Gallant Ar2006

TOTAL SOLUTIONS TOTAL VALUE
Annual Report 2006
Total Solutions. Total Value. In everything we do, we pride ourselves on our ability to deliver total, integrated solutions to our customers. Whether in our Utilities business, our Industrial Parks business, our Resort Operations business, or our Property Development business, our ability to create value stems from this integrated approach to delivering solutions.
Contents
1 10 12 14 16 18 19 20 About Gallant Venture Letter to Shareholders 2006 in Review Board of Directors Key Management Our Strong Foundation Gallant Venture Ltd. and Its Subsidiaries Corporate Information
*Gallant Venture Share Price since listing 6 June - 31 December 2006
SINGAPORE
Bintan Resorts
BATAM
Batamindo Industrial Park Bintan Industrial Estate
BINTAN
With more than a decade of excellence in property development in Batam and Bintan, Gallant Venture Ltd. is recognized as the leading large scale developer in the Riau Archipelago. By converting vast tracts of land into industrial parks and recreational resorts, we have transformed the region into the sophisticated international commercial focal point it is now. Since our establishment in the early 1990s, we have been an important innovator in four key business segments: utilities, industrial parks, resort operations and property development, and has helped catalyze the growth of the Riau Archipelago from a sleepy population of less than 200,000 to the bustling 1,200,000 people today.
Gallant Venture
Our utilities business develops and delivers power, water, telecommunications and waste management services to an international standard to our clients in the Riau Islands, and was instrumental in bringing new foreign direct investment into the Riau Archipelago. Our state-of-the-art industrial parks create a first world environment for manufacturing businesses to take advantage of Indonesias lower cost base while still benefiting from Singapores world class infrastructure, ports, and financial and other supporting services. Our resort operations business delivers a suite of services required for potential partners in the industrial parks or property development business to start up quickly and painlessly on a turn key basis. We also currently carry over 320,000 passengers a year on our ferries, and house over 60,000 workers in our dormitories. Our property development business is centered on Bintan Resorts, a destination with world class beaches and best in class golfing facilities. Bintan Resorts draws tourists from all over Asia, and increasingly, from around the world. With major hotel operators confirming new facilities hotel projects, we believe that Bintan Resorts will soon take its place high on the list of resort destinations.
Utilities
Focusing on the delivery of power, clean water, telecommunications and waste management services to our facilities in the Batamindo Industrial Park, Bintan Industrial Estate and Bintan Resorts, our integrated Utilities business segment is essentially responsible in powering Gallant Ventures diverse endeavors. Historically generating a large portion of our revenues and free cash flow, these significant investments in power plants, potable water treatment facilities, water reservoirs, sewerage systems, and waste water treatment plants, are all properly conditioned and managed to accommodate the complex needs of our varied tenant base and allow for seamless operations in our properties while protecting the regions natural environment.
Industrial Parks
Corporations handling large-scale operations, most especially the ones in the multinational manufacturing industries, have distinct infrastructural and logistical needs that our highly functional industrial parks-the Batamindo Industrial Park in Batam and the Bintan Industrial Estate in Bintan-can respond to. Aside from providing ready-built factories that can be modified according to our investors unique operational requirements, we also provide other logistical services such as warehousing, unit distribution, relocation facilities, and easy access to key ports in Singapore for transport to markets worldwide. We provide complete residential, recreational and commercial amenities for our tenant business communities, with their personal welfare and professional growth at the top priority. Multinational enterprises can find a secure home and a trusted partner in Gallant Venture.
Resort Operations
A perfect recreational attraction for tourists and nature aficionados, Bintan Resorts is a world-class assortment of boutique resorts and designer golf courses nestled on a 100-kilometer white sandy shoreline only 45 km from Singapore. All our resort enthusiasts are treated to a comfortable experience, as we offer facilities and services such as transportation, accommodation and a wide-ranging selection of travel packages to suit their various preferences. In addition, Bintan Resorts is home to internationally acclaimed resorts and hotels-including global brands Club Med and Banyan Tree-where we provide auxiliary amenities to ensure convenience and safety for visitors and investors. At Bintan Resorts, living the good life has never been more pleasurable.
Property Development
Sale of lands and integrated master planning of properties has always been one of our strengths. Our Property Development arm, through which we focus on developing our lands and transforming them into world-class industrial parks and luxurious tropical resorts, is geared towards accelerating our growth and advancing the regions land development in a world class form. In Bintan, where we are developing approximately 19,700 hectares of land, holistic planning has been crafted to turn it into an international commercial hub. It is only a matter of time before Lagoi Bay, an ideal location for niche developments and upscale vacation spots, becomes the unsurpassed destination of choice for business and leisure in this side of the world. By improving our infrastructure and support facilities, strengthening our investor relations, marketing our properties and servicing the communities we have successfully developed, we translate the regions promise of progress into a thriving reality.
LETTER TO SHAREHOLDERS
Highlights of our 2006, included our corporate restructuring, re-launch of our property development business, and our successful listing on the Singapore Exchange.
My fellow shareholders, 2006 was an eventful year for our company. In April, we completed our restructuring exercise, bringing our shareholders and our 16 different companies together under the umbrella of Gallant Venture. We were lucky enough to constitute an impressive Board of Directors and Board of Advisors who successfully led us to our admission to the Singapore Exchanges SESDAQ in June. Post restructuring, we began the reorganization of our company along four major lines of business, namely Utilities, Industrial Parks, Resort Operations, and Property Development. All of our business segments made excellent progress during the course of the year.
The results of our Utilities business showed improvement in 2006 as a consequence of an approximately $50-million investment program we started in the 4th quarter of 2005 to convert a significant portion of our electricity generation to use natural gas. Today, we produce almost 80% of our billable electrical power using natural gas for which we have a fixed price contract, thus allowing us to sell a significant portion of our power without being affected by global energy prices. Our Industrial Parks business produced steady results in a competitive environment, with the bulk of our tenants satisfied with our ability to provide high quality infrastructure in a lower cost setting in close proximity to Singapore and its extremely efficient port facilities. While we faced increasing competition from other low cost environments such as Vietnam and China, we were able to leverage on our superior infrastructure to retain and attract tenants. In 2006 our Resort Operations business carried over 320,000 visitors to Bintan via our ferries. Our services also benefited from the multi-million dollar refurbishment of the Tanah Merah Ferry Terminal in Singapore. In 2007, we look forward to finalizing our
Left to Right: Mr Eugene Park Mr Lim Hock San
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Gallant Venture Ltd.
Annual Report 2006
orders for our new generation ferries which we hope will shorten the travel time from Singapore to Bintan to around 35 minutes. Our Property Development business gained traction in 2006, with the signing of a number of contracts, including the two larger contracts previously announced which has now been branded as the exciting $1 billion Bintan Treasure Bay Development, as well as two smaller contracts at $75 per square meter which represents a significant premium to our carrying cost. These sales represent revenues of just under $36 million, and will be complemented with the launch of our 1,500-hectare Lagoi Bay Development in the first half of 2007. There has been increasing attention on our businesses as a result of the new Special Economic Zone (SEZ) initiatives by the Indonesian and Singaporean governments. The framework was laid out in mid-2006 during a signing ceremony witnessed by the President of Indonesia Susilo Bambang Yudhoyono and Singapore Prime Minister Lee Hsien Loong. We are hoping to see the final details of this bilateral agreement soon. In connection with the SEZ, we had high profile visits from leaders such as Indonesian President Susilo Bambang Yudhoyono, Indonesian Vice President Jusuf Kalla, Singapore Minister Mentor Lee Kuan Yew, Singapore Senior Minister Goh Chok Tong, and many other ministers from both Indonesia and Singapore. With majority of our operations located adjacent to relatively low income areas, we believe that we must share our success with the local community. Our community development efforts continue to provide over 1,000 scholarships and bursary awards every year to students in the Bintan and Batam community. We are also proud that one of the students we sponsored to attend the SHATEC (Singapore Hotel and Tourism Education Center) was awarded the top prize. We have continued providing medical outpatient treatments to more than 600 local villagers during the course of
our regular sponsored doctor visits, in addition to the annual contributions of gifts and building programs to the local schools and religious institutions. I know that many of you have yet to visit Bintan. As it forms one of the important parts of our Companys future, I encourage you to visit the island, and see the quality of the land we own and the types of developments we are working on. To make it easier for you to do this, we enclose a travel voucher in this Annual Report to Shareholders, which can be exchanged for a round trip off-peak Singapore-Bintan ferry ticket for each registered shareholder. We are confident that our businesses are strong and will continue to develop in the next years. We thank all of you for your continued support.
Mr Lim Hock San

Non-Executive Chairman Independent Director
Mr Eugene Park
Executive Director Chief Executive Officer
Total Solutions. Total Value.
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2006 IN REVIEW
Growth and sharper focus on business fundamentals were the key themes in Gallant Ventures performance in 2006. Despite operating in an increasingly competitive business environment, we set our sights on deeper market penetration and took advantage of opportunities which resulted in continued expansion of our business segments.
Revenue Contribution by Division

(in S$million)
19.9 16.2
Basic and diluted EPS during this period were 1.20 cents and 2.06 cents if based on weighted number of shares in issue. Our NTA per share as at end of FY2006 was 51.05 cents. The total capital expenditure for the year amounted to S$20.8 million, due mainly to the conversion of dieselfired power plant to dual gas-diesel-fired power plant in the Batamindo Industrial Park. Due to our April restructuring exercise leading up to our listing in June, we are reporting numbers this year for the 8 months ending 31 December 2006.
99.6 40.9
Utilities Industrial Park Resort Operation Property Developments
S$
176.6
of Revenue
Concerted Operations, Sterling Results
million
Across all our business segments, the overarching strategy of offering clients quality services clearly differentiated us from competitors and accounted for our remarkable performance in 2006. Utilities The division reported a turnover of S$99.6 million for FY2006, contributing a before-interest-and-tax earnings of S$16.7 million. The fuel hike in Indonesiacaused by escalating global fuel prices and the governments removal of fuel subsidiestranslated to higher power generation costs that consequently increased electricity tariffs for our tenants. To reduce power generation costs, PT BIC carried out Fuel Conversion Programs in 2006, which involved conversion of 12 diesel engines to gas-fired and installation of 3 new gas-fired generators. The division also undertook the conversion of 6 light fuel generators to heavy fuel operations, construction of an incinerator for disposal of heavy fuel oil, and reduction of electricity tariffs to tenants. Industrial Parks A revenue of S$40.9 million was recorded for FY2006, accounting for a before-tax-and-interest profit of S$8.6 million. Collectively, our industrial parks in Batam and Bintan registered 86% take-up rates. In Batamindo
Financial Review
For the 8 months ended 31 December in 2006, our Groups turnover grew to S$176.6 million, owing to the good performance of our four business segments. Our Utilities division generated the highest revenue at S$99.6 million while Property Development accounted for S$19.9 million of our total revenue due to partial recognition of a valuable land sale. Our Industrial Park division and Resort Operations contributed S$40.9 million and S$16.2 million respectively. We recorded a gross margin of S$61.7 million, representing a 34.9% growth in overall margin for 2006. Backed by a high margin contribution from our Property Development division, we registered a net after-tax profit of S$29.8 million or a net profit margin of 16.9%. As at 31 December 2006, the book value of our assets amounted to S$1.5 billion while borrowings totaled to S$151.1 million - a testimony to our strong and stable financial disposition.
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Annual Report 2006
Outlook
Industrial Park, available factory inventory stood at 74,000 square meters. In Bintan Industrial Estate, it stood at 15,632 square meters. Due to an oversupply of factory space in Batam, the division had to contend with rental pressure. Improvement of our park services and constant customer dialogues, however, ensured tenant loyalty. The rate of signings for factory rentals still outnumbered the reductions, most especially during December when our Group saw new signings in Batamindo by 4 large multinational tenants. Resort Operations The segment currently supports 4 resorts and 9 hotels in Bintan, housing approximately 1,350 rooms and registered a net earnings before-interest-and-tax loss of S$6.7 million on a turnover of S$16.2 million. Bintan Resorts accommodated a total of 323,610 visitors during 2006. FY2006 saw a 12.3% increase in visitor influx compared to 2005, attributable to a fastgrowing Asian market. Singapore alone comprises the largest single market for Bintan Resorts with a 30.7% visitors share. The Indonesian and Korean arrivals headcount also rose 37.1% and 18.3% respectively. Furthermore, we saw emergent markets from China, India and Russia. Property Development In 2006 our Property Development arm signed contracts worth S$35.9 million (S$16 million of which will be recognized in FY2007) compared to 2005 revenues of nil. Before recognizing the interest and tax for FY2006, the divisions earnings for FY2006 amounted to S$17.5 million. We expect our Utilities operations to remain stable and have generally organic growth along with our other businesses. Major initiatives include exploring investment in alternative power generating solutions to reduce electricity tariff to our customers in Bintan, where our power plants do not have the benefit of access to natural gas supply. The Batam-Bintan-Karimun Special Economic Zone (SEZ) established by the Indonesian and Singaporean governments to promote investment activity in the region, will bring additional prospects to our Industrial Parks business in the coming years. To complement the business opportunities presented by this economic cooperation, we will market our industrial parks to more diverse industries. In our Resort Operations, we expect a stronger 2007 performance as global and regional tourist trends continue upward. In addition, we have a strong pipeline of world class events scheduled for Bintan Resorts such as the Motorola Bintan Asian PGA Tour event and the Aviva Triathlon which should add significant numbers to our visitor arrivals. The 2007 focus for our Property Development business is the 1,500 hectare Lagoi Beach Village project. Phase One will be launched in 1st half 2007, and will include the beach village, a number of large hotel sites, and a significant amount of beachfront residential land for sale on the beautiful 5km long Lagoi Bay. 2007 looks to be an exciting year for our Company as we build on our existing strengths and grow in new areas. As we look forward to greater growth for our Group, we will ensure to only deliver best results to our shareholders and quality service to our customers.
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BOARD OF DIRECTORS
From Left to Right: Ms Low Sin Leng, Mr Gianto Gunara, Mr Eugene Cho Park, Mr Rivaie Rachman, Mr Lim Hock San, Mr Foo Ko Hing, BG (Ret) Chin Chow Yoon
Mr Lim Hock San

Non-Executive Chairman and Independent Director Mr Lim is presently the President and Chief Executive Officer of United Industrial Corporation Limited as well as Singapore Land Limited. He is the Independent Director of Indofood Agri Resources Ltd. He has a Bachelor of Accountancy from the then University of Singapore and a Master of Science (Management) from Massachusetts Institute of Technology. Mr Lim also attended the Advanced Management Program at Harvard Business School. He is a fellow of The Chartered Institute of Management Accountants (UK) and a Fellow and past President of the Institute of Certified Public Accountants of Singapore. He is also a recipient of the Singapore Government Meritorious Service Medal, the Public Administration Medal (Gold) and the Public Service Medal.
Mr Eugene Cho Park

Executive Director and Chief Executive Officer Responsible for the overall management of Gallant, Mr Park is a co-founder of Parallax Capital Management Group. He has also spent more than 15 years as an investment banker with Credit Suisse First Boston in London, Chase Manhattan Asia Ltd in Hong Kong and Banque Paribas in Singapore.
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Annual Report 2006
Mr Gianto Gunara
Executive Director Mr Gunara is currently, Director of Business Operations at Island Leisure International Pte. Ltd. and Vice-President Director of PT Batamindo Executive Village. He also holds directorship in Nirwana Pte. Ltd., PT Bintan Resort Cakrawala, Bintan Resort Ferries Pte. Ltd., PT Ria Bintan, PT Straits CM Village, PT Bintan Inti Industrial Estate, Bintan Resort Development Corporation Pte. Ltd. and BRF Holidays Pte. Ltd. Mr Gunara has over 22 years of industry experience having worked with Haagtechno BV - Den Bosch in Holland, Hagemeyer NV, PT Indomarco Nusatrada, Indomarco International and Kangaroo Industries in Los Angeles as well as PT Indoleather Swakarsa.
Ms Low Sin Leng

Non-Executive Director Ms Low is the Senior Executive Director of SembCorp Industries and concurrently the Executive Chairman of SembCorp Parks Holdings, Deputy Chairman of SembCorp Utilities. She is responsible for spear heading SembCorps industrial parks businesses in China, Indonesia and Vietnam and has been the Vice-President Director of both PT BIC and PT BIIE since 2003. Prior to joining SembCorp, she was the Executive Vice President of Singapore Power and had served 20 years in the Singapore Government Administrative Service holding several senior positions in the Ministries of Finance, Trade & Industry and Education. A President Scholar, she holds an MBA (High Distinction) from the Catholic University of Leuven, Belgium, a B Eng (Distinction) from the University of Alberta, Canada and attended Harvard Universitys Advanced Management Program.
BG (Ret) Chin Chow Yoon

Non-Executive Director BG (Ret) Chin is the Vice-President Director of PT BRC, Chairman of Bintan Resort Ferries Pte. Ltd., President of Bintan Resort Development Corporation Pte. Ltd. and Executive Chairman of Island Leisure International Pte. Ltd. He is also an Executive Director of Singapore Discovery Centre Ltd. BG (Ret) Chin has served as a director on the boards of Chartered Firearms Industries Private Limited from 1994 to 1996, Singapore Commuter Private Limited from 1991 to 1993, Vickers Capital Limited from 1984 to 1990. He was also the Chairman of Singapore Pools (Private) Limited from 2002 to 2004.
Mr Rivaie Rachman
Independent Director Mr Rachman has been a Consultant for the Riau Economic Development Board since 1970. He was also the ViceGovernor of Riau Province from 1994 to 1999, Head of the Riau Investment Coordination Board from 1988 to 1994, Head of the Riau Economic Development Board from 1978, President Director of the Development Bank of Riau from 1965 to 1968 and the Head of Finance in the Riau Governors Office from 1963 to 1965.
Mr Foo Ko Hing
Independent Director After leaving Price Waterhouse in 1986, Mr Foo joined the HSBC Group in the Trust and Fiduciary Business. He was later seconded to HSBC Jersey C.I .for two years , where he was promoted to Executive Director around 1990.Upon returning to Singapore in 1991, he resumed responsibilities with the HSBC Investment Bank Group Private Banking and Trust Services as an Executive Director and Head of Business Development. He has also held positions as Executive Director and Chairman of the Exco of CAM International Holdings Ltd.
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KEY MANAGEMENT
Gunawan Adiwibowo
The Director of PT BRC responsible for the Groups property development business, which includes managing land sales and infrastructure development in Bintan. Mr Adiwibowo joined the Group in 1994 and prior to that, he was Head of Sales and Marketing in PT Wahana Inti Central Mobilindo and the Product/Sales Manager of PT Indoturbine.
Malcolm Alphonso
The General Manager of PT BIIE responsible for the planning, development and growth of BIE as well as relationship management among tenants, BIE and related agencies. Mr Alphonso joined SembCorp Parks Management Pte. Ltd. in 1994 as the Assistant General Manager for PT BIIE. Prior to that, he held several staff and command appointments in Singapore and overseas with the Singapore Armed Forces, where he rose to the rank of Lieutenant-Colonel.
Choo Kok Kiong

The Group Chief Financial Officer overseeing Corporate Services. Mr Choo joined the Group in 2005 after holding various management positions in the SCI Group. He brings with him over 13 years of finance experience, having held the positions of Vice-President of Finance at SembCorp Parks Management Pte. Ltd. and SembCorp Parks Holdings Ltd., Assistant Vice-President of Finance at SembCorp Industries and Accounts Manager with Singapore Precision Industries Pte. Ltd.
Chow Yew Meng

The Deputy General Manager of PT BIC and an engineer by training. He has extensive experience in the power generation, transmission and distribution industry, having been with SembCorp Parks Management since 1995. Prior to that, Mr Chow was General Manager of Indoor Stadium Singapore and Development Resources, a subsidiary of PUB Singapore.
Elfast Goh Eng Pheng

The Corporate Human Resource Senior Manager responsible for the Groups strategic human resource management. Mr Goh has been with the Group since 2004 after holding managerial and supervisory positions in human resource with Island Leisure International Pte. Ltd., Delifrance Singapore Pte. Ltd., The Coffee Bean & Tea Leaf (S) Pte. Ltd., Rubycon Singapore Pte. Ltd. and Pentex-Schweizer Circuits Ltd.
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Annual Report 2006
Kuharajahsingam s/o Karalasingam

The General Manager of BRF responsible for the operation of ferry services between Singapore and Bintan Resorts. Before Mr Kuharajahsingam joined BRF in 2003, he was with the Singapore Armed Forces for over 30 years where he rose to the rank of Colonel and the Defence Science and Technology Agency as a Project Officer.
Albel Singh
The General Manager of PT BRC responsible for the day-to-day management of Bintan Resorts. Mr Albel Singh joined the Group as Assistant General Manager of PT BRC in 2002. Prior to that, Mr Albel Singh was with Singapores Ministry of Home Affairs as Chief Training Officer after 30 years of service in the Ministry of Defence where he rose to the position of Brigade Commander holding the rank of Lieutenant-Colonel.
Johannes Sulistijawan Surjaatmadja

The General Manager (Corporate) of PT BIC responsible for the organisations General Administration Division, Finance Division, General Affairs and Human Resource Division. Mr Surjaatmadja has been seconded to the Group by SembCorp Parks Management Pte. Ltd. since 1990. Before that, he was General Manager of PT Inti Salim Perkasa, Manager of Finance and Control in Freeport Indonesia Incorporated as well as lectured at the Universitas Negeri Diponegoro in Indonesia.
Wee Guan Yak

The Executive Director and General Manager of PT BEV and is responsible for the management and operations of PT BEV. Mr Wee joined SembCorp Parks Management Pte. Ltd. in 1997 and has since been seconded to our Group. He was previously the General Manager (Operations) with 2 Indonesian companies from 1994 to 1997. Prior to that, he was with the Ministry of Defence from 1991 to 1994, after having worked in various command staff and instructional appointments in the Singapore Armed Forces from 1967 to 1991 where he rose to the rank of Colonel.
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OUR STRONG FOUNDATION
Recognised for our international standards in industrial park and resorts masterplanning, we have established:
A Balanced Asset Portfolio

Our current investment portfolio provides a balanced mix of cash flow in the utility and industrial park businesses, promising profit and growth capabilities in the resort and property development business in Bintan, and a strong balance sheet with low gearing.
Strong Management Team

Our strong management team has the relevant experience and qualifications to manage the different functions of our businesses.
A Unique market position as an Integrated Master Planner

As the integrated master planner for industrial parks and resorts totaling approximately 19,700 ha in size, and as a private provider of utilities in Batam and Bintan, we place emphasis on the quality of our developments and the infrastructure and support services. We have attracted the presence of internationally known brands including Club Med and Banyan Tree.
Significant Economies of Scale and Barriers to Entry

Through our large pool of tenants and investors, we enjoy significant economics of scale to our industrial park business, which in turn allow us to offer investors a competitive advantage. The barriers to entry for industrial business are high and our ability to provide a wide range of comprehensive services may not be easily replicated.
Batam and Bintan as Investment Destination

We leverage on our strategic location in Batam and Bintan by providing investors with ready access to Singapore and Changi International Airport, access to an abundant workforce at all levels and labour cost advantage relative to Singapore. We also market Bintan Resorts to tourists as a twin resort holiday destination to Singapore and Bintan, with its scenic beauty with 100km of shoreline.
Good Government Support

We benefit from close economic ties between Indonesia and Singapore and from various investment incentives and privileges to develop Batam and Bintan, such as the Generalised System of Preferences, Bonded Zone Plus status and absence of foreign control in Indonesia.
Strong Financial Position

Our strong balance sheet with low gearing and a stable cash flow enables us to explore new business opportunities, strategic partnerships and investments.
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Annual Report 2006
G A L L A N T V E N T U R E LT D . A N D I T S S U B S I D I A R I E S
Subsidiaries
Batamindo Investments (S) Ltd. (100%) Bintan Resort Ferries Pte. Ltd. (88.60%) BRF Holidays Pte. Ltd. (88.60%) PT Batam Bintan Telekomunikasi (95%) PT Batamindo Executive Village (60%) PT Batamindo Investment Cakrawala (100%) PT Bintan Inti Industrial Estate (100%) PT Bintan Resort Cakrawala (83.72%) PT Buana Megawisatama (100% less 1 share) PT Suakajaya Indowahana (80%) PT Surya Bangunpertiwi (100% less 1 share) Verizon Resorts Limited (100%)
Associated Companies
Batamindo Carriers Pte. Ltd. (36%) Batamindo Medical Management Pte. Ltd. (50%) PT Soxal Batamindo Industrial Gases (30%)
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CORPORATE INFORMATION
BOARD OF DIRECTORS
Mr Lim Hock San (Non-Executive Chairman and Independent Director) Mr Eugene Cho Park (Executive Director and Chief Executive Officer) Mr Gianto Gunara (Executive Director) Ms Low Sin Leng (Non-Executive Director) BG (Ret) Chin Chow Yoon (Non-Executive Director) Mr Rivaie Rachman (Independent Director) Mr Foo Ko Hing (Independent Director)
AUDITORS
Foo Kon Tan Grant Thornton Certified Public Accountants of Singapore 47 Hill Street #05-01 Singapore Chinese Chamber of Commerce & Industry Building Singapore 179365 PARTNER-IN-CHARGE Ms Chia Siew Eng Date of Appointment: Since financial period ended 31 December 2003
PRINCIPAL BANKER
United Overseas Bank Limited 80 Raffles Place UOB Plaza Singapore 048624
AUDIT COMMITTEE
Mr Lim Hock San (Chairman) Ms Low Sin Leng Mr Rivaie Rachman Mr Foo Ko Hing
REGISTERED OFFICE
47 Hill Street #06-02 Singapore Chinese Chamber of Commerce & Industry Building Singapore 179365
NOMINATING COMMITTEE
Mr Rivaie Rachman (Chairman) Mr Lim Hock San BG (Ret) Chin Chow Yoon Mr Foo Ko Hing
COMPANY REGISTRATION NUMBER

200303179Z
REMUNERATION COMMITTEE
Mr Lim Hock San (Chairman) Mr Rivaie Rachman Mr Foo Ko Hing
JOINT COMPANY SECRETARIES

Mr Choo Kok Kiong, CPA Ms Foo Soon Soo, FCIS, FCPA Singapore, FCPA (Aust), LLB (Hons) (London) Ms Prisca Low Yim Leng, ACIS
SHARE REGISTRAR AND SHARE TRANSFER

Lim Associates (Pte) Ltd 3 Church Street, #08-01 Samsung Hub Singapore 049483
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Annual Report 2006
No. :
Travel Voucher
This voucher entitles the holder to one return off-peak complimentary Bintan Resort Ferries Ticket
Have a lovely time at Bintan Resorts!

For Ticket Claiming or Reservation contact us at Bintan Resort Ferries Pte. Ltd.
Tel: (65) 6542-4369. Fax: (65) 6542-4372 using the Advance Booking Form Website: http://www.brf.com.sg
w w w . g a l l a n t v e n t u r e . c o m
GALLANT VENTURE LTD.

(Company Registration Number: 200303179Z)
371 Beach Road #13-08 KeyPoint Singapore 199597 Tel +65 6389 3535 Fax +65 6396 7758
Contents
01 11 13 14 15 16 17 18 20 59 61 Statement of Corporate Governance Directors Report Statement by Directors Auditors Report Balance Sheets Consolidated Income Statement Consolidated Statement of Changes in Equity Consolidated Cash Flow Statement Notes to the Financial Statements Statistics of Shareholdings Notice of Annual General Meeting Proxy Form
S TAT E M E N T O F C O R P O R AT E G O V E R N A N C E
Gallant Venture Ltd. (the Company) was admitted to the Ofcial list of the SGX-SESDAQ on 6 June 2006. The Company is committed to achieving and maintaining high standards of corporate governance principles and processes in managing the business and affairs, so as to improve the performance, accountability, and transparency of the Company. This corporate governance report sets out how the Company has effectively applied the principles of good corporate governance in a disclosure-based regime where accountability of the Board to the Company shareholders and the Management to the Board provides the framework for achieving a mutually benecial tripartite relationship aimed at creating and growing sustainable shareholders value.
BOARD MATTERS The Boards Conduct of its Affairs Principle 1: Every company should be headed by an effective Board to lead and control the company. The Board is collectively responsible for the success of the company. The Board works with Management to achieve this and the Management remains accountable to the Board. The Board of Directors (the Board) comprises two Executive Directors, two Non-Executive Directors and three Independent Directors having the appropriate mix of core competencies and diversity of experience to direct and lead the Company. As at the date of this report, the Board comprises the following members: 1. 2. 3. 4. 5. 6. 7. Mr Lim Hock San (Non-Executive Chairman and Independent Director) Mr Eugene Cho Park (Executive Director and Chief Executive Ofcer) Mr Gianto Gunara (Executive Director) Ms Low Sin Leng (Non-Executive Director) BG (Ret) Chin Chow Yoon (Non-Executive Director) Mr Rivaie Rachman (Independent Director) Mr Foo Ko Hing (Independent Director)
The primary role of the Board is to protect and enhance long-term shareholders value. It sets the corporate strategies of the Group, sets directions and goals for the Management. It supervises the Management and monitors performance of these goals to enhance shareholders value. The Board is responsible for the overall corporate governance of the Group. Regular meetings are held to deliberate the strategic policies of the Company including signicant acquisitions and disposals, review and approve annual budgets, review the performance of the business and approve the public release of periodic nancial results. The Board has formed Board Committees namely the Audit Committee, the Nominating Committee and the Remuneration Committee to assist in carrying out and discharging its duties and responsibilities ef ciently and effectively. These Committees function within clearly dened terms of references and operating procedures, which are reviewed on a regular basis. The effectiveness of each Committee is also constantly reviewed by the Board.
The following table discloses the number of meetings held for Board and Board Committees and the attendance of all Directors for the nancial year ended 31 December 2006:BOARD Number of meetings held 6 AUDIT COMMITTEE 3 REMUNERATION COMMITTEE 1 NOMINATING COMMITTEE 1
Lim Hock San Eugene Cho Park Gianto Gunara Low Sin Leng
(2) (3) (1)
6 6 4 6 6 5 4
3 1 3 3 1 3 3
1 1 1 1
1 1 1 1
BG (Ret) Chin Chow Yoon Rivaie Rachman Foo Ko Hing

Notes: (1) (2) (3)
Mr Gianto Gunara was appointed as an Executive Director of the Company on 8 November 2006. Ms Low Sin Leng relinquished her position as a member of the Remuneration Committee on 8 February 2007. BG (Ret) Chin Chow Yoon relinquished his position as a member of the Remuneration Committee on 8 February 2007.
While the Board considers Directors attendance at Board meetings to be important, it should not be the only criteria to measure their contributions. It also takes into account the contributions by board members in other forms including periodical reviews, provision of guidance and advice on various matters relating to the Group.
Board Composition and Balance Principle 2: There should be a strong and independent element on the Board, which is able to exercise objective judgement on corporate affairs independently, in particular, from Management. No individual or small group of individuals should be allowed to dominate the Boards decision making. The Board now consists of seven Directors, of whom three are Independent Directors. The criterion for independence is based on the denition given in the Code of Corporate Governance (Code). The Board considers an independent director as one who has no relationship with the Company, its related companies or its ofcers that could interfere, or be reasonably perceived to interfere, with the exercise of the Directors independent judgment of the conduct of the Groups affairs. The Board is of the view that the current Board members comprise persons whose diverse skills, experience and attributes provide for effective direction for the Group. The composition of the Board will be reviewed on an annual basis by the Nominating Committee to ensure that the Board has the appropriate mix of expertise and experience, and collectively possess the necessary core competencies for effective functioning and informed decision-making. Key information regarding the Directors is given in the Board of Directors section of the annual report. Particulars of interests of Directors who held ofce at the end of the nancial year in shares, debentures, warrants and share options in the Company and in related corporations (other than wholly-owned subsidiaries) are set out in the Directors Report on page 11 of this annual report.
Gallant Venture Ltd. Annual Report 2006
Chairman and Chief Executive Ofcer Principle 3: There should be a clear division of responsibilities at the top of the company the working of the Board and the executive responsibility of the companys business which will ensure a balance of power and authority, such that no one individual represents a considerable concentration of power. The roles of the Chairman and the Chief Executive Ofcer (CEO) are separate and distinct, each having their own areas of responsibilities. The Company believes that a distinctive separation of responsibilities between the Chairman and the CEO will ensure an appropriate balance of power, increased accountability and greater capacity of the Board for independent decision-making. The posts of Chairman and CEO are held by Mr Lim Hock San and Mr Eugene Cho Park respectively. As the Chairman, Mr Lim Hock San is primarily responsible for overseeing the overall management and strategic development of the Company. His responsibilities include: Chair review meetings on key strategic development and investment plans; Ensure regular meetings (with the assistance of the Company Secretaries) to enable the Board to perform its duties responsibly while not interfering with the ow of the Groups operations; Preparing meeting agenda (in consultation with the CEO and CFO); Assisting in ensuring the Companys compliance with the Code; and Reviewing board papers that are presented to the Board. In assuming his roles and responsibilities, Mr Lim consults with the Board, Audit Committee, Nominating Committee and Remuneration Committee on major issues and as such, the Board believes that there are adequate safeguards in place against having a concentration of power and authority in a single individual. As the Companys CEO, Mr Eugene Cho Park is responsible for the day-to-day management of the Groups affairs. Mr Eugene Cho Park reports to the Board and ensures that policies and strategies adopted by the Board are implemented.
Board Membership Principle 4: There should be a formal and transparent process for the appointment of new Directors to the Board. The Nominating Committee (NC) comprises four members, majority of whom including its Chairman are independent Directors. The members of the NC are: Mr Rivaie Rachman (Chairman) Mr Lim Hock San BG (Ret) Chin Chow Yoon Mr Foo Ko Hing
The NC held its rst meeting on 31 October 2006 with all members present to adopt the Terms of Reference. The NC functions under the terms of reference which sets out its responsibilities: (a) (b) (c) To recommend to the Board on all board appointments, re-appointments and re-nominations; To ensure that independent Directors meet SGX-STs guidelines and criteria; and To assess the effectiveness of the Board as a whole and the effectiveness and contribution of each Director to the Board.
The Articles of Association of the Company require that one-third of the Board to retire from ofce at each Annual General Meeting (AGM). Accordingly, the Directors will submit themselves for re-nomination and re-election at regular intervals of at least once every three years.
Board Performance Principle 5: There should be a formal assessment of the effectiveness of the Board as a whole and the contribution by each director to the effectiveness of the Board. The NC examines the Boards size to satisfy that it is appropriate for effective decision making, taking into account the nature and scope of the Companys operations. The NC has reviewed and evaluated the performance of the Board as a whole, taking into consideration the attendance record at the meetings of the Board and Board Committees and also the contribution of each Director to the effectiveness of the Board.
Access to Information Principle 6: In order to ful ll their responsibilities, Board members should be provided with complete, adequate and timely information prior to board meetings and on an on-going basis. All Directors are from time to time furnished with information concerning the Company to enable them to be fully cognisant of the decisions and actions of the Companys executive management. The Board has unrestricted access to the Companys records and information. Senior members of management staff are available to provide explanatory information in the form of briengs to the Directors or formal presentations in attendance at Board meetings, or by external consultants engaged on specic projects. The Board has separate and independent access to the Company Secretaries and to other senior management executives of the Company and of the Group at all times in carrying out their duties. The Company Secretaries attend all Board meetings and meetings of the Committees of the Company and ensure that Board procedures are followed and that applicable rules and regulations are complied with. The minutes of all Board Committees meetings are circulated to the Board. Each Director has the right to seek independent legal and other professional advice, at the Companys expense, concerning any aspect of the Groups operations or undertakings in order to fulll their duties and responsibilities as Directors.
REMUNERATION MATTERS Procedures for Developing Remuneration Policies Principle 7: There should be a formal and transparent procedure for developing policy on executive remuneration and for xing the remuneration packages of individual Directors. No director should be involved in deciding his own remuneration. The Remuneration Committee (RC) comprises three members, all of whom including its Chairman are independent Directors. The members of the RC are: Mr Lim Hock San (Chairman) Mr Rivaie Rachman Mr Foo Ko Hing The RC recommends to the Board a framework of remuneration for the Directors and Executive Of cers, and determines specic remuneration package for each Executive Director. The RCs recommendations will be submitted for endorsement by the Board.
All aspects of remuneration, including but not limited to Directors fee, salaries, allowances, bonuses and benets in kind, will be covered by the RC. Each RC member will abstain from voting on any resolution in respect of his remuneration package. The RC held its rst meeting on 31 October 2006 with all members present to adopt the Terms of Reference. The RC functions under the terms of reference which sets out its responsibilities: (a) To recommend to the Board a framework for remuneration for the Directors and Key Executives of the Company; To determining specic remuneration packages for each Executive Director; and To review the appropriateness of compensation for Non-Executive Directors.
(b) (c)
The recommendations of the RC had been submitted to the Board for endorsement. The RC will be provided with access to expert professional advice on remuneration matters as and when necessary. The expense of such services shall be borne by the Company. All aspects of remuneration, including but not limited to Directors fees, salaries, allowances, bonuses, and benets-inkind shall be reviewed by the RC.
Level and Mix of Remuneration Principle 8: The level of remuneration should be appropriate to attract, retain and motivate the Directors needed to run the company successfully but companies should avoid paying more than is necessary for this purpose. A signicant proportion of Executive Directors remuneration should be structured so as to link rewards to corporate and individual performance. In setting remuneration packages, the Remuneration Committee will take into consideration the pay and employment conditions within the industry and in comparable companies. The remuneration of Non-Executive Directors is also reviewed to ensure that the remuneration is commensurate with the contribution and responsibilities of the Directors. The Company will submit the quantum of Directors fee of each year to the shareholders for approval at each AGM. The Chief Executive Ofcer has service agreement. The service agreement covers the terms of employment, salaries and other benets. Executive Director, other than the Chief Executive Ofcer, and Non-Executive Directors have no service contracts.
Disclosure on Remuneration Principle 9: Each company should provides clear disclosure of its remuneration policy, level and mix of remuneration, and the procedure for setting remuneration in the companys annual report. It should provide disclosure in relation to its remuneration policies to enable investors to understand the link between remuneration paid to Directors and Key Executives, and performance. The details of the remuneration of Directors of the Group disclosed in bands for services rendered during the nancial year ended 31 December 2006 are as follows: Number of Directors 2006 $500,000 and above $250,000 to $499,999 Below $249,999 Total 7 7 2005
The summary compensation table for the Directors and Key Executives of the Group for the nancial year ended 31 December 2006 is set out below: Allowances and Other Benets %
Salary % Directors Below S$250,000 Lim Hock San NonExecutive Chairman and Independent Director Eugene Cho Park Executive Director and Chief Executive Ofcer Gianto Gunara Executive Director Low Sin Leng NonExecutive Director BG (Ret) Chin Chow Yoon NonExecutive Director Rivaie Rachman Independent Director Foo Ko Hing Independent Director Key Executives of the Group Below $250,000 Gunawan Adiwibowo Malcolm Alphonso Choo Kok Kiong Chow Yew Meng Elfast Goh Eng Pheng Kuharajahsingam s/o Karalasingam Albel Singh Johannes Sulistijawan Surjaatmadja Wee Guan Yak 89 60 85 70 86 82 83 60 72
Bonus %
Directors Fee %
Total Compensation %
100
100
78 57 67
7 7 8
15 36 100 25 100 100
100 100 100 100 100 100
11 16 7 15 7 18 11 16 16
24 8 15 7 6 24 12
100 100 100 100 100 100 100 100 100
No employee of the Company and its subsidiaries was an immediate family member of a Director and/or a Substantial Shareholder whose remuneration exceeded S$150,000 during the nancial year ended 31 December 2006.
ACCOUNTABILITY AND AUDIT Accountability Principle 10: The Board should present a balanced and understandable assessment of the companys performance, position and prospects. The Board is accountable to the shareholders and is mindful of its obligations to furnish timely information and to ensure full disclosure of material information to shareholders in compliance with statutory requirements and the Listing Manual of the SGX-ST. Price sensitive information will be publicly released either before the Company meets with any group of investors or analysts or simultaneously with such meetings. Financial results and annual reports will be announced or issued within legally prescribed periods. Audit Committee Principle 11: The Board should establish an Audit Committee with written terms of reference which clearly set out its authority and duties. The Audit Committee (AC) comprises four members, majority of whom including its Chairman are independent Directors. The AC comprises the following members: Mr Lim Hock San (Chairman) Ms Low Sin Leng Mr Rivaie Rachman Mr Foo Ko Hing The AC functions under the terms of reference which sets out its responsibilities as follows: (a) (b) (c) To review the nancial statements of the Company and the Group before submission to the Board; To review the audit plans of the Company with the external auditors and the external auditors reports; To review the internal controls and procedures (including adequacy of the nance functions and the quality of nance staff) and co-operation given by the Companys management to the external auditors; To review and discuss with the external auditors any suspected fraud or irregularity, or suspected infringement of any relevant laws, rules or regulations; To make recommendations to our Board on the appointment, re-appointment and removal of the external auditor; To review interested person transactions and potential conicts of interest; To undertake such other reviews and projects as may be requested by the Board, and report to the Board its ndings from time to time on matters arising; To generally undertake such other functions and duties as may be required by the statute, regulations or the Listing Manual, or by such amendments as may be made thereto from time to time; and To review arrangements by which the staff of the Company may, in condence, raise concerns about possible improprieties in matters of nancial reporting.
(d)
(e)
(f) (g)
(h)
(i)
The AC has the power to conduct or authorise investigations into any matters within the ACs scope of responsibility. The AC is authorised to obtain independent professional advice if it deems necessary in the discharge of its responsibilities. Such expenses are to be borne by the Company. Each member of the AC shall abstain from voting any resolutions in respect of matters he is interested in.
The AC has full access to and co-operation of the Management and has full discretion to invite any Director or Executive Ofcer to attend its meetings, and has been given reasonable resources to enable it to discharge its functions. The AC meets with both the external and internal auditors without the presence of the Management at least once a year. The AC reviews the independence of the external auditors annually. The AC, having reviewed the range and value of non-audit services performed by the external auditors, Foo Kon Tan Grant Thornton was satised that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors. The AC recommended that Foo Kon Tan Grant Thornton be nominated for re-appointment as auditor at the forthcoming AGM. The Company has in place a whistle-blowing framework where staff of the Company can access the Audit Committee Chairman to raise concerns about improprieties.
Internal Controls and Risk Management Principle 12: The Board should ensure that the Management maintains a sound system of internal controls to safeguard the shareholders investments and the companys assets. The Audit Committee will ensure that a review of the effectiveness of the Companys material internal controls, including nancial, operational and compliance controls and risk management, is conducted annually. In this respect, the Audit Committee will review the audit plans, and the ndings of the auditors and will ensure that the Company follows up on the auditors recommendations raised, if any, during the audit process. The Group has in place a system of internal control and risk management for ensuring proper accounting records and reliable nancial information as well as management of business risks with a view to safeguarding shareholders investments and the Companys assets. The risk management framework implemented provides for systematic and structured review and reporting of the assessment of the degree of risk, evaluation and effectiveness of controls in place and the requirements for further controls.
Internal Audit Principle 13: The Company should establish an internal audit function that is independent of the activities it audits. The Company has engaged PricewaterhouseCoopers as its internal auditor. The internal auditor reports directly to the Chairman of the Audit Committee on all internal audit matters. The primary functions of internal audit are to help:(a) assess if adequate systems of internal controls are in place to protect the assets of the Group and to ensure control procedures are complied with; assess if operations of the business processes under review are conducted efciently and effectively; and identify and recommend improvement to internal control procedures, where required.
(b) (c)
The Audit Committee has reviewed the Companys internal control assessment and based on the internal auditors and external auditors reports and the internal controls in place, it is satised that there are adequate internal controls in the Company.
COMMUNICATION WITH SHAREHOLDERS Communication with Shareholders Principle 14: Companies should engage in regular, effective and fair communication with shareholders. Principle 15: Companies should encourage greater shareholder participation at AGMs and allow shareholders the opportunity to communicate their views on various matters affecting the Company. In line with continuous obligations of the Company pursuant to the SGX-STs Listing Rules, the Boards policy is that all shareholders be informed of all major developments that impact the Group. Information is disseminated to shareholders on a timely basis through: (a) (b) (c) (d) (e) SGXNET announcements and news release; Annual Report prepared and issued to all shareholders; Press releases on major developments of the Group; Notices of and explanatory memoranda for AGM and extraordinary general meetings (EGM); and Companys website at www.gallantventure.com which shareholders can access information on the Group.
The Companys AGMs are the principal forums for dialogue with shareholders. The Chairmen of the Audit, Remuneration and Nominating Committees are normally available at the meetings to answer any questions relating to the work of these Committees. The external auditors shall also be present to assist the Directors in addressing any relevant queries by the shareholders. Shareholders are encouraged to attend the AGM/EGM to ensure a high level of accountability and to stay appraised of the Groups strategy and goals. Notice of the meeting will be advertised in newspapers and announced on SGXNET.
Dealing In Securities The Company has in place a policy prohibiting share dealings by Directors and employees of the Company for the period of one month prior to the announcement of the Companys half yearly and yearly results as the case may be, and ending on the date of the announcement of the relevant results. Directors and employees are expected to observe the insider trading laws at all times even when dealing in securities within permitted trading period.
Interested Person Transactions Policy The Company adopted an internal policy in respect of any transactions with interested person and has established procedures for review and approval of the interested person transactions entered into by the Group. The Audit Committee has reviewed the rationale and terms of the Groups interested person transactions and is of the view that the interested person transactions are on normal commercial terms and are not prejudicial to the interests of the shareholders.
The interested person transactions transacted for the nancial year ended 31 December 2006 by the Group are as follows: Aggregate value of all interested person transactions conducted (excluding transactions less than $100,000 and transactions conducted under shareholders mandate pursuant to Rule 920)
Name of Interested Person PURCHASES SembCorp Parks Management Pte Ltd PT Herwido Rintis Riau Infrastructure Management Services Pte Ltd PT Tunas Karya Indowisata Island Leisure International Pte Ltd Bintan Resort Development Corporation Pte Ltd PT Asuransi Central Asia Claim received Temasek Group SALES PT Alam Indah Bintan PT Ria Bintan PT Straits CM Village Sembawang Kimtrans Ltd
Aggregate value of all interested person transactions conducted under shareholders mandate pursuant to Rule 920 (excluding transactions less than $100,000)
5,144 210 163 568 1,582 552 386 (162) 1,168
3,285 1,332 3,251 185
Material Contracts There was no material contracts entered into by the Company or any of its subsidiary companies involving the interest of the Chief Executive Ofcer, any Director, or controlling shareholder.
10
DIRECTORS REPORT
The Directors submit this annual report to the members together with the audited balance sheet of the Company and consolidated nancial statements of the Group for the nancial year ended 31 December 2006.
Names of directors The Directors in ofce at the date of this report are: Lim Hock San (Non-Executive Chairman and Independent Director) Eugene Cho Park (Executive Director and Chief Executive Ofcer) Gianto Gunara (Executive Director) (appointed on 8 November 2006) Low Sin Leng (Non-Executive Director) BG (Ret) Chin Chow Yoon (Non-Executive Director) Foo Ko Hing (Independent Director) Rivaie Rachman (Independent Director)
Arrangements to acquire shares or debentures During and at the end of the nancial year, neither the Company nor any of its subsidiaries was a party to any arrangement the object of which was to enable the Directors to acquire benets through the acquisition of shares in or debentures of the Company or of any other corporate body.
Directors interest in shares or debentures According to the Register of Directors Shareholdings kept by the Company under Section 164 of the Companies Act, Cap. 50, none of the Directors who held ofce at the end of the nancial year was interested in shares of the Company and its related corporations except as follows: Number of ordinary shares in which Director is deemed to have an interest As at 31.12.2006 and 21.1.2007
As at 1.1.2006 The Company Eugene Cho Park
627,293,350
Directors benets Since the end of the previous nancial year, no Director has received or has become entitled to receive a benet under a contract which is required to be disclosed under Section 201(8) of the Companies Act, Cap. 50 except as disclosed in Note 34 to the nancial statements.
Share options No options were granted during the nancial year to take up unissued shares of the Company or of its subsidiaries. No shares were issued by virtue of the exercise of options. There were no unissued shares under option at the end of the nancial year.
11
DIRECTORS REPORT
Audit Committee The Audit Committee comprises the following members: Lim Hock San (Chairman and Independent Director) Low Sin Leng (Non-Executive Director) Rivaie Rachman (Independent Director) Foo Ko Hing (Independent Director) The Audit Committee carried out its functions in accordance with Section 201B of the Companies Act, the Listing Manual of the Singapore Exchange Securities Trading Limited (SGX-ST) and the Code of Corporate Governance. The Audit Committee reviewed the overall scope of both the internal and external audits and the assistance given by the Companys Ofcers to the auditors. It met with the Companys internal and external auditors to discuss the results of their respective examinations and their evaluation of the Companys system of internal accounting controls. The Audit Committee also reviewed the consolidated nancial statements of the Group and the nancial statements of the Company for the nancial year ended 31 December 2006 as well as the auditors report thereon prior to consideration and approval by the Board, announcement of the unaudited results for quarterly, half-yearly and full year to SGX-ST and interested party transactions (as dened in the Listing Manual of the SGX-ST). The Audit Committee has full access to management and is given the resources required for it to discharge its functions. It has full authority and the discretion to invite any director or executive ofcer to attend its meetings. The Audit Committee has also conducted a review of the fees paid or payable to the auditors for non-audit services for nancial year ended 31 December 2006. In pursuance with Section 206(1A) of the Companies Act, Cap. 50, and based on the review by the Audit Committee and its recommendation, the Board is also satised that the level of nonaudit fees paid or payable to the auditors did not affect the independence of the auditors. The Audit Committee has therefore recommended to the Board of Directors the nomination of Foo Kon Tan Grant Thornton as external auditors at the forthcoming Annual General Meeting of the Company.
Auditors The auditors, Foo Kon Tan Grant Thornton, Certied Public Accountants, have expressed their willingness to accept re-appointment.
On behalf of the Directors
EUGENE CHO PARK
BG (Ret) CHIN CHOW YOON
Dated: 5 March 2007
12
S TAT E M E N T B Y D I R E C T O R S
The Board of Directors is responsible for the preparation and fair presentation of these nancial statements in accordance with the provisions of the Singapore Companies Act, Cap. 50 and Singapore Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of nancial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstance. In the opinion of the Directors, the accompanying balance sheets, consolidated income statement, consolidated statement of changes in equity and the consolidated cash ow statement, together with the notes thereon, are drawn up so as to give a true and fair view of the state of affairs of the Company and of the Group as at 31 December 2006 and of the results of the business, changes in equity and cash ows of the Group for the nancial year ended on that date and at the date of this statement there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.
On behalf of the Directors
EUGENE CHO PARK
BG (Ret) CHIN CHOW YOON
Dated: 5 March 2007
13
AUDITORS REPORT
to the members of Gallant Venture Ltd.
We have audited the accompanying nancial statements of Gallant Venture Ltd. (the Company) and of its subsidiaries (the Group) for the year ended 31 December 2006, which comprise the balance sheets of the Company and the Group as at 31 December 2006, and the consolidated income statement, consolidated statement of changes in equity and consolidated cash ow statement for the year then ended, and a summary of signicant accounting policies and other explanatory notes. Directors responsibility for the nancial statements The Companys Directors are responsible for the preparation and fair presentation of these nancial statements in accordance with Singapore Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of nancial statements that are free from material misstatement, whether due to fraud or error; 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 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 nancial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the nancial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entitys preparation and fair presentation of the 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 effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Directors, as well as evaluating the overall presentation of the nancial statements. We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our audit opinion.
Opinion In our opinion: (a) the balance sheet of the Company and the consolidated nancial statements of the Group are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Company and of the Group as at 31 December 2006 and the results, changes in equity and cash ows of the Group for the year ended on that date; and 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.
(b)
Foo Kon Tan Grant Thornton Certied Public Accountants Singapore, 5 March 2007
14
BALANCE SHEETS
as at 31 December 2006
Note Assets NonCurrent Intangible assets Property, plant and equipment Investment properties Subsidiaries Associated companies Other investments Deferred tax assets Loan receivable Other noncurrent assets
The Company 2006 2005 $000 $000
The Group 2006 $000
4 5 6 7 8 9 10 11 12
14 194 1,205,212 1,205,420
12 142 154 90,157 25,000 252 115,409 115,563
126 388,567 336,940 1,155 5,493 62,046 3,336 797,663 551,011 12,732 71,940 908 66,934 703,525 1,501,188
Current Land inventories Other inventories Trade and other receivables Restricted cash Cash and cash equivalents
13 14 15 16 17
88,061 2,387 90,448
Total assets Equity and liabilities Share capital Translation reserves (Accumulated losses)/retained prots Equity attributable to equity holders of the Company Minority interests Total equity Liabilities NonCurrent Deposits from tenants/golf membership Employee benets liabilities Deferred tax liabilities Loans and borrowings
1,295,868
18
1,205,212 (11,120) 1,194,902 1,194,092
* (4,444) (4,444) (4,444)
1,205,212 653 24,582 1,230,447 32,891 1,263,338
19 20 21 22
66,000 66,000
90,000 90,000 15,007 15,000 30,007 120,007 115,563
40,102 5,049 106 80,020 125,277 67,702 1,585 43,286 112,573 237,850 1,501,188
Current Trade and other payables Current tax payable Loans and borrowings
23 22
11,776 24,000 35,776
Total liabilities Total equity and liabilities
101,776 1,295,868
* Representing $2 share capital
The annexed notes form an integral part of and should be read in conjunction with these nancial statements.
15
C O N S O L I D AT E D I N C O M E S TAT E M E N T
for the year ended 31 December 2006
Note Revenue Cost of sales Gross prot Other income General and administrative expenses Other operating expenses Share of associated companys losses net of prots Finance costs Prot/(loss) before taxation Taxation Prot/(loss) after taxation Attributable to: Equity holders of the Company Minority interests 3
Year ended 31 December 2006 $000 176,639 (114,925) 61,714 20,635 (4,456) (30,123) (567) (6,334) 40,869 (11,026) 29,843
Year ended 31 December 2005 $000 391 (1,002) (3,754) (4,365) (4,365)
24 25 26 27 29
29,026 817 29,843
(4,365) (4,365) (0.18) (0.18)
Basic earnings/(loss) per share (in cents) Diluted earnings/(loss) per share (in cents)
30 30
2.06 2.06
16
C O N S O L I D AT E D S TAT E M E N T O F C H A N G E S I N E Q U I T Y
Share capital $000 Balance at 1 January 2005 Net loss for the year Balance at 31 December 2005 On acquisition of subsidiaries Issue of shares Currency translation difference Net prot for the year Balance at 31 December 2006 * * 961,322 243,890 1,205,212
(Accumulated Attributable losses)/ to equity Translation retained holders of reserves prots the Company $000 $000 $000 653 653 (79) (4,365) (4,444) 29,026 24,582 (79) (4,365) (4,444) 961,322 243,890 653 29,026 1,203,447
Minority interests $000 31,808 266 817 32,891
Total equity $000 (79) (4,365) (4,444) 993,130 243,890 919 29,843 1,263,338
* Representing $2 share capital
17
C O N S O L I D AT E D C A S H F L O W S TAT E M E N T
Year ended 31 December 2006 $000 Cash Flows from Operating Activities Prot/(loss) before taxation Adjustments for: Amortisation of intangible assets Depreciation of property, plant and equipment and investment properties Currency translation difference Gain on disposal of investment property Gain on disposal of property, plant and equipment Share of associated companys losses net of prots Excess of share of fair value of assets and liabilities of subsidiaries acquired over purchase consideration written off Provision for employees benets Interest expense Interest income Operating prot/(loss) before working capital changes Decrease in land inventories Decrease in other inventories Decrease/(increase) in operating receivables Decrease in operating payables Cash generated from/(used in) operating activities Income tax paid Employee benets paid Interest paid Interest received Deposits refunded to tenants/golf members Net cash generated from/(used) in operating activities Cash Flows from Investing Activities Net outow from acquisition of subsidiaries (Note A) Acquisition of intangible assets Acquisition of property, plant and equipment Dividend from associated company Proceeds from sale of property, plant and equipment Proceeds from sale of investment property Deposits paid Net cash used in investing activities Cash Flows from Financing Activities Proceeds from shares issued Advances from third parties Repayment of loan to a former shareholder Loan from a bank Repayment of bank loan Loan to a third party Decrease/(Increase) in xed deposits pledged with a bank Net cash generated from nancing activities Increase in cash and cash equivalents Cash and cash equivalents at beginning Cash and cash equivalents at end (Note 17)
Year ended 31 December 2005 $000
40,869 79 33,490 971 (105) (14) 567 (13,360) 1,092 6,334 (3,931) 65,992 2,906 3,525 129,166 (173,018) 28,571 (11,343) (56) (6,334) 3,931 (97) 14,672 (192,375) (108) (20,845) 78 90 163 (586) (213,583) 243,890 22,466 (29,798) 29,035 265,593 66,682 252 66,934
(4,365) 5 38 3,752 (391) (961) (1,473) (1,659) (4,093) 391 (3,702) (5) (22) (27) 12,232 (527) 112,500 (7,500) (87,862) (25,000) 3,843 114 138 252
18
C O N S O L I D AT E D C A S H F L O W S TAT E M E N T
Note A Acquisition of subsidiaries The fair value of identiable assets acquired and liabilities assumed during the year were as follows:
Year ended 31 December 2006 $000 Property, plant and equipment Investment properties Investments in unquoted equity shares Deferred tax assets Other non-current assets Land inventory Inventories Trade receivables Other receivables Due from related companies Restricted cash Cash and cash equivalents 389,735 348,409 1,774 4,794 64,871 553,917 16,257 63,173 22,768 24,917 4,944 51,515 1,547,074 Deposits from tenants/golf membership Deferred tax liability Employee benets liabilities Loans and borrowings Trade payables Other payables Due to related companies Current tax payable Other current liabilities (40,198) (17) (4,013) (44,932) (24,870) (39,997) (127,656) (1,120) (13,891) (296,694) 1,250,380 (31,808) 1,218,572 (13,360) 1,205,212 961,322 51,515 192,375
Minority interests Net assets Excess of fair value of assets and liabilities over purchase consideration Total purchase consideration Less: Purchase consideration satised by issue of shares Cash and cash equivalents acquired Net cash outow from acquisition of subsidiaries
19
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
General information The nancial statements of the Company and of the Group for the year ended 31 December 2006 were authorised for issue in accordance with a resolution of the Directors on the date of the Statement By Directors. The Company was incorporated as a limited liability company and domiciled in the Republic of Singapore. On 24 April 2006, the Company was converted to a public company and changed its name from Gallant Venture Pte Ltd to Gallant Venture Ltd. On 6 June 2006, the ordinary shares of the Company were admitted to the Ofcial List of the Singapore Exchange Securities Trading Limited Dealing and Automated Quotation System (SGX-Sesdaq). The registered ofce is located at 47 Hill Street #06-02, Singapore Chinese Chamber of Commerce & Industry Building, Singapore 179365. The principal place of business is at 371 Beach Road #13-08/09, Keypoint, Singapore 199597. The principal activity of the Company is investment holding. The principal activities of the subsidiaries are reected on Note 7 to the nancial statements. There is no 2005 Group comparative gures as the Group comprises only the Company.
2(a)
Basis of preparation The nancial statements are prepared in accordance with Singapore Financial Reporting Standards (FRS) including related Interpretations to FRS (INT FRS) promulgated by the Council on Corporate Disclosure and Governance (CCDG). The nancial statements have been prepared under the historical cost convention, except as disclosed in the accounting policies below. Signicant accounting estimates and judgements The preparation of the nancial statements in conformity with FRS requires the use of judgements, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the nancial statements and the reported amounts of revenues and expenses during the nancial year. Although these estimates are based on managements best knowledge of current events and actions, actual results may differ from those estimates. Critical judgements and key sources of estimation uncertainty (a) Judgement In the process of applying the Groups accounting policies, which are described below, management has made the following judgements, apart from those involving estimations, which have the most signicant effect on the amounts recognised in the nancial statements: Income tax Signi cant judgement is required in determining the capital allowances and deductibility of certain expenses during the estimation of the provision for income tax. There are also claims 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. When the nal tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. Operating lease commitments as lessor The Group has entered into commercial property leases on its investment properties. The Group has determined that it retains all the signicant risks and rewards of ownership of these properties which are leased out on operating leases.
20
2(a)
Basis of preparation (contd) (a) Judgement (contd) Investment properties The Group classies certain buildings and improvements as investment properties as these are leased out to earn rental income. An insignicant portion of investment properties is held for use in the supply of services or for administration purposes. (b) Estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a signicant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next nancial year are as follows: Employee benets An estimate for employee benets liability involves actuarial assumptions and management estimates on discount rate, annual salary increases, mortality rate, retirement age, turnover rates and disability rates. The balances of employee benets liabilities as of 31 December 2006 amounted to $5,049,000. Allowance for doubtful debts The Group provides for doubtful debts mainly based on the account collectibility and aging status of the individual receivable at the end of the period. The balance of allowance for doubtful debts amounted to $13,357,000. Depreciation of property, plant and equipment Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives. Management estimates the useful lives of these property, plant and equipment to be within 2 to 80 years. The carrying amount of the Groups property, plant and equipment as at 31 December 2006 is $388,567,000. Changes in the expected level of usage could impact the economic useful lives of these assets, therefore future depreciation charges could be revised.
2(b)
Interpretations and amendments to published standards effective in 2006 On 1 January 2006, the Group adopted the new or revised FRS and INT FRS that are mandatory for application from that date. Changes to the Groups accounting policies have been made as required, in accordance with the relevant transitional provisions in the respective FRS and INT FRS. The following are the FRS and INT FRS that are relevant to the Group: FRS 19 (Amendment) FRS 21 (Amendment) FRS 32 (Amendment) FRS 39 (Amendment) INT FRS 104 Employee Benets The Effects of Changes in Foreign Exchange Rates Financial Instruments: Disclosure and Presentation Financial Guarantee Contracts Determining whether an Arrangement contains a Lease
21
2(b)
Interpretations and amendments to published standards effective in 2006 (contd) During the year, the Company and the Group adopted the following amendments mandatory for the nancial periods beginning on or after 1 January 2006: FRS 39 Financial Instruments: Recognition and Measurement Amendment for nancial guarantee contracts The amendment addresses the treatment of nancial guarantee contracts by issuer. Financial guarantee contracts are recognised initially at fair value and generally remeasured at the higher of the amount determined in accordance with FRS 37 Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less, when appropriate cumulative amortisation recognised in accordance with FRS 18 Revenue. FRS 39 Amendment for hedges of forecast intragroup transactions FRS 39 was amended to permit foreign currency risk of a highly probable intragroup forecast transaction to qualify as the hedged item in a cash ow hedge, provided that the transaction is denominated in a currency other than the functional currency of the entity entering into the transaction and that the foreign currency risk will affect the nancial statements. FRS 39 Amendment for fair value option The amendment restricted the use of option to designate any nancial asset or any nancial liability to be measured at fair value through prot and loss. The adoption of these amendments will have no material impact on the nancial statements of the Company and the Group.
2(c)
FRS/INT FRS not effective At the date of authorisation of these nancial statements, the following FRS and INT FRS were issued but not effective: FRS 1 (Amendment) FRS 32 FRS 107 INT FRS 107 INT INT INT INT INT FRS FRS FRS FRS FRS 108 109 110 111 112 Amendments Relating to Capital Disclosure Financial Instruments: Presentation Financial Instruments: Disclosures Applying the Restatement Approach under FRS 29 Financial Reporting in Hyperinationary Economies Scope of FRS 102 Reassessment of Embedded Derivatives Interim Financial Reporting and Impairment FRS 102-Group and Treasury Shares Transactions Service Concession Arrangements
During the year, the Group applies early adoption of FRS 40-Investment Property. The Directors do not anticipate that the adoption of these FRS and INT FRS in the initial period of application will have a material impact on the nancial statements of the Company and the Group. 2(d) Summary of signicant accounting policies Basis of consolidation The nancial statements of the Group include the nancial statements of the Company and entities controlled by the Company (the subsidiaries), all of which prepare nancial statements at 31 December. Control is achieved where the Company has the power to govern the nancial and operating policies of an entity so as to obtain benets from its activities. The results of the subsidiaries acquired during the year are included in the consolidated income statement from the effective date of acquisition. Where necessary, adjustments are made to the nancial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group. All signicant inter-company balances and signicant inter-company transactions are eliminated on consolidation.
22
2(d)
Summary of signicant accounting policies (contd) Business combinations Acquisition of subsidiaries is accounted for using the purchase method. The cost of acquisition is measured as the fair value of assets given and liabilities incurred or assumed at the date of exchange plus costs directly attributable to the acquisition. Identiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values on the date of acquisition. The excess of the Groups interest in the net fair value of the identi able assets, liabilities and contingent liabilities over the cost of acquisition is credited to the income statement in the period of the acquisition. Intangible assets Intangible assets with de nite useful life are carried at cost less accumulated amortisation and impairment losses, if any. Intangible assets are written off where, in the opinion of the Directors, no further future economic benets are expected to arise. Costs relating to computer software acquired, which are not an integral part of related hardware, are capitalised and amortised on a straight-line basis over their useful life of three years. Property, plant and equipment and depreciation Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, if any. The cost of property, plant and equipment includes expenditure that is directly attributable to the acquisition of the items. Dismantlement, removal or restoration costs are included as part of the cost of property, plant and equipment if the obligation for dismantlement, removal or restoration is incurred as a consequence of acquiring or using the asset. Cost may also include transfers from equity of any gains/losses on qualifying cash ow hedges of foreign currency purchases of property, plant and equipment. Depreciation is computed utilising the straight-line method to write off the cost of these property, plant and equipment over their estimated useful lives as follows: Years Leasehold land Land improvements Landll Building and infrastructures Golf course Utilities Machinery and equipment Vessels and ferry equipment Working wharf Transportation equipment and vehicles Medical equipment Furniture, xtures and equipment Ofce equipment Resort equipment Reservoir Telecommunication equipment Leasehold improvements 15 80 20 3 3 30 36 45 3 30 3 15 4 15 3 37 7 1.5 10 25 35 30 10 30 5
Construction in progress is stated at cost. The accumulated costs will be reclassi ed to the appropriate property, plant and equipment account when the construction is substantially completed and the asset is ready for its intended use.
23
2(d)
Summary of signicant accounting policies (contd) Property, plant and equipment and depreciation (contd) The cost of maintenance and repairs is charged to the income statement as incurred; signicant renewals and betterments are capitalised. When assets retired or otherwise disposed of, their carrying values and the related accumulated depreciation and impairment losses are removed from the accounts and any resulting gain or loss is reected in the income statement. Costs incurred in the general overhaul of the main engines of vessels during dry docking are capitalised and depreciated over four to ve years. For acquisitions and disposals during the nancial year, depreciation is provided from the year of acquisition and to the year before disposal respectively. For acquisitions less than $1,000, they are expended as expenses in the income statement. The gain or loss on disposal or retirement of an asset is determined as the difference between the sale proceeds and the carrying amount of the asset and is recognised in the income statement. Fully depreciated property, plant and equipment are retained in the books of accounts until they are no longer in use. The carrying values of property and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets are written down to their recoverable amount. Investment properties Investment properties consist of buildings and improvements held to earn rentals including buildings, which could not be sold separately and where an insignicant portion is held for use in the supply of services or for administrative purposes. The Group applies the cost model. Investment properties are stated at cost less accumulated depreciation, less any impairment in value. Such cost includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met; and excludes the costs of day to day servicing of an investment property. Depreciation is computed using the straight-line method over the estimated useful lives of the investment properties of 3 30 years. Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benet is expected from its disposal. Any gains or losses on disposal or retirement of investment property are recognised in the consolidated income statement in the year of disposal or retirement. The carrying value of investment properties are reviewed for impairment when events on changes in circumstances indicate the carrying value may not be recoverable. If such indication exists and where the carrying values exceed the estimated recoverable amounts, the assets are written down to their recoverable amount. Transfers are made to investment property when, and only when, there is a change in use, evidenced by ending of owner-occupation, commencement of an operating lease to another party or ending of construction or development. Transfers are made from the investment property when and only when, there is a change in use, evidenced by the commencement of owner-occupation or commencement of development with a view to sell. Subsidiaries Subsidiaries are those in which more than 50% of the issued share capital is held or over whose nancial and operating policy decisions the Group controls. Shares in subsidiaries are stated at cost less provision for any impairment losses on an individual subsidiary basis.
24
2(d)
Summary of signicant accounting policies (contd) Associated companies Associated companies are those in which the Group has a long-term equity interest of between 20% and 50% or in whose nancial and operating policy decisions the Group exercises signicant inuence. Investments in associated companies at company level are stated at cost. Provision is made for any impairment losses on an individual company basis. The Groups share of pro ts less losses of associated companies is included in the Groups results. If the Groups share of losses of an associated company equals or exceeds the carrying amount of the investment, the Group discontinues including its share of further losses. The investment is reported at nil balance. The Groups share of the post-acquisition reserves is added to the amount of the investment in associated companies in the balance sheet. These amounts are based on the latest audited nancial statements or management accounts of the companies concerned made up to the end of the Companys nancial year. Where the accounting policies of the associated companies do not conform with those of the Group, adjustments are made on consolidation where the amounts involved are signicant to the Group. Land inventories Cost of land inventories is computed using the average cost method. Net realisable value represents the estimated selling price less costs to be incurred in selling the land. Land inventories are carried at the lower of cost and net realisable value. Cost of land inventories includes pre-acquisition cost, cost of land, borrowing cost and other costs directly or indirectly related to the acquisition and development of the land. These costs are capitalised during the period such activities that are necessary to get these assets ready for sale are in progress. Capitalisation of these costs will cease when land development is completed and the land is available for sale. The costs incurred in the development of the resort and common areas/facilities are allocated proportionally to the saleable parcels of land. Other land development costs incurred are allocated to each parcel of land using the specic identication method. Land inventories are derecognised when it has been sold as integral part with sale of land and no future economic benet is expected from its disposal. Cost of land infrastructure inventory on sale of land or loss from disposal is recognised in the income statement in the year of sales or disposal. Other inventories Other inventories are stated at the lower of cost and net realisable value. Cost is determined on a rst-in, rstout basis. Provision is made for obsolete, slow moving or defective inventory in arriving at the net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale. Investment in nancial assets Classication The Group classies its investments in nancial assets in the following categories: nancial assets at fair value through pro t or loss, loans and receivables, held-to-maturity investments, and available-for-sale nancial assets, where applicable. The classi cation depends on the purpose for which the assets were acquired. Management determines the classi cation of its nancial assets at initial recognition and re-evaluates this designation at every reporting date, with the exception that the designation of nancial assets at fair value through prot or loss is not revocable. (1) Financial assets at fair value through prot or loss This category has two sub-categories: nancial assets held for trading, and those designated at fair value through pro t or loss at inception. A nancial asset is classi ed in this category if acquired principally for the purpose of selling in the short term or if so designated by management. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classied as current assets if they are either held for trading or are expected to be realised within 12 months after the balance sheet date. As at 31 December 2006, the Group has no nancial assets at fair value through prot or loss.
25
2(d)
Summary of signicant accounting policies (contd) Investment in nancial assets (contd) Classication (contd) (2) Loans and receivables Loans and receivables are non-derivative nancial assets with xed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of trading the receivable. They are included in current assets, except those maturing more than 12 months after the balance sheet date. These are classied as non-current assets. Loans and receivables include loan receivable and trade and other receivables on the balance sheet. (3) Held-to-maturity investments Held-to-maturity investments are non-derivative nancial assets with xed or determinable payments and xed maturities that the Groups management has the positive intention and ability to hold to maturity. As at 31 December 2006, the Group has no held-to-maturity investments. (4) Available-for-sale nancial assets Available-for-sale nancial assets are non-derivatives that are either designated in this category or not classied in any of the other categories. They are included in non-current assets unless management intends to dispose of the assets within 12 months after the balance sheet date. Investments in unquoted equity shares are classied as available-for-sale nancial assets. Recognition and derecognition Purchases and sales of investments are recognised on trade-date the date on which the Group commits to purchase or sell the asset. Investments are derecognised when: (i) (ii) the rights to receive cash ows from the nancial assets have expired or have been transferred, or the Group retains the right to receive cash ows from the asset but has assumed an obligation to pay them in full without material delay to a third party under a pass-through arrangement, and the Group has transferred substantially all risks and rewards of ownership or has neither substantially all risks and rewards of ownership but has transferred the control of the asset.
(iii)
Initial measurement Financial assets are initially recognised at fair value plus transaction costs except for nancial assets at fair value through prot or loss, which are recognised at fair value. Subsequent measurement Available-for-sale nancial assets and nancial assets at fair value through prot or loss are subsequently carried at fair value. Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method. Realised and unrealised gains and losses arising from changes in the fair value of the nancial assets at fair value through prot or loss investment category are included in the income statement in the period in which they arise. Unrealised gains and losses arising from changes in the fair value of investments classi ed as available-for-sale are recognised in the fair value reserve within equity. When investments classied as availablefor-sale are sold or impaired, the accumulated fair value adjustments in the fair value reserve within equity are included in the income statement. Determination of fair value The fair values of quoted nancial assets are based on current bid prices. If the market for a nancial asset is not active, the Group establishes fair value by using valuation techniques. These include the use of recent arms length transactions, reference to other instruments that are substantially the same, discounted cash ow analysis, and option pricing models rened to reect the issuers specic circumstances.
26
2(d)
Summary of signicant accounting policies (contd) Golf membership Golf membership is measured initially at cost. Subsequent to initial recognition, golf membership is stated at cost less any accumulated impairment losses. The carrying value of golf membership is reviewed annually for impairment when an indicator of impairment arises during the reported period indicating that the carrying value may not be recoverable. Cash and cash equivalents Cash and cash equivalents comprise cash and bank balances and short-term time deposits with an original maturity of three months or less but exclude xed deposits which are pledged to a bank. Financial liabilities The companys nancial liabilities include bank borrowings, loans and payables. Financial liabilities are recognised when the Group becomes a party to the contractual agreements of the instrument. All interest-related charges are recognised as an expense in nance costs in the income statement. Borrowings are recognised initially at fair value of proceeds received less attributable transaction costs, if any. Borrowings are subsequently stated at amortised cost which is the initial fair value less any principal repayments. Any difference between the proceeds (net of transaction costs) and the redemption value is taken to the income statement over the period of the borrowings using the effective interest method. Borrowings which are due to be settled within 12 months after the balance sheet date are included in current liabilities in the balance sheet even though the original terms was for a period longer than 12 months and an agreement to renance, or to reschedule payments, on a long-term basis is completed after the balance sheet date and before the nancial statements are authorised for issue. Borrowings to be settled within the Groups normal operating cycle are classied as current. Other borrowings due to be settled more than 12 months after the balance sheet date are included in non-current liabilities in the balance sheet. Payables, which represent the amounts to be paid in the future for goods and services received, whether or not billed to the Group, are initially measured at fair value, and subsequently measured at amortised cost, using the effective interest method. Employee benets Pension obligations The Group participates in national pension schemes as de ned by the laws of the countries in which it operates. As required by Indonesian Law, the Group makes contributions to the dened contributions state pension scheme, Jamsostek. Jamsostek contributions are recognised as compensation expense in the same period as the employment that gives rise to the contributions. The ASTEK fund from Jamsostek contributions are responsible for the entire insurance claim relating to accidents incurred by the employees at the work place and for the entire retirement benet obligations of the related employees under the said state pension scheme. The Group also makes contributions to a de ned contribution pension plan which is administered by legal entity, Dana Pensiun Lembaga Keuangan Indolife Pensiontama for certain employees. The contributions are recognised as an expense in the same period as the employment that gives rise to the contributions. The Company and its subsidiaries operating in Singapore make contributions to the Central Provident Fund scheme in Singapore, a dened contribution pension scheme. Contributions to national pension schemes are recognised as an expense in the period which the related service is performed.
27
2(d)
Summary of signicant accounting policies (contd) Employee benets (contd) Employee leave entitlements Employee entitlements to annual leave are recognised when they accrue to employees. Accrual is made for the estimated liability for unconsumed leave as a result of services rendered by employees up to the balance sheet date. Provisions for employee service entitlements The Group has recognised unfunded employee benets liability in accordance with Labor Law No. 13/2003 dated 25 March 2003 (the Law). The cost of providing employee benets under the Law is determined using the projected unit credit actuarial valuation method. Actuarial gains and losses are recognised as income or expense when the net cumulative unrecognised actuarial gains and losses at the end of the previous reporting period exceeded 10% of the higher of the present value of dened obligation. These gains or losses are recognised over the expected average remaining working lives of the employees. Further, part service costs arising from the introduction of a dened benet plan or changes in the benets payable of an existing plan are required to be amortised on a straight-line basis over the period until the benets concerned become vested. Key Management Personnel Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of the entity. Directors and certain general managers/head of departments are considered key management personnel. Income taxes The liability method of tax effect accounting is adopted by the Group. Current taxation is provided at the current taxation rate based on the tax payable on the income for the nancial year that is chargeable to tax. Deferred taxation is provided at the current taxation rate on all temporary differences existing at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts in the nancial statements. Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible temporary differences to the extent that it is probable that future taxable prot will be available against which the deductible temporary differences can be utilised. Deferred income 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. In compliance with Government Regulation No. 5/2002 dated 23 March 2002 of the Republic of Indonesia, each payment of building rentals is subject to nal tax of 10%. Impairment of assets The carrying amounts of the Groups and the Companys non- nancial assets subject to impairment are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, these assets recoverable amounts are estimated. An impairment loss is recognised whenever the carrying amounts of these assets exceeds their recoverable amounts. Recoverable amount is dened as the higher of the fair value less cost to sell and value in use. For the purpose of impairment testing of these assets, recoverable amount is determined on an individual asset basis unless the asset does not generate cash ows that are largely independent of those from other assets. In such case, recoverable amount is determined for the cash-generating-units to which the asset belongs to.
28
2(d)
Summary of signicant accounting policies (contd) Impairment of assets (contd) An impairment loss is recognised for the amount by which the assets or cash-generating units carrying amount exceeds its recoverable amount. Impairment losses are charged to the income statement unless it reverses a previous revaluation in which case it will be charged to equity under the heading revaluation reserve. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount or when there is an indication that the impairment loss recognised for the asset no longer exists or decreases. An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined if no impairment loss had been recognised. A reversal of an impairment loss on a revalued asset is credited directly to equity under the heading revaluation reserve. However, to the extent that an impairment loss on the same revalued asset was previously recognised as an expense in the income statement, a reversal of that impairment loss is recognised as income in the income statement. Revenue recognition Revenue is recognised to the extent that it is probable that the economic benets will ow to the Group and the revenue can be reliably measured. Revenue from services is recognised when service has been rendered. Revenue from the sale of goods is recognised when all signicant risks and rewards of ownership of the goods have been passed to the customers. The following speci c recognition criteria must also be met before revenue is recognised: Sales of land and building Revenue from the sale of land and building should be recognised when all the following conditions have been satised: (a) (b) The entity has transferred to the buyer the signicant risks and rewards of ownership of the goods; The entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; The amount of revenue can be measured reliably; It is probable that the economic benets associated with the transaction will ow to the enterprise; and The costs incurred or to be incurred in respect of the transaction can be measured reliably.
(c) (d) (e)
The Group also considers the means of payment and evidence of the buyers commitment to complete payment. For example, when the aggregate of the payments received, including the buyers initial down payment, or continuing payments by the buyer, provide insufcient evidence of the buyers commitment to complete payment. If the above conditions are not met, the payments received are accounted for under the deposit method. Resort operations and ferry services Revenue is recognised when the services are rendered. Golf and social facilities revenue Revenue from golf and social facilities is recognised as goods are delivered or services rendered. Revenue from golf subscription fees is recognised over the period of the subscription. Upon completion of the golf course, sales of non-refundable golf club membership is fully recognised as revenue in the year of sales.
29
2(d)
Summary of signicant accounting policies (contd) Rental income and rendering of service and maintenance Revenue from rental, service and maintenance charges is recognised proportionately over the lease term. The aggregate cost of any incentives as a reduction of rental income is recognised proportionately over the lease term. Rental payments received in advance are recorded as unearned income and amortised proportionately over the lease term using the straight-line method. Deposits received from tenants are recorded as part of other current liabilities. Utilities revenue Revenue from electricity and water supply is recognised upon delivery. Telecommunication service Revenue from telecommunication services is recognised on the accrual basis. Revenue from telecommunication installation services is recognised at the time the installations are placed in service. Revenue from network interconnection with other domestic telecommunications carriers are recognised at the time connections takes place. Clinic operation Income from clinic operation is recognised when medical services are rendered or when medical supplies are delivered to patients. Interest income Interest income is recognised on a time-apportioned basis. Dividends Dividend income is recognised when the shareholders right to receive the payment is established. Capitalisation of borrowing costs Interest costs and similar charges are expensed in the consolidated income statement in the period in which they are incurred, except to the extent that they are capitalised as being attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to prepare for its intended use or sale. Foreign exchange differences arising from foreign currency borrowings are capitalised to the extent that they are regarded as an adjustment to interest costs. Capitalisation of borrowing costs will cease when all the activities necessary to prepare the asset for its intended use or sale are substantially completed. Operating leases Where the Company/Group is the lessee Leases of assets in which a signicant portion of the risks and rewards of ownership are retained by the lessor are classied as operating leases. Rentals on operating leases are charged to the income statement on a straight-line basis over the lease term. Lease incentives, if any, are recognised as an integral part of the net consideration agreed for the use of the leased asset. Penalty payments on early termination, if any, are recognised in the income statement when incurred. Where the Company/Group is the lessor Assets leased out under operating leases are included under investment properties (see policy on investment properties). Rental income (net of any incentives given to lessees) on operating leases is recognised on a straight-line basis over the lease term (see policy on revenue recognition).
30
2(d)
Summary of signicant accounting policies (contd) Functional and presentation currency Items included in the nancial statements of each entity in the Group are measured using the currency that best re ects the economic substance of the underlying events and circumstances relevant to that entity (the functional currency). The consolidated nancial statements of the Group and the balance sheet of the Company are presented in Singapore dollars to the nearest thousand, which is also the functional currency of the Company. Conversion of foreign currencies Monetary assets and liabilities in foreign currencies are translated into Singapore dollars at rates of exchange closely approximating those ruling at balance sheet date. Transactions in foreign currencies are converted at rates closely approximating those ruling at transaction dates. Exchange differences arising from such transactions are recorded in the consolidated income statement in the period in which they arise. For inclusion in the Groups nancial statements, assets and liabilities of foreign subsidiary and associated companies are translated into Singapore dollars at rates of exchange closely approximate to those ruling at the balance sheet date. The results of foreign subsidiary and associated companies are translated using the average monthly rates. Exchange differences due to such currency translations are dealt with through translation reserves. Financial instruments Financial instruments carried on the balance sheet include cash and cash equivalents, nancial assets and nancial liabilities. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item. Disclosures on nancial risk management objectives and policies are provided in Note 36. Segment reporting A segment is a distinguishable component of the Group within a particular industry (business segment) which is subject to risks and rewards that differ from those of other segments. Inter-segment pricing is determined on an arms length basis. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise interest-bearing loans, borrowings and related expenses, and corporate assets and expenses and income tax assets and liabilities. Segment capital expenditure is the total cost incurred during the nancial year to acquire segment assets that are expected to be used for more than one year. Segment information is presented in respect of the Groups business segments. The primary format by business segments, is based on the Groups management and internal reporting structure. In presenting information on the basis of business segments, segment revenue and segment assets are based on the nature of the products or services provided by the Group. Related Parties Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise signicant inuence over the other party in making nancial and operating decisions. Parties are also considered related if they are subject to common control or common signicant inuence. Related parties may be individuals or corporate entities.
31
Revenue Revenue of the Group consists of income from operations of utilities, industrial parks, resort operations and property development. The segmental analysis is given in Note 35. Revenue excludes applicable goods and services tax and inter-company transactions and is arrived at after deduction of any trade discounts.
Intangible assets Computer software $000 The Company Cost At 1 January 2005 Additions At 31 December 2005 Additions At 31 December 2006 Accumulated amortisation At 1 January 2005 Amortisation for the year At 31 December 2005 Amortisation for the year At 31 December 2006 Net book value At 31 December 2006 At 31 December 2005 The Group Cost At 1 January 2006 On acquisition of subsidiaries Additions At 31 December 2006 Accumulated amortisation At 1 January 2006 On acquisition of subsidiaries Amortisation for the year At 31 December 2006 Net book value At 31 December 2006
15 5 20 11 31
3 5 8 9 17
14 12
20 137 108 265
8 52 79 139
126
32
Property, plant and equipment Furniture xtures and equipment $000 The Company Cost At 1 January 2005 Additions At 31 December 2005 Additions At 31 December 2006 Accumulated depreciation At 1 January 2005 Depreciation for the year At 31 December 2005 Depreciation for the year At 31 December 2006 Net book value At 31 December 2006 At 31 December 2005
Ofce equipment $000
Leasehold improvements $000
Total $000
57 57 17 74
19 13 32 23 55
91 9 100 56 156
167 22 189 96 285
5 11 16 12 28
3 7 10 11 21
1 20 21 21 42
9 38 47 44 91
46 41
34 22
114 79
194 142
33
Property, plant and equipment (contd) Balance at 1.1.2006 $000 On acquisition of subsidiaries $000 Balance at 31.12.2006 $000
The Group Cost Leasehold land Land improvements Landll Building and infrastructures Golf course Utilities Machinery and equipment Vessels and ferry equipment Working wharf Transportation equipment and vehicles Medical equipment Furniture, xtures and equipment Ofce equipment Resort equipment Reservoir Telecommunications equipment Leasehold improvements Constructioninprogress Total Accumulated depreciation Leasehold land Land improvements Landll Building and infrastructures Golf course Utilities Machinery and equipment Vessels and ferry equipment Working wharf Transportation equipment and vehicles Medical equipment Furniture, xtures and equipment Ofce equipment Resort equipment Reservoir Telecommunications equipment Leasehold improvements Total
Additions $000
Transfers $000
Disposals $000
100 57 32 189
100,155 4,661 1,559 214,713 25,307 241,665 53,336 21,980 1,685 5,527 661 20,895 2,202 2,080 12,734 9,495 1,032 34,093 753,780
49 5 1,307 11,830 18 112 508 5 2,276 712 108 115 3,800 20,845
372 32,656 14 (33,042)
(84) (133) (29) (34) (23) (303)
100,071 4,710 1,564 216,492 25,307 286,151 53,354 21,959 1,685 6,006 666 23,208 2,923 2,188 12,734 9,610 1,032 4,851 774,511
21 16 10 47
20,147 1,928 1,559 95,441 6,633 149,879 37,147 13,848 1,685 4,998 656 15,146 2,065 1,964 4,788 5,210 951 364,045
1,381 150 1 6,778 375 7,829 2,192 1,234 267 3 997 177 29 302 353 11 22,079
(13) (132) (29) (29) (24) (227)
21,515 2,078 1,560 102,240 7,008 157,708 39,339 14,950 1,685 5,236 659 16,130 2,228 1,993 5,090 5,563 962 385,944
34
Property, plant and equipment (contd) Balance at 31.12.2006 $000
The Group Net book value Leasehold land Land improvements Landll Building and infrastructures Golf course Utilities Machinery and equipment Vessels and ferry equipment Working wharf Transportation equipment and vehicles Medical equipment Furniture, xtures and equipment Ofce equipment Resort equipment Reservoir Telecommunications equipment Leasehold improvements Constructioninprogress Total
78,556 2,632 4 114,252 18,299 128,443 14,015 7,009 770 7 7,078 695 195 7,644 4,047 70 4,851 388,567
The leasehold land on Bintan Island represent 1,762 ha used as site for utilities and common facilities under PT Bintan Resort Cakrawala. The leasehold land and property (Hak Guna Bangunan / HGB) at Batam Island, which are leased from Batam Industrial Development Authority, are held for 30 years up to the following expiration dates: HGB PT Batamindo Investment Cakrawala (236.3 hectares) Expiration date 17 and 18 December 2019, (54.3 ha and 151.6 ha) 26 February 2025 (28.9 ha) and 1 July 2031 (1.5 ha) 31 August 2020
PT Batamindo Executive Village (213 hectares)
PT Bintan Inti Industrial Estates (PT BIIE) HGB covering a land of approximately 168.6 ha at Bintan Island is held for 30 years up to 24 August 2025 with an option to extend for another 50 years up to 24 August 2075. As of 31 December 2006, the HGB on another 100 ha of land, currently held by another subsidiary, PT Surya Bangunpertiwi, is not yet transferred under PT BIIEs name. The leasehold land and building at land parcels AU1, BT1a and WR1 (township. utility and reservoir) which cover an area of 1,698 hectares are used as collateral for the bank loan payables to PT Bank Mega Tbk as disclosed under Note 22 Loans and borrowings. Vessels and ferry equipment are pledged to a bank as collateral for the secured bank loan and other banking facilities as disclosed under Note 22 Loans and borrowings.
35
Property, plant and equipment (contd) Construction in progress at the Industrial Parks amounting to $2,848,000 as at 31 December 2006 includes all costs related to the construction of the industrial complex and supporting infrastructures and amenities and telecommunication project. The accumulated costs will be transferred to the appropriate property and equipment and investment property accounts upon completion of the specic phases of the Project. Construction in progress at the Executive Village amounting to $1,278,000 as at 31 December 2006, includes all preliminary costs related to the construction of condominium phase 3A and for golf course phase 2 such as design, soil investigation and consultation fee. The management believes that the postponed projects can be realised upon shareholders approval that depends on the improvement of economic conditions in Indonesia. The remaining balance of construction in progress represents mainly all preliminary costs related to the construction of urban beach centre.
Investment properties 2006 $000
The Group Cost Balance at beginning Acquisition of subsidiaries Disposals Balance at end Accumulated depreciation Balance at beginning Acquisition of subsidiaries Depreciation charge Disposals Balance at end Net book value Details of the investment properties are as follows:
567,626 (122) 567,504
219,217 11,411 (64) 230,564 336,940
Description and location Factories, dormitories, commercial complex and housing in Batamindo Industrial Park, Batamindo Executive Village and Bintan Industrial Estate situated at Batam Island and Bintan Island
Gross Area (approximately) 926,616 sqm
The fair value of the investment properties, except PT Batamindo Executive Village (BEV)s investment properties, as of 31 December 2006 amounted to $403.5 million and were based on recent valuation using the open market value and depreciated replacement cost method by independent professional valuers, Colliers International Consultancy and Valuation (Singapore) Pte Ltd, after taking into consideration the prevailing market conditions and other factors considered appropriate by the Directors. The net carrying values of BEVs investment properties as of 31 December 2006 amounted to $1.1 million.
36
Subsidiaries 2006 $000 1,205,212 2005 $000
The Company Unquoted equity investments, at cost
On 24 April 2006, pursuant to purchase and sale agreements dated 31 March 2006, 16 April 2003 (as amended by supplemental agreements dated 8 February 2005 and 31 March 2006), and 23 December 2004 (as amended by supplemental agreement dated 31 March 2006), the Company acquired the following subsidiaries for a total consideration of $1,205,212,000. Purchase consideration $000 463,663
Name of subsidiaries PT Batamindo Investment Cakrawala
Satised by Issuance and allotment of 532,064,886 ordinary shares to PT Herwido Rintis and 101,929,379 ordinary shares to Ascendas Investments Pte Ltd and cash of $154,999,449 Issuance and allotment of 3,106,688 ordinary shares to PT Elitindo Citra Lestari and cash of $3,999,615 Issuance and allotment of 74,470,683 ordinary shares to Ascendas Investment Pte Ltd and cash of $79,690,388 Issuance and allotment of 1,220,864,026 ordinary shares to Parallax Venture Partners XXX Limited Cash of $5,200,000
PT Bintan Resort Cakrawala
5,569
PT Bintan Inti Industrial Estate
117,439
Verizon Resorts Limited Biintan Resort Ferries Private Limited
613,341 5,200 1,205,212
The acquired subsidiaries contributed revenue of $176,639,000 and net prot of $36,520,000 to the Group. The subsidiaries assets and liabilities as at 31 December 2006 were $1,410,532,000 and $136,256,000. If the acquisition had occurred on 1 January 2006, Group revenue would have been $258,955,000 and net prot would have been $21,135,000.
37
Subsidiaries (contd) The subsidiaries as at 31 December 2006 are as follows: Country of incorporation/ principal place of business
Name of subsidiaries
Cost of investment 2006 $000 2005 $000
Percentage of effective interest 2006 % 2005 %
Principal activities
Directly held PT Batamindo Investment Cakrawala (PT BIC) (1) Verizon Resorts Limited (VRL Labuan) (2) PT Bintan Inti Industrial Estate (PT BIIE) (1) (a) Indonesia Malaysia Indonesia 463,663 613,341 117,439 100 100 100 Development and management of industrial estate Investment holding Development, operation, maintenance and management of Bintan Industrial Estate together with the supporting infrastructure support activities Development and operation of a tourism area in Bintan including the sale of land in such area Provision of ferry services between Singapore and Bintan
PT Bintan Resort Cakrawala (PT BRC) (1) (b)
Indonesia
5,569
83.72
Bintan Resort Ferries Private Limited (BRF) (4) (c) Indirectly held through PT BIC: PT Batamindo Executive Village (PT BEV) (1)
Singapore
5,200
88.60
Indonesia
60
Development and operation of Southlinks Country Club and Batam Executive Village, an integrated complex consisting of golf course, condominiums, cottages and other social facilities Telecommunications service provider Dormant
PT Batam Bintan Telekomunikasi (PT BBT) (1) Batamindo Investment (S) Ltd (BI) (6)
Indonesia
95
Singapore
100
38
Subsidiaries (contd) Country of incorporation/ principal place of business
Name of subsidiaries
Cost of investment 2006 $000 2005 $000
Percentage of effective interest 2006 % 2005 %
Indirectly held through VRL Labuan PT Surya Bangunpertiwi (PT SBP) (3) PT Buana Megawisatama (PT BMW) (3) PT Suakajaya Indowahana (PT SI) (3) Indirectly held through BRF BRF Holidays Pte Ltd (BRFH) (5) Singapore 1,205,212
(a) (b)
Indonesia Indonesia Indonesia
99.99 99.99 80
Wholesaler of hotels, resorts and golf courses Wholesaler of hotels, resorts and golf courses Trading, industry, development and services
88.60
Provision of tour operations and related services
The Company has an interest of 40% in PT BIIE and the balance of 60% is held by PT BIC. The Company has a direct interest of 3.69% in PT BRC, while a subsidiary, Verizon Resorts Limited, has an interest of 67.83% in PT BRC, and another subsidiary, PT SI, has an interest of 15.25% in PT BRC. The effective interest of equity held by the Group is 83.72%. The Company has a direct interest of 30% in BRF whilst its subsidiary, PT BRC, has an interest of 70%. The effective interest of equity held by the Group is 88.6%. Audited by Purwantono, Sarwoko & Sandjaja Audited by Chieng & Associates Audited by Drs Johan, Malonda & Rekan Audited by TeoFoongWongLCLoong Audited by N.F Lee & Co Audited by Ernst & Young
(c) (1) (2) (3) (4) (5) (6)
Shares held in PT BIC and PT SI are used as collateral to secure bank loan as disclosed under Note 22 Loans and borrowings.
Associated companies 2006 $000 543 (16) 628 1,155
The Group Unquoted equity investments, at cost Exchange translation difference Share of post-acquisition reserves
39
Associated companies (contd) The associated companies are as follows: Country of incorporation Percentage of equity held 2006 % Held by PT BIC PT Soxal Batamindo Industrial Gases Batamindo Carriers Pte Ltd Batamindo Medical Management Pte Ltd Held by PT SI Bintan Resort Management Pte Ltd Singapore 40 Dormant Indonesia Singapore Singapore 30 36 50 Production and sale of industrial gases Provision of ship and boat chartering services Dormant 2005 %
Name of associated companies
The summarised nancial information of associated companies is as follows: 2006 $000 Current assets Noncurrent assets Current liabilities Noncurrent liability Net assets Revenue Losses Dividend 869 576 (289) (7) 1,149 1,715 (567) 78
Other investments 2006 $000 10,000 (10,000)
The Group Unquoted equity investments, at cost Allowance for impairment losses
40
10
Deferred tax assets 2006 $000 4,794 699 5,493 (Charged)/ credited to income statement $000
The Group Balance at beginning On acquisition of subsidiaries Credited to income statement Balance at end
On acquisition of subsidiaries $000 The balance comprises tax on: Fiscal loss net of expired tax loss Estimated liability for employee service entitlements Allowance for doubtful debts Provision for impairment loss in value of investments Valuation allowance Property, plant and equipment 5,279 498 720 3,000 (2,839) (1,864) 4,794
Balance at 31 December 2006 $000
279 497 1,300 942 (2,319) 699
5,558 995 2,020 3,000 (1,897) (4,183) 5,493
11
Loan receivable 2006 $000
The Group Receivable Not later than one year Later than one year and not later than ve years Later than ve years
62,046 62,046
Convertible loan receivable of approximately $62,046,000 is unsecured and is convertible at the option of its subsidiary, Verizon Resorts Limited, into shares in the capital of PT Alam Indah Bintan (PT AIB) at the par value of each PT AIB share of US$1. The conversion price was agreed between the parties taking into account the unaudited net liabilities of PT AIB as at 31 December 2004 of approximately S$14.9 million. Interest on the loan is at the rate of 1.5% above the Singapore Inter-bank Offer Rate (SIBOR) on a quarterly basis per annum. The PT AIB Convertible Loan shall be settled via repayment and/or the issue of PT AIB Shares pursuant to the exercise of the option, in any event by 31 December 2009. The conversion of the loan receivable from PT AIB into PT AIB shares would result in VRL Labuan holding approximately 48.71% of the enlarged issued share capital of PT AIB. In that event, PT AIB will become an associated company of VRL Labuan.
41
12
Other non-current assets 2006 $000 4,223 (2,240) 1,983 1,317 36 3,336
(a) Golf membership represents the value of non-refundable unsold golf membership. Due to the low market demand for golf membership, the Group writes down the non-refundable membership to its recoverable amount. The recoverable amount is based on the published market price of the golf membership.
The Group Golf membership (a) Provision for impairment loss Estimated claims for income tax refund Deposits paid
13
Land inventories 2006 $000 551,011
The Group At cost
As at 31 December 2006, PT SBPs land inventories comprise 3,767 ha with Building Use Right (HGB) Certicates which includes 100 ha to be transferred to PT BIIE. These landrights will expire on certain dates in 2023 to 2026. As at 31 December 2006, PT BMWs land inventories comprise 14,224 ha of land with HGB certicates. These landrights will expire on several dates from 2023 to 2028.
14
Other inventories 2006 $000 9,333 70 3,866 13,269 (537) 12,732 Stated at Cost Medicine Fuel and lubrication oil Consumables and supplies Net realisable value Fuel and lubrication oil Consumables and supplies 70 2,121 190 7,193 3,158 12,732
The Group Fuel and lubrication oil, at cost Medicines, at cost Consumables and supplies, at cost Provision for stock obsolescence
42
15
Trade and other receivables The Company 2006 2005 $000 $000 Trade receivables external parties Allowance for doubtful debts The Group 2006 $000
19 4 87,862 2,272 90,157
63,113 (10,142) 52,971 18 2,878 6,067 13,166 55 (3,215) 71,940
Refundable deposits Prepayments Loan to a subsidiary Recoverable from third party Interest receivable Amount owing by related parties Others Allowance for doubtful debts
27 76 87,958 88,061
Trade receivables are generally due within 30 to 90 days and do not bear any interest. All receivables are subject to credit risk exposure. The Group does not identify any specic concentration of credit risk as the receivables resemble a large number of balances spread over a large number of customers. The Company has identied signicant concentration of credit risk arising from the loan given to a subsidiary. Certain trade receivables are used as collateral for the interest-bearing loans obtained (Note 22). Recoverable from third party represents direct expenditure incurred relating to the planned future acquisition of group of companies. The expenditure includes legal and professional fees. The loan to a subsidiary, is unsecured, interest-free and repayable on demand.
16
Restricted cash The Company 2006 2005 $000 $000 Fixed deposits The Company and The Group The restricted cash represents cash in a bank account with United Overseas Bank Limited (UOBL). As disclosed in Note 22 Loans and borrowings, the bank loan with UOBL is secured by an assignment of accounts receivable and the related bank account is designed and maintained for collection of such accounts receivable. The xed deposit matured within 3 years and 8 months from the end of the nancial year in 2005. The effective interest rate is 3.2% (2005 1.8%) per annum. During the nancial year, the xed deposit of $25,000,000 pledged for bank loan to the extent of $112,500,000 (Note 22) was released. 25,000 The Group 2006 $000 908
43
17
Cash and cash equivalents The Company 2006 2005 $000 $000 Cash on hand Cash in banks 1 386 387 2,000 2,387 Interest rate on time deposits Singapore Dollar Indonesian Rupiah United States Dollar 1 251 252 252 The Group 2006 $000 301 41,008 41,309 25,625 66,934
Time deposits
3.2%
2% 3.355% 10.25% 13% 3.5% 5.025%
18
Share capital 2006 $000 * 961,322 243,890 1,205,212 2005 $000 * *
The Company and The Group Balance at beginning 20 (2005 2) ordinary share Issue 1,932,435,662 ordinary shares for the acquisition of subsidiaries Issue 477,987,502 ordinary shares for cash Balance at end 2,410,423,184 (2005 2) ordinary shares
* Representing $2 share capital.
Pursuant to amendments to the Companies Act, Cap. 50, the concepts of par value of shares and authorised share capital were abolished with effect from 30 January 2006 and on that date, the shares of the Company ceased to have a par value. The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at shareholders meetings. All shares rank equally with regard to the Companys residual assets.
19
Deposits from tenants and golf membership 2006 $000 32,615 7,487 40,102
The Group Deposits from tenants Refundable golf membership deposit
44
19
Deposits from tenants and golf membership (contd) Deposits from tenants represent advance payments received from tenants equivalent to certain months factory and dormitory rentals, hawkers centers, and deposits for electricity supply, in accordance with the provisions of their respective lease agreements. These deposits will be refunded or applied against rentals due at the end of the lease period. Refundable deposits received for golf club membership, which consist of Individual Type, Corporate A and B type, will be due on 1 August 2020.
20
Employee benets liabilities 2006 $000 4,013 1,092 (56) 5,049
The Group Balance at beginning On acquisition of subsidiaries Net employee benets expense Actual benet payment Balance at end
On 20 June 2000, under Indonesian Law, the Minister of Manpower of the Republic of Indonesia issued Decree No. Kep-150/Men/2000 regarding The Settlement of Work Dismissal and Determination of Separation, Gratuity and Compensation Payment by Companies. Should there be any work dismissal, a company is obliged to settle any separation, gratuity and compensation payment, based on the duration of work of the respective employees and in accordance with the conditions stated in the Decree. The Decree has been enacted into Law No.13 of 2003 regarding Manpower by the President of the Republic of Indonesia on 25 March 2003. The Group recognised a provision for employees service entitlement in accordance with the above Law. The benets are unfunded. The provision is estimated using the Projected Unit Credit Method based on the actual calculation performed by independent actuaries, PT Dayamandiri Dharmakonsilindo and PT Jasa Aktuaria Pensiun dan Asuransi which considered the following assumptions: Discount rate Mortality rate Annual salary increases Retirement age Turnover rates Disability rate : : : : : : 11% per annum USA Table of Mortality, commissioners standard ordinary 1980 9% to 10% per annum 55 years 5% up to age 25 and reducing linearly by 0.25% for each year up to 0% at the age of 45 and thereafter 10% of mortality rate
The net employee benets expense comprises the following: 2006 $000 Current service cost Interest expense Immediate recognition of past service cost Unrecognised past service costvested Excess payment 686 387 (15) 22 12 1,092
45
20
Employee benets liabilities (contd) Present value of employee benets: 2006 $000 Unfunded status Unrecognised past service costunvested Unrecognised past service costvested Unrecognised actual losses 5,092 52 (48) (47) 5,049
21
Deferred tax liabilities 2006 $000 17 89 106 Charged/ (credited) to income statement $000
The Group Balance at beginning On acquisition of subsidiaries Charged to income statement Balance at end
On acquisition of subsidiaries $000 The balance comprises tax on: Fiscal loss net of expired tax loss Estimated liability for employee service entitlements Property, plant and equipment 183 1,161 (1,327) 17
Balance at 31 December 2006 $000
(208) (1,161) 1,458 89
(25) 131 106
46
22
Loans and borrowings The Company 2006 2005 $000 $000 Bank loans Term loan 1 United Overseas Bank Limited Term loan 2 United Overseas Bank Limited Term loan 3 United Overseas Bank Limited PT Bank Mega Tbk Bank Niaga Tbk The Group 2006 $000
90,000 90,000
105,000 105,000 (15,000) 90,000
90,000 20,840 1,500 10,740 226 123,306 (43,286) 80,020
Less: Current portion
(24,000) 66,000
The outstanding bank loans of the Company and the Group exposed to interest rates are as follows: The Company 2006 2005 $000 $000 Current portion: at oating interest rate at xed interest rate The Group 2006 $000
24,000 24,000
15,000 15,000
32,320 10,966 43,286
Non-current portion: at oating interest rate at xed interest rate
66,000 66,000
90,000 90,000
80,020 80,020
(a)
Term loan 1 The loan is secured by: (i) (ii) pledge of shares in the capital of PT BIC and PT SI; and deed of assignment and charge, whereby the companies have assigned and charged to the bank all its rights, title and interest in dividends arising from; inter alia, the shares pledged as mentioned in (i) above.
During the nancial year, the following which were previously placed as securities for the loan, were released: (i) (ii) pledge of shares in the capital of PT BMW and PT SBP ; and xed deposit of $25,000,000 (Note 16).
47
22
Loans and borrowings (contd) (a) Term loan 1 (contd) Certain covenants, among others, need to be maintained and complied with: (a) (b) the tangible consolidated net worth of PT BIC will not at any time be less than $400,000,000; the ratio of EBITDA of PT BIC to its interest expense for each test period will not be less than 2.5 to 1. the operating margin of PT BIC for its nancial year will not be less than 25%. For the purpose of this sub-clause, the operating margin for PT BICs nancial year shall be determined based on the EBITDA of PT BIC for the relevant nancial year as compared to its revenue for that nancial year; or the occupancy rate at Batamindo Industrial Park (BIP) located at Batam Indonesia will not be less than 80%. For the purpose of this sub-clause, occupancy rate means the total factory area (in square metres) leased or sold by PT BIC to third parties at BIP divided by the total factory area available for lease or sale by PT BIC at BIP as at the date of the Agreement. For the avoidance of doubt, any new factory or premises built, constructed or purchased at BIP by PT BIC or any third party after the date of the Agreement shall not be included in the computation of the occupancy rate for the purpose of this sub-clause.
(c)
(d)
The term loan is repayable semi-annually in 9 installments starting from August 2005, comprising: (i) (ii) (iii) (iv) (v) 1st to 3rd installments of $7,500,000 each; 4th and 5th installments of $12,000,000 each; 6th and 7th installments of $16,000,000 each; 8th installments of $17,000,000; 9th installment of $17,000,000 and all outstanding total indebtedness.
The effective interest rate of the bank loan is approximately 5.5% (2005 4.37%) per annum. The loan bears interest at 2.25% per annum above SWAP rate, presently at 3.65% per annum. During the year, the bank reprice the interest rate to 1.5% per annum above SWAP rate. (b) Term loan 2 This loan is secured by an assignment of accounts receivable (Note 15) and the related bank account with UOBL which is maintained for the collections of such accounts receivables (Note 16). This loan is payable in 12 (twelve) equal quarterly installments commencing 15 August 2006. The loan agreement includes certain covenants, among others maintenance of certain nancial ratio. The loan bears interest at 1.4% per annum above SWAP rate, presently at 3.65% per annum, and the rates ranged from 4.37% to 5.15% per annum. There is no repricing of interest rate. (c) Term loan 3 The Group obtained revolving credit facilities from UOBL amounting to S$3,000,000 which was drawn on various dates. The terms of revolving credit facility will expire on 10 January 2008. These loans bear interest at the annual rate of 1% above the swap rate, which ranged from 4.11% to 4.76%. The revolving credit facilities are secured by the following: (i) deed of Debenture creating a xed and oating charge over Bintan Resort Ferries Pte Ltd (BRF)s assets both present and future including goodwill and uncalled capital; rst legal mortgage on BRFs vessels;
(ii)
48
22
Loans and borrowings (contd) (iii) (iv) corporate guarantee from PT BRC; and a hull and machinery and war insurance on BRFs vessels.
There is no repricing of interest rate (d) PT Bank Mega Tbk On March 2, 2006, PT BRC obtained a loan facility to nance working capital requirements of the company amounting to US$7,000,000. Interest per annum was 9%. The loan has term of one year and renewable every year based on the agreement of both parties. The loan is secured by land parcels AU1, BT1A and WR1 which cover an area of 1,698 hectares and the buildings thereon (township, utility and reservoir). (e) Bank Niaga Tbk This loan was obatined to nance the purchase of vehicle amounting to S$245,631 bearing a at interest rate at 10% per annum. The loan is repayable by August 2010.
23
Trade and other payables The Company 2006 2005 $000 $000 Trade payables Accruals Interest payable on bank loan Advances from related corporations Advances from subsidiaries Loan from PT BIIE Loan payable 613 1,550 30 9,583 11,776 Trade payables are generally on 30 days credit terms. The loan from PT BIIE was unsecured, bore interest at 1.8% per annum and was repaid during the nancial year. Advances from subsidiaries and related corporations are unsecured and interest-free and repayable on demand. Loan payable is unsecured and repayable on demand. Interest is charged at the rate of 2.25% per annum. 1,262 1,512 2,399 9,834 15,007 The Group 2006 $000 19,655 3,767 2,407 22,578 19,295 67,702
49
24
Other income 2006 $000 3,931 14 105 1,487 13,360 1,738 20,635 2005 $000 391 391
The Group Interest income bank Gain on disposal of property, plant and equipment Gain on disposal of investment property Miscellaneous income Excess of share of fair value of assets and liabilities of subsidiaries acquired over purchase consideration written off Exchange gain
25
Other operating expenses 2006 $000 2,985 1,793 5,704 6,642 1,352 1,253 6,870 1,269 667 1,588 30,123 2005 $000
The Group Depreciation and amortisation Management fee Marketing and promotion expenses Others Repairs and maintenance Representation costs Staff costs Taxes and licences Transport and travelling Utilities
26
Finance costs 2006 $000 5,738 100 496 6,334 2005 $000 3,754 3,754
The Group Bank loans Minority shareholders Others
50
27
Prot/(loss) before taxation 2006 $000 2005 $000
The Group Prot/(loss) before taxation has been arrived at after charging/(crediting): Amortisation of intangible assets Depreciation of property, plant and equipment Depreciation of investment properties Directors fees Directors remuneration Directors salaries and related costs CPF contributions Foreign exchange (gain)/loss Operating lease rentals ofce equipment and ofce premises Staff costs (other than directors) salaries and related costs CPF contributions
Note
4 5 6
79 22,079 11,411 351 322 35 (1,738) 430 13,919 262 14,181
5 39 44 80 367 39 406
28
Key management personnel compensation 2006 $000 1,409 2005 $000
The Group Shortterm benets
29
Taxation 2006 $000 2005 $000
The Group Current taxation Indonesia tax Final tax Nonnal tax Singapore tax Deferred taxation Indonesia tax
10,708 804 123 11,635 (609) 11,026
No current taxation for nancial year ended 31 December 2005 had been provided in the nancial statement as the Company has no taxable prot.
51
29
Taxation (contd) The tax expense on the results of the nancial year varies from the amount of income tax determined by applying the Singapore statutory rate of income tax on companys prot/(loss) as a result of the following: 2006 $000 40,869 8,174 268 1,248 1,336 11,026 2005 $000 (4,365) (873) 873
The Group Prot/(loss) before taxation Tax at statutory rate of 20% Tax suffered at foreign source Difference of tax effects on gross income subject to nal tax instead of corporate tax Tax effects on nondeductible expenses
30
Earnings/(loss) per share The Group The earnings per share for 2006 is calculated based on the Groups pro t after taxation for the year of $29,026,000 attributable to the shareholders divided by weighted average number of 1,406,080,191 ordinary shares in issue during the nancial year. There are no dilutive potential ordinary shares that were outstanding during the year. The loss per share for the nancial year ended 31 December 2005 is calculated based on the loss of $4,365,000 divided by the 2,410,423,184 ordinary shares, on the assumption that they were issued at the beginning of 2005.
31
Operating lease commitments At the balance sheet date, the Company and the Group were committed to making the following lease rental payments under non-cancellable operating leases for ofce equipment and ofce premises: The Company 2006 2005 $000 $000 Not later than one year Later than one year and not later than ve years Later than ve years The Company and The Group The Companys lease on the ofce equipment and ofce premises on which rentals are payable will expire on 31 March 2008 and 31 May 2008, subject to an option to renew for another 5 years and 3 years and the current rent payable on the leases are $350 and $5,155 per month which is subject to revision on renewal. The subsidiaries have entered into operating lease of ofce premises, telecommunication equipment and two vessels which will expire in 2007 and 2010 respectively. The current lease rental ranges from $1,106 per month to $4,778 per month. 106 54 66 70 The Group 2006 $000 492 398
52
31
Operating lease commitments (contd) The Group The Group has entered into operating leases of factory buildings. Future minimum rentals receivable under noncancellable operating leases are as follows: 2006 $000 30,161 24,156
The Group Not later than one year Later than one year and not later than ve years Later than ve years
32
Capital commitments The Group At the balance sheet date, the Company and the Group were committed to the following capital expenditure for equipment as follows: 2006 $000 Capital expenditure contracted but not provided for 18,068
33 33.1
Contingent liabilities (unsecured) As of 31 December 2006, there is a claim against PT BEV by Akira Heavy Machinery and Construction Pte., Ltd. (Akira) for sums allegedly unpaid for works done in the construction of the golf course amounting to S$1,495,410. In 2001, Akira and PT Karya Titan (Titan), a local joint venture of Akira, agreed with the claim settlement offered by PT BEV amounting to S$450,000. However, Titan led a lawsuit with the Riau High Court against Akira on the claim amount allocation into their joint account. On November 1, 2002, the Riau High Court ratied the claim amount to be paid to Akira and Titan, but Titan did not agree with the verdict and led the lawsuit to the Supreme Court. As of 31 December 2006, PT BEV recorded the accrual for the claim amounting to S$450,000 under Trade payables account in the balance sheet. The Directors are of the opinion that the case will not have an adverse impact on the operations and nancial position of PT BEV.
53
33 33.2
Contingent liabilities (contd) PT Adhya Tirta Batam (PT ATB) led an infringement case against PT BIC. PT ATB alleged inter alia, PT BICs business activity of water extraction in Batam, processing and water supply to tenants in BIP is beyond the authority of PT BICs articles of association, contravenes the permits owned by PT BIC and breaches PT ATBs alleged exclusive right to water exploitation in Batam Island. PT ATB also claims that PT BIC under the management of the other defendants failed to act honestly in registering and notifying its business activities to the Indonesian authorities. PT ATB is claiming (amongst others) from the defendants alleged losses totalling approximately the equivalent of S$49 million (based on an exchange rate of Rp5,800:S$1). PT ATB is also seeking (i) an order that PT BIC stops any business activity related to water exploitation which does not conform with its articles of association and licences, (ii) an order that the defendants demolish the buildings, equipment, facilities and infrastructure related to the business activity of water extraction and distribution or sale of water to the public and/or group of customers in Batam Island; and (iii) a declaration that PT BIC be dissolved. On 1 November 2006, ATB, Batam Industrial Development Authority (BIDA) and PT BIC entered into Heads of agreement on Raw Water Abstraction Licence (the settlement Agreement) whereby the three parties have agreed on the following matters, among others, ATB acknowledged the fact that BIDA had licensed PT BIC to abstract raw water from Duriankang and Mukakuning, PT BIC acknowledged the fact that BIDA has granted an exclusive licence to ATB to abstract raw water throughout the Batam island, BIDA shall reconrm the right of PT BIC by issuing new licence to PT BIC for raw water abstraction with a total volume of 4,500 m3 per day. Following the Settlement Agreement, on 7 November 2006, PT BIC and ATB entered into the Deed of Settlement (Akta Perdamaian) based on the notarial deed No 8 Edison Jingga S.H.
33.3
During the year, PT Raesia Matrawisata (PT Raesia) led a civil suit against ve defendants, namely, the Gallant subsidiaries, PT BMW and PT BRC (together the Gallant Subsidiaries, which expression may where applicable mean one or both of them); PT Bintan Lagoon Resort; Badan Pertanahan National (the Indonesia National Land Ofce); Badan Pertanahan National Cq Kantor Pertanahan Kabupaten Kepulauan Riau (the Bintan Land Ofce) on their rights over certain land parcels of land in Bintan. The land ownership under dispute covers an area of 963,353 square meters (the land) and it includes land currently occupied by PT Bintan Lagoon Resort and other land parcels not specied in the suit. PT Raesia claimed to be the rightful owner of the said land and sought court remedy on land purportedly occupied by the defendants. On 19 October 2006, the court issued restraining order (putusan sala-provision) which, inter alia, to require Gallant Subsidiaries and PT Bintan Lagoon Resort and other parties to refrain from advertising for sales or transfer the land to any parties until the court verdict has been issued with nal legal effect. The Group is in the view that the claim by PT Raesia for material losses of approximately 57 billion Rupiah (equivalent to approximately S$ 9.5 million) is for alleged loss of rental income for the land with an area of 115,080 square meters, on which the Bintan Lagoon Resort Hotel is located. This hotel and buildings on the said land are owned by PT Bintan Lagoon Resort, which is not part of the Group. Further, the Group has no ownership interest in PT Bintan Lagoon Resort. Accordingly, there is no basis for PT Raesia to claim against the Gallant Group. The Group maintains that the Suit is frivolous, vexatious and has no legal merits. As disclosed in the Prospectus, Gallant acquired its interest in PT BMW and PT BRC shortly prior to the registration of the Prospectus pursuant to a sale and purchase agreement with Parallax Venture Partners XXX Limited (PVP), which is a substantial shareholder of Gallant. Under this agreement, Gallant obtained warranties and undertakings from PVP. These included warranties as to ownership and title to all the land acquired including the land concerned and an indemnity from PVP. PVP has conrmed that it will indemnify Gallant in full for any losses or damages suffered as a result of this Suit. The Gallant Subsidiaries will however continue to vigorously defend the Suit as they are named defendants. All costs incurred by them in this respect will be borne by PVP. Therefore, the Group will not have any adverse nancial exposure to the Suit.
54
34
Related parties transactions For the purposes of these nancial statements, parties are considered to be related to the Company if the Company has the ability, directly or indirectly, to control the party or exercise signicant inuence over the party in making nancial and operating decisions, or vice versa, or where the Company and the party are subject to common control or common signicant inuence. Related parties may be individuals or other entities. Apart from the balances with related parties disclosed elsewhere in this report, the following transactions have been entered into by the Group are as follows: 2006 $000 Shareholders Marketing services Marketing remuneration fees Offshore marketing services Staff secondment fees Management fee Companies in which a shareholder has an interest Technical assistance fee Human resource management fee Management fee Port management fees Insurance premiums Claims received Sales Utilities Telecommunication expenses Fees and rentals Minority shareholders Interest expense Associated company Interest Income 2005 $000
2,482 19 1,275 1,386 210
163 568 2,134 185 386 (162) (7,895) 73 29 1,168
100
(6)
35
Segment information Industrial parks segment Industrial parks segment is engaged in activities consisting of the development, construction, operation and maintenance of industrial properties in Batam and Bintan together with the supporting infrastructure activities. Utilities segment Utilities segment is engaged in the activities of provision of electricity and water supply, telecommunications services and waste management and sewage treatment services to the industrial parks in Batam and Bintan as well as resorts in Bintan. Resort operations segment The resort operation segment is engaged in the activities of provision of services to resort operators in Bintan Resort including ferry terminal operations, workers accommodation, security, re ghting services and facilities required by resort operators.
55
35
Segment information (contd) Property development segment Property development segment is engaged in the activities of developing industrial and resort properties in Batam and Bintan. The Group Industrial parks $000 Business segments Operating revenue External sales Inter segment sales Total sales Segment results Prot/(loss) from operations Finance costs Prot before taxation Taxation Prot after taxation Attributable to: Equity holders of the Company Minority interests 40,891 19 40,910 99,651 417 100,068 16,186 16,186 19,911 19,911 (436) (436) 176,639 176,639 Resort operations $000 Property developer $000
Utilities $000
Corporate $000
Elimination $000
Total $000
8,653
16,766
(6,665)
17,541
10,908
47,203 (6,334) 40,869 (11,026) 29,843
29,026 817 29,843
Assets Segment assets Unallocated corporate assets Total assets Liabilities Segment liabilities Unallocated corporate liabilities Total liabilities Other information Capital expenditure Software costs Amortisation of software cost Depreciation of property, plant and equipment Depreciation of investment properties Gain on disposal of property, plant and equipment Gain on disposal of investment property Allowance for doubtful debts (trade)
522,045
276,855
59,780
559,864
71,246
1,489,790 11,398 1,501,188
65,545
21,606
27,394
6,574
103,596
224,715 13,135 237,850
5,753 97 68 5,390 11,411 (4) (105) (92)
13,854 10,713
821 5,807 (10)
321 2 125
96 11 9 44
20,845 108 79 22,079 11,411 (14) (105) 116
208
56
35
Segment information (contd) Geographical segments The Group operates mainly in Batam Island and Bintan Island. Accordingly, analysis by geographical segments is not presented. Segment revenue and segment expense All segment revenue and expense are directly attributable to the segments. Segment assets and liabilities Segment assets include all operating assets and consist principally of operating cash, receivables, inventory, investment property and property, plant and equipment, net of allowances and provisions. While most assets can be directly attributed to individual segments, the carrying amount of certain assets used jointly by two or more segments is allocated on a reasonable basis. Segment liabilities include all operating liabilities and consist principally of operating payables, loans and borrowings. Segment assets and liabilities do not include deferred tax assets, deferred tax liabilities and current tax payable.
36
Financial risk management objectives and policies The Group is affected by various nancial risks, including credit risk, foreign currency risk, interest rate risk and liquidity risk. The Groups overall risk management objective is to effectively manage these risks and minimize potential adverse effects on their nancial performance. The Board of Directors review and agree with the policies for managing each of these risks, as well as economic risk and business risk of the Group, which are summarised below, and also monitors the market price risk arising from all nancial instruments. 36.1 Credit risk Credit risk is the risk that one party to a nancial instrument will fail to discharge an obligation and cause the other party to incur a nancial loss. The nancial assets that potentially subject the Group to signicant concentration of credit risk consist principally of cash and cash equivalents, trade and other receivables, and due from related parties. The Group has in place credit policies and procedures to ensure the ongoing credit evaluation and active account monitoring. The Groups exposures to credit risk arise from default of other parties, with maximum exposure equal to the carrying amount of these instruments. At the balance sheet date, there were no signicant concentrations of credit risk. 36.2 Foreign currency risk Currency risk is the risk that the value of a nancial instrument will uctuate due to changes in foreign exchange rates. The Group is exposed to foreign currency exchange rate movement primarily in Indonesian Rupiah on certain expenses, assets and liabilities which arise from daily operations and United States dollar loan from the bank. The Group uses foreign currency denominated assets as a natural hedge against its foreign currency denominated liabilities. As at balance sheet date, the Groups exposures to foreign exchange risk are not signicant and most transactions are denominated in Singapore Dollars as their functional currency.
57
36
Financial risk management objectives and policies (contd) 36.3 Cash ow and fair value interest rate risk Cash ow interest rate risk is the risk that future cash ows of a nancial instrument will uctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a nancial instrument will uctuate due to changes in market interest rates. The Group is nanced through interest-bearing bank loans and other borrowings such as shareholders loans and advances from related parties. Therefore, the Groups exposures to market risk for changes in interest rates relate primarily to its long-term borrowings obligations and interest-bearing assets and liabilities. The Groups policy is to obtain the most favourable interest rates available without increasing its foreign currency exposure by managing its interest cost using a mixture of xed and variable rate debts and long and short-term borrowings. 36.4 Liquidity risk Liquidity or funding risk is the risk that an enterprise will encounter difculty in raising funds to meet commitments associated with nancial instruments. Liquidity risk may result from an inability to sell a nancial asset quickly at close to its fair value. Prudent liquidity risk management implies maintaining sufcient cash and cash equivalents to support their business activities on timely basis. The Group maintains a balance between continuity of accounts receivable collectibility and exibility through the use of bank loans and other borrowings.
37
Financial instruments Fair values The carrying amounts of nancial assets and nancial liabilities with a maturity of less than one year as reected in the balance sheet approximate their fair values. The Group does not anticipate that the carrying amounts of nancial assets and nancial liabilities of more than one year recorded at balance sheet date would be signicantly different from the values that would eventually be received or settled. For other nancial instruments which are not stated at quoted market price and whose fair value cannot be reliably measured without incurring excessive costs, they are carried at amortised cost. It is not practical to estimate the fair values of golf membership, other long-term receivables, other long-term loans and borrowings and deposits from tenants/golf membership due to a lack of xed or repayment terms between both parties. However, the Group does not anticipate the carrying amounts recorded at the balance sheet date to be signicantly different from the values that would eventually be received or settled.
38
Economic conditions The operations of the Group have been affected, and may continue to be affected for the foreseeable future by the economic conditions in Indonesia that may contribute to volatility in currency values and negatively impact economic growth. Economic improvements and sustained recovery are dependent upon several factors such as scal and monetary actions being undertaken by the government and others; actions that are beyond the control of the Group.
39
Events after the balance sheet date Subsequent to the balance sheet date, the Company acquired an additional 20% equity interest if PT Suakajaya Indowahana for a consideration of $1,519,000.
58
S TAT I S T I C S O F S H A R E H O L D I N G S
as at 19 March 2007
DISTRIBUTION OF SHAREHOLDINGS Size of Shareholdings 1 999 1,000 10,000 10,001 1,000,000 1,000,001 AND ABOVE GRAND TOTAL No. of Shareholders 600 698 311 18 1,627 % 36.88 42.90 19.11 1.11 100.00 No. of Shares 204,704 3,659,663 18,609,887 2,387,948,930 2,410,423,184 % 0.01 0.15 0.77 99.07 100.00
TWENTY LARGEST REGISTERED SHAREHOLDERS No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Name Citibank Nominees Spore Pte Ltd SembCorp Parks Holdings Ltd Parallax Venture Partners XXX Limited United Overseas Bank Nominees Pte Ltd Ascendas Investment Pte Ltd Dornier Prots Limited Rafes Nominees Pte Ltd Morgan Stanley Asia (Spore) Securities Pte Ltd DBS Nominees Pte Ltd DBSN Services Pte Ltd HSBC (Singapore) Nominees Pte Ltd PT Elitindo Citralestari Kim Eng Securities Pte. Ltd. OCBC Securities Private Ltd DBS Vickers Securities (S) Pte Ltd Merrill Lynch (Spore) Pte Ltd Mayban Nominees (S) Pte Ltd Royal Bank of Canada (Asia) Ltd UOB Kay Hian Pte Ltd Ng Theng Lock Total No. of Shares 783,131,913 647,057,166 423,646,675 91,636,652 88,200,031 84,000,000 75,348,400 63,438,600 42,003,200 39,797,000 36,985,000 3,106,688 3,077,500 1,754,500 1,549,405 1,097,600 1,090,600 1,028,000 711,000 667,000 2,389,326,930 % 32.49 26.84 17.58 3.80 3.66 3.48 3.13 2.63 1.74 1.65 1.53 0.13 0.13 0.07 0.06 0.05 0.05 0.04 0.03 0.03 99.12
PUBLIC FLOAT Based on the information available to the Company as at 19 March 2007, approximately 22.48% of the issued ordinary shares of the Company is held by the public, and therefore, Rule 723 of the Listing Manual issued by the Singapore Exchange Securities Trading Limited is complied with.
59
S TAT I S T I C S O F S H A R E H O L D I N G S
as at 19 March 2007
SUBSTANTIAL SHAREHOLDERS Number of Shares Direct interest Deemed interest 627,293,350

(1)
Name of Substantial Shareholders PVP Venture Partners XXX Ltd Parallax Venture Fund XXX
(1)
627,293,350 627,293,350 627,293,350 627,293,350 627,293,350 507,011,738 507,011,738 1,221,411,776 647,057,166 650,541,166
Parallax Capital Management Pte Ltd Edan Cho Park(1) Eugene Cho Park(1) Dornier Prots Limite
d(1)(3) (3)
84,000,000 3,106,688 507,011,738
PT Elitindo Citralestari PT Herwido Rintis

(2)
PT Gadingpratama Mandir PT Dornier Indonesia Anthoni Salim

(4) (2)
i(2)
647,057,166
SembCorp Parks Holdings Ltd SembCorp Industries Ltd(5) Temasek Holdings (Private) Limited(5)
(1)
Eugene Cho Park and Edan Cho Park hold the entire issued share capital of Parallax Capital Management Pte Ltd (PCM), and PCM holds more than 50% of the voting share capital of Parallax Venture Fund XXX (PVF), and PVF in turn holds more than 20% of the issued share capital of PVP Venture Partners XXX Ltd (PVP). In addition, Dornier Prots Limited holds more than 50% of the issued share capital of PVP. In this respect, pursuant to Section 7 of the Companies Act, Cap. 50., Eugene Cho Park is deemed to be interested in the shares of the Company held by PVP. The Salim Group holds the entire issued share capital of PT Gadingpratama Mandiri (PT GPM) through PT Dornier Indonesia. PT GPM in turn holds more than 50% of the issued share capital of PT Herwido Rintis (PT HR). PT GPM is therefore deemed to be interested in the shares of the Company held by PT HR. The Salim Group has a direct interest in the shares of the Company via PT Elitindo Citralestari and Dornier Prots Limited. The Salim Group is controlled by Anthoni Salim. Temasek Holdings (Private) Limited (Temasek) is the ultimate holding company of SembCorp Industries Limited (SCI), and SCI in turn holds the entire issued share capital of SembCorp Parks Holdings Ltd (SCP). Accordingly, Temasek is deemed to be interested in the shares of the Company held by SCI, and SCI is deemed to be interested in the shares of the Company held by SCP.
(2)
(3) (4) (5)
60
NOTICE OF ANNUAL GENERAL MEETING

(Incorporated in the Republic of Singapore) Registration No. 200303179Z
NOTICE IS HEREBY GIVEN that the Annual General Meeting of the Company will be held at Rafes City Convention Centre, Sophia Room, 4th Level, No. 2 Stamford Road, Singapore 178882 on Friday, 27th day of April 2007 at 10.00 a.m. to transact the following business:-
AS ORDINARY BUSINESS 1. To receive and adopt the Audited Financial Statements of the Company for the nancial year ended 31 December 2006 and the Reports of the Directors and Auditors thereon. (Resolution 1) To approve the Directors fee of S$351,000 for the nancial year ended 31 December 2006. To re-elect the following Directors:(a) Mr Foo Ko Hing who is retiring under Article 115 of the Articles of Association (Resolution 3) (Resolution 2)
2. 3.
Mr Foo Ko Hing will, upon re-election as Director of the Company, remain as a member of the Audit, Nominating and Remuneration Committees. He will be considered independent for the purposes of Rule 704(8) of the Listing Manual of the Singapore Exchange Securities Trading Limited. (b) Mr Lim Hock San who is retiring under Article 115 of the Articles of Association (Resolution 4)
Mr Lim Hock San will, upon re-election as Director of the Company, remain as the Non-executive Chairman, Chairman of the Audit and Remuneration Committees, and a member of the Nominating Committee. He will be considered independent for the purposes of Rule 704(8) of the Listing Manual of the Singapore Exchange Securities Trading Limited. (c) Mr Eugene Cho Park who is retiring under Article 115 of the Articles of Association (Resolution 5)
Mr Eugene Cho Park will, upon re-election as Director of the Company, remain as an Executive Director of the Company. 4. To consider, and if thought t, to pass the following resolution: That pursuant to Section 153(6) of the Companies Act, Chapter. 50, Mr Rivaie Rachman be and is hereby reappointed a Director of the Company to hold ofce until the next Annual General Meeting. (Resolution 6) Mr Rivaie Rachman will, upon re-appointment as Director of the Company, remain as the Chairman of the Nominating Committee, and a member of the Audit and Remuneration Committees. He will be considered independent for the purposes of Rule 704(8) of the Listing Manual of the Singapore Exchange Securities Trading Limited. 5. To re-appoint Foo Kon Tan Grant Thornton as Auditors of the Company and to authorise the Directors to x their remuneration. (Resolution 7)
61
AS SPECIAL BUSINESS To consider and, if thought t, to pass the following ordinary resolutions with or without modications:6. Authority to allot and issue shares (a) That pursuant to Section 161 of the Companies Act, Chapter 50, and the listing rules of the Singapore Exchange Securities Trading Limited, approval be and is hereby given to the Directors of the Company at any time to such persons and upon such terms and for such purposes as the Directors may in their absolute discretion deem t, to: (i) (ii) issue shares in the capital of the Company whether by way of rights, bonus or otherwise; make or grant offers, agreements or options that might or would require shares to be issued or other transferable rights to subscribe for or purchase shares (collectively, Instruments) including but not limited to the creation and issue of warrants, debentures or other instruments convertible into shares; issue additional Instruments arising from adjustments made to the number of Instruments previously issued in the event of rights, bonus or capitalisation issues; and
(iii)
(b)
(notwithstanding the authority conferred by the shareholders may have ceased to be in force) issue shares in pursuance of any Instrument made or granted by the Directors while the authority was in force, provided always, that subject to any applicable regulations as may be prescribed by the Singapore Exchange Securities Trading Limited, (i) the aggregate number of shares to be issued pursuant to this resolution (including shares to be issued in pursuance of Instruments made or granted pursuant to this resolution) does not exceed 50% of the Companys issued share capital, of which the aggregate number of shares (including shares to be issued in pursuance of Instruments made or granted pursuant to this resolution) to be issued other than on a pro rata basis to shareholders of the Company does not exceed 20% of the issued share capital of the Company, and for the purpose of this resolution, the issued share capital shall be the Companys issued share capital at the time this resolution is passed, after adjusting for; (a) (b) new shares arising from the conversion or exercise of convertible securities, or new shares arising from exercising share options or vesting of share awards outstanding or subsisting at the time this resolution is passed provided the options or awards were granted in compliance with Part VIII of Chapter 8 of the Listing Manual of the Singapore Exchange Securities Trading Limited, and any subsequent consolidation or subdivision of the Companys shares, and
(c) (ii)
such authority shall, unless revoked or varied by the Company at a general meeting, continue in force until the conclusion of the next Annual General Meeting or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier. (Resolution 8) (See Explanatory Note 1)
7.
Renewal of the Shareholders Mandate for Interested Person Transactions (a) That approval be and is hereby given, for the purposes of Chapter 9 of the Listing Manual (Chapter 9) of the Singapore Exchange Securities Trading Limited, for the Company, its subsidiaries and associated companies that are considered to be entities at risk under Chapter 9, or any of them, to enter into any of the transactions falling within the types of Interested Person Transactions as set out in the Appendix to this Notice of Annual General Meeting (the Appendix), with any party who falls within the classes of Interested Persons as described in the Appendix, provided that such transactions are made on normal commercial terms and in accordance with the review procedures for Interested Person Transactions as set out in the Appendix (the IPT Mandate);
62
(b)
That the IPT Mandate shall, unless revoked or varied by the Company in general meeting, continue in force until the date on which the next Annual General Meeting of the Company is held or is required by law to be held, whichever is earlier; That the Directors of the Company be and are hereby authorised to complete and do all such acts and things (including, without limitation, executing all such documents as may be required) as they may consider expedient or necessary or in the interests of the Company to give effect to the IPT Mandate and/or this Resolution. (Resolution 9) (See Explanatory Note 2)
(c)
8.
To transact any other business which may be properly transacted at an Annual General Meeting.
BY ORDER OF THE BOARD
Choo Kok Kiong Foo Soon Soo Prisca Low Joint Secretaries Singapore 10 April 2007
Explanatory Notes:1. The ordinary resolution in item 6 is to authorise the Directors of the Company from the date of the above Meeting until the next Annual General Meeting to issue shares and convertible securities in the Company up to an amount not exceeding in aggregate 50 percent of the issued share capital of the Company of which the total number of shares and convertible securities issued other than on a pro rata basis to existing shareholders shall not exceed 20 percent of the issued share capital of the Company at the time the resolution is passed, for such purposes as they consider would be in the interests of the Company. Rule 806(3) of the Listing Manual of Singapore Exchange Securities Trading Limited currently provides that the issued share capital of the Company for this purpose shall be the issued share capital at the time of this resolution is passed (after adjusting for new shares arising from the conversion of convertible securities or share options on issue at the time this resolution is passed and any subsequent consolidation or subdivision of the Companys shares). This authority will, unless revoked or varied at a general meeting, expire at the next Annual General Meeting of the Company. The ordinary resolution in item 7 relates to the renewal of the mandate in the Companys Prospectus dated 28 April 2006 allowing the Company, its subsidiaries and associated companies to enter into transactions with interested persons as dened in Chapter 9 of the Listing Manual of the Singapore Exchange Securities Trading Limited. Please refer to the Appendix to this Notice of Annual General Meeting for details.
2.
Notes:
1. 2. 3. 4. A member of the Company entitled to attend and vote at the Meeting is entitled to appoint a proxy in his stead. A proxy need not be a member of the Company. If the appointor is a corporation, the proxy must be executed under seal or the hand of its duly authorised ofcer or attorney. The instrument appointing a proxy must be deposited at the registered of ce of the Company at 47 Hill Street #06-02 Singapore Chinese Chamber of Commerce and Industry Building Singapore 179365 not later than 48 hours before the time appointed for the Meeting.
63
PROXY FORM
IMPORTANT 1. For investors who have used their CPF monies to buy GALLANT VENTURE LTD. shares, the Annual Report is forwarded to them at the request of their CPF Approved Nominees, and is sent FOR INFORMATION ONLY. This proxy form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them.

Registration No. 200303179Z (Incorporated in the Republic of Singapore)
2.
I/We, of being *a member/members of GALLANT VENTURE LTD. (the Company), hereby appoint Proportion of shareholdings to be represented by proxy (%)
Name
Address
NRIC/ Passport No.
*and/or
or failing him/her, the Chairman of the Meeting as *my/our *proxy/proxies, to vote for *me/us on *my/our behalf and, if necessary, to demand a poll at the Annual General Meeting of the Company to be held at Rafes City Convention Centre, Sophia Room, 4th Level, No. 2 Stamford Road, Singapore 178882 on Friday, 27th day of April 2007 at 10.00 a.m. and at any adjournment thereof. *I/We direct *my/our *proxy/proxies to vote for or against the Ordinary Resolutions to be proposed at the Annual General Meeting as indicated with an X in the spaces provided hereunder. If no specied directions as to voting are given, the *proxy/proxies will vote or abstain from voting at *his/their discretion. No. 1. Ordinary Resolutions To receive and adopt the Audited Financial Statements of the Company for the nancial year ended 31 December 2006 and the Reports of the Directors and Auditors thereon. To approve the Directors fee of S$321,000 for the nancial year ended 31 December 2006. To re-elect Mr Foo Ko Hing, a Director of the Company, pursuant to Article 115 of the Articles of Association. To re-elect Mr Lim Hock San, a Director of the Company, pursuant to Article 115 of the Articles of Association. To re-elect Mr Eugene Cho Park, a Director of the Company, pursuant to Article 115 of the Articles of Association. To re-appoint Mr Rivaie Rachman, a Director of the Company, pursuant to Section 153(6) of the Companies Act, Chapter. 50. To re-appoint Foo Kon Tan Grant Thornton as Auditors of the Company and to authorise the Directors to x their remuneration. To authorize Directors to issue shares pursuant to Section 161 of the Companies Act, Chapter 50. To approve the Renewal of the Shareholders Mandate for Interested Person Transactions. For Against
2. 3. 4. 5. 6. 7. 8. 9.
Dated this
day of
2007. Total Number of Shares Held
Signature(s) of Member(s)/Common Seal
Notes: 1. A member of the Company entitled to attend and vote at the Annual General Meeting is entitled to appoint not more than two proxies to attend and vote on his stead. Such proxy need not be a member of the Company. Where a member of the Company appoints two proxies, he shall specify the proportion of his shareholding (expressed as a percentage of the whole) to be represented by each such proxy. This instrument appointing a proxy or proxies must be under the hand of the appointor or his attorney duly authorized in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed under its common seal or under the hand of its attorney or duly authorised ofcer. A corporation which is a member of the Company may authorize by resolution of its directors or other governing body such person as it thinks t to act as its representative at the Annual General Meeting, in accordance with its Articles of Association and Section 179 of the Companies Act, Chapter 50 of Singapore. The instrument appointing proxy or proxies, together with the power of attorney or other authority (if any) under which it is signed, or notarially certied copy thereof, must be deposited at the registered ofce of the Company at 47 Hill Street #06-02 Singapore Chinese Chamber of Commerce and Industry Building Singapore 179365 not later than 48 hours before the time set for the Annual General Meeting.
2.
3.
4.
5.
fold here
Afx Postage Stamp
The Company Secretaries

47 Hill Street #06-02 Singapore Chinese Chamber of Commerce and Industry Building Singapore 179365
fold here
6.
A member should insert the total number of shares held. If the member has shares entered against his name in the Depository Register (as dened in Section 130A of the Companies Act, Chapter 50 of Singapore), he should insert that number of shares. If the member has shares registered in his name in the Register of Members of the Company, he should insert the number of shares. If the member has shares entered against his name in the Depository Register and shares registered in his name in the Register of Members of the Company, he should insert the aggregate number of shares. If no number of shares is inserted, this form of proxy will be deemed to relate to all the shares held by the member of the Company. 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 specied in the instrument appointing a proxy or proxies. In addition, in the case of members of the Company whose shares are entered against their names in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if such members are not shown to have shares entered against their names in the Depository Register 48 hours before the time appointed for holding the Annual General Meeting as certied by The Central Depository (Pte) Limited to the Company. A Depositor shall not be regarded as a member of the Company entitled to attend the Annual General Meeting and to speak and vote thereat unless his name appears on the Depository Register 48 hours before the time set for the Annual General Meeting.
7.
8.

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TOTAL SOLUTIONS TOTAL VALUE

Annual Report 2006

*Gallant Venture Share Price since listing 6 June - 31 December 2006

Left to Right: Mr Eugene Park Mr Lim Hock San

Gallant Venture Ltd.

Annual Report 2006

Mr Lim Hock San

Total Solutions. Total Value.

Revenue Contribution by Division

Concerted Operations, Sterling Results

Gallant Venture Ltd.

Annual Report 2006

Total Solutions. Total Value.

Mr Lim Hock San

Mr Eugene Cho Park

Gallant Venture Ltd.

Annual Report 2006

Ms Low Sin Leng

BG (Ret) Chin Chow Yoon

Total Solutions. Total Value.

Choo Kok Kiong

Chow Yew Meng

Elfast Goh Eng Pheng

Gallant Venture Ltd.

Annual Report 2006

Kuharajahsingam s/o Karalasingam

Johannes Sulistijawan Surjaatmadja

Wee Guan Yak

Total Solutions. Total Value.

OUR STRONG FOUNDATION

A Balanced Asset Portfolio

Strong Management Team

A Unique market position as an Integrated Master Planner

Significant Economies of Scale and Barriers to Entry

Batam and Bintan as Investment Destination

Good Government Support

Strong Financial Position

Gallant Venture Ltd.

Annual Report 2006

Gallant Venture Ltd.

Total Solutions. Total Value.

COMPANY REGISTRATION NUMBER

JOINT COMPANY SECRETARIES

SHARE REGISTRAR AND SHARE TRANSFER

Gallant Venture Ltd.

Annual Report 2006

Have a lovely time at Bintan Resorts!

GALLANT VENTURE LTD.

Total Solutions. Total Value.

BG (Ret) Chin Chow Yoon Rivaie Rachman Foo Ko Hing

Gallant Venture Ltd. Annual Report 2006

Total Solutions. Total Value.

Gallant Venture Ltd. Annual Report 2006

Total Solutions. Total Value.

15 36 100 25 100 100

100 100 100 100 100 100

100 100 100 100 100 100 100 100 100

Gallant Venture Ltd. Annual Report 2006

Total Solutions. Total Value.

Gallant Venture Ltd. Annual Report 2006