and administration and is currently the managing partner of HK Seah & Co, public accounting firm. He is a member of the Singapore Institute of Directors and a fellow member of both the Institute of Certified Public Accountants of Singapore and CPA Australia. He graduated with Bachelor of Commerce in Accountancy (Honours) from Nanyang University.

Ong Tiew SiamIndependent Director

Ong Tiew Siam was appointed as our Independent Director on 1 March 2007. He has more than 30 years of experience in finance and administrations. He graduated with a Bachelor of Commerce (Accountancy) (Honours) degree in 1975 from the Nanyang University, Singapore and is a fellow member of the Institute of Certified Public Accountants of Singapore and CPA Australia. He is also a member of the Singapore Institute of Directors. Mr Ong also sits on the board of several listed companies.

Tan Siok Chin Independent Director

Tan Siok Chin was appointed as an Independent Director of our Company on 1 January 2006. Ms Tan practices as an advocate and solicitor in Singapore. She is a Director of ACIES Law Corporation, a firm of advocates and solicitors heading its corporate practice group.

Prior to joining ACIES Law Corporation, she practised as a partner in Messrs Rajah & Tann (now known as Rajah & Tann LLP), a firm of advocates and solicitors. Ms Tan has over 16 years of experience in legal practice. Her main areas of practice are corporate finance, mergers and acquisitions, capital markets and commercial matters. Ms Tan is also an independent director of several other public companies listed on the SGX-ST. Ms Tan graduated from the National University of Singapore with a Bachelor of Law (Honours) degree.

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48

Design Studio Furniture Manufacturer Ltd

CORPORATE GOVERNANCE REPORT

The Board of Directors and Management of Design Studio Furniture Manufacturer Ltd (the “Company”) are committed to maintaining a high standard of corporate governance within the Group, in conformity with the Code of Corporate Governance (“Code”) issued by the Singapore Exchange Securities Trading Limited (“SGX-ST”). Good corporate governance establishes and maintains a legal and ethical environment in the Group to preserve the interest of all shareholders.

BOARD MATTERS

Principle 1 : The Board’s Conduct of its aff airs

The Board meets regularly to oversee the business aff airs of the Group, approves fi nancial objectives and business strategies, monitors the standard of performances and adequacy of internal controls and risk management, both directly and through specialised committees set up by the Board.

In order to ensure that our Group’s operations are not disrupted, Board and committee meetings for the ensuing fi nancial year are carefully scheduled prior to the start of each fi nancial year. Ad-hoc meetings are also convened when circumstances require.

The Board is supported by the Audit Committee (“AC”), the Nominating Committee (“NC”) and the Remuneration Committee (“RC”). These committees were formed at the time of our listing on the SGX-ST and are chaired by Independent Directors.

The number of board meetings held in the fi nancial year 2009 by the Board and meetings of specialised committees established by the Board including the attendance of the members are set out below:

Directors

BoardMeetings

Audit Committee Meetings

Nominating Committee Meetings

Remuneration Committee Meetings

No. HeldNo.

Attended No. HeldNo.



AttendedBernard Lim Leng Foo 6 6 N.A. N.A. 1 1 N.A. N.A.Elin Wong Hong Keow 6 6 N.A. N.A. N.A. N.A. N.A. N.A.Kelly Ng Chai Choey 6 6 N.A. N.A. N.A. N.A. N.A. N.A.Wong Chee Herng 6 5 4 4 N.A. N.A. N.A. N.A.Mohannad Izzat Sweid 6 4 N.A. N.A. N.A. N.A. N.A. N.A.Seah Hou Kee 6 6 4 4 1 1 1 1Tan Siok Chin 6 6 N.A. N.A. 1 1 1 1Ong Tiew Siam 6 6 4 4 1 1 1 1

*Note :

N.A. – Not applicable

The Company has and will organise orientation programmes for new directors to familiarise the new directors with the Group’s operations and business issues and the relevant regulations and governance requirements. The Company Secretary will attend all Board and committee meetings. She is responsible for ensuring that procedures are followed and that the Company has complied with the requirements of the Companies Act and all other rules and regulations that are applicable to the Company. The directors have independent access to the Company Secretary at all times.

Management provides the Board members with quarterly management accounts to keep them abreast with the Group’s business development and performance. In addition, the Board members have separate and independent access to the executive offi cers, thus enabling them to make enquiries or seek clarifi cations on the Group’s aff airs.

49

Annual Report 2009

The Board (whether individually or as a group) has, in the furtherance of its duties, access to independent professional advice if necessary, at the Company’s expenses.

Principle 2 : Board Composition and Balance As at the date of this Report, the Board comprises the following members:

Bernard Lim Leng Foo (Executive Chairman & CEO)Elin Wong Hong Keow (Executive Director)Kelly Ng Chai Choey (Executive Director) Wong Chee Herng (Non-Executive Director)Mohannad Izzat Sweid (Non-Executive Director)Seah Hou Kee (Independent Director)Tan Siok Chin (Independent Director)Ong Tiew Siam (Independent Director)

The Board, through its NC, examines, on an on-going basis, the size and the composition of the Board in order to evaluate the Board’s eff ectiveness in carrying out its duties. The NC is of the view that the current board size is appropriate and eff ective in carrying out its duties, taking into account the nature and scope of the Group’s operations. The current Board comprises persons, who as a group, provides core competencies necessary to meet the Group’s objectives.

To assist in discharging its duties, the Board has delegated certain functions to the AC, NC and RC, which operate under clearly defi ned terms of reference.

The NC has reviewed and is satisfi ed that with the Independent Directors making up at least one-third of the number of directors the Board have an independent element that suffi ciently enables the Board to exercise objective judgement on corporate aff airs independently from the Management. The NC is of the view that no individual or small group of individuals dominates the Board’s decision-making process. Principle 3 : Role of Executive Chairman & CEO Mr Bernard Lim Leng Foo is our Executive Chairman & CEO. Mr Lim is responsible for the day-to-day operations of the Company and ensures the timeliness and quality of information fl ow between the Board and the Management.

The Board is of the view that it is in the best interest of the Company to adopt a single leadership structure whereby the Executive Chairman of the Board and the Chief Executive Offi cer is the same person, to ensure that the decision-making process of the Company would not be unnecessarily hindered.

The Board is of the view that there is also a balance of power and authority with the various committees chaired by the Independent Directors.

Principle 4 : Board Membership

We believe that Board renewal should be an on-going process in order to ensure good corporate governance. Our Articles of Association require one-third of the directors to retire from offi ce by rotation at each Annual General Meeting (“AGM”), provided that all directors except the Managing or Joint Managing Director (or an equivalent offi ce) shall retire from offi ce at least once every three years.

50


Principle 5 : Board Performance

As at the date of this Report, the NC comprises the following members:

Ong Tiew Siam (Chairman & Independent Director) Tan Siok Chin (Independent Director) Seah Hou Kee (Independent Director)Bernard Lim Leng Foo (Executive Chairman & CEO)

The NC uses its best eff orts to ensure that the directors appointed to the Board possesses the relevant background, experience and knowledge and that each Independent Director brings to the Board an independent and objective perspective to enable the making of balanced and well-considered decisions.

The NC will review and evaluate the performance of the Board as a whole, taking into consideration, attendance records at respective Board and committee meetings as well as the contribution of each individual director to the Board’s eff ectiveness.

In evaluating the Board performance, the NC implements a self-assessment process that requires each director to submit the assessment of the performance of the Board as a whole during the year under review. This self-assessment process takes into account, inter alia, the board composition, maintenance of independence, board information, board process, board accountability, communication with top management and standard of conduct.

The NC also reviews the independence of the non-executive directors annually, in accordance with the guidelines on independence set out in the Code and the board structure, size and composition and makes recommendation to the Board if any adjustment is necessary. Principle 6 : Access to Information

All Board members have unrestricted access to the Company’s Management and the Company Secretary in carrying out their duties.

To enable the Board to fulfi ll its responsibilities, the Management is required to provide quarterly reports to the Board on the Group’s activities. Under the direction of the Executive Chairman & CEO, the Company Secretary ensures good information fl ows within the Board and its committees and between Management, Non-Executive Directors and Independent Directors. The Company Secretary also ensures that board procedures are followed and applicable rules and regulations are complied with. An agenda for Board meetings together with the relevant papers are prepared in consultation with the Executive Chairman and CEO and usually circulated before the holding of each Board and committee meeting. This allows control over the quality, quantity and timeliness of the fl ow of information between Management and the Board. The Company Secretary also assists to facilitate orientation and professional development as and when required.

To keep pace with regulatory changes that have an important bearing and eff ect on our Company and directors, the Board members will be required to attend briefi ng sessions conducted during Board meetings or at specially convened sessions conducted by professionals.

The Board members may, at any time, in the furtherance of their duties, request for independent professional advice and receive training at the Company’s expense.

51

Annual Report 2009

Remuneration Matters

Principle 7 : Procedures for Developing Remuneration PoliciesPrinciple 8 : Level and Mix of RemunerationPrinciple 9 : Disclosure on Remuneration

As at the date of this Report, the RC comprises the following members:

Tan Siok Chin (Chairman & Independent Director)Seah Hou Kee (Independent Director)Ong Tiew Siam (Independent Director)

The RC has three members comprising entirely of Independent Directors who are independent of Management and free from any business or other relationships that may materially interfere with the exercise of their independent judgement. The RC has at least one member who is knowledgeable in the fi eld of executive compensation and has access to expert advice on remuneration matters and will obtain such advice, if required.

The role of the RC is to review and recommend to the Board an appropriate competitive framework of remuneration for the Board. No director is involved in deciding his own remuneration. The review covers all aspects of remuneration including but not limited to directors’ fees, salaries, allowance, bonuses, annual incentive bonus and benefi ts in kind.

The RC reviews and recommends to the Board a framework of remuneration for the Board and key executives and determines specifi c remuneration packages for each Executive Director and Executive Chairman & CEO for endorsement by the entire Board.

In reviewing the remuneration packages, the RC takes into account the current market circumstances and the need to attract and retain directors of experience and good standing. The RC has full authority to obtain external professional advice on matters relating to remuneration should the need arises.

In respect of fees for directors, approval of shareholders is required at each annual general meeting of the Company.

Our Executive Directors have entered into service agreements with the Company, subject to renewal every three (3) years. The review of service contracts for Executive Directors come under the purview of the RC and ensures that fair and reasonable terms of service is tied in with performance. Executive Directors are paid a fi xed salary, guaranteed bonus plus annual incentive bonus calculated based on the consolidated net profi t before tax and extraordinary items. Executive Directors do not receive directors’ fees.

Non-Executive Directors are currently paid only directors’ fees. They do not receive an attendance fee for attending meetings.

52


For the fi nancial year ended 31 December 2009, the remuneration of directors and key executives are set out below:

Remuneration bandNames of directors

Salary(%)

Bonus(%)

Profi t Sharing

(%)

Director Fees (%)

Other Benefi ts

(%)Total(%)

≥S$1,500,000Executive Chairman & CEOBernard Lim Leng Foo 23 6 70 1 100≥S$750,000 to S$1,000,000Executive DirectorsElin Wong Hong Keow 26 6 67 1 100Kelly Ng Chai Choey 26 6 66 2 100≥S$500,000 to S$750,000Executive Offi cersJeremy Koh Kah Liam 27 4 65 4 100Michael Leong Ting Boon 27 5 66 2 100≤S$250,000Non-Executive DirectorsWong Chee Herng 100 100Mohannad Izzat Sweid 100 100Independent DirectorsSeah Hou Kee 100 100Tan Siok Chin 100 100Ong Tiew Siam 100 100Executive Offi cersEdward Ho Kai Hon 83 14 3 100Lim Thiam Hock 64 26 10 100See Beng Koon 63 27 10 100

Save for Mr Bernard Lim Leng Foo, Ms Elin Wong Hong Keow and Ms Kelly Ng Chai Choey, none of the above directors’ remuneration exceeds S$250,000 during the year.

There is no employee of the Group who is an immediate family member of a director or the Chief Executive Officer with remuneration exceeding S$150,000 during the year.

The Company does not have any share option scheme.

ACCOUNTABILITY AND AUDIT

Principle 10 : Accountability

The Board accepts that it is accountable to the shareholders and adopts best practices to maintain shareholders’ confi dence and trust. Quarterly results are released via SGXNET within the respective periods stipulated in the SGX-ST Listing Manual after review by the Board. In presenting the quarterly announcements and yearly fi nancial statements, the Board strives to provide the shareholders with detailed analysis and a balanced and understandable assessment of the Company’s performance, position and prospects.

The Management provides the Board with a continual fl ow of relevant information on a timely basis in order that it may eff ectively discharge its duties. On a quarterly basis, Board members are provided with up-to-date fi nancial reports and other information on the Group’s performance for eff ective monitoring and decision making.

53

Annual Report 2009

Principle 11 : Audit Committee

The members of the Audit Committee (“AC”) at the date of this report are as the following:

Seah Hou Kee (Chairman & Independent Director)Ong Tiew Siam (Independent Director) Wong Chee Herng (Non-Executive Director)

The AC carried out its functions in accordance with Section 201B(5) of the Singapore Companies Act, Cap. 50, the SGX Listing Manual and the Code including the following:

Reviews the audit plans of the internal and external auditors of the Company, and reviews the internal auditors’ evaluation of the adequacy of the Company’s system of internal accounting controls and the assistance given by the Company’s management to the external and internal auditors;

Reviews the quarterly announcements and annual fi nancial statements and the auditors’ report on the annual fi nancial statements of the Company before their submission to the Board;

Reviews eff ectiveness of the Company’s material internal controls, including fi nancial, operational and compliance controls and risk management via reviews carried out by the internal auditors;

Meets with the external auditors, other committees, and Management in separate executive sessions to discuss any matters that these groups believe should be discussed privately with the AC;

Reviews legal and regulatory matters that may have a material impact on the fi nancial statements, related compliance policies and programmes and any reports received from regulators;

Reviews the cost eff ectiveness and the independence and objectivity of the external auditors;

Reviews the nature and extent of non-audit services provided by the external auditors;

Recommends to the Board the external auditors to be nominated, approves the compensation of the external auditors, and reviews the scope and results of the audit;

Reports actions and minutes of the AC to the Board with such recommendations as the AC considers appropriate; and

Reviews interested person transactions in accordance with the requirements of the SGX-ST’s Listing Manual.

The AC, having reviewed all non-audit services provided by the external auditors to the Group, is satisfi ed that the nature and extent of such services would not aff ect the independence of the external auditors. The AC has also conducted a review of interested person transactions.

The AC convened four meetings during the year. In performing its function, the AC has also met with the external auditors, without the presence of Management at least once a year, and reviewed the overall scope of the external audit and the assistance given by Management to the auditors.

The AC has recommended to the Board that the auditors, Ernst & Young LLP be nominated for re-appointment as auditors at the forthcoming Annual General Meeting of the Company.

54


Both the AC and Board have reviewed the appointment of diff erent auditors for its subsidiaries and signifi cant associate and are satisfi ed that the appointment of diff erent auditors would not compromise the standard and eff ectiveness of the audit of the Company and the Group. Accordingly, the Company has complied with Rule 716 of the Listing Rules of the SGX-ST.

Principle 12 : Internal Controls

The Board acknowledges that it is responsible for the overall internal control framework, but recognises that no cost eff ective internal control system can preclude all errors and irregularities, as a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can provide only reasonable but not absolute assurance against material misstatement or loss.

The AC, on behalf of the Board has reviewed the eff ectiveness of the internal control system put in place by the Management and is satisfi ed that there are adequate internal controls within the Group.

Principle 13 : Internal Audit

The Group’s internal audit function is outsourced to an international accounting fi rm, which is not the external auditor of the Group. The AC reviewed and approved the internal audit plan put up by the internal auditors. The internal auditors report to the Chairman of the AC on a regular basis to ensure the adequacy of the internal audit function. The AC also reviews annually the eff ectiveness of the Group’s system of internal controls in the light of key business and fi nancial risks aff ecting the operations to satisfy itself that there are adequate internal controls to meet the needs of the Group in its current business environment.

COMMUNICATION WITH SHAREHOLDERS

Principle 14 : Greater Shareholder Participation

The Company is in regular and eff ective communication with shareholders in order to maintain a high standard of transparency and to promote better investor communications. The Board strives for timeliness and transparency in its disclosures to shareholders and the public.

Information is communicated to shareholders on a timely basis through:

The Annual Report, containing the full fi nancial statements of the Company and the Group

Notices of Annual General Meeting/Extraordinary General Meeting (“AGM/EGM”)

Press release on major developments of the Company

SGXNET announcements

The Company’s website at www.designstudio.com.sg where shareholders can access information on the Company. The website provides, inter alia, corporate announcements, press releases, annual reports and profi les of the Company.

In addition, shareholders are encouraged to attend the AGM/EGM. This allows shareholders the opportunity to communicate their views on various matters aff ecting the Company and to stay informed of the Company’s strategy and goals.

55

Annual Report 2009

SECURITIES TRANSACTIONS

The Company has adopted internal codes in relation to dealings in the Company’s securities pursuant to Rule 1207(18) of the SGX-ST Listing Manual that is applicable to the Company and all its offi cers. All directors and key offi cers of the Group who have access to “price-sensitive” information are required to observe this Rule. Under the Rule, the directors and these offi cers are prohibited from dealing in the Company’s securities from 25th January, 25th April, 25th July and 25th October until after the release of the announcement of the Company’s quarterly results, and as the case may be, unless under extenuating or special circumstances. The directors and offi cers are reminded of this requirement via the circulation of an internal memorandum. Each offi cer is required to submit a declaration annually that he/she is in compliance with and has not breached the Rule. The policy also discourages trading on short term considerations.

The directors are required to notify the Company of any dealings in the Company’s securities (during the open window period) within two (2) business days of the transactions.

Directors’ Report

Statement by Directors

Independent Auditors’ Report

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ConsolidatedStatement ofComprehensiveIncome

Annual Report 2009

DIRECTORS' REPORT

57

The directors are pleased to present their report to the members together with the audited consolidated fi nancial statements of Design Studio Furniture Manufacturer Ltd (the “Company”) and its subsidiaries (collectively, the “Group”) and the balance sheet and statement of changes in equity of the Company for the fi nancial year ended 31 December 2009.

Directors

The directors of the Company in offi ce at the date of this report are:

Bernard Lim Leng Foo (Executive Chairman & CEO)Elin Wong Hong Keow Kelly Ng Chai Choey Wong Chee HerngMohannad Izzat Sweid Seah Hou KeeTan Siok Chin Ong Tiew Siam

Arrangements to enable directors to acquire shares and debentures

Neither at the end of nor at any time during the fi nancial year was the Company a party to any arrangement whose objects are, or one of whose object is, to enable the directors of the Company to acquire benefi ts by means of the acquisition of shares or debentures of the Company or any other body corporate.

Directors’ interests in shares or debentures

The following directors, who held offi ce at the end of the fi nancial year, had, according to the register of directors’ shareholdings required to be kept under Section 164 of the Singapore Companies Act, Cap. 50, an interest in the shares or debentures of the Company and related corporations, as stated below:

Direct interest Deemed interest

The Company1 January

2009 31 December

20091 January

2009 31 December

2009

Ordinary shares

Bernard Lim Leng Foo 24,750,000 14,750,000 – –Wong Chee Herng (1) – – 51,975,000 40,975,000

Notes:

(1) Mr Wong Chee Herng is deemed to have an interest in the 40,975,000 shares held by S C Wong Holdings Pte. Ltd. (previously known as Straits Construction Company (Private) Limited). He is a director and a shareholder of S C Wong Holdings Pte. Ltd. [with 4.09% interest in S C Wong Holdings Pte. Ltd.]. He sits on the board of the Company as a nominee of S C Wong Holdings Pte. Ltd., representing S C Wong Holdings Pte. Ltd.’s interest in the Company.


DIRECTORS' REPORT

58

Directors’ interests in shares or debentures (cont’d)

There was no change in any of the above mentioned interests between 31 December 2009 and 21 January 2010.

By virtue of Section 7 of the Singapore Companies Act, Cap. 50, Mr Wong Chee Herng is deemed to have interests in shares of the subsidiaries held by the Company.

Except as disclosed above, no director who held offi ce at the end of the fi nancial year had interests in shares or debentures of the Company, or of related corporations, either at the beginning of the fi nancial year or date of appointment if later, or end of the fi nancial year.

Directors’ contractual benefi ts

Except as disclosed in the fi nancial statements, since the end of the previous fi nancial year, no director of the Company has received or become entitled to receive a benefi t by reason of a contract made by the Company or a related corporation with the director, or with a fi rm of which the director is a member, or with a company in which the director has a substantial fi nancial interest.

Options

No options were issued by the Company or its subsidiaries during the fi nancial year. As at 31 December 2009, there are no options on the unissued shares of the Company or its subsidiaries which are outstanding.

Audit committee

The members of the Audit Committee (“AC”) at the date of this report are as the following:

Seah Hou Kee (Chairman & Independent Director)Ong Tiew Siam (Independent Director) Wong Chee Herng (Non-Executive Director)

The AC carried out its functions in accordance with Section 201B(5) of the Singapore Companies Act, Cap. 50, the Singapore Exchange Securities Trading Limited (“SGX-ST”)’s Listing Manual and the Code of Corporate Governance, including the following:

Reviews the audit plans of the internal and external auditors of the Company, and reviews the internal auditors’ evaluation of the adequacy of the Company’s system of internal accounting controls and the assistance given by the Company’s management to the external and internal auditors;

Reviews the quarterly announcements and annual fi nancial statements and the auditors’ report on the annual fi nancial statements of the Company before their submission to the Board of Directors (the “Board”);

Reviews eff ectiveness of the Company’s material internal controls, including fi nancial, operational and compliance controls and risk management via reviews carried out by the internal auditors;

Meets with the external auditors, other committees, and management in separate executive sessions to discuss any matters that these groups believe should be discussed privately with the AC;

Reviews legal and regulatory matters that may have a material impact on the fi nancial statements, related compliance policies and programmes and any reports received from regulators;

Annual Report 2009

DIRECTORS' REPORT

59

Audit committee (cont’d)

Reviews the cost eff ectiveness and the independence and objectivity of the external auditors;

Reviews the nature and extent of non-audit services provided by the external auditors;

Recommends to the Board the external auditors to be nominated, approves the compensation of the external auditors, and reviews the scope and results of the audit;

Reports actions and minutes of the AC to the Board with such recommendations as the AC considers appropriate; and

Reviews interested person transactions in accordance with the requirements of the SGX-ST’s Listing Manual.

The AC, having reviewed all non-audit services provided by the external auditors to the Group, is satisfi ed that the nature and extent of such services would not aff ect the independence of the external auditors. The AC has also conducted a review of interested person transactions.

The AC convened four meetings during the year. In performing its function, the AC has also met with the external auditors, without the presence of Management at least once a year, and reviewed the overall scope of the external audit and the assistance given by Management to the auditors.

The AC has recommended to the Board that the auditors, Ernst & Young LLP be nominated for re-appointment as auditors at the forthcoming Annual General Meeting of the Company.

Further details regarding the AC are disclosed in the Annual Report, Corporate Governance Report.

Auditors

Ernst & Young LLP have expressed their willingness to accept re-appointment as auditors.

On behalf of the Board of Directors,



Singapore10 March 2010


STATEMENT BY DIRECTORS

60

We, Bernard Lim Leng Foo and Wong Chee Herng, being two of the directors of Design Studio Furniture Manufacturer Ltd, do hereby state that, in the opinion of the directors,

(i) the accompanying balance sheets, consolidated income statement, consolidated statement of comprehensive income, statements of changes in equity, and consolidated cash fl ow statement together with notes thereto are drawn up so as to give a true and fair view of the state of aff airs of the Group and of the Company as at 31 December 2009 and the results of the business, changes in equity and cash fl ows of the Group and the changes in equity of the Company for the year ended on that date; and

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

On behalf of the Board of Directors,



Singapore10 March 2010

Annual Report 2009

INDEPENDENT AUDITORS' REPORTFor the fi nancial year ended 31 December 2009

61

To the Members of Design Studio Furniture Manufacturer Ltd

We have audited the accompanying fi nancial statements of Design Studio Furniture Manufacturer Ltd (the “Company”) and its subsidiaries (collectively, the “Group”) set out on pages 63 to 118, which comprise the balance sheets of the Group and the Company as at 31 December 2009, the statements of changes in equity of the Group and the Company and the consolidated income statement, consolidated statement of comprehensive income and consolidated cash fl ow statement of the Group for the year then ended, and a summary of signifi cant accounting policies and other explanatory notes.

Management’s responsibility for the fi nancial statements

Management is responsible for the preparation and fair presentation of these fi nancial statements in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting Standards. This responsibility includes devising and maintaining a system of internal accounting controls suffi cient 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 profi t and loss account and balance sheet and to maintain accountability of assets; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the fi nancial 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 fi nancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the eff ectiveness 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 fi nancial statements.

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


INDEPENDENT AUDITORS' REPORTFor the fi nancial year ended 31 December 2009

62

Opinion

In our opinion,

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

(ii) the accounting and other records required by the Act to be kept by the Company have been properly kept in accordance with the provisions of the Act.

Ernst & Young LLPPublic Accountants and Certifi ed Public Accountants Singapore

10 March 2010

Annual Report 2009

BALANCE SHEETSAs at 31 December 2009

The accompanying accounting policies and explanatory notes form an integral part of the fi nancial statements.

63

Group Company

Note2009$’000

2008$’000

2009$’000

2008$’000

Non-current assetsProperty, plant and equipment 4 9,845 9,302 6,481 5,051Investment in subsidiaries 5 – – 265 1,072Investment in an associate 6 5,896 1,849 2,250 2,250Club membership 7 73 79 73 79Deferred tax assets 23 35 567 – 176Current assetsInventories 8 6,890 10,484 2,278 929Gross amount due from customers for contract work-in-progress 9 6,381 3,362 7,430 4,102Trade receivables- third parties 10 13,987 15,691 13,645 15,143- corporate shareholders 10 7,943 11,047 7,943 11,047- subsidiary 10 – – – 991- associate 10 11,072 – 11,072 –Prepayments 905 2,022 243 1,015Other receivables and deposits- third parties 10 531 570 171 229- subsidiaries 10 – – 281 4,537Loan to an associate 10 1,350 – 1,350 –Investment securities 11 4 4 4 4Tax recoverable 28 93 – –Fixed deposits 12 31,640 28,140 31,529 28,031Cash and bank balances 12 4,719 3,019 3,543 2,396

85,450 74,432 79,489 68,424Current liabilitiesTrade payables- third parties 13 5,120 5,644 3,603 3,699- subsidiaries 13 – – 3,968 –Other payables 13 532 680 399 455Accrued operating expenses 13 19,925 16,032 18,026 13,943Deposits received 13 592 5,868 592 5,854Finance lease liabilities (current portion) 14 132 242 17 65Long-term bank loan, secured (current portion) 14 – 313 – 297Provision for tax 3,484 2,855 3,484 2,855Convertible notes 15 50 – 50 –

29,835 31,634 30,139 27,168Net current assets 55,615 42,798 49,350 41,256Non-current liabilitiesDeferred tax liabilities 23 39 – 39 –Other payables 13 105 49 – –Finance lease liabilities (non-current portion) 14 29 213 11 78Long-term bank loan, secured (non-current portion) 14 – 2,671 – 2,671Convertible notes 15 – 50 – 50Net assets 71,291 51,612 58,369 47,085Equity attributable to equity holders of the CompanyShare capital 16 30,111 30,111 30,111 30,111Reserves 17 41,180 21,501 28,258 16,974Total equity 71,291 51,612 58,369 47,085


CONSOLIDATED INCOME STATEMENTFor the year ended 31 December 2009


64

Group

Note2009$’000

2008$’000

Revenue 18 113,935 74,356Cost of sales (78,324) (50,357)

Gross profi t 35,611 23,999Other income 20 264 –

35,875 23,999Marketing and distribution expenses (2,902) (3,463)General and administrative expenses (7,022) (4,840)

Profi t from operations 21 25,951 15,696Finance expenses 22 (107) (274)Finance income 22 70 237Share of result of an associate 4,047 (401)

Profi t before tax 29,961 15,258Tax expense 23 (4,584) (2,476)Profi t net of tax 25,377 12,782

Earnings per share (cents)- basic 24 9.95 5.01- diluted 24 9.94 5.01

Annual Report 2009


65

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFor the year ended 31 December 2009

Group

Note2009$’000

2008$’000

Profi t net of tax 25,377 12,782

Other comprehensive income:Foreign currency translation 42 (7)

Total comprehensive income for the year attributable to equity holders of the Company 25,419 12,775


STATEMENTS OF CHANGES IN EQUITYFor the year ended 31 December 2009


66

Attributable to equity holders of the CompanyShare

capitalRevenue reserves

Other reserves Total

$’000 $’000 $’000 $’000

2009GroupOpening balance at 1 January 2009 30,111 21,557 (56) 51,612Total comprehensive income for the year – 25,377 42 25,419Dividends on ordinary shares (Note 32) – (5,740) – (5,740)Closing balance at 31 December 2009 30,111 41,194 (14) 71,291

2008GroupOpening balance at 1 January 2008 30,111 11,326 (49) 41,388Total comprehensive income for the year – 12,782 (7) 12,775Dividends on ordinary shares (Note 32) – (2,551) – (2,551)Closing balance at 31 December 2008 30,111 21,557 (56) 51,612

Sharecapital

Revenue reserves Total

$’000 $’000 $’000

2009CompanyOpening balance at 1 January 2009 30,111 16,974 47,085Total comprehensive income for the year – 17,024 17,024Dividends on ordinary shares (Note 32) – (5,740) (5,740)Closing balance at 31 December 2009 30,111 28,258 58,369

2008CompanyOpening balance at 1 January 2008 30,111 7,272 37,383Total comprehensive income for the year – 12,253 12,253Dividends on ordinary shares (Note 32) – (2,551) (2,551)Closing balance at 31 December 2008 30,111 16,974 47,085

Annual Report 2009

CONSOLIDATED STATEMENT OF CASH FLOWSFor the year ended 31 December 2009


67

Note2009$’000

2008$’000

Cash fl ows from operating activities Profi t before tax 29,961 15,258Adjustments:Impairment loss on doubtful receivables 21 1 55Depreciation of property, plant and equipment 4 2,450 2,642Loss on disposal of property, plant and equipment 21 90 10Finance expenses 22 107 274Finance income 22 (70) (237)Share of (gain)/loss of an associate (4,047) 401Fair value gain on structured fi xed deposit 21 – (38)Amortisation of club membership 7 6 6Fair value loss on held for trading investment securities 21 – 1Currency translation diff erence 64 9

Operating profi t before working capital changes 28,562 18,381Decrease/(increase) in:Inventories 3,594 (5,030)Contract work-in-progress (3,019) 1,788Trade receivables (6,264) (4,226)Prepayments, other receivables and deposits 1,156 (586)(Decrease)/increase in:Trade payables (524) 299Bills payable to banks – (495)Other payables and accrued operating expenses 3,801 2,784Deposits received (5,276) 2,228Cash fl ows from operations 22,030 15,143Finance expense paid (107) (274)Income taxes paid (3,320) (1,418)Net cash fl ows from operating activities 18,603 13,451

Cash fl ows from investing activitiesCosts incurred for construction-in-progress A (151) –Finance income received 70 237Proceeds from sale of property, plant and equipment 75 28Purchase of property, plant and equipment A (3,029) (1,524)Investment in an associate – (2,250)Loan to an associate (1,350) –Net cash fl ows used in investing activities (4,385) (3,509)

Cash fl ows from fi nancing activities(Increase)/decrease in fi xed deposits pledged (560) 2,781Dividends paid on ordinary shares by the Company 32 (5,740) (2,551)Repayment of fi nance lease liabilities (294) (607)Repayment of long-term bank loan (2,984) (468)Net cash fl ows used in fi nancing activities (9,578) (845)

Net increase in cash and cash equivalents 4,640 9,097Cash and cash equivalents at beginning of year 31,050 21,953Cash and cash equivalents at end of year B 35,690 31,050


CONSOLIDATED STATEMENT OF CASH FLOWSFor the year ended 31 December 2009


68

Notes to the consolidated statement of cash fl ows

A. Purchase of property, plant and equipment

During the financial year, the Group acquired property, plant and equipment with an aggregate cost of $3,180,000 (2008: $1,574,000) of which $Nil (2008: $50,000) were acquired by means of hire purchase agreements. Cash payments of $3,029,000 and $151,000 (2008: $1,524,000 and $Nil) were made towards the purchase of these property, plant and equipment and construction-in-progress respectively.

B. Cash and cash equivalents

Cash and cash equivalents included in the consolidated statement of cash fl ows comprise the following at the balance sheet date:

Group

Note2009$’000

2008$’000

Cash at banks and on hand 12 4,719 3,019Fixed deposits 12 31,640 28,140

36,359 31,159Less: Fixed deposits pledged (669) (109)Cash and cash equivalents 35,690 31,050

Annual Report 2009

NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 December 2009

69

1. Corporate information

Design Studio Furniture Manufacturer Ltd (the “Company”) is a public limited liability company domiciled and incorporated in Singapore and is listed on the SGX-ST.

The address of the Company’s registered offi ce and principal place of business is 8 Sungei Kadut Crescent, Singapore 728682.

The principal activities of the Company are the manufacture, supply and installation of panelling products such as kitchen and vanity cabinets, wardrobes, doors and doorframes, and furniture components for local and overseas markets, the provision of interior fi tting-out services on a turnkey basis and structural works for hospitality, commercial and retail properties such as hotels, resorts, offi ce, shops and bank branches. The Company also acts as the distributor for furniture products of reputable overseas brand in Singapore and Brunei. The principal activities of the subsidiaries are shown in Note 5 to the fi nancial statements.

There have been no signifi cant changes in the nature of the principal activities during the fi nancial year.

2. Summary of signifi cant accounting policies

2.1 Basis of preparation

The consolidated fi nancial statements of the Group and the balance sheet and statement of changes in equity of the Company have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”).

The fi nancial statements have been prepared on a historical cost basis except as disclosed in the accounting policies below.

The fi nancial statements are presented in Singapore Dollars (SGD or $), the functional currency of the Company and all values in the tables are rounded to the nearest thousand ($‘000) as indicated.

2.2 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous fi nancial year except as follows:

On 1 January 2009, the Group adopted the following standards and interpretations mandatory for annual fi nancial periods beginning on or after 1 January 2009.

FRS 1 Presentation of Financial Statements (Revised)

Amendments to FRS 18 Revenue

Amendments to FRS 23 Borrowing Costs

Amendments to FRS 32 Financial Instruments: Presentation and FRS 1 Presentation of Financial Statements – Puttable Financial Instruments and Obligations Arising on Liquidation

Amendments to FRS 101 First-time Adoption of Financial Reporting Standards and FRS 27 Consolidated and Separate Financial Statements – Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate

Amendments to FRS 102 Share-based Payment – Vesting Conditions and Cancellations



70

2. Summary of signifi cant accounting policies (cont’d)

2.2 Changes in accounting policies (cont’d)

Amendments to FRS 107 Financial Instruments: Disclosures

FRS 108 Operating Segments

Improvements to FRSs issued in 2008

INT FRS 113 Customer Loyalty Programmes

INT FRS 116 Hedges of a Net Investment in a Foreign Operation

Amendments to INT FRS 109 Reassessment of Embedded Derivatives and FRS 39 Financial Instruments: Recognition and Measurement – Embedded Derivatives

INT FRS 118 Transfers of Assets from Customers

Adoption of these standards and interpretations did not have any eff ect on the fi nancial performance or position of the Group. They did however give rise to additional disclosures, including, in some cases, revisions to accounting policies.

The principal eff ects of these changes are as follows:

FRS 1 Presentation of Financial Statements – Revised Presentation

The revised FRS 1 separates owner and non-owner changes in equity. The statement of changes in equity includes only details of transactions with owners, with all non-owner changes in equity presented in the statement of other comprehensive income. In addition, the Standard introduces the statement of comprehensive income which presents income and expense recognised in the period. This statement may be presented in one single statement, or two linked statements. The Group has elected to present this statement as two linked statements.

Amendments to FRS 107 Financial Instruments: Disclosures

The amendments to FRS 107 require additional disclosure about fair value measurement and liquidity risk. Fair value measurements are to be disclosed by source of inputs using a three level hierarchy for each class of fi nancial instrument. In addition, reconciliation between the beginning and ending balance for Level 3 fair value measurements is now required, as well as signifi cant transfers between Level 1 and Level 2 fair value measurements. The amendments also clarify the requirements for liquidity risk disclosures. The fair value measurement disclosures and liquidity risk disclosures are presented in Note 30 and Note 29 to the fi nancial statements respectively.

FRS 108 Operating Segments

FRS 108 requires disclosure of information about the Group’s operating segments and replaces the requirement to determine primary and secondary reporting segments of the Group. As this is a disclosure standard, it had no fi nancial impact on the fi nancial position and results of the Group when implemented at the beginning of the year. Additional disclosures about each of the segments are shown in Note 28, including revised comparative information.

Annual Report 2009


71


2.2 Changes in accounting policies (cont’d) Improvements to FRSs issued in 2008

In 2008, the Accounting Standards Council issued an omnibus of amendments to FRS. There are separate transitional provisions for each amendment. The adoption of the following amendments resulted in changes to accounting policies but did not have any impact on the fi nancial position or performance of the Group:

FRS 1 Presentation of Financial Statements: Assets and liabilities classifi ed as held for trading in accordance with FRS 39 Financial Instruments: Recognition and Measurement are not automatically classifi ed as current in the balance sheet. The Group amended its accounting policy accordingly and analysed whether Management’s expectation of the period of realisation of fi nancial assets and liabilities diff ered from the classifi cation of the instrument. This did not result in any re-classifi cation of fi nancial instruments between current and non-current in the balance sheet.

FRS 16 Property, Plant and Equipment: Replaces the term “net selling price” with “fair value less costs to sell”. The Group amended its accounting policy accordingly, which did not result in any change in the fi nancial position.

FRS 23 Borrowing Costs: The defi nition of borrowing costs is revised to consolidate the two types of items that are considered components of “borrowing costs” into one – the interest expense calculated using the eff ective interest rate method calculated in accordance with FRS 39. The Group has amended its accounting policy accordingly which did not result in any change in its fi nancial position.

2.3 Standards issued but not yet eff ective

The Group has not adopted the following standards and interpretations that have been issued but not yet eff ective:

Description

Eff ective for annual periods beginning on

or after

Amendments to FRS 27 Consolidated and Separate Financial Statements 1 July 2009Amendments to FRS 39 Financial Instruments: Recognition and Measurement – Eligible Hedged Item 1 July 2009Revised FRS 103 Business Combinations 1 July 2009Amendments to FRS 105 Non-current Assets Held for Sale and Discontinued Operations 1 July 2009INT FRS 117 Distributions of Non-cash Assets to Owners 1 July 2009Improvements to FRSs issued in 2009: – Amendments to FRS 38 Intangible Assets 1 July 2009– Amendments to FRS 102 Share-based Payment 1 July 2009– Amendments to FRS 108 Operating Segments 1 July 2009– Amendments to INT FRS 109 Reassessment of Embedded Derivatives 1 July 2009– Amendments to INT FRS 116 Hedges of a Net Investment in a Foreign Operation 1 July 2009– Amendments to FRS 1 Presentation of Financial Statements 1 January 2010– Amendments to FRS 7 Statement of Cash Flows 1 January 2010– Amendments to FRS 17 Leases 1 January 2010– Amendments to FRS 36 Impairment of Assets 1 January 2010– FRS 39 Financial Instruments: Recognition and Measurement 1 January 2010– Amendments to FRS 105 Non-current Assets Held for Sale and Discontinued Operations 1 January 2010– Amendments to FRS 108 Operating Segments 1 January 2010



72


2.3 Standards issued but not yet eff ective (cont’d)

Except for the revised FRS 103 and the amendments to FRS 27, the directors expect that the adoption of the other standards and interpretations above will have no material impact on the fi nancial statements in the period of initial application. The nature of the impending changes in accounting policy on adoption of the revised FRS 103 and the amendments to FRS 27 are described below.

Revised FRS 103 Business Combinations and Amendments to FRS 27 Consolidated and Separate Financial Statements

The revised standards are eff ective for annual periods beginning on or after 1 July 2009. The revised FRS 103 introduces a number of changes in the accounting for business combinations occurring after 1 July 2009. These changes will impact the amount of goodwill recognised, the reported results in the period that an acquisition occurs, and future reported results. The Amendments to FRS 27 require that a change in the ownership interest of a subsidiary (without loss of control) is accounted for as an equity transaction. Therefore, such transactions will no longer give rise to goodwill, nor will they give rise to a gain or loss. Furthermore, the amended standard changes the accounting for losses incurred by the subsidiary as well as the loss of control of a subsidiary. Other consequential amendments were made to FRS 7 Statement of Cash Flows, FRS 12 Income Taxes, FRS 21 The Eff ects of Changes in Foreign Exchange Rates, FRS 28 Investments in Associates and FRS 31 Interests in Joint Ventures. The changes from revised FRS 103 and Amendments to FRS 27 will aff ect future acquisitions or loss of control and transactions with minority interests. The standards may be early applied. However, the Group does not intend to early adopt.

2.4 Basis of consolidation

The consolidated fi nancial statements comprise the fi nancial statements of the Company and its subsidiaries as at the balance sheet date. The fi nancial statements of the subsidiaries used in the preparation of the consolidated fi nancial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied for like transactions and events in similar circumstances.

All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.

Acquisitions of subsidiaries are accounted for by applying the purchase method. Identifi able assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Adjustments to those fair values relating to previously held interests are treated as a revaluation and recognised in equity. Any excess of the cost of business combination over the Group’s share in the net fair value of the acquired subsidiary’s identifi able assets, liabilities and contingent liabilities is recorded as goodwill on the balance sheet. Any excess of the Group’s share in the net fair value of the acquired subsidiary’s identifi able assets, liabilities and contingent liabilities over the cost of business combination is recognised as income in the income statement on the date of acquisition.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

2.5 Foreign currency

Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

Annual Report 2009


73


2.5 Foreign currency (cont’d)

Exchange diff erences arising on the settlement of monetary items or on translating monetary items at the balance sheet date are recognised in the income statement except for exchange diff erences arising on monetary items that form part of the Group’s net investment in foreign subsidiaries, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassifi ed from equity to profi t or loss of the Group on disposal of the foreign operation.

The assets and liabilities of foreign operations are translated into SGD at the rate of exchange ruling at the balance sheet date and their statement of comprehensive income are translated at the average exchange rates for the year. The exchange diff erences arising on the translation are taken directly to other comprehensive income. On disposal of a foreign operation, the cumulative amount recognised in other comprehensive income relating to that particular foreign operation is recognised in the income statement.

2.6 Property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefi ts associated with the item will fl ow to the Group and the cost of the item can be measured reliably.

Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.

Depreciation of an asset begins when it is available for use and is computed on a straight-line basis over the estimated useful life of the asset as follows:

Leasehold factory building – 22 years (lease term)Leasehold improvement – 10 yearsOffi ce equipment – 5 to 10 yearsFurniture and fi ttings – 3 to 10 yearsMotor vehicles – 5 yearsComputers – 5 yearsRenovation – 2 to 5 yearsMachinery – 5 years

Construction-in-progress included in property, plant and equipment are not depreciated as these assets are not available for use.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

The residual value, useful life and depreciation method are reviewed at each fi nancial year-end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefi ts embodied in the items of property, plant and equipment.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefi ts are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in the income statement in the year the asset is derecognised.



74


2.7 Intangible asset

Club membership

Club membership acquired is measured on initial recognition at cost. Following initial recognition, club membership is carried at cost less any accumulated amortisation and any impairment losses. Club membership is amortised on a straight-line basis over its fi nite useful life of 21 years and assessed for impairment whenever there is an indication that the club membership is impaired. The amortisation period and the amortisation method for a club membership is reviewed at each fi nancial year-end. The amortisation expense on intangible assets is recognised in the income statement.

2.8 Impairment of non-fi nancial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, the Group makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash infl ows that are largely independent of those from other assets. In assessing value in use, the estimated future cash fl ows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that refl ects current market assessments of the time value of money and the risks specifi c to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount.

Impairment losses are recognised in the income statement except for assets that are previously revalued where the revaluation was taken to other comprehensive income.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in the income statement.

2.9 Subsidiaries

A subsidiary is an entity over which the Group has the power to govern the fi nancial and operating policies so as to obtain benefi ts from its activities.

In the Company’s separate fi nancial statements, investments in subsidiaries are accounted for at cost less impairment losses.

2.10 Associate

An associate is an entity, not being a subsidiary or a joint venture, in which the Group has signifi cant infl uence. The associate is equity accounted for from the date the Group obtains signifi cant infl uence until the date the Group ceases to have signifi cant infl uence over the associate.

Annual Report 2009


75


2.10 Associate (cont’d)

The Group’s investment in an associate is accounted for using the equity method. Under the equity method, the investment in an associate is measured in the balance sheet at cost plus post-acquisition changes in the Group’s share of net assets of the associate. Goodwill relating to the associate is included in the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the associate’s identifi able assets, liabilities and contingent liabilities over the cost of the investment is deducted from the carrying amount of the investment and is recognised as income as part of the Group’s share of results of the associate in the period in which the investment is acquired.

When the Group’s share of losses in the associate equals or exceeds its interest in the associate, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

The fi nancial statements of the associate are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

In the Company’s separate fi nancial statements, investment in an associate is accounted for at cost less impairment losses.

2.11 Financial assets

Financial assets are recognised on the balance sheet when, and only when, the Group becomes a party to the contractual provisions of the fi nancial instrument.

When fi nancial assets are recognised initially, they are measured at fair value, plus, in the case of fi nancial assets not at fair value through profi t or loss, directly attributable transaction costs.

A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On derecognition of a fi nancial asset in its entirety, the diff erence between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised directly in other comprehensive income is recognised in the income statement.

All regular way purchases and sales of fi nancial assets are recognised or derecognised on the trade date i.e. the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of fi nancial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned.

(i) Financial assets at fair value through profi t or loss

Financial assets held for trading are classifi ed as fi nancial assets at fair value through profi t or loss. Financial assets held for trading are derivatives (including separated embedded derivatives) or fi nancial assets acquired principally for the purpose of selling in the near term.

Subsequent to initial recognition, fi nancial assets at fair value through profi t or loss are measured at fair value. Any gains or losses arising from changes in fair value of the fi nancial assets are recognised in the income statement.

(ii) Loans and receivables

Financial assets with fi xed or determinable payments that are not quoted in an active market are classifi ed as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the eff ective interest method. Gains and losses are recognised in the income statement when the loans and receivables are derecognised or impaired, and through the amortisation process.



76


2.12 Impairment of fi nancial assets

The Group assesses at each balance sheet date whether there is any objective evidence that a fi nancial asset is impaired.

Assets carried at amortised cost

If there is objective evidence that an impairment loss on fi nancial assets carried at amortised cost has been incurred, the amount of the loss is measured as the diff erence between the asset’s carrying amount and the present value of estimated future cash fl ows discounted at the fi nancial asset’s original eff ective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The impairment loss is recognised in the income statement.

When the asset becomes uncollectible, the carrying amount of impaired fi nancial assets is reduced directly or if an amount was charged to the allowance account, the amounts charged to the allowance account are written off against the carrying value of the fi nancial asset.

To determine whether there is objective evidence that an impairment loss on fi nancial assets has been incurred, the Group considers factors such as the probability of insolvency or signifi cant fi nancial diffi culties of the debtor and default or signifi cant delay in payments.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in the income statement.

2.13 Cash and cash equivalents

Cash and cash equivalents comprise cash at banks and on hand and fi xed deposits that are readily convertible to known amounts of cash and which are subject to an insignifi cant risk of changes in value. These also include bank overdrafts that form an integral part of the Group’s cash management.

2.14 Construction contracts

Project 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, when the outcome of a construction contract can be estimated reliably. When the outcome of a construction contract cannot be estimated reliably, project revenue is recognised to the extent of contract costs incurred that are likely to be recoverable and contract costs are recognised as expense in the period in which they are incurred. An expected loss on the construction contract is recognised as an expense immediately when it is probable that total contract costs will exceed total contract revenue.

Project revenue comprises the initial amount of revenue agreed in the contract and variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue and they are capable of being reliably measured.

Revenue arising from fi xed price contracts is recognised in accordance with percentage of completion method. The stage of

completion is determined by reference to professional surveys of work performed.

Annual Report 2009


77


2.15 Inventories

Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing the inventories to its present location and conditions are accounted for as follows:

– Raw materials: purchase costs determined on a fi rst-in, fi rst-out basis;

– Finished goods and work-in-progress: costs of direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. The direct materials and labour costs are assigned on specifi c identifi cation basis and the overheads are assigned on allocation basis.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

2.16 Contract work-in-progress

Contract work-in-progress comprises costs incurred on incomplete projects plus recognised profi ts less losses and progress billings, and provision for foreseeable losses. Costs include cost of materials, direct labour and direct and indirect overheads incurred in connection with the contracts.

Expected loss on a contract is recognised as an expense as soon as it is known.

2.17 Investment securities

Investment securities are classifi ed as fi nancial assets at fair value through profi t or loss.

The accounting policy for the aforementioned category of fi nancial asset is stated in Note 2.11.

2.18 Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) where, as a result of a past event, it is probable that an outfl ow of economic resources will be required to settle the obligation and the amount of the obligation can be measured reliably.

Provisions are reviewed at each balance sheet date and adjusted to refl ect the current best estimate. If it is no longer probable that an outfl ow of economic resources will be required to settle the obligation, the provision is reversed. If the eff ect of the time value of money is material, provisions are discounted using a current pre tax rate that refl ects, where appropriate, the risks specifi c to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a fi nance cost.

2.19 Financial liabilities

Financial liabilities within the scope of FRS 39 are recognised on the balance sheet when, and only when, the Group becomes a party to the contractual provisions of the fi nancial instrument.

Financial liabilities are recognised initially at fair value, plus, in the case of fi nancial liabilities other than derivatives, directly attributable transaction costs.

Subsequent to initial recognition, all fi nancial liabilities (except for fi nancial guarantees) are measured at amortised cost using the eff ective interest method.



78


2.19 Financial liabilities (cont’d)

For fi nancial liabilities, gains and losses are recognised in income statement when the liabilities are derecognised, and through the amortisation process.

A fi nancial liability is derecognised when the obligation under the liability is extinguished. When an existing fi nancial liability is replaced by another from the same lender on substantially diff erent terms, or the terms of an existing liability are substantially modifi ed, such an exchange or modifi cation is treated as a derecognition of the original liability and the recognition of a new liability, and the diff erence in the respective carrying amounts is recognised in the income statement.

2.20 Financial guarantee

A fi nancial guarantee contract is a contract that requires the issuer to make specifi ed payments to reimburse the holder for a loss it incurs because a specifi ed debtor fails to make payment when due.

Financial guarantees are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequent to initial recognition, fi nancial guarantees are recognised as income in the income statement over the period of the guarantee. If it is probable that the liability will be higher than the amount initially recognised less amortisation, the liability is recorded at the higher amount with the diff erence charged to income statement.

2.21 Borrowing costs

Borrowing costs are recognised in the income statement as incurred except to the extent that they are capitalised.

Borrowing costs are capitalised a part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale.

2.22 Employee benefi ts

(i) Defi ned contribution plans

The Group participates in the national pension schemes as defi ned by the laws of the countries in which it has operations. In particular, the Company makes contributions to the Central Provident Fund (“CPF”) scheme in Singapore, a defi ned contribution pension scheme. The subsidiary in Malaysia makes contribution to the Employees Provident Fund (“EPF”). The subsidiary incorporated in the People’s Republic of China (“PRC”) is required to provide certain staff pension benefi ts to their employees under existing PRC regulations. Pension contributions are provided at rates stipulated by PRC regulations and are contributed to a pension fund managed by government agencies, which are responsible for administering these amounts for the subsidiary’s PRC employees.

Contributions to defi ned contribution schemes are recognised as an expense in the period in which the related service is performed.

(ii) Employee leave entitlement

Employee entitlements to annual leave are recognised as a liability when they accrue to employees. The estimated liability for leave is recognised for services rendered by employees up to balance sheet date.

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2.23 Leases

(i) As lessee

Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the fi nance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of liability. Finance charges are charged to the income statement.

Capitalised leased assets are depreciated over the estimated useful life of the asset.

Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term. The aggregate benefi t of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

(ii) As lessor

Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classifi ed as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income.

2.24 Revenue

Revenue is recognised to the extent that it is probable that the economic benefi ts will fl ow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable.

(i) Sale of goods

Revenue from sale of goods is recognised upon the transfer of signifi cant risk and rewards of ownership of the goods to the customer. Revenue is not recognised to the extent where there are signifi cant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

(ii) Project revenue

Revenue recognition from project revenue is set out in Note 2.14.

(iii) Interest income

Interest income is recognised using the eff ective interest method.



80


2.25 Income taxes

(i) Current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.

Current taxes are recognised in the income statement except to the extent that tax relates to items recognised outside the income statement, either in other comprehensive income or directly in equity.

(ii) Deferred tax

Deferred income tax is provided using the liability method on temporary diff erences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for fi nancial reporting purposes.

Deferred tax assets and liabilities are recognised for all taxable temporary diff erences, except:

Where the deferred tax arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, aff ects neither the accounting profi t nor taxable profi t or loss;

In respect of temporary diff erences associated with investments in subsidiaries, where the timing of the reversal of the temporary diff erences can be controlled by the Group and it is probable that the temporary diff erences will not reverse in the foreseeable future; and

In respect of deductible temporary diff erences and carry-forward of unused tax credits and unused tax losses, if it is not probable that taxable profi t will be available against which the deductible temporary diff erences and carry-forward of unused tax credits and unused tax losses can be utilised.

The carrying amount of deferred tax asset is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that suffi cient taxable profi t will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profi t will allow the deferred tax asset to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date.

Deferred income tax relating to items recognised outside the income statement is recognised outside the income statement. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.

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2.25 Income taxes (cont’d)

(iii) Sales tax

Revenue, expenses and assets are recognised net of the amount of sales tax except: Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority,

in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

Receivables and payables that are stated with the amount of sales tax included.

The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.

2.26 Segment reporting

For management purposes, the Group is organised into operating segments based on their products and services. Additional disclosures on each of those segments are shown in Note 28.

2.27 Share capital and share issue expenses

Proceeds from issuance of ordinary shares are recognised as share capital in equity. Incremental costs directly attributable to the issuance of ordinary shares are deducted against share capital.

2.28 Contingencies

A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confi rmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of the Group.

Contingent liabilities and assets are not recognised on the balance sheet of the Group.

3. Signifi cant accounting judgements and estimates

The preparation of the Group’s fi nancial statements requires management to make judgements, estimates and assumptions that aff ect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability aff ected in the future.



82

3. Signifi cant accounting judgements and estimates (cont’d)

3.1 Judgements made in applying accounting policies

In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimations, which has the most signifi cant eff ect on the amounts recognised in the fi nancial statements:

(i) Income taxes

The Group has exposure to income taxes in numerous jurisdictions. Signifi cant judgement is involved in determining the Group-wide provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the fi nal tax outcome of these matters is diff erent from the amounts that were initially recognised, such diff erences will impact the income tax and deferred tax provisions in the period in which such determination is made. The carrying amount of the Group’s net income tax payables, deferred tax assets and deferred tax liabilities at the balance sheet date was $3,456,000 (2008: $2,762,000), $35,000 (2008: $567,000) and $39,000 (2008: $Nil) respectively.

(ii) Determination of functional currency

The Group measures foreign currency transactions in the respective functional currencies of the Company and its subsidiaries. In determining the functional currencies of the entities in the Group, judgement is required to determine the currency that mainly infl uences sales prices for goods and services and of the country whose competitive forces and regulations mainly determines the sales prices of its goods and services. The functional currencies of the entities in the Group are determined based on management’s assessment of the economic environment in which the entities operate and the entities’ process of determining sales prices.

3.2 Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a signifi cant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next fi nancial year are discussed below.

(i) Useful lives of property, plant and equipment

The costs of property, plant and equipment are depreciated on a straight-line basis over the property, plant and equipment’s estimated economic useful lives. Management estimates the useful lives of these property, plant and equipment to be within 2 to 22 years. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore, future depreciation charges could be revised. The carrying amount of the Group’s property, plant and equipment at the balance sheet date is disclosed in Note 4 to the fi nancial statements.

(ii) Impairment of non-fi nancial assets

The Group assesses whether there are any indicators of impairment for all non-fi nancial assets at each reporting date. Non-fi nancial assets of the Group are tested for impairment when there are indicators that the carrying amounts may not be recoverable.

When value in use calculations are undertaken, management must estimate the expected future cash fl ows from the asset or cash-generating unit and choose a suitable discount rate in order to calculate the present value of those cash fl ows.

Annual Report 2009


83

3. Signifi cant accounting judgements and estimates (cont’d)

3.2 Key sources of estimation uncertainty (cont’d)

(iii) Impairment of loans and receivables

The Group assesses at each balance sheet date whether there is any objective evidence that a fi nancial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or signifi cant fi nancial diffi culties of the debtor and default or signifi cant delay in payments.

Where there is objective evidence of impairment, the amount and timing of future cash fl ows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s loans and receivables at the balance sheet date is disclosed in Note 10 to the fi nancial statements.

(iv) Stage of completion of construction contracts

The Group recognises project revenue by reference to the stage of completion of the contract activity at the balance sheet date, when the outcome of a construction contract can be estimated reliably. The stage of completion is determined by reference to professional surveys of work performed. Signifi cant assumptions are required to estimate the total contract costs and the recoverable variation works that will aff ect the stage of completion. The carrying amounts of assets and liabilities arising from construction contracts at the balance sheet date are disclosed in Note 9 to the fi nancial statements.

(v) Deferred tax assets

Deferred tax assets are recognised for all unused tax losses and reinvestment allowances (“RA”) to the extent that it is probable that taxable profi t will be available against which the losses or RA can be utilised. Signifi cant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profi ts together with future tax planning strategies.



84

4. Property, plant and equipment

Group

Leasehold factory

buildingLeasehold

improvementOffi ce

equipment

Furnitureand

fi ttingsMotor

vehicles Computers Renovation MachineryConstruction-

in-progress Total$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Cost:

Balance at 1.1.2008 5,680 67 302 677 1,388 615 729 11,671 121 21,250

Additions – – 34 38 337 67 50 746 302 1,574

Written off – – (148) (99) (14) (163) – (51) – (475)

Disposal – – – – – – – (6) – (6)

Reclassifi cations – – – – – – 423 – (423) –

Transferred to an associate – – (5) – – (35) – – – (40)

Translation diff erence – – 3 10 (8) 1 (42) 1 – (35)

Balance at 31.12.2008 and 1.1.2009 5,680 67 186 626 1,703 485 1,160 12,361 – 22,268

Additions – – 59 194 398 113 83 2,182 151 3,180

Written off – – – – – – (105) – – (105)

Disposal – – (23) (125) (243) (20) (266) (3) – (680)

Translation diff erence – – (3) (5) (7) (3) (13) – – (31)

Balance at 31.12.2009 5,680 67 219 690 1,851 575 859 14,540 151 24,632

Accumulated depreciation:

Balance at 1.1.2008 1,441 19 194 330 819 396 362 7,265 – 10,826

Depreciation charge for the year 259 7 33 81 192 73 177 1,820 – 2,642

Written off – – (137) (99) (14) (163) – (51) – (464)

Disposal – – – – – – – (5) – (5)

Transferred to an associate – – – – – (14) – – – (14)

Translation diff erence – – 1 7 (1) 1 (28) 1 – (19)

Balance at 31.12.2008 and 1.1.2009 1,700 26 91 319 996 293 511 9,030 – 12,966

Depreciation charge for the year 258 6 32 86 264 84 294 1,426 – 2,450

Written off – – – – – – (105) – – (105)

Disposal – – (5) (46) (178) (20) (265) (1) – (515)

Translation diff erence – – (1) (3) (1) (1) (3) – – (9)

Balance at 31.12.2009 1,958 32 117 356 1,081 356 432 10,455 – 14,787

Net book value:

As at 31.12.2009 3,722 35 102 334 770 219 427 4,085 151 9,845

As at 31.12.2008 3,980 41 95 307 707 192 649 3,331 – 9,302

Annual Report 2009


85

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

Company

Leasehold factory

buildingLeasehold

improvementOffi ce

equipment

Furnitureand

fi ttingsMotor

vehicles Computers Renovation MachineryConstruction-

in-progress Total$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Cost:Balance at 1.1.2008 5,680 67 210 453 1,255 468 563 1,238 – 9,934

Additions – – 6 – 164 25 – 14 – 209

Written off – – (148) (99) (14) (163) – (51) – (475)

Disposal – – – – – – – (6) – (6)

Transferred to an associate – – (4) – – (35) – – – (39)

Balance at 31.12.2008 and 1.1.2009 5,680 67 64 354 1,405 295 563 1,195 – 9,623

Additions – – 28 156 398 101 60 1,619 151 2,513

Written off – – – – – – (105) – – (105)

Disposal – – (3) (103) (243) (20) (266) – – (635)

Balance at 31.12.2009 5,680 67 89 407 1,560 376 252 2,814 151 11,396

Accumulated depreciation:Balance at 1.1.2008 1,441 19 156 228 781 342 343 1,076 – 4,386

Depreciation charge for the year 259 7 13 35 154 41 86 74 – 669

Written off – – (137) (99) (14) (163) – (51) – (464)

Disposal – – – – – – – (5) – (5)

Transferred to an associate – – – – – (14) – – – (14)

Balance at 31.12.2008 and 1.1.2009 1,700 26 32 164 921 206 429 1,094 – 4,572

Depreciation charge for the year 258 6 9 32 210 51 93 272 – 931

Written off – – – – – – (105) – – (105)

Disposal – – – (46) (178) (19) (240) – – (483)

Balance at 31.12.2009 1,958 32 41 150 953 238 177 1,366 – 4,915

Net book value:

As at 31.12.2009 3,722 35 48 257 607 138 75 1,448 151 6,481

As at 31.12.2008 3,980 41 32 190 484 89 134 101 – 5,051



86

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

Assets held under fi nance leases

The carrying amount of property, plant and equipment held under fi nance leases at the end of the year was as follows:

Group Company2009$’000

2008$’000

2009$’000

2008$’000

Net book value of

- machinery 267 482 – 75

- motor vehicles 151 526 123 480

418 1,008 123 555

Assets pledged as security

As at 31 December 2009, the leasehold factory building of the Company with a net book value of approximately $3,722,000 (2008: $3,980,000) is pledged to a bank as security for banking facilities granted (Note 14). The security was related to the overdraft, trade and term loan facilities provided by the bank. The bank loan was repaid in June 2009 and the mortgage over the Company leasehold factory building was removed in February 2010. Plant and machinery of a subsidiary with a net book value of $Nil (2008: $51,550) is pledged to a foreign licensed bank for loan facility granted to the subsidiary (Note 14).

Related party transactions

During the year, the Group transferred property, plant and equipment with net book value amounting to approximately $Nil (2008: $26,000) to its associate’s wholly-owned subsidiary.

5. Investment in subsidiaries

Company2009$’000

2008$’000

Unquoted shares, at cost 1,331 1,331Impairment losses (1,066) (259)

265 1,072

During the fi nancial year, impairment losses amounting to approximately $807,000 (2008: $259,000) was recognised for DS Interior Contracts & Renovation (Shanghai) Co., Ltd (2008: Design Studio Furniture (Shanghai) Co., Ltd.).

Annual Report 2009


87

5. Investment in subsidiaries (cont’d)

Details of the subsidiaries are as follows:

Name Principal activities

Country of incorporation and place of business

Proportion(%) of ownership

interest2009 2008

DS Furniture Manufacturer Sdn. Bhd. * Design, manufacture and trading of panel furniture products

Malaysia 100 100

Design Studio Furniture (Shanghai) Co., Ltd #

Manufacture and supply/ installation of panelling products

People’s Republic of China

100 100

DS Interior Contracts & Renovation (Shanghai) Co., Ltd #

Interior fi tting-out and structural work to residential, commercial and retail properties

People’s Republic of China

100 100

DSI (Middle East) Pte. Ltd. + Dormant Singapore 100 100

D S Interior Decoration (Middle East) LLC ##

Interior decoration works United Arab Emirates

49@ 49@

* Audited by Ernst & Young, Malaysia.

# Audited by Grant Thornton, Shanghai, Member of Grant Thornton International Ltd.

## Audited by Ernst & Young, Dubai, United Arab Emirates.

+ Not required to present audited fi nancial statements under the laws of its country of incorporation.

@ Although the Company holds 49% of the issued share capital in D S Interior Decoration (Middle East) LLC (“DS LLC”), DS LLC is accounted for as a 100%-owned subsidiary as the remaining 51% is held in trust by a nominee shareholder, who has assigned all the voting rights and benefi cial interests in DS LLC to the Company.



88

6. Investment in an associate


2008$’000

2009$’000

2008$’000

Investment in an associate, at cost 2,250 2,250 2,250 2,250Share of post-acquisition profi t/(loss) 3,646 (401) – –

5,896 1,849 2,250 2,250

Details of the associate are as follows:

Name Principal activities

Country of incorporation and place of business

Proportion(%) of ownership

interest2009 2008

Held through the Company:

DDS Asia Holdings Pte Ltd * Investment holding company Singapore 45 45

* Audited by Deloitte & Touche LLP, Singapore.

The summarised fi nancial information of the associate, not adjusted for the proportion of ownership interest held by the Group, is as follows:

Group2009$’000

2008$’000

Assets and liabilities:Total assets 51,998 7,860Total liabilities (38,896) (3,750)

Results:Revenue 103,183 3,675Profi t/(loss) for the year/period 8,992 (890)

Annual Report 2009


89

7. Club membership

Group and Company2009$’000

2008$’000

At cost 128 128Less: Accumulated amortisation and impairment (55) (49)

73 79

Amortisation expense

The amortisation of club membership is included in the “general and administrative expenses” line items in the income statement.

Movement in accumulated amortisation and impairment of club membership during the fi nancial year was as follows:


2008$’000

At beginning of year 49 43Amortisation during the year 6 6At end of year 55 49

8. Inventories


2008$’000

2009$’000

2008$’000

Balance sheet:Raw materials, at cost 6,127 7,323 2,170 927

Work-in-progress, at cost 763 3,161 108 2

6,890 10,484 2,278 929

The amount of inventories charged to the contract cost during the year was $20,138,000 (2008: $14,343,000). The contract cost was recognised as expense in cost of sales based on stage of completion of the contract activity at the balance sheet date.



90

9. Gross amount due from customers for contract work-in-progress


2008$’000

2009$’000

2008$’000

Aggregate amount of costs incurred and recognised profi ts (less recognised losses) to date 207,582 123,487 193,614 114,578Less: Progress billings (201,201) (120,125) (186,184) (110,476)Presented as:Gross amount due from customers for contract work 6,381 3,362 7,430 4,102Gross amount due to customers for contract work – – – –

6,381 3,362 7,430 4,102

10. Trade and other receivables


2008$’000

2009$’000

2008$’000

Trade receivables (current):Trade receivables 6,977 9,692 6,887 9,359Retention monies 7,011 6,054 6,759 5,829

13,988 15,746 13,646 15,188Less: Allowance for doubtful receivables (1) (55) (1) (45)

13,987 15,691 13,645 15,143

Corporate shareholders:Trade receivables 1,811 9,340 1,811 9,340Retention monies 6,132 1,707 6,132 1,707

7,943 11,047 7,943 11,047

Subsidiary:Trade receivables – – – 991

Associate:Trade receivables 9,878 – 9,878 –Retention monies 1,194 – 1,194 –

11,072 – 11,072 –

Annual Report 2009


91

10. Trade and other receivables (cont’d)


2008$’000

2009$’000

2008$’000

Other receivables (current):Other receivables 16 12 75 72Deposits 515 558 96 157

531 570 171 229Amounts due from subsidiaries (non-trade) – – 281 4,537

531 570 452 4,766

Other receivables (non-current):Amount due from a subsidiary (non-trade) – – 408 387Less: Allowance for doubtful receivables – – (408) (387)

– – – –

Loan to an associate (current) 1,350 – 1,350 –Total trade and other receivables (current and non-current) 33,533 27,308 33,112 31,947Cash and fi xed deposits (Note 12) 36,359 31,159 35,072 30,427Total loans and receivables 71,242 58,467 69,534 62,374

Trade receivables

Trade receivables including amounts due from corporate shareholders and an associate are non-interest bearing and are generally on 30 to 90 days’ terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition.

At the balance sheet date, trade receivables arising from export sales amounting to $1,017,000 (2008: $864,000) are arranged to be settled via letters of credits issued by reputable banks in countries where the customers are based.

Amounts due from subsidiaries (current)

The amounts due from subsidiaries are non-trade, unsecured, non-interest bearing and are repayable on demand.

Amount due from a subsidiary (non-current)

At the balance sheet date, the Company has provided an allowance of $408,000 (2008: $387,000) for impairment of net amount due from a subsidiary with a nominal amount of $408,000 (2008: $387,000). The subsidiary has been suff ering losses for the current and past few fi nancial years.

There is a charge of $21,000 for impairment loss for the fi nancial year ended 31 December 2009 (2008: $387,000).



92

10. Trade and other receivables (cont’d)

Loan to an associate

Loan to an associate is unsecured, non-interest bearing and is repayable on demand.

Receivables that are past due but not impaired

The Group and the Company have trade receivables including amounts due from corporate shareholders and an associate amounting to $4,257,000 (2008: $1,404,000) and $4,235,000 (2008: $1,301,000) respectively that are past due at the balance sheet date but not impaired. Trade receivables that are past due but not impaired at the balance sheet date includes a debtor that has provided the Company with a standby letter of credit amounting to $Nil (2008: US$250,000). The remaining trade receivables are unsecured. The analysis of their aging at the balance sheet date is as follows:


2008$’000

2009$’000

2008$’000

Trade receivables past due:61 to 90 days 2,895 433 2,895 36591 to 150 days 321 149 300 139More than 150 days 1,041 822 1,040 797

4,257 1,404 4,235 1,301

Receivables that are impaired

The Group’s trade receivables that are impaired at the balance sheet date and the movement of the allowance accounts used to record the impairment are as follows:

Group 2009$’000

2008$’000

Trade receivables - nominal amounts 1 55 Less: Allowance for impairment (1) (55)

– –

Movement in allowance accounts:At 1 January (55) –Charge for the year (1) (55)Written-off 55 –At 31 December (1) (55)

Trade receivables that are individually determined to be impaired at the balance sheet date relate to debtors that have defaulted on payments due to disputes on work done. These receivables are not secured by any collateral or credit enhancements.

Annual Report 2009


93

11. Investment securities


2008$’000

Current:Held for trading investments

Quoted equity shares – at fair value 4 4

12. Cash and fi xed deposits


2008$’000

2009$’000

2008$’000

Cash at banks and on hand 4,719 3,019 3,543 2,396

Fixed deposits (secured) 669 109 558 –Fixed deposits (unsecured) 30,971 28,031 30,971 28,031

31,640 28,140 31,529 28,031

Total cash and fi xed deposits 36,359 31,159 35,072 30,427

Cash at banks earn interest at fl oating rates based on daily bank deposit rates ranging from 0.05% to 0.36% (2008: 0.05% to 0.36%). Fixed deposits of the Group and the Company amounting to approximately $669,000 and $558,000 (2008: $109,000 and $Nil) respectively are pledged to banks as security for banking facilities granted. Fixed deposits of the Group and the Company bear interest ranging from 0.03% to 2.00% (2008: 0.06% to 3.71%) per annum respectively. These fi xed deposits mature within 12 months from the end of the fi nancial year.



94

13. Trade and other payables


2008$’000

2009$’000

2008$’000

Current:Trade payables 5,120 5,644 3,603 3,699Amounts due to subsidiaries – – 3,968 –Other payables 532 680 399 455

5,652 6,324 7,970 4,154

Non-current:Other payables 105 49 – –

Total trade and other payables 5,757 6,373 7,970 4,154Accrued operating expenses 19,925 16,032 18,026 13,943Deposits received 592 5,868 592 5,854Loans and borrowings (Note 14) 211 3,489 78 3,161Total fi nancial liabilities carried at amortised cost 26,485 31,762 26,666 27,112

Trade payables and other payables

Trade payables and other payables are non-interest bearing and are normally settled on 30 to 60 days’ terms.

Amounts due to subsidiaries

Amounts due to subsidiaries are unsecured, non-interest bearing and are repayable on demand.

Deposits received

Deposits received are non-interest bearing and are proportionately off set against the progress billings made to customers.

Annual Report 2009


95

14. Loans and borrowings

Group CompanyMaturity 2009 2008 2009 2008

$’000 $’000 $’000 $’000

Current:Obligations under fi nance leases – secured [Note 26 (ii)] 2010 132 242 17 65Long-term bank loan 2010 – 313 – 297Convertible notes (Note 15) 2010 50 – 50 –

182 555 67 362

Non-current:Obligations under fi nance leases – secured [Note 26 (ii)] 2011 - 2013 29 213 11 78Long-term bank loan 2010 – 2,671 – 2,671Convertible notes (Note 15) 2010 – 50 – 50

29 2,934 11 2,799

Total loans and borrowings 211 3,489 78 3,161

Long-term bank loans (secured)

Company (denominated in SGD)

The bank term loan of $Nil (2008: $2,968,000) is repayable in equal instalments commencing in 2002 over 15 years and interest is payable at 4.50% per annum for the fi rst and second years and thereafter, at the bank’s prime lending rate. As at 31 December 2009, this bank term loan has an eff ective interest rate of 5.00% (2008: 5.00%). The bank term loan is secured by the leasehold factory building of the Company as disclosed in Note 4.

The term loan was repaid in June 2009 and the mortgage over the Company’s leasehold factory building had been removed in February 2010.

A subsidiary (denominated in USD)

The bank term loan of $Nil (2008: $16,000) is repayable in equal instalments commencing in 2004 over 5 years and interest is payable at SIBOR plus 2.00% over the term loan amount. As at 31 December 2009, this bank term loan has an eff ective interest rate of 3.56% (2008: 3.69%). The bank term loan is secured by plant and machinery as disclosed in Note 4 and corporate guarantee from the Company.

The term loan has been fully repaid during the year and the charges has been discharged.



96

14. Loans and borrowings (cont’d)

Bills payable and bank overdrafts

Company (denominated in SGD)

Banking facilities are secured by a pledge of fi xed deposit of the Company amounting to approximately $558,000 (2008: $Nil).

A subsidiary (denominated in Malaysian Ringgit)

Banking facilities are secured by the following:

(i) a corporate guarantee by the Company;

(ii) pledge of a fi xed deposit of a subsidiary amounting to approximately $111,000 (2008: $109,000); and

(iii) debenture incorporating fi xed and fl oating charges up to $1,637,000 (2008: $1,656,000) over present and future assets of the subsidiary. The subsidiary is in the process of discharging the debenture.

15. Convertible notes

The outstanding convertible notes as at 31 December 2009 was $50,000. Assuming these notes were converted into new shares based on 90% of the average of the fi ve consecutive closing prices per share prior to 31 December 2009, the number of ordinary shares to be issued would be 97,982.

16. Share capital

Group and Company2009 2008

No. ofshares

No. ofshares

‘000 $’000 ‘000 $’000

Issued and fully paid:

At 1 January and 31 December 255,126 30,111 255,126 30,111

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

Annual Report 2009


97

17. Reserves


2008$’000

2009$’000

2008$’000

Revenue reserves 41,194 21,557 28,258 16,974Translation reserves (14) (56) – –

41,180 21,501 28,258 16,974

The translation reserves represent exchange diff erences arising from the translation of the fi nancial statements of foreign operations whose functional currencies are diff erent from that of the Group’s presentation currency.

18. Revenue

Revenue represents project revenue and invoiced sales, net of returns and discounts and less goods and services tax. Intra-group transactions have been excluded from Group revenue. It comprises:

Group2009$’000

2008$’000

Project revenue 109,099 72,336Sale of goods 4,836 2,020

113,935 74,356

19. Personnel expenses

Group2009$’000

2008$’000

Wages, salaries and bonuses 17,223 12,052Pension contributions 917 775Other personnel expenses 293 312

18,433 13,139Less:Directors’ remuneration (3,024) (1,896)

15,409 11,243

Personnel expenses are classifi ed as part of cost of sales, marketing and distribution expenses or general and administrative expenses, as appropriate.



98

20. Other income

Group2009$’000

2008$’000

Sundry income 4 –Grant income from jobs credit scheme 260 –

During the fi nancial year ended 31 December 2009, the Singapore Finance Minister announced the introduction of a Jobs Credit Scheme (the “Scheme”). Under this Scheme, the Group received a 12% cash grant on the fi rst $2,500 of each month’s wages for each employee on their Central Provident Fund payroll. The Scheme is for one year and the Group received its grant income of $260,000 (2008: $Nil) in four receipts in March, June, September and December 2009.

21. Profi t from operations

This is determined after charging/(crediting) the following:

Group2009$’000

2008$’000

Non-audit fees paid to- auditors of the Company 13 8Depreciation of property, plant and equipment 2,450 2,642Directors’ fees 180 201Directors’ remuneration (Note 19)- directors of the Company 2,855 1,729- other directors 169 167Foreign exchange loss, net 1,272 309Loss on disposal of property, plant and equipment 90 10Operating lease expenses 1,852 1,279Personnel expenses (Note 19) 15,409 11,243Amortisation of club membership 6 6Fair value loss on held for trading investment securities – 1Fair value gain on structured fi xed deposits – (38)Impairment loss on doubtful receivables 1 55

Annual Report 2009


99

22. Finance expenses and fi nance income

Group2009$’000

2008$’000

Finance expenses:- Bank overdrafts – 1- Bank term loans 59 161- Bills payable and discounting 12 28- Finance leases 30 78- Convertible notes 1 1- Bankers’ guarantee and commitment fee 5 5

107 274

Finance income:- Fixed deposits (70) (237)

23. Tax expense

Group2009$’000

2008$’000

Current tax:Singapore- current year 3,484 2,855- under provision in respect of prior year 37 27Foreign- current year 492 42- under provision in respect of prior year 3 3

Deferred tax:Singapore- current year 206 (17)- eff ect of reduction in tax rate 9 –Foreign- benefi ts from previously unrecognised allowances – (361) - original and reversal of temporary diff erences 319 (77)- under provision in respect of prior year 34 –- eff ect of reduction in tax rate – 4

4,584 2,476



100

23. Tax expense (cont’d)

The corporate income tax rate applicable to the Singapore companies of the Group was reduced to 17% for the year of assessment 2010 onwards from 18% for year of assessment 2009. The corporate income tax rate applicable to the Malaysian company of the Group was reduced from 27% to 26% and 25% for the year of assessment 2009 and the year of assessment 2010 respectively.

The reconciliation between the tax expense and the product of accounting profi t multiplied by the applicable tax rate is as follows:

Group2009$’000

2008$’000

Profi t before tax 29,961 15,258

Tax at the domestic rates applicable to profi ts in the countries where the Group operates 4,700 2,884Tax eff ect of non-deductible expenses 235 106Income not subject to taxation (44) (7)Eff ect of reduction in tax rate 9 4Tax exemption (26) (27)Deduction on tax incentives (1) (23)Total under provision in respect of prior year - current tax 40 30Total over provision of deferred taxation in respect of prior year - unutilised capital allowances and tax losses 34 –Utilisation of reinvestment allowance (363) (491)

4,584 2,476

Deferred tax balances as at 31 December relate to the following:


2008$’000

2009$’000

2008$’000

Deferred tax assets (net)

Diff erences in depreciation 1 168 168Unrealised foreign exchange 31 – – –Other general provisions 3 8 – 8Utilisation of reinvestment allowances – 391 – –

35 567 – 176

Deferred tax liabilities (net)

Diff erences in depreciation 47 – 47 – Other general provisions (8) – (8) –

39 – 39 –

Annual Report 2009


101

23. Tax expense (cont’d)

Reinvestment allowance (“RA”) is a tax incentive granted to manufacturing companies in Malaysia which have been in operation for at least 12 months and have incurred qualifying capital expenditure for the expansion of production capacity, modernisation and upgrading of production facilities, and diversifi cation into related products.

RA is calculated based on 60% of capital expenditure incurred by the Company’s subsidiary in Malaysia. RA can be utilised to off set against 70% of the statutory income of the Company’s subsidiary in Malaysia in the relevant year of assessment.

As at 31 December 2009, the Company’s subsidiary in Malaysia had unabsorbed reinvestment allowances amounting to approximately $Nil (2008: $1,325,000) to off set future taxable profi ts subject to the agreement with the tax authorities in Malaysia.

24. Earnings per share

Basic earnings per share is calculated by dividing the net profi t for the year by the weighted average number of ordinary shares outstanding during the fi nancial year.

Diluted earnings per share is calculated by dividing the net profi t for the year by the weighted average number of ordinary shares outstanding during the fi nancial year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

The following table refl ects the income and share data used in the computation of basic and diluted earnings per share for the years ended 31 December:

Group2009$’000

2008$’000

Profi t net of tax 25,377 12,782

No. ofshares

No. of shares

‘000 ‘000

Weighted average number of ordinary shares for basic earnings per share 255,126 255,126Eff ects of dilution:- Convertible notes 98 97Weighted average number of ordinary shares for diluted earnings per share computation 255,224 255,223



102

25. Related party disclosures

(i) Sale and purchase of goods and services

In addition to those related party information disclosed elsewhere in the fi nancial statements, the following signifi cant transactions between the Group and related parties took place at terms agreed between the parties during the fi nancial year.

The Group had the following signifi cant related party transactions on terms agreed by the respective parties:

Group2009$’000

2008$’000

Expenses:Sale of fi nished goods to an associate 15,618 200Purchase of services from fi rms related to directors 103 130

(ii) Compensation of key management personnel

Short-term employee benefi ts 4,802 3,704Central Provident Fund contributions 91 105

4,893 3,809

Comprise amounts paid to:

Directors of the Company 3,035 1,929Other key management personnel 1,858 1,880

4,893 3,809

Annual Report 2009


103

26. Commitments

(i) Operating lease commitments – As lessee

The Group and Company had various operating lease agreements for leasehold land, equipment, offi ce and other facilities that are non-cancellable within one year. These lease terms have an average tenure of between three to six years with no renewal option or contingent rent provision included in the contracts. Lease terms do not contain restrictions on the Group’s activities concerning dividends, additional debt or further leasing.

Future minimum lease payments payable under non-cancellable operating leases as at 31 December are as follows:


2008$’000

2009$’000

2008$’000

Not later than one year 1,366 1,136 451 93Later than one year but not later than fi ve years 992 2,147 393 279Later than fi ve years 957 974 957 974

3,315 4,257 1,801 1,346

(ii) Finance lease commitments

Lease terms, ranging from one to seven years, do not contain restrictions concerning dividends, additional debt or further leasing. These leases have no terms of renewal, purchase options and escalation clauses.

The fi nance lease liabilities of the Group and Company bear interest ranging from 2.65% to 4.25% and 2.65% (2008: 2.50% to 7.86% and 2.50% to 4.00%) per annum respectively.

The fi nance lease liabilities of the subsidiary amounting to approximately $123,000 (2008: $285,000) are secured by a corporate guarantee from the Company.



104

26. Commitments (cont’d)

(ii) Finance lease commitments (cont’d)

Future minimum lease payments under fi nance leases together with the present value of the net minimum lease payments are as follows:

Minimum lease

payments

Presentvalue of

payments

Minimum lease

payments

Present value of

payments2009$’000

2009$’000

2008$’000

2008$’000

Group

Not later than one year 138 132 266 242Later than one year but not later than fi ve years 31 29 228 213Total minimum lease payments 169 161 494 455Less: Amounts representing fi nance charges (8) – (39) –Present value of minimum lease payments 161 161 455 455

Company

Not later than one year 18 17 73 65Later than one year but not later than fi ve years 12 11 87 78Total minimum lease payments 30 28 160 143Less: Amounts representing fi nance charges (2) – (17) –Present value of minimum lease payments 28 28 143 143

iii) Capital commitments

Capital expenditure contracted for as at the balance sheet date but not recognised in the fi nancial statements are as follows:

Group Company

2009$’000

2008$’000

2009$’000

2008$’000

Capital commitments in respect of property, plant and equipment 1,308 – – –

Annual Report 2009


105

27. Contingencies

Contingent liabilities

Guarantees

The Company had provided guarantee to a main contractor for the performance of a contract by its associate’s wholly-owned subsidiary. The Company’s exposure if the associate’s wholly-owned subsidiary is unable to deliver its obligation under the contract would be the Company’s share of approximately $45,583,000 (2008: $40,220,000).

As at 31 December 2009, the Company had provided corporate guarantees of approximately $29,485,000 (2008: $21,707,000) in favour of banks and fi nancial institutions for the granting of credit facilities and hire purchase fi nancing to a subsidiary and an associate.

Financial support

The Group and Company has undertaken to provide fi nancial support to a subsidiary for its defi ciency in its shareholders’ funds and to extend adequate funding to meeting its net current liability position for the years ended 31 December 2009 and 2008.

Lawsuit against our Group

On 12 March 2009, the Company’s subsidiary in Dubai was served a Judicial Summons and a Statement of Claim (together, the “Summons”) from the Dubai Courts of First Instance, UAE. This Summons relates to a claim by Talal Saeed Ghazi (the “Claimant”) whereby the Claimant is claiming against the Company a sum of AED 300,000,000 (S$114,750,000) for alleged breach of contractual obligations, or alternatively, as compensation for obligations that the Claimant had fulfi lled pursuant to projects that the Claimant had allegedly undertaken with the Company.

On 22 March 2009, the court has ordered the Claimant to serve the Summons through diplomatic channels as the Company does not have an offi ce in the UAE. The Company has not been served as yet in this matter as of 10 March 2010. The next date of hearing is fi xed on 25 April 2010.

The Company has been advised by its legal counsel that the alleged claim against the Company is without substance.

28. Segment information

For management purposes, the Group is organised into business units based on their products and services, and has three reportable operating segments as follows:

Business segments

The residential property projects segment is involved in the manufacture, supply and installation of panelling products such as kitchen and vanity cabinets, wardrobes, doors and doorframes and furniture components for local and overseas market.

The hospitality and commercial (previously known as interior fi tting-out) projects segment is in the business of providing interior fi tting-out services on a turnkey basis and structural works for hospitality, commercial and retail properties such as hotels, resorts, offi ce, shops and bank branches.



106

28. Segment information (cont’d)

The distribution projects segment relates to the distributorship of furniture products of reputable overseas brand.

No operating segments have been aggregated to form the above reportable operating segments.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profi t or loss which in certain respects, as explained in the table below, is measured diff erently from operating profi t or loss in the consolidated fi nancial statements.

Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.

Residential property projects

Hospitalityand

commercial projects

Distributionprojects

Adjustments and

eliminations Notes Consolidated$’000 $’000 $’000 $’000 $’000

2009

Revenue:External customers 57,136 51,963 4,836 – 113,935Inter-segment 26,928 12,116 95 (39,139) A –Total revenue 84,064 64,079 4,931 (39,139) 113,935

Results:Share of result of an associate – 4,047 – – 4,047Other non-cash expenses – (1) – (2,456) B (2,457)Segment profi t before tax 13,167 18,509 554 (2,269) C 29,961

Assets:Investment in an associate – 5,896 – – 5,896Additions to non-current assets – – – 3,029 D 3,029Segment assets 18,333 26,339 2,065 54,562 E 101,299

Segment liabilities 11,112 7,088 1,069 10,739 F 30,008

Annual Report 2009


107


Residential property projects

Hospitalityand

commercial projects

Distributionprojects

Adjustments and

eliminations Notes Consolidated$’000 $’000 $’000 $’000 $’000

2008

Revenue:External customers 46,128 26,208 2,020 – 74,356Inter-segment 11,853 7,403 36 (19,292) A –Total revenue 57,981 33,611 2,056 (19,292) 74,356

Results:Share of result of an associate – (401) – – (401)Other non-cash expenses – – – (2,648) B (2,648)Segment profi t before tax 11,926 5,439 618 (2,725) C 15,258

Assets:Investment in an associate – 1,849 – – 1,849Additions to non-current assets – 2,250 – 1,574 D 3,824Segment assets 17,277 14,128 547 54,277 E 86,229

Segment liabilities 14,947 8,441 307 10,922 F 34,617

A Inter-segment revenue are eliminated on consolidation.

B Other non-cash expenses consist of depreciation expenses, impairment of fi nancial assets and amortisation of club membership.



108


C The following items are added to/(deducted from) segment profi t to arrive at “profi t before tax” presented in the consolidated statement.

Group2009$’000

2008$’000

Other income 265 –Finance expenses (107) (274)Finance income 70 237Depreciation of property, plant and equipment (2,450) (2,642)Unallocated corporate expenses (47) (46)

(2,269) (2,725)

D Additions to non-current assets consist of additions to property, plant and equipment and investment in an associate.

E The following items are added to/(deducted from) segment assets to arrive at total assets presented in the consolidated balance sheet.

Property, plant and equipment 9,845 9,302Club membership 73 79Deferred tax assets 35 567Cash and fi xed deposits 36,359 31,159Unallocated stocks 6,782 10,481Investment securities 4 4Tax recoverable 28 93Other receivables, deposits and prepayments 1,436 2,592

54,562 54,277 F The following items are added to/(deducted from) segment liabilities to arrive at total liabilities presented in the

consolidated balance sheet.

Unallocated other payables 489 254Unallocated accrued operating expenses 6,628 4,323Lease obligations 49 456Provision for tax 3,484 2,855Convertible notes 50 50Deferred tax liabilities 39 –Long term bank loans – 2,984

10,739 10,922

Annual Report 2009


109


Geographical information

Revenue by geographical markets are as follows:

Group2009$’000

2008$’000

Singapore 54,681 43,865Malaysia 361 2,565United Arab Emirates 57,994 20,757Others 899 7,169

113,935 74,356

Carrying amount of non-current assets by geographical markets are as follows:

Singapore 6,554 5,130Malaysia 2,749 3,370People’s Republic of China 76 154United Arab Emirates 539 727

9,918 9,381

Information about a major customer

Revenue from a major customer amounted to $66,778,000 (2008: $12,308,000) arising from sales by the residential property and hospitality and commercial projects.

29. Financial risk management objectives and policies

The Group and the Company is exposed to fi nancial risks arising from its operations. The key fi nancial risks include credit risk, liquidity risk, foreign currency risk and interest rate risk. The Board reviews and agrees policies for managing of these risks and they are summarised as follows:

(i) Credit risk

The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables. For other fi nancial assets including investment securities and cash and cash equivalents, the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.

The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. In addition, receivable balances are monitored on an ongoing basis to minimise the Group’s exposure to bad debts. For transactions that do not occur in the country of the relevant operating unit, the payment terms are usually by letter of credits or advance payment before shipment.



110

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

(i) Credit risk (cont’d)

Exposure to credit risk

At the balance sheet date, the Group’s and the Company’s maximum exposure to credit risk is represented by

- the carrying amount of each class of fi nancial assets recognised in the balance sheets; and

- a nominal amount of $29,485,000 (2008: $21,707,000) relating to a corporate guarantee provided by the Company in favour of banks and fi nancial institutions for the granting of credit facilities and hire purchase fi nancing to a subsidiary and associate’s wholly-owned subsidiary.

Information regarding credit enhancements for trade and other receivables is disclosed in Note 10.

Credit risk concentration profi le

Concentration of credit risk with respect to trade receivables is limited to the entities comprising the Group’s customer base in Singapore. The credit risk concentration profi le of the Group’s trade receivables including amounts due from corporate shareholders and an associate at the balance sheet date is as follows:

2009 2008$’000 % of total $’000 % of total

Group

By country:Singapore 23,747 71.96% 11,925 44.60%Malaysia 342 1.04% 344 1.29%United Arab Emirates 8,623 26.12% 14,143 52.89%People’s Republic of China – – 4 0.01%USA 14 0.04% 277 1.04%Thailand 276 0.84% 45 0.17%

33,002 100.00% 26,738 100.00%

At the balance sheet date, approximately:

- 74.06% (2008: 63.57%) of the Group’s trade receivables were due from 5 major customers who are property conglomerates located in Singapore.

- 57.62% (2008: 41.32%) of the Group’s trade and other receivables were due from related parties.

Annual Report 2009


111


(i) Credit risk (cont’d)

Financial assets that are neither past due nor impaired

Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment record with the Group. Cash and cash equivalents and investment securities that are neither past due nor impaired are placed with or entered into with reputable fi nancial institutions or companies with high credit ratings and no history of default.

Financial assets that are either past due or impaired

Information regarding fi nancial assets that are either past due or impaired is disclosed in Note 10 (Trade and other receivables).

(ii) Liquidity risk

The Group’s and the Company’s exposure to liquidity risk arises in the general funding of the Group’s and the Company’s business activities. The Group’s and the Company’s objective is to maintain a balance between continuity of funding and fl exibility through diverse sources of committed and uncommitted credit facilities from various banks.

The table below summarises the maturity profi le of the Group’s and the Company’s fi nancial liabilities at the balance sheet date based on contractual undiscounted payments.

2009 20081 yearor less

1 to 5years

Over 5years Total

1 yearor less

1 to 5years

Over 5years Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Group

Trade payables 5,120 – – 5,120 5,644 – – 5,644Other payables 532 105 – 637 680 49 – 729Accrued operating expenses 19,925 – – 19,925 16,032 – – 16,032Deposits received 592 – – 592 5,868 – – 5,868Loans and borrowings 182 29 – 211 555 1,595 1,339 3,489

26,351 134 – 26,485 28,779 1,644 1,339 31,762

Company

Trade payables 7,571 – – 7,571 3,699 – – 3,699Other payables 399 – – 399 455 – – 455Accrued operating expenses 18,026 – – 18,026 13,943 – – 13,943Deposits received 592 – – 592 5,854 – – 5,854Loans and borrowings 67 11 – 78 362 1,460 1,339 3,161

26,655 11 – 26,666 24,313 1,460 1,339 27,112



112


(iii) Foreign currency risk

The Group has transactional currency exposures arising from sales or purchases that are denominated in a currency other than the respective functional currencies of Group entities, primarily US Dollars (USD) and Malaysian Ringgit (Ringgit). The Group uses foreign currency forward exchange contracts to manage these foreign exchange risks. As at year-end, the Group has no outstanding foreign currency forward exchange contracts.

Foreign currency denominated fi nancial assets and liabilities of the Group and Company are shown in the following table:


2008$’000

2009$’000

2008$’000

Trade and other receivables (including trade receivables from corporate shareholders):USD 8,911 14,223 8,911 18,123Ringgit 650 657 – –UAE Dirhams 91 287 324 705

Cash and fi xed deposits:USD 105 1,702 104 1,658Ringgit 638 406 – –RMB 109 23 – –UAE Dirhams 539 259 – –

Trade and other payables (including accrued operating expenses):USD 345 1,209 344 1,208Ringgit 1,970 2,023 12 10Euro 986 513 986 513UAE Dirhams 1,109 920 – –Francs 37 – 37 –

Loans and borrowings:USD – 16 – –Ringgit 130 293 – –UAE Dirhams 3 19 – –

Sensitivity analysis for foreign exchange risk

The following table demonstrates the sensitivity of the Group’s profi t net of tax to a reasonably possible change in the USD and Ringgit exchange rates against the respective functional currencies of the Group entities, with all other variables held constant.

Annual Report 2009


113


(iii) Foreign currency risk (cont’d)

Group2009 2008

Profi t net of tax Profi t net of tax$’000 $’000

USD/SGD - strengthened 5% (2008: 5%) 457 735 - weakened 5% (2008: 5%) (457) (735)

Ringgit/SGD - strengthened 5% (2008: 5%) 167 63 - weakened 5% (2008: 5%) (167) (63)

(iv) Interest rate risk

The Group’s exposure to interest rates relates primarily to interest-earning fi nancial assets and interest-earning fi nancial liabilities. Interest rate risk is managed by the Group on an ongoing basis with the primary objective of limiting the extent to which net interest expense could be aff ected by an adverse movement in interest rates.

The Group obtains additional fi nancing through bank borrowings and fi nance lease arrangements. The following table sets out the carrying amount, by maturity, of the Group’s and the Company’s fi nancial instruments that are exposed to interest rate risk.

The table below demonstrates the sensitivity to a reasonably possible change in interest rates with all other variables held constant, of the Group’s profi t net of tax (through the impact on interest income and expense on fl oating rate fi xed deposits and loans and borrowings).

GroupIncrease/ decrease

in basis pointsEff ect on profi t net

of tax$’000 $’000

2009- Singapore dollar +15 (47)- Singapore dollar -10 32

2008- Singapore dollar +15 (38)- Singapore dollar -10 25



114


(iv) Interest rate risk (cont’d)

Within 1 year

1-2 years

2-3 years

3-4 years

4-5 years

More than 5 years Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000

2009

Group

Fixed rate

Obligations under fi nance leases 132 29 – – – – 161Convertible notes 50 – – – – – 50

Floating rate

Fixed deposits 31,640 – – – – – 31,640

2008

Group

Fixed rate

Obligations under fi nance leases 242 160 50 3 – – 455Convertible notes – 50 – – – – 50

Floating rateFixed deposits 28,140 – – – – – 28,140Bank loans 313 309 324 341 358 1,339 2,984

Annual Report 2009


115


(iv) Interest rate risk (cont’d)

Within 1 year

1-2 years

2-3 years

3-4 years

4-5 years

More than 5 years Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000

2009

Company

Fixed rate

Obligations under fi nance leases 17 11 – – – – 28Convertible notes 50 – – – – – 50

Floating rate

Fixed deposits 31,529 – – – – – 31,529

2008

Company

Fixed rate

Obligations under fi nance leases 65 43 35 – – – 143Convertible notes – 50 – – – – 50

Floating rate

Fixed deposits 28,031 – – – – – 28,031Bank loans 297 309 324 341 358 1,339 2,968



116

30. Fair value of fi nancial instruments

Fair value is defi ned as the amount at which the fi nancial instrument could be exchanged or settled between knowledgeable and willing parties in an arm’s length transaction, other than in a forced or liquidation sale. Fair values are obtained from quoted market prices, discounted cash fl ow models and option pricing models as appropriate.

The following methods and assumptions are used to estimate the fair value of each class of fi nancial instrument:

Bank balances, other liquid funds and short-term receivables

The carrying amount approximates fair value due to the relatively short-term maturity of these instruments.

Quoted investments

The fair values of quoted investments are estimated based on quoted market prices for these investments.

Short-term borrowings and other current liabilities

The carrying amount approximates fair value because of the short period to maturity of these instruments.

Finance lease liabilities

These fi nancial instruments approximate the fair values as they bear interests which approximate the prevailing market interest rates.

31. Capital management

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 December 2009 and 31 December 2008.

Annual Report 2009


117

31. Capital management (cont’d)

The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group’s policy is to keep the gearing ratio below 30% in view of strong cash position. The Group includes within net debt, trade and other payables, accrued operating expenses, deposits received, loans and borrowings, less cash and cash equivalents. Capital includes equity attributable to the equity holders of the Company.


2008$’000

2009$’000

2008$’000

Trade payables (Note 13) 5,120 5,644 7,571 3,699Other payables (current) (Note 13) 532 680 399 455Accrued operating expenses (Note 13) 19,925 16,032 18,026 13,943Deposits received (Note 13) 592 5,868 592 5,854Other payables (non-current) (Note 13) 105 49 – –Loans and borrowings (Note 14) 211 3,489 78 3,161

Less:Cash at banks and on hand (Note 12) (4,719) (3,019) (3,543) (2,396)Fixed deposits (unsecured) (Note 12) (30,971) (28,031) (30,971) (28,031)Net (cash)/debt (9,205) 712 (7,848) (3,315)

Equity attributable to the equity holders of the Company 71,291 51,612 58,369 47,085

Total capital 71,291 51,612 58,369 47,085

Capital and net debt 62,086 52,324 50,521 43,770

Gearing ratio N.M. 1% N.M. N.M.

N.M.: Not meaningful



118

32. Dividends


2008$’000

Declared and paid during the fi nancial year: Dividends on ordinary shares: • Final exempt (one-tier) dividend for 2008: 1.00 cents (2007: 1.00 cents) per share 2,551 2,551 • Interim exempt (one-tier) dividend for 2009: 1.25 cents (2008: Nil cents) per share 3,189 –

5,740 2,551

Proposed but not recognised as liability as at 31 December: Dividends on ordinary shares, subject to shareholders’ approval at the AGM: • Final exempt (one-tier) dividend for 2009: 1.25 cents (2008: 1.00 cents) per share 3,189 2,551

33. Comparative fi gures

The following comparative fi gures have been reclassifi ed to better refl ect the nature of the balances and to be consistent with the current year’s classifi cation:

As previously reported As restatedGroup$’000

Company$’000

Group$’000

Company$’000

Balance sheet:Accrued operating expenses 16,081 13,943 16,032 13,943Other payables (non-current) – – 49 –

34. Subsequent event

On 3 February 2010, the convertible notes holder has exercised its right to convert the convertible note with an aggregate principal value of $50,000 into shares. The conversion price was $0.5175 and a total of 96,618 shares have been issued. The total number of issued and fully paid up ordinary shares after the conversion is 255,222,505.

Subsequent to year-end, additional banking facilities of the Company were secured by pledges of fi xed deposits of the

Company amounting to approximately $2,065,000.

35. Authorisation of fi nancial statements

The fi nancial statements for the year ended 31 December 2009 were authorised for issue in accordance with a directors’ resolution dated 10 March 2010.

Annual Report 2009

SUPPLEMENTARY INFORMATION31 December 2009

119

1. Aggregate value of all interested person transactions conducted under shareholders’ mandate

Name of interested person

Aggregate value of all interested persons transactions during the review

(excluding transactions less than $100,000 and transactions conducted

under shareholders’ mandate pursuant to Rule 920)

Aggregate value of all interested person transactions conducted under

shareholders’ mandate pursuant to Rule 920 (excluding transactions less than

$100,000)

S C Wong Holdings Pte. Ltd.& its associates S$Nil S$526,533

Depa Interior LLC & its associates S$Nil S$22,783,192

2. Material contracts

There were no material contracts of the Group involving the interests of the executive directors or controlling shareholders subsisting at the end of the fi nancial year ended 31 December 2009.

3. Major property

Location Description Tenure of landNet book value

S$’000

Held by the Company8 Sungei Kadut Crescent,Singapore 728682

Offi ce-cum factory 30 years commencing1 June 1994 3,722

4. Use of proceeds from convertible notes

S$ (million)

Convertible notes proceed (net) 11.95

Less:

Arrangement fee 0.42

Investment in associate – DDS Asia Holdings Pte Ltd 2.25

Loan to an associate – DDS Asia Holdings Pte Ltd 1.35

Balance carried forward 7.93

The balance of proceeds raised was placed as fi xed deposits with the banks.


STATISTICS OF SHAREHOLDERSAS AT 9 MARCH 2010

120

Issued and fully paid up capital: S$30,366,000Class of Shares: Ordinary Shares with equal voting rights

Distribution of shareholdings

Size Of Shareholdings No. Of Shareholders % No. Of Shares %

1 - 999 3 0.33 1,236 0.001,000 - 10,000 413 45.43 2,785,059 1.0910,001 - 1,000,000 472 51.93 39,806,821 15.601,000,001 and above 21 2.31 212,629,389 83.31

TOTAL : 909 100.00 255,222,505 100.00

Twenty largest shareholders

No. Name No. Of Shares %

1. Depa Interiors LLC 63,064,000 24.712. S C Wong Holdings Pte. Ltd. 40,975,000 16.053. Citibank Nominees Singapore Pte Ltd 15,718,000 6.164. Lim Leng Foo 14,750,000 5.785. Kim Eng Securities Pte. Ltd. 14,569,000 5.716. Edward Ho Kai Hon 10,050,000 3.947. Wong Swee Chun 8,538,000 3.358. Ng Keng Teong 6,812,000 2.679. United Overseas Bank Nominees Pte Ltd 6,036,000 2.36

10. Royal Bank of Canada (Asia) Ltd 5,939,000 2.3311. Raffl es Nominees (Pte) Ltd 5,790,000 2.2712. Soon Chiew Yong 4,000,000 1.5713. Hong Leong Finance Nominees Pte Ltd 3,001,000 1.1814. DB Nominees (S) Pte Ltd 2,492,000 0.9815. Pang Heng Kwee 2,353,000 0.9216. JIHE Development Pte Ltd 2,068,000 0.8117. DBSN Services Pte Ltd 1,665,389 0.6518. Lee Sze Hao 1,468,000 0.5819. UOB Kay Hian Pte Ltd 1,174,000 0.4620. Chew Jen Kiat 1,100,000 0.43 TOTAL : 211,562,389 82.91

Annual Report 2009

STATISTICS OF SHAREHOLDERSAS AT 9 MARCH 2010

121

Substantial Shareholders’ Interests in the Company’s Shares

The Shareholdings of the Substantial Shareholders as recorded in the Register of Substantial Shareholder as at 9 March 2010:

Substantial ShareholderDirect Interest Deemed Interest

No of shares % No of shares %

Depa Interiors LLCS C Wong Holdings Pte. Ltd. Bernard Lim Leng Foo Wong Chee Herng (1)

Wong Swee Chun (2)

Wong Swee Chun Contractor Pte Ltd (3)

Prudential Asset Management (Singapore) Ltd

63,064,000 40,975,00014,750,000

–8,538,000

–13,278,000

24.71 16.05 5.78

– 3.35

– 5.20

–––

40,975,00040,975,00040,975,000

–

–––

16.0516.0516.05

–

Notes

(1) Mr Wong Chee Herng is deemed to have an interest in the 40,975,000 shares held by S C Wong Holdings Pte. Ltd. (previously known as Straits Construction Company (Private) Limited). He is a director and shareholder of S C Wong Holdings Pte. Ltd. [with 4.09% interest in S C Wong Holdings Pte. Ltd.]. He sits on the board of the Company as a nominee of S C Wong Holdings Pte. Ltd., representing S C Wong Holdings Pte. Ltd.’s interest in the Company.

(2) Mr Wong Swee Chun is deemed to have an interest in the 40,975,000 shares held by S C Wong Holdings Pte. Ltd.

(3) Wong Swee Chun Contractor Pte Ltd is deemed to have an interest in the 40,975,000 shares held by S C Wong Holdings Pte. Ltd.

Shareholdings in hands of public

The percentage of shareholdings in the hand of public was approximately 44.91% as at 9 March 2010 and hence the Company has complied with Rule 723 of the SGX-ST Listing Manual.


NOTICE OF ANNUAL GENERAL MEETING

122

NOTICE IS HEREBY GIVEN that the Annual General Meeting of DESIGN STUDIO FURNITURE MANUFACTURER LTD (the “Company”) will be held at the registered offi ce, No. 8 Sungei Kadut Crescent, Singapore 728682 on Thursday, 22 April 2010 at 10.30 a.m. for the following purposes:

As Ordinary Business:

1. To receive and adopt the Directors’ Report and Financial Statements of the Company for the year ended 31 December 2009 and the Auditors’ Report thereon. [Resolution No. 1]

2. To re-elect the following directors who are retiring under the Company’s Articles of Association:

Rotation under the Article 104:

i) Wong Chee Herng [Resolution No. 2]

ii) Elin Wong Hong Keow [Resolution No. 3]

iii) Ong Tiew Siam [Resolution No. 4]

3. To approve the payment of directors’ fees of $230,000 for the year ending 31 December 2010, to be paid quarterly in arrears. (2009: $180,000) [Resolution No. 5]

4. To approve the payment of a fi nal one-tier dividend of 1.25 cents per ordinary share for the year ended 31 December 2009.

[Resolution No. 6]

5. To appoint auditors and to authorize the directors to fi x their remuneration. [Resolution No. 7]

As Special Business:To consider and, if thought fi t, to pass the following resolutions as Ordinary Resolutions:

6. That pursuant to Section 161 of the Companies Act, Cap 50 and the Listing Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST”) authority be and is hereby given to the Directors to:

(A) (i) issue shares in the capital of the Company (“shares”) whether by way of rights, bonus or otherwise; and/or

(ii) make or grant off ers, 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 fi t; 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,

Annual Report 2009


123

provided that:

(a) 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):

(i) by way of renounceable rights issues on a pro rata basis to shareholders of the Company (“Renounceable Rights Issues”) shall not exceed 100 per cent. of the total number of issued shares in the capital of the Company excluding treasury shares (as calculated in paragraph (c) below); and

(ii) otherwise than by way of Renounceable Rights Issues (“Other Share Issues”) shall not exceed 50 per cent. of the total number of issued shares in the capital of the Company excluding treasury shares (as calculated in accordance with paragraph (c) below), of which the aggregate number of shares to be issued other than on a pro rata basis to shareholders of the Company shall not exceed 20 per cent. of the total number of issued shares in the capital of the Company excluding treasury shares (as calculated in accordance with paragraph (c) below);

(b) the Renounceable Rights Issues and Other Share Issues shall not, in aggregate, exceed 100 per cent. of the total number of issued shares in the capital of the Company excluding treasury shares (as calculated in accordance with paragraph (c) below);

(c) (subject to such manner of calculation as may be prescribed by the SGX-ST) for the purpose of determining the aggregate number of shares that may be issued under paragraphs (a)(i) and (a)(ii) above, the percentage of issued shares shall be based on the total number of issued shares in the capital of the Company excluding treasury shares at the time this Resolution is passed, after adjusting for:

(i) new share arising from the conversion or exercise of any convertible securities or share options which are outstanding or subsisting at the time this Resolution is passed; and

(ii) any subsequent bonus issue or consolidation or subdivision of shares; and

(d) 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

(e) (unless revoked or varied by the Company in 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. [Resolution No. 8]

7. THAT:

(a) approval be and is hereby given for the Company, its subsidiaries and associated companies or any of them to enter into transactions falling within the categories of Interested Person Transactions set out in paragraph 3.2 of the Company’s Addendum to Shareholders dated 7 April 2010 (being an addendum to the Annual Report of the Company for the fi nancial year ended 31 December 2009) (the “Addendum”), with any party who is of the class or classes of Interested Persons described in paragraph 3.1 of the Addendum, provided that such transactions are made on normal commercial terms in accordance with the guidelines and procedures for Interested Person Transactions as set out in paragraph 4 of the Addendum (the “Shareholders’ Mandate”);



124

(b) the Shareholders’ Mandate shall, unless revoked or varied by the Company in general meeting, continue in force until the conclusion of the next Annual General Meeting of the Company; and

(c) the directors of the Company be and each of them be hereby authorised to complete and do all such acts and things (including executing all such documents as may be required) as they or he may consider expedient or necessary or in the interests of the Company to give eff ect to the Shareholders’ Mandate and/or this Resolution. [Resolution No. 9]

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

By Order of the Board

Eliza Lim Bee LianCompany Secretary

7 April 2010

Note:A member entitled to attend and vote at this meeting is entitled to appoint a proxy or proxies to attend and vote instead of him. A proxy need not be a member of the company. The instrument appointing a proxy must be deposited at the Company’s Registered Offi ce at No. 8 Sungei Kadut Crescent, Singapore 728682, not less than 48 hours before the time for holding of the meeting.

Explanatory Notes on Ordinary Business to be transacted:

a) Mr Wong Chee Herng is a Non-Executive Director and member of the Audit Committees. If re-elected, he will remain as member of the Audit Committee. b) Ms Elin Wong Hong Keow is an Executive Director.

c) Mr Ong Tiew Siam is an Independent Director, Chairman of the Nominating Committee and member of the Remuneration and Audit Committee. If re-elected, he will remain as the Chairman of the Nominating Committee and member of the Remuneration and Audit Committees.

d) The proposed directors’ fees of $230,000 for the year ending 31 December 2010 are fees payable to non-Executive Directors. Ordinary Resolution No. 5 proposed in item 3 above, if passed, will allow the Company to pay fees to directors on a quarterly basis, in arrears, as directors render their services during the course of the fi nancial year ending 31 December 2010. This will facilitate directors’ compensation for services rendered in a more timely manner.

e) The Audit Committee has recommended the re-appointment of Ernst & Young LLP as Auditors.

Explanatory Notes on Special Business to be transacted:

f ) Resolution No. 8 is to empower the Directors to issue shares in the capital of the Company and to make or grant instruments (such as warrants or debentures) convertible into shares, and to issue shares in pursuance of such instruments, up to a number not exceeding (i) 100% for Renounceable Rights Issues and (ii) 50% for Other Share Issues, of which up to 20% may be issued other than on a pro rata basis to shareholders, provided that the total number of shares which may be issued pursuant to (i) and (ii) shall not exceed 100% of the issued shares (excluding treasury shares) in the capital of the Company. For the purpose of determining the aggregate number of shares that may be issued, 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 that Resolution No. 8 is passed, after adjusting for (a) 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 that Resolution No. 8 is passed, and (b) any subsequent bonus issue or consolidation or subdivision of shares.

The authority for 100% Renounceable Rights Issues is proposed pursuant to the SGX news release of 19 February 2009 which introduced further measures to accelerate and facilitate listed issuers’ fund raising eff orts.

g) Resolution No. 9 if passed, will allow the Company, its subsidiaries and associated companies or any of them to enter into certain interested person transactions with persons who are considered “Interested Persons” and will empower the directors of the Company from the date of this meeting until the next Annual General Meeting of the Company to do all acts necessary to give eff ect to the Shareholders’ Mandate or the Ordinary Resolution.

Information relating to the renewal of the Shareholders’ Mandate can be found in the Addendum to this Notice.

DESIGN STUDIO FURNITURE MANUFACTURER LTD

PROXY FORM

Important:1. For investors who have used their CPF monies to buy Design Studio Furniture Manufacturer Ltd’s shares, the Annual Report is forwarded to them at the request of their

CPF Approved nominee and is sent solely for information only.2. This Proxy Form is not valid for use by CPF Investors and shall be ineff ective for all intents and purposes if used or purported to be used by them.

I/We (Name) of (Address) being a member/members of Design Studio Furniture Manufacturer Ltd (the “Company”) hereby appoint:

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

and/or (delete as appropriate)

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

as my/our proxy/proxies to attend and to vote for me/us on my/our behalf, and, if necessary, to demand a poll, at the Annual General Meeting of the Company to be held No. 8 Sungei Kadut Crescent, Singapore 728682 on Thursday, 22 April 2010 at 10.30 a.m. and at any adjournment thereof.

I/We have indicated with an “X” in the appropriate box against such item how I/we wish my/our proxy/proxies to vote. If no specifi c direction as to voting is given, my/our proxy/proxies may vote or abstain as he/they may think fi t, as he/they will on any other matter arising at the Annual General Meeting.

Resolutions relating to: For Against

1. Adoption of Reports and Financial Statements for year ended 31 December 2009

2. Re-election of Mr Wong Chee Herng as a director

3 Re-election of Ms Elin Wong Hong Keow as a director

4 Re-election of Mr Ong Tiew Siam as a director

5. Payment of directors’ fees, quarterly in arrears, for year ending 31 December 2010

6. To approve the Final Dividend for year ended 31 December 2009

7. Re-appointment of Ernst & Young LLP as Auditors

8. Authority to Issue Shares pursuant to Section 161 of the Companies Act, Cap. 50

9. Renewal of Shareholders’ Mandate for Interested Person Transactions

Signed this day of April 2010

Signature(s) of Shareholder(s) or Common Seal of Corporate Shareholder

Important: Please read notes overleaf

Total Number of Shares Held in:

CDP Register

Register of Members

To: The Company SecretaryDESIGN STUDIO FURNITURE MANUFACTURER LTD

No. 8 Sungei Kadut Crescent, Singapore 728682

Fold along dotted line

Fold along dotted line

NOTES :a. Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register (as defi ned in Section 130A

of the Companies Act, Chapter 50 of Singapore), you should insert that number of Shares. If you have Shares entered against you name in the Register of Members, you should insert that number of Shares. If you have Shares entered against your name in the Depository Register and Shares registered in your name in the Register of Members, you should insert the aggregate number of Shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, this instrument of proxy will be deemed to relate to all the Shares held by you.

b. A member entitled to attend and vote at the Annual General Meeting is entitled to appoint no more than two proxies to attend and vote on his behalf and such proxy need not be a member of the Company. Where a member appoints two proxies, the appointment shall be deemed to be alternative unless he specifi es the proportion of his shareholding (expressed as a percentage of the whole) to be represented by each proxy.

c. A member of the Company, which is a corporation, is entitled to appoint its authorised representative or proxy by resolution of its directors or other governing body such person as it thinks fi t to vote on its behalf.

d. The instrument appointing a proxy or proxies must be deposited at the registered offi ce of the Company at No. 8 Sungei Kadut Crescent, Singapore 728682 not less than 48 hours before the time appointed for the Annual General Meeting.

e. The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specifi ed in the instrument appointing a proxy or proxies.

f. In the case of members whose Shares are deposited with The Central Depository (Pte) Limited (“CDP”), the Company shall be entitled to reject any instrument appointing a proxy or proxies lodged if such members are not shown to have Shares entered against their names in the Depository Register as at forty-eight (48) hours before the time appointed for holding the Annual General Meeting as certifi ed by the CDP to the Company.

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

h. 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 certifi ed 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.

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Head Office/Showroom/Factory8 Sungei Kadut Crescent Singapore 728682 Tel: (65) 6367 0133 Fax: (65) 6366 [email protected]@designstudio.com.sg

Malaysia FactoryPLO 44 Kawasan Perindustrian Senai 81400 Senai Johor Bahru Malaysia

China Office/Showroom630 Xie Tu Road Shanghai China 200023 Tel: (8621) 6303 1383 Fax: (8621) 5301 [email protected]

Dubai Office/ShowroomShed 31 Plot 368-443 Al Quoz Industrial 3 P.O.Box 212896 Dubai U.A.E.Tel: +971 4 3419953 Fax: +971 4 [email protected]

Thailand ShowroomEuro Creations Thonglor Gallery119 Sukhumvit 55 North Klong Ton Wattana Bangkok 10110 ThailandTel: (662) 712 9555 Fax: (662) 712 8033

PANELZ USA Showroom20 West 22nd Street Suite 908 NY 10010 Tel: (212) 627 0060 Fax: (212) 627 7650

www.designstudio.com.sg

A Premier Furniture Manufacturer, Product & Interior Fitting-Out Specialist

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