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Our MissionTo excel as a world-class engineering corporation with enduringpartnerships and teamwork.Our VisionWe strive to be a living company.Our Core ValuesSERVICE To understand, determine and deliver what our customers wantwith a high standard of workmanship and professionalism.TRUST We believe that trust and respect is essential for teamwork.RELATIONSHIPS We believe in good relationships and fairnessin all dealings.INTEGRITY We are committed to a high standard of integrity.VALUE PEOPLE We value every member of our team and encouragetheir development.EXCELLENCE We strive to excel always.inter-roller engineering limited annual report2004 01

“Inter-Roller provides Total System Solutions.From conceptual planning to detailed engineeringdesign, equipment manufacture, installation andsystem integration, we customize our products andservices in close consultation with our customers.”

Corporate InformationProducts and ServicesBaggage Handling SystemsInflight Catering SystemsAir Cargo Handling SystemsExpress Courier ServicesIndustrial Automation SystemsAutomated Car Parking SystemsBulk Handling SystemsMaintenance ServicesEngineering SupportEngineering DesignProductionBusiness DevelopmentControl & Systems IntegrationAdministrationInformation TechnologyHuman ResourcesRisk ManagementFinanceShippingInvestmentBoard of DirectorsLim Yong Wah (Chairman)Yap Lem (Deputy Chairman)Lim Yee Min (CEO)Rajan MenonHaider Mohamedally SithawallaLow Kok HuaNicolaas Johannes KlaverLoh Chin HuaLim Hwee ChiangCompany SecretaryLow Cze SooAmy Lew Hooi ChingAudit CommitteeRajan Menon (Chairman)Haider Mohamedally SithawallaLoh Chin HuaNomination andRemuneration CommitteeHaider Mohamedally Sithawalla(Chairman)Low Kok HuaLim Yong WahAuditorsFoo Kon Tan Grant Thornton(Partner, Chin Sin Beng)47 Hill Street #05-01Chinese Chamberof Commence & IndustrySingapore 179365Share RegistrarLim Associates (Pte) Ltd10 Collyer Quay#19-08 Ocean BuildingSingapore 049315BankersDBS BankOCBC BankMayBankHSBC BankRegistered Office20 Benoi CrescentSingapore 629983Tel: 65-6861 2828Fax: 65-6266 5516Email: ir@irel.com.sgWebsite: www.inter-roller.comCorporate StructureInter-Roller Engineering Limited100% Inter-Roller Investments Pte Ltd100% Inter-Roller Engineering Services Pte Ltd100% Pteris Pte Ltd100% IR Engineering Sdn Bhd100% IR (Middle East) Limited Liability Companyinter-roller engineering limited annual report2004 05

Letter to ShareholdersDear Shareholders,I am pleased to report that we had anothersuccessful year. The Group had outstandingresults for the year ended 31 December2004 with record turnover and profit after tax.The turnover at $69.9 million was 32% higherthan the turnover of $52.9 million for theprevious year. Net profit after tax rose 56%from $6.6 million in 2003 to $10.3 millionin 2004.Increasing Shareholder ValueThe good performance enhanced shareholdervalue. Earnings per share rose from 9.1 centsin 2003 to 13.6 cents in 2004. The return onequity for 2004 was 27.5% compared with20.1% for the previous year. Net tangibleassets per share rose from 44 cents in 2003 to48.7 cents in 2004. Market capitalization of thecompany increased from $14 Million at theend of 2002 to $52 Million at the end of 2003and to $58.9 Million at the end of 2004. As atthe date of this letter, it is $108.6 Million.The liquidity of our shares continued toimprove due to good performance andincreased coverage of our stock by analystsand journalists. Based on recommendation byour management and feedback from ourinvestor-shareholders we have applied tomove our listing from Sesdaq to the MainBoard of the SGX. This should contributeto further improvement of the liquidity ofour shares.DividendsIn view of the improved results this year,Directors have proposed a final gross dividendof 25% or 5 cents per share lesstax (2003: 20% or 4 cents per share taxexempt) to be paid on the enlarged sharecapital of the Company. During the year, theCompany paid an interim dividend of 10%or 2 cents per share tax exempt (2003: 5% or1 cent per share tax exempt). This would bringtotal gross dividends for the year to 35% or7 cents per share compared with 25% or5 cents per share paid for the previous year.Rights IssueIn November 2004, we announced a rightsissue, on the basis of 1 rights share for every2 shares. As directors were confident thatthe Group would continue to achieve a goodreturn on the enlarged capital, it wasattractively priced at 36 cents per shareto reward shareholders. In view of theirconfidence in the performance of thecompany, directors also gave an undertakingto subscribe for any shortfall. While therewas a small shortfall of 500,000 rights shares,total application for excess shares amountedto 27.5 million. As a result, no additionalshares other than their rights entitlement wereallocated to any director. The net proceedsof the rights issue of $13.6 Million werereceived on 28 January 2005.Management and BoardPlans announced in our 2003 annual reportfor management succession took placesmoothly with support from all levels. On1 January 2005, Mr. Lim Yee Min succeededMr. Yap Lem as Chief Executive Officer ofthe Company. Mr. Lim Yee Min has served the06 inter-roller engineering limited annual report2004

Company for 23 years. Directors are confidentthat the team led by Yee Min will take theGroup to new heights.The Group has benefited from Mr. Yap’sleadership and foresight. He remains in theteam as Executive Director assisting inbusiness strategies. Mr. Yap was alsoappointed Deputy Chairman of the Board witheffect from 1 March 2005.The Group continuously searches for talentedindividuals to further strengthen the team.Mr. John Lim Hwee Chiang, joined our Boardof Directors as an Independent Directoron 9 November 2004. Mr. Lim has over 20years of experience in engineering and realestate with extensive international businessexperience. Ms Amy Lew joined us as GeneralManager and takes charge of Finance andCorporate matters.We were saddened by the loss of one of ourfounding members, Mr. Chan Chin Wah whopassed away on 27 April 2004. Mr. Chan wasa Non-Executive and Independent Director onthe Board since 1980. He also served as amember of the Audit Committee and theNomination and Remuneration Committee. Hehad contributed significantly in formulating andsetting the strategies, policies and values ofInter-Roller.Looking ForwardThe medium term demand for Airport LogisticsSystems is expected to remain strong. This isdue to the need to continuously upgrade andexpand airport facilities and the need for newairports. The growth of the budget airlinebusiness is expected to contribute to thisincrease in overall air passenger traffic.For the longer term I think the future dependson our culture and our people. Our peoplework well as a team and many share a senseof ownership. Our team is challenged by theexcitement of doing business in new marketsand our engineers go the extra mile to developsolutions for the complex and exacting needsof our customers. These experiences helpthem address “memes” that influence ourminds and help them “reboot”, and think out ofthe box. In other words our people arecontinuously learning, adapting to changesand applying their knowledge for the benefit ofour customers.The pool of shareholders who regard themselvesas owner-shareholders continue togrow and this should help us build a companywith a long term future. They have contributedto the success of our rights issue.The good performance of the Group in 2003and 2004 was achieved while maintaininga low debt equity ratio. The enlarged capitalhas further strengthened our balance sheet.Working closely with our bankers, the lowgearing will allow us to seize opportunitiesfor growth in the future.On behalf of the Board of Directors, I wouldlike to thank you for being our shareholder.Do attend our AGM if you can and give us yourfeedback, advice and comments.Lim Yong WahChairman8 March 2005We have a good track record, strongengineering capability and international projectmanagement experience. Barring unforeseencircumstances, Directors believe that thecompany will achieve higher turnover andprofit after tax in 2005.inter-roller engineering limited annual report2004 07

Project ReferencesencesAustralia• Brisbane AirportCaribbean Islands• Curacao Hato International AirportCambodia• Siem Reap AirportChina• Xiamen Gaoqi International Airport• Fuzhou Changle International Airport• Changsha Huanghua InternationalAirport• Hangzhou Xiaoshan InternationalAirport• Zhengzhou Xinzheng Airport• Jinan Airport• Xi’an Xianyang International Airport• Qingdao Liuting International Airport• Huherhaote Airport (Inner Mongolia)CuracaoHong Kong• Hong Kong International Airport -Skyplaza• Super Hub Air Cargo TerminalIndia• Mumbai Sahar International Airport• Chennai Anna International Airport• Ahmedabad AirportIndonesia• Bali International Airport T2• Surabaya International Airport• Kemayoran Internationl Airport• Jogjarkarta Airport• Pekan Baru AirportJapan• Okinawa Airport (Duty Free)Malaysia• Subang International Airport T1• Kuching International Airport• Senai Airport• Miri AirportMiddle East• King Fhad International AirportSaudi Arabia• Cairo International Airport, Egypt• Dubai International AirportTerminal 1• Emirates Catering (Dubai)Mongolia• Mongolia AirportPhilippines• Ninoy Aquino International Airport -T3, Manila• Manado Airport• Halim AirportSingapore• Singapore Changi Airport T1• Singapore Changi Airport T2• Singapore Changi Airport T3• Singapore Cruise Terminal• Changi Low Cost TerminalSouth Korea• Korean AirlinesThailand• Hadyai International Airport• New Bangkok International Airport(Suvarnabumi Airport)Tunisia• L’Aeroport International De Djerba-ZazisUnited Kingdom• Manchester Airport• Teeside Airport• Conventry AirportVietnam• Tan Son Nhat Airport08 inter-roller engineering limited annual report2004

UnitedKingdomTunisiaEgyptUAESaudiArabiaChinaHuherhaoteZhengZhou,XinZhengIndia ThailandCambodiaMalaysiaMongoliaXi’an,XianyangChangsha,HuanghuaJinanIndonesiaQingdao,LiutingXiamen,GaoqiHangzhouFuzhou,ChangleSouthKoreaJapanHong KongVietnamSingaporePhilippinesAustraliainter-roller engineering limited annual report2004 09

Project ReferencesBaggage HandlingSystemsSINGAPORESingapore Changi Airport Terminal 3Fully-automatic Baggage Handling System. Comprises 132Check-in rows, tilt-tray sorters, make-up carousels, 100%Hold Bag Screening with Level 1 to Level 3 x-ray securitysystem.Singapore Changi Airport Terminal 2Fully-automatic Baggage Handling System. Includes 2 Tilt-Tray Sorters, a new Transfer Bag Facility, a New Early BagSystem, Maintenance Diagnostic System and SortAllocation Computers.Singapore Changi Airport Terminal 1Automatic Baggage Handling System. Includes completeDeparture System and Inter-Terminal Baggage TransferSystem.Singapore Changi Airport Terminal 1Baggage Handling System Operations and MaintenanceContractsSingapore Changi Airport Terminal 2Baggage Handling System Operations and MaintenanceContractsSingapore Changi Airport Terminal 1New Arrival Baggage Handling SystemSingapore Changi Airport Terminal 2Replacement of Departure Racetrack Sorter with NewRacetrack SortersSingapore Changi Airport Terminals 1 & 2Baggage Handling System for Telecar Transfer of Baggagebetween Terminal 1 and Terminal 2.Singapore Changi Airport Terminals 1 & 2Redevelopment of Baggage Handling System comprising100% Hold Bag Screening SystemSingapore Changi Airport Terminal 2Security Belts at Departure HallSingapore Cruise TerminalDeparture System and Arrival System at Tanah Merah FerryTerminalChangi Low Cost TerminalCHINAXiamen Gaoqi International AirportAutomated Baggage Handling System. Includes Departureand Arrival Baggage Handling Systems complete withComputerised Maintenance Scheduling and MonitoringManagement System.Fuzhou Changle International AirportAutomated Baggage Handling System. Includes Departureand Arrival Baggage Handling Systems complete withComputerised Maintenance Scheduling and MonitoringManagement System.Changsha Huanghua International AirportAutomated Baggage Handling System. Includes Departureand Arrival Baggage Handling Systems.Hangzhou Xiaoshan International AirportAutomated Baggage Handling System. Includes Departureand Arrival Baggage Handling Systems.Zhengzhou Xinzheng AirportArrival Baggage Claim SystemJinan AirportBaggage Handling System with In-line Baggage ScreeningSystemXian Xianyang International AirportArrival Baggage Claim SystemQingdao Liuting International AirportAutomated Baggage Handling System. Includes Departureand Arrival Baggage Handling Systems including Hold BagScreening.Huherhaote Airport (Inner Mongolia)Arrival CarouselHONG KONGHong Kong International Airport Skyplaza ProjectDeparture and Transport Baggage Handling SystemVIETNAMTan Son Nhat AirportArrival and Departure Baggage Handling SystemMONGOLIAMongolia AirportDeparture Baggage Check-in SystemSAUDI ARABIAKing Fhad International AirportDeparture and Arrival Baggage Handling SystemEGYPTCairo International AirportDeparture and Arrival Baggage Handling SystemUNITED ARAB EMIRATESDubai International Airport Terminal 1Arrival Baggage Handling SystemINDIAMumbai Sahar International AirportAutomated Baggage Handling System. Includes Departureand Arrival Baggage Handling Systems.Chennai Anna International AirportDepature Baggage Handling SystemAhmedabad AirportDeparture Baggage Handling System10 inter-roller engineering limited annual report2004

PHILIPPINESNinoy Aquino International Airport- T3, ManilaFully Automatic Baggage Handling System comprising 140check-in counters, 100% baggage tracking system and100% Hold Bag Screening SystemINDONESIABali International Airport Terminal 2Automated Baggage Handling System. Includes Departureand Arrival Baggage Handling Systems complete withComputerised Maintenance Scheduling and MonitoringManagement System.Surabaya International AirportDeparture and Arrival Baggage Handling SystemKemayoran International AirportDeparture and Arrival Baggage Handling SystemJogjarkarta AirportDeparture Baggage Handling SystemPekan Baru AirportDeparture and Arrival Baggage Handling SystemManado AirportArrival and Departure Baggage Handling SystemHalim AirportArrival Baggage Handling SystemMALAYSIASubang International Airport Terminal 1Arrival Baggage Handling SystemKuching International AirportArrival and Departure Baggage Handling SystemSenai AirportArrival Baggage Handling SystemMiri AirportArrival and Departure Baggage Handling SystemTHAILANDHad Yai International AirportBaggage Handling System including arrival anddeparture systemNew Bangkok International AirportAutomatic Baggage Handling System including 100% HoldBag Screening, 65 carousels and 280 check-in conveyorsand associated controlsCAMBODIASiem Reap AirportBaggage Handling SystemAUSTRALIABrisbane AirportAutomatic Baggage Handling System including sortingsystemUNITED KINGDOMManchester AirportArrival Carousels – Friction DrivenTeeside AirportCheck-in conveyorsCoventry AirportArrival CarouselTUNISIAL’Aeroport International De Djerba-ZazisDeparture and Arrival SystemCARIBBEAN ISLANDSCuracao Hato International AirportArrival and Departure System including multi-level securityscreening systemJAPANOkinawa Airport (Duty Free)Arrival Carousel – Friction DrivenAirline CateringSystemsSINGAPORESingapore AirlinesAutomated Handling System for the new Singapore AirlinesInflight Catering Centre at Singapore Changi AirportSOUTH KOREAKorean AirlinesAutomated Handling System for the new Korean AirlinesInflight Catering Center at the new Inchon InternationalAirport in Seoul.UNITED ARAB EMIRATESEmirates AirlinesAutomated Handling System for the new Emirates In-flightCatering Center at the Dubai International Airport in UAE.AircargoHandling SystemsCHINAXiamen Air Cargo LimitedAutomated Cargo Handling System including 2 ETVsHONG KONGSuper Hub Air Cargo TerminalBox/Bin Handling Systeminter-roller engineering limited annual report2004 11

Low Kok Hua Remuneration Committee MemberMr. Low, one of the founding shareholders of Inter-Roller, joined the Board in 1979 andwas the Chairman until January 1993. He is currently Managing Director of Chuan SengHeng Hardware Co. Pte Ltd and a Board Member of several other private companiesincluding Inter-Roller Investments Pte Ltd. Mr. Low is President of the Singapore Metaland Machinery Association and an active member of the Singapore Hokkien Huay Kuan.Loh Chin Hua Audit Committee MemberMr. Loh joined the Board of Inter-Roller in January 2000. He is the Managing Director ofAlpha Investment Partners Ltd, and is also a Director of Asia Real Estate FundManagement Ltd. A Colombo Plan Scholar, Chin Hua holds a Bachelor of PropertyAdministration degree and a MBA from Auckland University and Pepperdine Universityrespectively. He is also a Chartered Financial Analyst (CFA) and Certified Public Valuerwith the New Zealand Institute of Valuers.Nicolaas Johannes Klaver DirectorMr. Klaver, a Dutch national, was appointed a Director of Inter-Roller in 1996. He holds aBachelor of Electrical Engineering degree. Nicolaas has broad business experience inSouth East Asia, Europe and South America. Mr. Klaver was Managing Director ofTelefunken Electronic GmbH in Germany from 1986 to 1990. In 1990, he joined AEG PteLtd (Singapore), a subsidiary of the AEG-Daimler Benz Industry Group, as ManagingDirector for the South East Asian region. He is currently Managing Director and Directorof several other private companies in Asia and Germany, including TransworldConsultants Pte Ltd (Singapore) and Consolidated Lease Management (Hong Kong).Lim Hwee Chiang DirectorMr. Lim was appointed to the Board as Independent Director in 2004. Mr. Lim is theDirector and Chief Executive Officer of the ARA group of companies, including ARA TrustManagement (Suntec) Limited, which is the Manager of Suntec REIT. Mr. Lim holds anEngineering degree (First Class Honours), a Master of Science degree as well as aDiploma in Business Administration from the National University of Singapore. He sits onthe board of Teckwah Industrial Corporation Ltd as an Independent Director and amember of the audit committee. In addition, he is a Director of the Al Islami Far EasternReal Estate Fund Limited as well as The Land Managers (S) Pte Ltd.inter-roller engineering limited annual report2004 13

Senior ManagementJohn Sng Hee Kwee General Manager / Head of Engineering Group 3John joined Inter-Roller in 1982. He holds a Diploma in Mechanical Engineering from theSingapore Polytechnic. John is also a member of the Material Handling and ManagementSociety (USA). An all-rounder with more than 12 years' experience in various seniormanagement positions, he provides stewardship in Inter-Roller’s Senior ManagementTeam. John leads Engineering Group 3, which is responsible for business relating toAirport Baggage Handling Systems in the European market.Leong Siew Hay General ManagerSiew Hay joined the company in 2003. Prior to joining Inter-Roller, he has held seniormanagement positions in Intraco Limited over the last 15 years. He holds a Bachelor ofEngineering (Mechanical) from the University of Singapore and a Master of Science(Mechanical Engineering) from the National University of Singapore. He also holds anMBA (Accountancy) from the Nanyang Technological University. He is a registeredProfessional Engineer and a member of the Institution of Engineers (Singapore). Siew Hayhas more than 25 years of marketing, project engineering and general managementexperience.Amy Lew Hooi Ching General ManagerAmy joined the Company in 2005. As General Manager, she takes charge of the corporatedevelopment and oversees the commercial, financial and administrative functions withinthe Group. Amy has 20 years of experience in financial management and corporateadministration. She was previously with the Company for 11 years from 1990 to 2001. AFellow Certified Public Accountant with the Institute of Certified Public Accountants ofSingapore and CPA Australia, she holds a Bachelor degree in Accountancy and an MBA.Tony Tan Head of Production DepartmentTony has been with the company since its inception in 1979. He is one of the pioneerswho spearheaded Inter-Roller’s business initiatives and expansion as well as seekingbusiness opportunities in the region. He has dedicated himself to the Material HandlingIndustry for more than 25 years and has vast experience in marketing, engineering andproject management. He leads the production team and plays a major role in ensuring thedelivery of quality products to customers on time.Rajasundram Sivakumar Head of Control & System Integration DepartmentSivakumar joined the company in 1993. He holds a Bachelor of Science (Honours) inElectrical & Electronic Engineering and is a member of the Institute of Electrical Engineer(UK), Institute of Engineers (Australia), Chartered Engineers (UK) and CharteredProfessional Engineers (Australia). Sivakumar has worked in the UK, Australia and theMiddle East before joining Inter-Roller. He provides leadership in the field of controland systems integration.Francis Ngiam Kia Huat Head of Training DepartmentA Colombo Plan Scholar and a MBA holder, Francis joined Inter-Roller in 1983 andbrought with him 7 years of experience in pollution control in both the public and privatesectors. He headed the Air Pollution Control Division for 16 years and was appointed theHead of Design Department in December 1999. Francis currently heads Inter-Roller’sTraining Department.14 inter-roller engineering limited annual report2004

Low Cze Soo Chief Financial Officer / Head of Finance & Administration DepartmentLow Cze Soo is a Certified Public Accountant and a member of the Institute of CertifiedPublic Accountants of Singapore. He joined the company on 28 June 2001. He managesthe finance, treasury, human resource and corporate affairs of the group. These includefinancial and management reporting, corporate taxation and group consolidation. AChartered Certified Accountant, he is a Fellow of the Association of Chartered CertifiedAccountants (United Kingdom).Lee Yeow Hwee Head of Engineering Group 2Yeow Hwee joined the company in 1992 after graduating from Nanyang TechnologicalUniversity (NTU) in Singapore with a Bachelors Degree in Mechanical and ProductionEngineering. He has 12 years of experience with the company in the fields of projectmanagement and marketing, of which 6 years were spent in the China market. Currently,he heads Engineering Group 2 in the Airport Baggage Handling Business. Yeow Hwee isalso responsible for marketing and business development of the Baggage HandlingSystem business in the US market.Goh Ching Beng Head of Engineering Group 4Ching Beng graduated with a Masters of Science from the University of Manchester(Institute of Science and Technology), United Kingdom and joined Inter-Roller in 1991. Hewas sent for training in Kobe Steel, organized by Overseas Training Association of Japan,in 1992. Ching Beng has since gathered more than 10 years of experience in projectmanagement and marketing. He currently leads Engineering Group 4, which is responsiblefor business relating to Airport In-flight Catering Systems, Air Cargo Handling Systems,Pollution Control Systems and Express Courier Systems.Chai Fook Chuan Head of Engineering Group 1 / Design DepartmentFook Chuan joined Inter-Roller in 1982. Armed with a Diploma in Mechanical Engineering,Fook Chuan has more than 20 years experience in system design, engineering and systemproposal. His strong technical background has contributed to the various productdevelopments in the company. He currently heads Engineering Group 1 and is responsiblefor the business development of the Airport Baggage Handling System in the South EastAsian Region.Ting Pang Cheo General Manager, IR Engineering Sdn BhdPang Cheo joined IR Engineering in 1998. He holds a Bachelors of Engineering with FirstClass Honours in Mechanical Engineering and is a member of the Board of Engineers(Malaysia), Institute of Engineers (Malaysia) and Society of Petroleum Engineers (USA).Pang Cheo has more than 14 years of engineering and management experience withmulti-national companies in Europe and Asia. He oversees Inter-Roller’s businessoperations in Pontian, Malaysia.Vairakkannu Singaram Head of Engineering Group 5Ram joined the company in 1988. He holds a Bachelor of Business (BusinessAdministration) from RMIT University, Australia. He currently heads Engineering Group5 and has been responsible for the marketing and business development of the AirportBaggage Handling business for the entire Middle East market since 1996. He alsooversees business development efforts in South Asia, Central Asia and Russia.inter-roller engineering limited annual report2004 15

Financial HighlightsGroup PerformanceTurnover (S$M)Net Profit After Tax (S$M)80757060655045403530252015105069.952.910.334.56.629.11.019.1-3.22000 2001-0.22002 2003 200420.519.017.516.014.513.010.59.07.56.04.53.01.50.0-1.5-3.0TurnoverNet Profit/(Loss) After TaxPer Share DataEarnings Per Share/Dividend Per Share (cents)Net Tangible Assets Per Share (cents)14541244.0481044.640.1 38.04286438.99.065.013.67.036302420-2-4.50.61.4 1.2 1.2-0.3418126-40-6-62000 2001 2002 2003 2004Earnings/(Loss) Per Share Dividend Per Share Net Tangible Assets Per Shareinter-roller engineering limited annual report2004 17

Financial HighlightsTotal Assets(S$M)70656055504540353025201510068.047.947.241.542.831.629.421.823.419.7 19.418.718.520.812.92000 2001 2002 2003 2004Fixed AssetsCurrent &Other AssetsTotal AssetsTotal Reserves and Liabilities(S$M)70656055504540353025201510019.114.67.08.211.67.027.56.228.43.41.20.727.032.737.32000 2001 2002 2003 2004Shareholder’sFundsLong andShort-TermBorrowingsOther Liabilities18 inter-roller engineering limited annual report2004

Half-Year Results of the Group2004 2003 % Change$’000 $’000For the yearTurnover1st half 30,725 25,354 21.22nd half 39,131 27,520 42.269,856 52,874 21.1Net Profit Before Tax1st half 4,918 3,874 26.92nd half 6,600 3,891 69.6Net Profit After Tax Attributable to Shareholders11,518 7,765 48.31st half 4,251 3,229 31.72nd half 6,023 3,348 79.9Earnings Per Share (Cents)10,274 6,577 56.21st half 5.6 4.5 26.72nd half 8.0 4.6 73.913.6 9.1 49.5inter-roller engineering limited annual report2004 19

Five-Year Financial Profile2004 2003 2002 2001 2000$'000 $'000 $'000 $'000 $'000Profit & Loss AccountTurnover 69,856 52,874 19,098 34,508 29,110Net Profit/(Loss) After Taxand Minority Interest 10,274 6,577 (238) 999 (3,188)Net Profit/(Loss) After Taxand Extraordinary Items 10,274 6,577 (238) 999 (3,188)Proposed Dividends (Net) 6,120 3,711 849 849 437Balance SheetFixed Assets & Long Term Assets 20,791 18,558 18,580 19,392 19,670Long Term Investments 72 72 100 141 276Current Assets 47,152 29,292 12,923 23,294 21,537Total Assets 68,015 47,922 31,603 42,827 41,483Shareholders' Funds 37,295 32,687 26,983 28,374 27,510Long-Term Liabilities 93 494 457 855 1,391Current Liabilities 30,627 14,741 4,163 13,598 12,582Total Reserves and Liabilities 68,015 47,922 31,603 42,827 41,483Per Share Data (Cents)Net Earnings/(Loss) After Tax 13.56 9.06 (0.34) 1.40 (4.50)Dividends (Gross) 7.00 5.00 1.20 1.20 0.60Dividends (Net) 6.00 5.00 1.20 1.20 0.60Dividend Cover - Times 1.68 1.80 - 1.20 -Net Tangible Assets* 48.70 44.00 38.20 40.10 38.90Financial RatiosReturn on Shareholders' Funds (%) 27.50 20.10 (0.90) 3.60 (11.60)Return on Total Assets Employed (%) 15.11 13.70 (0.80) 2.30 (7.70)Debt-Equity Ratio 0.31 0.02 0.04 0.22 0.26EmployeesAverage Number 421 348 287 312 321Wages, Salaries and Related Costs 16,180 13,757 8,961 9,989 10,001* The per share datea are computed as follows:2000 - Based on share capital of 70,717,454 ordinary shares of $0.20 each2001 - Based on share capital of 70,717,454 ordinary shares of $0.20 each2002 - Based on share capital of 70,717,454 ordinary shares of $0.20 each2003 - Based on share capital of 74,335,954 ordinary shares of $0.20 each2004 - Based on share capital of 76,547,954 ordinary shares of $0.20 each20 inter-roller engineering limited annual report2004

Value-Added StatementsGroup 2004 2003 2002 2001 2000$’000 $’000 $’000 $’000 $’000Turnover 69,856 52,874 19,098 34,508 29,110Purchase of Goods & Services 40,608 30,609 9,264 22,391 21,430Value Added from Operations 29,248 22,265 9,834 12,117 7,680Investment Income 829 682 83 268 28330,077 22,947 9,917 12,385 7,963Applied As Follows:To Employees:Salaries and Other 16,180 13,757 8,961 9,989 10,001Staff CostsTo Government:Income and Other Taxes 1,350 1,529 88 150 (392)To Providers of Capital:Finance Charges 143 98 137 265 459Dividends 7,268 3,711 848 849 437Retained for Re-Investmentand Future Growth:Depreciation 1,112 1,001 970 982 1,083Retained Profits 4,024 2,851 (1,087) 150 (3,625)30,077 22,947 9,917 12,385 7,963Productivity DataValue Added Per Employee 71,440 65,941 34,265 38,837 23,924Value Added Per $ 1.86 1.67 1.1 1.21 0.77Employment CostValue Added Per $ Investment 1.45 1.24 0.39 0.48 0.31in Fixed AssetsAverage Number of Employees 421 348 287 312 321inter-roller engineering limited annual report2004 21

Operations ReviewBAGGAGE HANDLING SYSTEMSThe year 2004 is another record year for Inter-Roller. Inaddition to previously secured projects such as ChangiAirport Terminal 3 in Singapore, New BangkokInternational Airport in Thailand and Djerba-Zarzis inTunisia (North Africa), we also secured new orders forBaggage Handling System Projects in AhmedabadAirport in India as well as various projects in the MiddleEast. Repeat orders also came in from China includingHangzhou Xiaoshan Airport, Fuzhou Changle andChangsha Huanghua Airport.We ventured into new territory with the award of acontract to design and build a Baggage HandlingSystem for Curacao Hato International Airport in theCaribbean Islands. In the In-flight Catering business,we secured a project to supply a material handlingsystem to Emirates Airlines.Hong Kong International AirportSkyplaza ProjectHong KongIn January 2005, Inter-Roller secured a contract todesign and build a new Baggage Handling System atHong Kong International Airport’s Skyplaza Building.This is a new terminal designed to increase thecapacity of the existing Chek Lap Kok InternationalAirport in Hong Kong.The system includes 2 check-in islands, return tubsystem and high-speed conveyors in tunnelsconnecting to the existing passenger terminal building.The system is to interface with the existingin town check-in system.A Management Information and Controls System(MICS) is also included as part of the supply. This MICSallows users to navigate on a graphical screen tomonitor status of the system.inter-roller engineering limited annual report2004 23

Operations ReviewHaikou Meilan International AirportChinaInter-Roller consolidates its position in the Chinamarket by bagging its 10th China airport project -a Baggage Handling System at the Haikou MeilanInternational Airport. Previously, Inter-Roller hassupplied similar Baggage Handling System Projects toother cities in China including Xiamen, Fuzhou,Changsha, Hangzhou, Zhengzhou, Qingdao, Xi’an,Huherhaote and Jinan.Inter-Roller has been able to capitalize on theexpanding Chinese aviation market with its strong trackrecord in China and an excellent reputation. Last yearalone, Inter-Roller has sealed contracts worth millionsof dollars for expansion works with Fuzhou Airport,Changsha Airport and Hangzhou Airport.Dubai International Airport Terminal 1United Arab EmiratesInter-Roller successfully secured a contract to designand build a Baggage Handling System or the arrival hallat Dubai International Airport Terminal 1.To strengthen Inter-Roller’s position as a key BaggageHandling System player in the Middle East, IR (MiddleEast) LLC was set up in Dubai.Changi Low Cost TerminalSingaporeIn January 2005, Inter-Roller successfully secured acontract to supply a Baggage Handling System forSingapore’s Changi Low Cost Terminal. Comprising 12check-in positions, the Baggage Handling System,scheduled to complete in year 2005, will handle thebaggage from low cost airlines such as Valuair, Tiger Airand Jetstar Asia.Changi Airport Terminal 3SingaporeInstallation work for the new Baggage Handling Systemat Changi Airport Terminal 3 has started.Designed to accommodate a passenger traffic of20 million a year, Changi Airport Terminal 3’s BaggageHandling System Project comprises 135 check-ins,more than 6 km of transport conveyors, a fullyautomated departure control system, high-speed interterminalbaggage transfer system using tray system,and an early bag storage system. Baggageof transfer passengers making connections at differentterminals can be transported individually throughunderground tunnels at a speed of 7m/s.A multi-tier security system is included as part of thesecurity requirement in the airport. Inter-Roller’sBaggage Handing System is required to interface with24 inter-roller engineering limited annual report2004

Operations Reviewthis security system. This includes interfacing with aBomb Shelter. Inter-Roller has successfully completedsimilar integration with multi-tier security systems inother airports.Upon completion, the baggage handling system inTerminal 3 will be able to support the operations of newlarge aircraft, such as the Airbus A380. Four out of theeight baggage claim carousels in Terminal 3's ArrivalHall are designed to support the new large aircraft.Together with Changi Airport Terminal 1 and 2, the totalhandling capacity of Changi Airport will be raised to 64million passengers per year when Terminal 3 iscompleted by end of Year 2006."The project is currently running smoothly. We areconfident the project will complete successfully on timeand to the satisfaction of CAAS " said Rickson Chan,the Deputy Project Manager who manages this project.New Bangkok International Airport(Suvarnabumi Airport)ThailandIn 2002, Inter-Roller Engineering Limited was awardeda contract by Kawasaki Heavy Industries Ltd to designand build a highly automated Baggage HandlingSystem in the new Bangkok International Airport,Thailand. The system was designed to handle anannual passenger capacity of 30 million.Due to a rapid increase in the passenger traffic, theairport authority in Thailand reviewed the design of thenew airport and decided to increase its handlingcapacity to 45 million passengers a year.Loh Mun Fai, Project Manager responsible forthis project said, "We have started installation for theconveyors at site and we have received manycompliments for our equipment. Some Americanvisitors were so impressed with our equipment thatthey approached us to work with them in theUnited States."inter-roller engineering limited annual report2004 25

Operations ReviewJinan International AirportChinaInter-Roller clinched its 9th airport project in China withthe Baggage Handling System Project at JinanInternational Airport. The project comprises 52 checkinlines, 5 departure lines each with its own in linescreening systems, 7 arrival carousels and a PC basedMaintenance Diagnostic System. In addition, thesystem also includes the design and supply of aComputer Control System that allows integration withthe Flight Information Display System (FIDS) and theBaggage Information Display System (BIDS).This follows the successful commissioning of six otherairports in China namely, Xiamen Gaoqi InternationalAirport, Fuzhou Changle International Airport,Zhengzhou Xuedian Airport, Changsha HuanghuaAirport, Hangzhou Xiaoshan International Airport,Qingdao Liuting International Airport and Xi’anXiangyang International Airport.The Jinan project is in its final testing and commissioningstage.Okinawa Airport (Duty Free)JapanInter-Roller also supplied a friction drive carousel toOkinawa Airport in Japan.Inter-Roller’s friction drive carousel is extremely quietand aesthetically appealing. A special chain has beendeveloped to allow flexibility in both linear and verticalmovements to compensate for differences in floorheights. Inter-Roller has filed for a patent for thisnew type of chain.Inter-Roller has also supplied such carousels to ChangiAirport in Singapore, Manchester Airport in UK, JinanAirport and Xiamen Gaoqi International Airport in China.26 inter-roller engineering limited annual report2004

Operations ReviewL’Aeroport International DeDjerba AirportTunisiaWork at Tunisia Airport is on-going and is expectedto be completed by first quarter of 2005.The Baggage Handling System comprises 36 check-inlines, 4 in-line screening systems, 3 departurecarousels, 7 arrival carousels and a fully automatedsorting control system. In addition, Inter-Roller alsoprovides the BHS with a sophisticated Maintenanceand Diagnostic System (MDS). The MDS, built upona System Control and Data Acquisition (SCADA)platform, allows BHS operators to navigate the wholeBHS layout, zoom in to individual zones fortroubleshooting, and generate operational and faultreports.Manchester Airport Terminal 1United KingdomHaving successfully delivered Baggage HandlingSystem to Manchester Airport Terminal 1 in 2003and 2004, Inter-Roller continues to win ordersin Manchester for additional works in 2005. Inter-Rolleris to supply 2 more friction drive carousel atthe arrival halls. The repeat orders are a testament toInter-Roller’s high quality of work.Ahmedabad AirportIndiaInter-Roller Engineering Ltd secured its third contract inIndia with the award of a project in Ahmedabad Airport.We have previously supplied Systems to Mumbai andChennai. The India market has different specificationsas compared to that of other markets. Our strongengineering capabilities enable us to adapt our designsto meet different customer requirements.Curacao Hato International AirportCaribbean IslandsInter-Roller secured a contract to deliver a BaggageHandling System and a Hold Baggage HandlingSystem to Curacao Hato International Airport in theCaribbean Sea.The scope of supply includes 17 weighing platforms,departure conveyors, arrival carousels and a securityscreening machine.inter-roller engineering limited annual report2004 27

Operations ReviewINFLIGHT CATERING SYSTEMSEmirates CateringUnited Arab Emirates“We have built one of the most modern In-flightCatering System in Korea. Korean Airlines has beenvery pleased with our system and has recommendedus to many potential customers who visited them.Emirates Airlines is one such visitor turned customer”said Chia Kai Li, Deputy Project Manager responsiblefor the Emirates Inflight Catering System Project.In addition to this project, Inter-Roller has alsopreviously completed similar projects for SingaporeAirlines and Korean Air.Inter-Roller is now one of the few experienced In-flightCatering System providers in the world.28 inter-roller engineering limited annual report2004

Operations ReviewEXPRESS COURIER SYSTEMSUPS International Inc.PhilippinesInter-Roller secured a contract to design and builda Material Handling System (MHS) at United ParcelService (UPS) in the Philippines.This contract was secured following the successfulcompletion of a similar project for UPS in Sydney,Australia.The MHS, comprising inbound and outboundequipment is designed using a series of roller decks,belt conveyor diverters and ball decks. Parcels arrivingwill be unloaded into the MHS, undergo sorting, beforebeing distributed to different regions.Inter-Roller has supplied similar systems to UPSSingapore, FedEx Subic Bay in Philippines, FedExTaipei, DHL Hong Kong and DHL Singapore.AUTOMATED CAR PARKING SYSTEMSFragrance GroupSingaporeWe secured a contract to supply an 8-lot Best ParkingSystem to the Fragrance Group in 2004.The development, located in Geylang Lorong 39, isa triple deck parking system, designed for a residentialbuilding.Special safety features are built into the system.They include anti-fall safety device that prevents anyaccidental slips as well as length and height checksto ensure the length of cars fit into the lot prior toany movement.The project was successfully completed in August2004Ming TeikSingaporeInter-Roller secured another Best Park System thathandles 10 parking lots for a residential cumcommercial building. The project is expected tocomplete by April 2005.inter-roller engineering limited annual report2004 29

Corporate EventsJanuary 2004• 1st Runner-up at the 30th Annual Report Awards2003.• Awarded a second contract to supply arrivalcarousels to Manchester Airport, United Kingdom.• Awarded a contract to expand the BaggageHandling System at Xiamen Gaoqi InternationalAirport, China.February 2004• Held a press conference to release FY2003 results.• Participated in Passenger Terminal Exhibition inHamburg, Germany.March 2004• Held the company’s management retreat from6th to 8th March.April 2004• Participated in luncheon session with VicePresident, Trade Minister and Airport Authorityof Panama.• Participated in trade mission led by InternationalEnterprise Singapore to Panama, Puerto Ricoand Mexico.June 2004• Awarded a SGD 15 million contract to design andsupply an Inflight Catering System to EmiratesAirlines in Dubai.November 2004• Proposed Non-Underwritten RenounceableRights Issue.• Appointment of Mr Lim Hwee Chiang Johnas Independent Director.December 2004• Received In-Principle Approval from SGX-STfor the listing of and quotation of rights issueon the official list of the SGX Sesdaq.January 2005• Appointment of Mr Lim Yee Min as ChiefExecutive Officer.• Held the company’s annual dinner and danceon 15 Jan 2005.• Completed listing of Rights Share.February 2005• Participated in Airport Industry 2005 Exhibitionand Conference in Moscow.• Participated in Passenger Terminal Exhibition2005 in Koln, Germany.• Awarded contract to design and supply BaggageHandling System for Hong Kong SkyplazaBuilding.• Awarded contract to design and supply BaggageHandling System for Changi Low Cost Terminal.• Announced record FY2004 results.August 2004• Secured a SGD 3 million Baggage HandlingSystem Project in the Caribbean Islands.inter-roller engineering limited annual report2004 31

Index to the Financial Statements34 Directors’ Report38 Statement by Directors and the Chief Financial Officer39 Auditors’ Report40 Balance Sheets41 Income Statements42 Statement of Changes in Equity44 Consolidated Cash Flow Statement45 Notes to the Financial Statements73 Report on Corporate Governance78 Share Transaction Statistics79 Statistics of Shareholdings80 Notice of Annual General Meetingproxy form - AGM

Directors’ ReportThe directors submit this annual report to the members together with the audited consolidated financial statements ofthe Group and of the Company for the financial year ended 31 December 2004.Names of directorsThe directors in office at the date of this report are:Lim Yong WahYap Lem @ Yap Kee LumLim Yee MinLow Kok HuaRajan MenonHaider Mohamedally SithawallaNicolaas Johannes KlaverLoh Chin HuaLim Hwee ChiangChairman and Executive DirectorExecutive DirectorChief Executive OfficerNon-Executive DirectorIndependent DirectorIndependent DirectorIndependent DirectorIndependent DirectorIndependent DirectorArrangements to acquire shares or debenturesDuring and at the end of the financial year, neither the Company nor the subsidiary companies was a party to anyarrangement the object of which was to enable the directors to acquire benefits through the acquisition of shares in ordebentures of the Company or of any other corporate body other than as disclosed in this report.Directors’ interest in shares or debenturesAccording 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 office at the end of the financial year was interested in shares of the Companyand its related corporations except as follows:Name of directorOrdinary shares inOrdinary shareswhich director isregistered in namedeemed toof director have an interestAs at31.12.2004As at As at As at As at and1.1.2004 31.12.2004 21.1.2005 1.1.2004 21.1.2005The Company -Inter-Roller Engineering LimitedNumber of shares of $0.20 eachLim Yong Wah 2,484,749 2,534,749 2,584,749 66,000 252,000Yap Lem @ Yap Kee Lum 6,591,837 7,591,837 7,851,837 7,210,777 6,210,777Lim Yee Min 820,000 920,000 920,000 - -Low Kok Hua 12,032,000 6,032,000 6,032,000 40,000 6,040,000Chan Chin Wah* 2,670,000 2,670,000 2,670,000 - -Rajan Menon 311,500 311,500 311,500 - -Haider Mohamedally Sithawalla 624,000 624,000 624,000 - -Nicolaas Johannes Klaver 461,000 461,000 461,000 - -Loh Chin Hua 174,000 174,000 174,000 - -* Deceased on 27 April 200434 inter-roller engineering limited annual report2004

Directors’ ReportDirectors’ interest in shares or debentures (cont’d)Mr Yap Lem @ Yap Kee Lum and Mr Low Kok Hua, by virtue of the provisions of Section 7 of the Companies Act, Cap.50, are deemed to be interested in the whole of the issued share capital of all the subsidiary companies of Inter-RollerEngineering Limited.Directors’ benefitsSince the end of the previous financial year, no director has received or has become entitled to receive a benefit undera contract which is required to be disclosed under Section 201(8) of the Companies Act, Cap. 50.Share option schemeAt an Extraordinary General Meeting of the Company held on 25 May 2001, shareholders approved the Inter-RollerExecutives’ Share Option Scheme 2001 (the “Scheme”), which supersedes, in respect of further share options to beissued by the Company, the Inter-Roller Executives’ Share Option Scheme (the “Previous Scheme”) implemented afterthe approval of Shareholders was given at an EGM of the company held on 28 June 1994. However, the rules of thePrevious Scheme (as amended with modifications) shall continue to apply to the Outstanding Options granted underthe Previous Scheme. This included extending the validity of share options granted from 1999 onwards to ten (10)years. The Previous Scheme expired in June 2004.The Scheme extends to Executives and Directors (including Non-Executive Directors and Associated Company Executives)who have contributed significantly to the growth and performance of the Group. It is primarily a shareincentive scheme.The maximum size of the Scheme is based on 25% of the Company’s total issued share capital. Based on the existingissued share capital of S$15,309,591 divided into 76,547,954 shares, the maximum size of the Scheme will beapproximately 19,136,989 shares. The Scheme is intended to last for fifteen (15) years.The Scheme is administered by the Remuneration Committee which comprises the following non-executivedirectors:-Haider Mohamedally SithawallaLow Kok HuaLim Yong WahShare options granted and acceptedParticulars of share options granted to and accepted by directors and other full-time executives during the financialyear under the Scheme are:Name of Person to Date ofcompany in which whom options Number expiry Exerciseoptions were granted were granted Class of shares of shares of option priceInter-Roller Chief Executive Officer Ordinary shares 200,000 19.2.2014 $1.06Engineering Limited - Lim Yee Min of $0.20 eachInter-Roller Full-time Ordinary shares 1,730,000 19.2.2014 $1.06Engineering Limited Executives of $0.20 eachThe options may be exercised in full or in respect of 1,000 shares or a multiple thereof on payment of the exercise priceat any time after the first anniversary of the grant but before the tenth anniversary.The persons to whom the options have been granted have no right to participate by virtue of the options in any shareissue of any other company. There have been no options granted to controlling shareholders or their associates.No options to take up unissued shares of the subsidiary companies have been granted during the financial year.inter-roller engineering limited annual report2004 35

Directors’ ReportShare options exercisedParticulars of shares issued during the financial year by virtue of the exercise of options to take up unissued shares ofthe Company whether granted before or during the financial year are as follows:No. of Class of Amount paidCompany Person to whom shares were issued shares issued shares issued per shareInter-Roller Chief Executive Officer - 100,000 Ordinary $0.31Engineering Lim Yee Min share ofLimited$0.20 eachInter-Roller Full-time Executives 270,000 Ordinary $0.20Engineering 129,000 share of $0.28Limited 1,195,000 $0.20 each $0.31228,000 $0.3375,000 $0.39215,000 $0.422,212,000Unissued shares under optionThe unissued shares under options granted to full-time executives and directors at the end of the financial year are asfollows:Inter-Roller Engineering Limited Executives’ Share Option Scheme 2001DateGrantedoptions Balance during Exercised Balance at Offer price Periodgranted at 1.1.2004 the year during the year 31.12.2004 per share exercisable18.3.99 129,500 - (129,000) 500 $0.28 18.3.00 -17.3.097.9.99 180,000 - (165,000) 15,000 $0.42 7.9.00 - 6.9.0917.3.00 252,500 - (228,000) 24,500 $0.33 17.3.01 - 16.3.1019.9.00 40,000 - (40,000) - $0.20 19.9.01 - 18.9.1023.3.01 62,000 - (60,000) 2,000 $0.20 23.3.02 - 22.3.1119.4.02 190,000 - (170,000) 20,000 $0.20 19.4.03 - 18.4.1211.4.03 1,345,000 - (1,295,000) 50,000 $0.31 11.4.03 - 10.4.1320.6.03 75,000 - (75,000) - $0.39 20.6.03 - 19.6.132.7.03 50,000 - (50,000) - $0.42 2.7.03 - 1.7.1320.2.04 - 1,930,000 - 1,930,000 $0.36 20.2.04 - 19.2.142,324,000 1,930,000 (2,212,000) 2,042,000There were no unissued shares of any subsidiary company under option as at end of the financial year.36 inter-roller engineering limited annual report2004

Directors’ ReportThe director’s interests in Executive Share Options are as follows:Unissued shares under option (cont’d)Options inOptions registeredwhich director isin name of director deemed to have an interestAs atAs at31.12.2004 31.12.2004As at and As at andName of director 1.1.2004 21.1.2005 1.1.2004 21.1.2005Lim Yee Min 100,000 200,000 - -Audit CommitteeThe Audit Committee comprises the following members, all of whom are independent directors:Rajan Menon (Chairman)Haider Mohamedally SithawallaLoh Chin HuaThe Audit Committee performs the functions set out in Section 201B(5) of the Companies Act, Cap. 50. In performingits functions, the Committee reviewed the overall scope of both the internal and external audits and the assistancegiven by the Company’s officers to the auditors. It met with the Company’s internal and external auditors to discussthe results of their respective examinations and their evaluation of the Company’s system of internal accountingcontrols. The Committee also reviewed the financial statements of the Company and the consolidated financialstatements of the Group for the financial year ended 31 December 2004 as well as the auditors’ report thereon.The Committee recommends to the Board of Directors the nomination of Foo Kon Tan Grant Thornton as externalauditors at the forthcoming Annual General Meeting of the company.AuditorsThe auditors, Foo Kon Tan Grant Thornton, Certified Public Accountants, have expressed their willingness to acceptre-appointment.On behalf of the Directors.....................................................LIM YONG WAH.....................................................LIM YEE MINDated: 15 February 2005inter-roller engineering limited annual report2004 37

Statement by Directors and theChief Financial OfficerIn the opinion of the directors and the chief financial officer, the accompanying balance sheets, income statements,statements of changes in equity of the Group and of the Company and the consolidated cash flow statement, togetherwith the notes thereon, are drawn up in accordance with and comply with Singapore Financial Reporting Standards soas to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2004 and ofthe results of the business, changes in equity of the Group and of the Company and cash flows of the Group for thefinancial year ended on that date and at the date of this statement there are reasonable grounds to believe that theCompany will be able to pay its debts as and when they fall due.On behalf of the Directors.....................................................LIM YONG WAHChairman & Executive Director.....................................................LIM YEE MINChief Executive Officer.....................................................LOW CZE SOOChief Financial OfficerDated: 15 February 200538 inter-roller engineering limited annual report2004

Auditors’ Reportto the members of Inter-Roller Engineering LimitedWe have audited the accompanying financial statements of Inter-Roller Engineering Limited (“the Company”) for theyear ended 31 December 2004. These financial statements are the responsibility of the Company’s Directors. Ourresponsibility is to express an opinion on these financial statements based on our audit.We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we planand perform the audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing the accounting principles used and significant estimates madeby the Directors, as well as evaluating the overall financial statement presentation. We believe that our audit providesa reasonable basis for our opinion.In our opinion:(a)(b)(c)the consolidated financial statements of the Group are properly drawn up in accordance with the provisions ofthe Singapore Companies Act, Cap. 50 (“the Act”) and Singapore Financial Reporting Standards so as to givea true and fair view of the state of affairs of the Group as at 31 December 2004 and the results, changes inequity and cash flows of the Group for the year ended on that date;the balance sheet, income statement, and statement of changes in equity of the Company are properly drawnup in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give atrue and fair view of the state of affairs of the Company as at 31 December 2004 and the results and changesin equity of the Company for the year ended on that date; andthe accounting and other records required by the Act to be kept by the Company and by those subsidiarycompanies incorporated in Singapore of which we are the auditors have been properly kept in accordance withthe provisions of the Act.Chin Sin BengPartner in charge of auditDate of appointment: 28 August 2002Foo Kon Tan Grant ThorntonCertified Public AccountantsSingapore, 15 February 2005inter-roller engineering limited annual report2004 39

Balance SheetsThe GroupThe Company31 December 31 December 31 December 31 December2004 2003 2004 2003Note $ $ $ $SHARE CAPITAL 4 15,309,591 14,867,191 15,309,591 14,867,191RETAINED PROFITS 9,155,207 5,131,751 6,989,755 5,277,445OTHER RESERVES 5 12,831,128 12,688,338 12,542,805 12,809,448Share capital and reserves 37,295,926 32,687,280 34,842,151 32,954,084LiabilitiesNon-CurrentDeferred taxation 6 19,353 158,554 19,353 158,554Hire-purchase creditors 7 73,606 - - -Bank borrowings 8 - 335,175 - -92,959 493,729 19,353 158,554CurrentTrade payables 9 17,301,928 13,058,586 16,517,066 12,468,343Other payables 318,569 328,443 60,656 43,423Loans owing to subsidiary companies 10 - - 2,977,709 1,016,606Provision for taxation 1,387,299 1,018,879 1,307,899 959,364Hire-purchase creditors 7 14,260 - - -Bank borrowings 8 11,604,871 335,175 11,282,371 -30,626,927 14,741,083 32,145,701 14,487,736Total equity and liabilities 68,015,812 47,922,092 67,007,205 47,600,374AssetsNon-CurrentProperty, plant and equipment 11 20,749,883 18,498,438 13,004,881 13,916,503Long-term investments 12 71,817 72,203 62,000 62,000Subsidiary companies 10 - - 10,936,508 6,931,014Other receivables 13 41,540 59,820 41,540 59,82020,863,240 18,630,461 24,044,929 20,969,337CurrentInventories 14 1,564,707 1,819,691 1,035,021 1,513,770Contract work-in-progress 15 39,172,102 14,054,725 36,956,279 13,709,046Trade receivables 16 3,713,380 4,949,125 3,713,380 4,927,007Other receivables 13 779,325 490,833 649,389 455,112Short-term investments 17 379,836 1,757,218 - -Cash and cash equivalents 18 1,543,222 6,220,039 608,207 6,026,10247,152,572 29,291,631 42,962,276 26,631,037Total assets 68,015,812 47,922,092 67,007,205 47,600,374The annexed notes form an integral part of and should be read in conjunction with these financial statements.40 inter-roller engineering limited annual report2004

Income StatementsThe GroupThe CompanyYear ended Year ended Year ended Year ended31 December 31 December 31 December 31 December2004 2003 2004 2003Note $ $ $ $Revenue 3 69,855,950 52,874,362 68,244,184 52,864,406Investment and interest income 828,968 681,820 55,000 70,000Other operating income 200,021 163,755 70,662 324,473Materials, components andsubcontract costs (33,965,823) (26,887,291) (36,279,136) (28,366,015)Staff costs (16,179,885) (13,756,788) (15,052,177) (12,979,522)Depreciation and amortisation expense (1,112,073) (1,001,579) (904,240) (818,402)Other operating expenses (7,965,708) (4,210,917) (6,966,465) (3,780,574)Profit from operations 11,661,450 7,863,362 9,167,828 7,314,366Finance cost (143,233) (97,830) (109,258) (29,106)Profit before taxation 19 11,518,217 7,765,532 9,058,570 7,285,260Taxation 20 (1,243,785) (1,188,064) (1,161,744) (1,116,574)Profit after taxation attributableto members of the Company 10,274,432 6,577,468 7,896,826 6,168,686Earnings per share 22 13.6 cents 9.1 centsFully diluted earnings per share 22 13.5 cents 9.0 centsThe annexed notes form an integral part of and should be read in conjunction with these financial statements.inter-roller engineering limited annual report2004 41

Statement of Changes in EquityExchangeShare Share Revaluation fluctuation Statutory Dividend Retainedcapital premium reserve reserve reserve reserve profits TotalThe Group $ $ $ $ $ $ $ $Balance at 1 January 2003 14,143,491 2,922,685 7,608,740 (821,008) - 848,609 2,280,940 26,983,457Issue of share capital - Optionexercised 723,700 136,385 - - - - - 860,085Exchange difference arising fromtranslation of investment inforeign subsidiary not recognisedin income statement - - - (131,902) - - - (131,902)Net profit for the year - - - - - - 6,577,468 6,577,4682002 first and final tax exemptdividend of 1.2 cents pershare paid - - - - - (848,609) (15,196) (863,805)2003 interim tax exempt dividendof 1.0 cent per share paid - - - - - - (738,023) (738,023)2003 second and final taxexempt dividend of 4.0 centsper share proposed - - - - - 2,973,438 (2,973,438) -Balance at 31 December 2003 14,867,191 3,059,070 7,608,740 (952,910) - 2,973,438 5,131,751 32,687,280Issue of share capital - Optionexercised 442,400 243,960 - - - - - 686,360Exchange difference arising fromtranslation of investment inforeign subsidiary companiesnot recognised in incomestatement - - - (331,554) - - - (331,554)Exchange difference arising fromhedging instrument notrecognised in income statement - - - (547,350) - - - (547,350)Net profit for the year - - - - - - 10,274,432 10,274,432Deficit on revaluation - - (908,165) - - - - (908,165)Transfer of 10% net profit of IR(Middle East) LLC up to 50% of paid-upcapital to statutory reserve - - - - 66,460 - (66,460) -2003 second and final taxexempt dividend of 4.0 centsper share paid - - - - - (2,973,438) (65,680) (3,039,118)2004 interim taxexempt dividend of 2.0 centsper share paid - - - - - - (1,525,959) (1,525,959)2004 second and final dividendof 5.0 cents per share lesstax of 20% proposed - - - - - 4,592,877 (4,592,877) -Balance at 31 December 2004 15,309,591 3,303,030 6,700,575 (1,831,814) 66,460 4,592,877 9,155,207 37,295,926The annexed notes form an integral part of and should be read in conjunction with these financial statements.42 inter-roller engineering limited annual report2004

Statement of Changes in EquityExchangeShare Share Revaluation fluctuation Dividend Retainedcapital premium reserve reserve reserve profits TotalThe Company $ $ $ $ $ $ $Balance at 1 January 2003 14,143,491 2,922,685 7,731,902 (833,283) 848,609 2,835,416 27,648,820Issue of share capital - Optionexercised 723,700 136,385 - - - - 860,085Exchange difference arising fromtranslation of investment inforeign subsidiary company notrecognised in income statement - - - (121,679) - - (121,679)Net profit for the year - - - - - 6,168,686 6,168,6862002 first and final tax exemptdividend of 1.2 cents per sharepaid - - - - (848,609) (15,196) (863,805)2003 interim tax exempt dividendof 1.0 cents per share paid - - - - - (738,023) (738,023)2003 second and final taxexempt dividend of 4.0 centsper share proposed - - - - 2,973,438 (2,973,438) -Balance at 31 December 2003 14,867,191 3,059,070 7,731,902 (954,962) 2,973,438 5,277,445 32,954,084Issue of share capital - Optionexercised 442,400 243,960 - - - - 686,360Exchange difference arising fromhedging instrument notrecognised in income statement - - - (547,350) - - (547,350)Net profit for the year - - - - - 7,896,826 7,896,826Deficit on revaluation - - (1,582,692) - - - (1,582,692)2003 second and final taxexempt dividend of 4.0 centsper share paid - - - - (2,973,438) (65,680) (3,039,118)2004 first and interim tax exemptdividend of 2.0 centsper share paid - - - - - (1,525,959) (1,525,959)2004 second and final dividendof 5.0 cents per share lesstax of 20% proposed - - - - 4,592,877 (4,592,877) -Balance at 31 December 2004 15,309,591 3,303,030 6,149,210 (1,502,312) 4,592,877 6,989,755 34,842,151The annexed notes form an integral part of and should be read in conjunction with these financial statements.inter-roller engineering limited annual report2004 43

Consolidated Cash Flow StatementYear endedYear ended31 December 31 December2004 2003$ $Cash Flows from Operating ActivitiesProfit before taxation 11,518,217 7,765,532Adjustments for:Depreciation of property, plant and equipment 1,112,072 1,001,579Exchange differences on translation (700,147) (38,187)Loss on liquidation - 1,107Profit on disposal of property, plant and equipment (16,661) (3,408)Provision for diminution in value of investments no longer required (275,613) (157,715)Profit on disposal of equity investments (450,884) (347,096)Dividend income (47,471) (106,129)Interest income - (879)Interest expense 143,231 97,830Operating profit before working capital changes 11,282,744 8,212,634Decrease/(increase) in trade and other receivables 965,533 (2,789,937)Increase in inventories and contract work-in-progress (24,862,393) (9,304,945)Increase in trade and other payables 4,233,468 10,228,007Income tax (paid)/refunded (1,008,702) 154,751Net cash (used in)/generated from operating activities (9,389,350) 6,500,510Cash Flows from Investing ActivitiesProceeds from sale of equity investments 2,563,385 1,227,534Proceeds from sale of property, plant and equipment 33,727 6,971Purchase of property, plant and equipment (4,345,858) (1,141,016)Purchase of quoted equity investments (459,506) (1,047,175)Proceeds from liquidation of long term investments - 25,898Interest received - 879Dividend received 41,606 90,953Net cash used in investing activities (2,166,646) (835,956)Cash Flows from Financing ActivitiesNet proceeds from issue of share 686,360 860,085Bank loans obtained/(repaid) 10,862,150 (479,888)Dividends paid (4,565,077) (1,601,828)Interest paid (143,231) (97,830)Payment to hire purchase creditors (33,394) (4,192)Net cash generated from/(used in) financing activities 6,806,808 (1,323,653)Net (decrease)/increase in cash and cash equivalents (4,749,188) 4,340,901Cash and cash equivalents as at the beginning of the financial year 6,220,039 1,879,138Cash and cash equivalents as at the end of the financial year (Note 18) 1,470,851 6,220,039Note:Property, plant and equipmentDuring the financial year, the Group acquired property, plant and equipment with an aggregate cost of S$4,467,119(2003- $1,141,016) of which $121,261 (2003- $Nil) was acquired by means of hire-purchase. Cash payments of$4,345,858 (2003- $1,141,016) were made to purchase property, plant and equipment.The annexed notes form an integral part of and should be read in conjunction with these financial statements.44 inter-roller engineering limited annual report2004

Notes to the Financial Statements1 General informationThe financial statements of the Group and of the Company for the year ended 31 December 2004 were authorisedfor issue in accordance with a resolution of the directors on the date of the Statement By Directors and the ChiefFinancial Officer.The Company is a limited liability company and domiciled in the Republic of Singapore.The registered office is located at 20 Benoi Crescent, Jurong, Singapore 629983.The number of employees of the Group as at 31 December 2004 is 465 (2003 - 376) and the company is 305(2003 - 284) respectively.2 Summary of significant accounting policiesBasis of preparationThe financial statements are prepared under the historical cost convention as modified by the revaluation ofcertain properties and in accordance with Singapore Financial Reporting Standards (“FRS”) including relatedInterpretations promulgated by the Council on Corporate Disclosure and Governance.The preparation of the financial statements in conformity with FRS requires the use of estimates and assumptionsthat affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at thedate of the financial statements and the reported amounts of revenues and expenses during the financial year.Although these estimates are based on management’s best knowledge of current events and actions, actualresults may differ from those estimates.ConsolidationThe financial statements of the Group include the financial statements of the Company and the subsidiarycompanies made up to the end of the financial year. Details of its subsidiary companies are given in Note 10. Allinter-company balances and significant inter-company transactions and resulting unrealized profits or lossesare eliminated on consolidation and the consolidated financial statements reflect external transactions andbalances only. The results of subsidiary companies acquired or disposed of during the financial year are includedor excluded from the consolidated income statement from the effective date of acquisition or disposal.Goodwill on consolidation arises where the purchase price exceeds the fair values attributed to net assets atthe date of acquisition. Goodwill is carried at cost less any accumulated amortization and any accumulatedimpairment losses. Goodwill is amortised on a systematic basis over its useful life of 5 years.At the balance sheet date, the Group assesses whether there is any indication of impairment. If such indicationsexist, an analysis is performed to assess whether the carrying amount of goodwill is fully recoverable. A writedown is made if the carrying amount exceeds the recoverable amount.Property, plant and equipment and depreciationProperty, plant and equipment are stated at cost or valuation less accumulated depreciation and impairmentlosses, if any.Depreciation is computed utilising the straight-line method to write off the cost of these property, plant andequipment over their estimated useful lives as follows:inter-roller engineering limited annual report2004 45

Notes to the Financial StatementsProperty, plant and equipment and depreciation (Cont’d)Leasehold propertiesMotor vehiclesPlant and machineryComputer systemsOthersRemaining life of the lease7 years3 - 10 years3 years3 - 10 yearsNo depreciation is provided for(i) freehold land(ii) leasehold properties under construction; and(iii) plant and machinery under constructionThe net surplus or deficit on revaluation of leasehold properties is taken to revaluation reserve. In the event thatthe total revaluation surplus is not sufficient to cover a deficit, the amount by which the deficit exceeds theamount in the revaluation reserve is charged to the income statement. An increase in revaluation directly relatedto a previous decrease in carrying amount that was charged to the income statement is credited to the incomestatement to the extent that it offsets the previously recorded decrease of that same property, plant and equipment.On disposal of property, plant and equipment, the revaluation surplus relating to the property, plant and equipmentis taken directly to the retained profits.No deferred taxation is provided on the revaluation surplus as they are considered to be capital in nature andthe revalued properties are used in the business and not to be sold.For acquisitions and disposals during the financial year, depreciation is provided from the month of acquisitionand to the month before disposal respectively.Fully depreciated property, plant and equipment are retained in the accounts until they are no longer in use.The carrying amount of property, plant and equipment including those revalued are reviewed yearly in order toassess whether the carrying amount needs to be written down to its recoverable amount. To assist the directorsin determining recoverable amounts, an independent professional valuation of the leasehold properties is madeonce in every five years. Recoverable amount is defined as the higher of value in use and net selling price.Subsequent expenditure relating to a property, plant and equipment that has already been recognized is addedto the carrying amount of the property, plant and equipment when it is probable that future economic benefits,in excess of the originally assessed standard of performance of the existing property, plant and equipment, willflow to the enterprise. All other subsequent expenditure is recognised as an expense in the period in which it isincurred.InvestmentsQuoted and unquoted investments held on a long-term basis are stated at cost. Provision is made for diminutionin value, other than temporary, on an individual investment basis.Investments held as current assets are stated at the lower of cost and net realisable or market value determinedon an individual investment basis. Cost is determined on the weighted average method.46 inter-roller engineering limited annual report2004

Notes to the Financial StatementsSubsidiary companiesA subsidiary company is defined as a company in which the investing company has a long-term equity interestof more than 50% or over whose financial and operating policy decisions the Group controls.Shares in subsidiary companies are stated at cost less impairment in value on an individual subsidiary companybasis.Membership rightsMembership rights are stated at cost and represent transferable corporate memberships in recreational clubs.Provision for any impairment losses, on an individual basis, is taken to the income statement.InventoriesInventories are stated at the lower of cost and net realisable value. Cost is determined on a weighted averagebasis, and includes all costs in bringing the inventories to their present location and condition. In the case ofmanufactured products, cost includes all direct expenditure and production overheads based on the normallevel of activity.Provision is made for obsolete, slow-moving and defective inventories in arriving at the net realisable value.Net realisable value is the estimated selling price in the ordinary course of business less the estimated costsnecessary to make the sale.Contract work-in-progressContract work-in-progress is stated at cost and comprises direct materials, direct labour, direct expenditureand the relevant production overheads plus attributable profit and less progress billings received and receivable.Profits are recognised in the financial statements on the percentage of completion method based on workdone. Provision is made for all losses expected to arise on completion of contracts entered into at the balancesheet date, whether or not work on these contracts has commenced.Specific costs incurred during the year for major projects are capitalised as contract work-in-progress andtaken to income statement in the same manner as other contract costs, provided that such costs incurredrelate to contracts already secured and can be separately identified and reliably measured. Otherwise, thecosts are expensed when incurred.ReceivablesReceivables are carried at cost which is the original invoiced amount less provision for doubtful debts. Thecarrying value approximates the fair value of receivables.Specific provision for doubtful debts is provided based on estimated possible losses in respect of certainoutstanding debtors’ accounts. Bad debts are written off as soon as it is established that they are irrecoverable.Receivables include trade and non-trade balances with third parties.inter-roller engineering limited annual report2004 47

Notes to the Financial StatementsCash and cash equivalentsCash and cash equivalents comprise cash on hand, bank deposits and highly liquid investments which arereadily convertible to cash and which are subject to an insignificant risk of changes in value. For the purpose ofthe statement of cash flows, cash and cash equivalents are presented net of bank overdrafts which are repayableon demand and which form an integral part of the Group’s cash management.Hire-purchase assetsWhere assets are financed by hire-purchase agreements that give rights approximating to ownership, the assetsare capitalized as if they had been purchased outright at values equivalent to the present value of the total rentalpayable during the periods of the hire-purchase and the corresponding hire purchase commitments are includedunder liabilities. The excess of the hire-purchase payments over the recorded hire-purchase liabilities are treatedas finance charges which are allocated over each hire purchase term to give a constant rate of charge on theremaining balance of the outstanding balance at end of each period.The hire-purchase assets are depreciated on a straight-line basis over their estimated useful lives.Rentals on operating leases are charged to the income statement on a straight-line basis over the lease term oron another systematic basis that is representative of the time pattern of the benefit obtained.LoansInterest-bearing loans and borrowings are recognised initially at cost, less attributable transaction costs.Subsequent to initial recognition, interest-bearing loans and borrowings are stated at amortised cost which isthe initial cost less any principal repayments. The interest expense is chargeable on the amortised cost over theperiod of the borrowings on an effective interest basis.PayablesPayables are carried at cost which is the fair value of the consideration to be paid in the future for goods andservices received, whether or not billed to the group and the company.Payables include trade and non-trade balances with third parties.ProvisionsProvisions are recognised when the Group and the Company have a present obligation (legal or constructive)as a result of a past event, it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation and a reliable estimate can be made of the amount of the obligation.The directors review provisions annually and where in their opinion, the provision is inadequate or excessive,due adjustment is made.Impairment of assetsThe carrying amounts of the Group’s and Company’s assets subject to impairment are reviewed at each balancesheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’srecoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an assetexceeds its estimated recoverable amount. Recoverable amount is defined as the higher of value in use andnet selling price.Any impairment loss is charged to the income statement unless it reverses a previous revaluation in which caseit is charged to equity.48 inter-roller engineering limited annual report2004

Notes to the Financial StatementsImpairment of assets (cont’d)An impairment loss is reversed if there has been a change in the estimates used to determine the recoverableamount or when there is an indication that the impairment loss recognised for the asset no longer exists ordecreases.An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carryingamount that would have been determined if no impairment loss had been recognised.Related partiesFor the purposes of these financial statements, parties are considered to be related to the Group if the Grouphas the ability, directly or indirectly, to control the party or exercise significant influence over the party in makingfinancial and operating decisions, or vice versa, or where the Group and the party are subject to commoncontrol or common significant influence. Related parties may be individuals or other entities.Revenue recognitionRevenue from project is recognised based on the percentage of completion method over the period taken tocomplete the project.Dividend income from investments is recognised gross when the right to receive the dividend has been established.Interest income is recognised on a time-apportioned basis.Employee benefits(i) Pension obligationsThe Group and the Company participate in the defined contribution national pension schemes as providedby the laws of the countries in which it has operations. In particular, the Singapore incorporated companiescontribute to the Central Provident Fund (“CPF”), a defined contribution plan regulated and managed bythe Government of Singapore, which applies to the majority of the employees. The contributions tonational pension schemes are charged to the income statement in the period to which the contributionsrelate.(ii)Employee leave entitlementsEmployee entitlements to annual leave are recognised when they accrue to employees. Accrual is madefor the estimated liability for unconsumed leave as a result of services rendered by employees up to thebalance sheet date.(iii)Employee Share Option SchemeThe Company also has an employee share option plan for the granting of non-transferable options.No compensation cost or obligation is recognised when the options are issued or exercised. When theoptions are exercised, equity is increased by the amount of the proceeds received.inter-roller engineering limited annual report2004 49

Notes to the Financial StatementsIncome taxesThe liability method of tax effect accounting is adopted by the Group and the Company. Current taxation isprovided at the current taxation rate based on the tax payable on the income for the financial year that ischargeable to tax. Deferred taxation is provided at the current taxation rate on all temporary differences existingat the balance sheet date between the tax bases of assets and liabilities and their carrying amounts in thefinancial statements.Deferred tax liabilities are recognised for all taxable temporary differences (unless the deferred tax liability arisesfrom goodwill or the initial recognition of an asset or liability in a transaction that is not a business combinationand at the time of the transaction, affects neither the accounting profit nor taxable profit or loss). Deferredincome tax is provided on all temporary differences arising on investment in subsidiary companies, exceptwhere the timing of the reversal of the temporary differences can be controlled and it is probable that thetemporary difference will not reverse in the foreseeable future.Deferred tax assets are recognized for all deductible temporary differences to the extent that it is probable thatfuture taxable profit will be available against which the deductible temporary differences can be utilized (unlessthe deferred tax asset relating to the deductible temporary differences arises from goodwill or the initial recognitionof an asset or liability in a transaction that is not a business combination and, at the time of the transaction,affects neither the accounting profit nor taxable profit or loss).The statutory tax rates enacted at the balance sheet date are used in the determination of deferred income tax.Conversion of foreign currenciesItems included in the financial statements of each entity in the Group are measured using the currency that bestreflects the economic substance of the underlying events and circumstances relevant to that entity (“themeasurement currency”). The consolidated financial statements of the Group and the financial statements ofthe Company are presented in Singapore dollars, which is the measurement currency of the Company.Monetary assets and liabilities in foreign currencies except for foreign currency assets and liabilities hedged byforward exchange contracts are translated into Singapore dollars at rates of exchange closely approximatingthose ruling at balance sheet date. Foreign currency assets and liabilities hedged by forward exchange contractsare translated into Singapore dollars at the contracted forward exchange rates at the date of transaction andare not retranslated at balance sheet date. Other transactions in foreign currencies are converted at ratesclosely approximating those ruling at transaction dates.Except for the situations described below, exchange differences arising from such transactions are recorded inthe income statement.(i)(ii)Where a monetary item in substance forms part of the Company’s net investment in the foreign subsidiarycompanies and associated companies, exchange differences arising on such a monetary item are recordeddirectly to exchange fluctuation reserve to the extent that the net investment is represented by net assetsin the foreign entity until the disposal of the investments.Where foreign currency loans provide an effective hedge against the net investment in foreign subsidiarycompanies and associated companies, exchange differences arising on the loans are recorded directlyin exchange fluctuation reserve until the disposal of the investments.50 inter-roller engineering limited annual report2004

Notes to the Financial StatementsConversion of foreign currencies (cont’d)Assets and liabilities of foreign subsidiary companies are translated at the rates of exchange ruling at thebalance sheet date. The income statements of the foreign subsidiary companies are translated using theaverage monthly rates. Foreign currency translation adjustments arising are recorded directly in exchangefluctuation reserves.Segment reportingA segment is a distinguishable component of the Group that is engaged in providing material handling systemsand its related engineering services within a particular economic environment (geographical segment) and to aparticular industry (business segment) which is subject to risks and rewards that are different from those ofother segments.Inter-segment pricing is determined on an arm’s length basis. Segment results, assets and liabilities includeitems attributable to segment as well as those that can be allocated on a reasonable basis. Unallocated itemsmainly comprise income-earning assets and revenue, interest-bearing loans, borrowings and expenses, andcorporate assets and expenses.Segment capital expenditure is the total cost incurred during the period to acquire segment assets that areexpected to be used for more than one period.Segment information is presented in respect of the Group’s geographical and business segments. The primaryformat, geographical segments, is based on the Group’s management and internal reporting structure. Inpresenting information on the basis of geographical segments, segment revenue and segment assets arebased on the geographical location of the Group’s facilities. Supplementary information of the group’s turnoverbased on the geographical location of customers is also given.Financial instrumentsFinancial instruments carried on the balance sheet include cash and cash equivalents, investments (excludingsubsidiary companies, associated companies or joint ventures), trade receivables and payables, other receivablesand payables, finance leases and borrowings. The particular recognition methods adopted are disclosed in theindividual policy statements associated with each item. These instruments are recognised when contracted for.The Group and the Company are also party to financial instruments that reduce exposure to fluctuations inforeign currency exchange and interest rates. These instruments, which mainly comprise foreign currencyforward contracts, are recognised in the financial statements on inception. The purpose of these instruments isto reduce risk.Foreign currency forward contracts protect the Group and the Company from movements in exchange rates byestablishing the rate at which a foreign currency asset or liability, or forecasted transaction will be settled. Anyincrease or decrease in the amount required to settle the asset or liability, or forecasted transaction is offset bya corresponding movement in the value of the forward exchange contract. The gains and losses are recogniseddirectly in equity through the Statement of Changes in Equity provided the criteria for hedge accountingare met.Disclosures on financial risk management are provided in Note 28.inter-roller engineering limited annual report2004 51

Notes to the Financial Statements3 Principal activities and revenueThe principal activities of the Company consist of the provision of engineering solutions, design, manufacture,installation and maintenance of material handling, air handling and pollution control systems. The principalactivities of the subsidiary companies are as stated in Note 10.Revenue represents total contract value of completed jobs and net additions to or deductions from work-inprogressfor the year and services at invoiced value less discounts and returns and includes works completedjointly with consortium partners. Revenue of the Group excludes sales between group companies.Revenue excludes applicable goods and services tax.4 Share capital2004 2003The Group and The Company $ $Authorised:250,000,000 ordinary shares of $0.20 each 50,000,000 50,000,000Issued and fully paid:76,547,954 (2003 - 74,335,954) ordinary shares of $0.20 each 15,309,591 14,867,1915 Other reservesThe GroupThe Company2004 2003 2004 2003$ $ $ $Share premium 3,303,030 3,059,070 3,303,030 3,059,070Revaluation reserve 6,700,575 7,608,740 6,149,210 7,731,902Statutory reserve 66,460 - - -Exchange fluctuation reserve (1,831,814) (952,910) (1,502,312) (954,962)Dividend reserve 4,592,877 2,973,438 4,592,877 2,973,43812,831,128 12,688,338 12,542,805 12,809,448The share premium account is set up in accordance with Section 69 of the Companies Act, Cap. 50 where theCompany issued shares above par at a premium.Revaluation reserve arises from the surplus on revaluation of leasehold properties and freehold land.The statutory reserve, under the regulations in the country in which the subsidiary company operates, will notbe available for dividend distribution.Exchange fluctuation reserve arises from the translation of foreign subsidiary companies assets and liabilitiesand net unrealised gains/ losses on hedging instruments.Dividend reserve refers to unpaid dividend proposed after balance sheet date.52 inter-roller engineering limited annual report2004

Notes to the Financial Statements6 Deferred taxation2004 2003The Group and The Company $ $Deferred tax liabilitiesBalance at beginning of year 158,554 -Transfer (to)/from income statement- Current year lease (Note 20) (26,900) 158,554- Overprovision in respect of prior year (Note 20) (112,301) -Balance at end of year 19,353 158,554The balance comprises tax on:Excess of net book value over tax written down value ofproperty, plant and equipment 367,051 478,346Provisions (347,698) (319,792)19,353 158,5547 Hire-purchase creditors2004 2003The Group $ $Minimum instalments payable:Due not later than one year 16,113 -Due later than one year and not later than five years 84,556 -Due later than five years - -100,669 -Finance charges allocated to future periods (12,803) -Present value of minimum hire-purchase payments 87,866 -Instalments payable:Due not later than one year 14,260 -Due later than one year and not later than five years 73,606 -Due later than five years - -Present value of minimum hire-purchase payments 87,866The weighted average effective interest rate of hire purchase creditors at the balance sheet date is 6.5%.8 Bank borrowingsThe GroupThe Company2004 2003 2004 2003$ $ $ $Amount repayable within one year:Revolving loans - secured 322,500 223,450 - -Revolving loan - unsecured 11,210,000 - 11,210,000 -Bank overdraft - unsecured 72,371 - 72,371 -Term loan - secured - 111,725 - -11,604,871 335,175 11,282,371Amount repayable after one year:Term loan - secured - 335,175 - -inter-roller engineering limited annual report2004 53

Notes to the Financial Statements8 Bank borrowings (cont’d)The borrowings are in respect of the Company and its Malaysian subsidiary company.The secured revolving loan is secured by corporate guarantee provided by the Company of Malaysian Ringgit500,000. Interest is charged at a weighted average effective interest rate of 5.75% (2003 - 5.25%) per annum.The unsecured revolving loan bears interest at a weighted average effective interest rate of 2.34% (2003 -nil%)per annum.The unsecured bank overdraft bears interest at a weighted average effective interest rate of 5.5% (2003 - nil%)per annum.The term loan has been fully repaid during the year. The loan was secured by a legal charge over a subsidiarycompany’s leasehold land and building and corporate guarantee provided by the Company.The amount repayable within one year is included under current liabilities whilst the amount repayable after oneyear is included under non-current liabilities.The carrying amounts of borrowings approximate their fair values.9 Trade payablesTrade payables include provisions for the following:The Group and The Company 2004 2003$ $Provision for warrantiesBalance at beginning 541,000 290,000Provision for the year (Note 19) 142,000 251,000Balance at end 683,000 541,000The Group and The Company 2004 2003$ $Provision for employee leave compensationBalance at beginning 373,122 316,945Provision for the year (Note 19) 37,652 56,177Provision utilised during the year (1,354) -Balance at end 409,420 373,122The provision for warranties is to cater for expenses that may be incurred due to customer claims for rectificationworks.54 inter-roller engineering limited annual report2004

Notes to the Financial Statements10 Subsidiary companies2004 2003The Company $ $Unquoted equity investments, at cost 4,695,849 4,552,449Impairment losses (1,353,155) (1,353,155)3,342,694 3,199,294Amounts owing by subsidiary companies (non-trade) 8,548,776 4,686,682Exchange difference on translation of the net investmentin IR Engineering Sdn Bhd (954,962) (954,962)10,936,508 6,931,014Loans owing to subsidiary companies 2,977,709 1,016,606The amounts owing by the subsidiary companies are long-term loans and are an extension of the Company’s netinvestment in the subsidiary companies. They are unsecured, interest-free and are not expected to be repaid withinone year. The loans owing to subsidiary companies are unsecured, interest-free and have no fixed terms of repayment.The subsidiary companies are:Country ofEffectiveName of incorporation Cost of percentagesubsidiary company /Principal investment of equity held Principal activitiesplace of 2004 2003 2004 2003business $ $ % %Inter-Roller Investments Singapore 1,181,263 1,181,263 100 100 Securities investmentPte LtdInter-Roller Engineering Singapore 1,336,583 1,336,583 100 100 InfrastructualServices Pte Ltdengineering(formerly known asservicesRefine TechnologyPte Ltd)Pteris Pte Ltd Singapore 300,000 300,000 100 100 Investment holding.(dormant)*IR Engineering Malaysia 1,734,603 1,734,603 100 100 Manufacture ofSdn Bhdmaterial handlingsystems andequipment* #I R (Middle East) LLC Dubai, 143,400 - 100 - Engineering worksUAE* Audited by member of Grant Thornton International.# 51% of the equity is held in trust for the Company by a United Arab Emirates national.inter-roller engineering limited annual report2004 55

Notes to the Financial Statements11 Property, plant and equipmentLeasehold Freehold Motor Plant and ComputerThe Group properties land vehicles machinery systems Others Total$ $ $ $ $ $ $CostAt 1.1.04- Cost 67,509 304,425 1,251,656 3,978,556 1,781,013 1,495,607 8,878,766- Valuation 17,066,569 - - - - - 17,066,569Additions 2,680,280 77,873 75,390 965,952 399,722 267,902 4,467,119Disposals - - (43,000) (21,733) (1,499) (102,208) (168,440)Deficit/surplus onrevaluation (2,902,384) 462,555 - - - - (2,439,829)Exchange differenceon translation (156,335) (11,512) (2,810) (38,208) (880) (6,350) (216,095)At 31.12.04 16,755,639 833,341 1,281,236 4,884,567 2,178,356 1,654,951 27,588,090Representing- Cost 9,999,110 - 1,281,236 4,884,567 2,178,356 1,654,951 9,999,110- Valuation 16,755,639 833,341 - - - - 17,588,98016,755,639 833,341 1,281,236 4,884,567 2,178,356 1,654,951 27,588,090Accumulated depreciationAt 1.1.04 1,228,904 - 506,213 2,940,025 1,489,698 1,282,057 7,446,897Depreciation forthe year 308,961 - 172,327 340,031 216,427 74,326 1,112,072Disposals - - (31,226) (16,086) (1,289) (102,208) (150,809)Deficit/surplus onrevaluation (1,529,275) - - - - - (1,529,275)Exchange differenceon translation (8,590) - (2,443) (23,806) (838) (5,001) (40,678)At 31.12.04 - - 644,871 3,240,164 1,703,998 1,249,174 6,838,207Depreciation for2003 308,669 - 156,470 314,849 157,135 64,456 1,001,579Net book valueAt 31.12.04 16,755,639 833,341 636,365 1,644,403 474,358 405,777 20,749,883At 31.12.03 15,905,174 304,425 745,443 1,038,531 291,315 213,550 18,498,43856 inter-roller engineering limited annual report2004

Notes to the Financial Statements11 Property, plant and equipment (cont’d)Leasehold Freehold Motor Plant and ComputerThe Company properties land vehicles machinery systems Others Total$ $ $ $ $ $ $CostAt 1.1.04- Cost - - 1,177,357 3,191,650 1,757,745 1,345,866 7,472,618- Valuation 13,000,000 - - - - - 13,000,000Additions 388,330 - 686,726 391,851 114,261 1,581,168Disposals - - (21,733) (1,499) (102,208) (125,440)Deficit on revaluation (2,888,330) - - - - - (2,888,330)At 31.12.04 10,500,000 - 1,177,357 3,856,643 2,148,097 1,357,919 19,040,016Representing- Cost - - 1,177,357 3,856,643 2,148,097 1,357,919 8,540,016- Valuation 10,500,000 - - - - - 10,500,00010,500,000 - 1,177,357 3,856,643 2,148,097 1,357,919 19,040,016Accumulated depreciationAt 1.1.04 1,043,479 - 454,211 2,414,883 1,470,044 1,173,498 6,556,115Depreciation forthe year 262,158 - 158,183 222,937 213,312 47,650 904,240Disposals - - - (16,086) (1,289) (102,208) (119,583)Deficit on revaluation (1,305,637) - - - - - (1,305,637)At 31.12.04 - - 612,394 2,621,734 1,682,067 1,118,940 6,035,135Depreciation for2003 260,870 - 145,578 213,303 154,210 44,441 818,402Net book valueAt 31.12.04 10,500,000 - 564,963 1,234,909 466,030 238,979 13,004,881At 31.12.03 11,956,521 - 723,146 776,767 287,701 172,368 13,916,503Other assets comprise office equipment, furniture and fittings and electrical fittings.inter-roller engineering limited annual report2004 57

Notes to the Financial Statements11 Property, plant and equipment (cont’d)Notes:(a)The leasehold properties, all held by either the Company or by wholly-owned subsidiary companies,comprise:Address Held by Title Land Area Description20 Benoi Inter-Roller Lease term of 16,388 sq.m. Factory premisesCrescent, Engineering 30 years for production andJurong Limited expiring on office useSingapore1.11.2019 with629983 an option fora further termof 30 yearsPTD 2447 IR Engineering Lease term of 31,591 sq.m. Leasehold propertiesMukim of Sdn Bhd 93 years for production andApi-Api, expiring on office usePontian, Johore, 15.12.2088Malaysia(b)In 2004, the leasehold property at 20 Benoi Crescent, Jurong, Singapore 629983 was revalued by thedirectors at $10,500,000 based on a valuation at open market value on an existing use basis by DTZDebenham Tie Leung (SEA) Pte Ltd on 31 December 2004. The deficit on revaluation of $1,582,692 wascharged to revaluation reserve.(c) In 2004, the leasehold property at PTD 2447, Pontian, Malaysia was revalued by the directors at $7,088,980(RM16,486,000) based on a valuation at open market value on an existing use basis by Colliers JordanLee & Jaafar on 5 November 2004. The surplus on revaluation has been credited to revaluation reserveamounting to $551,365 (RM1,282,245) after having set-off against a revaluation deficit of $123,162(RM280,872) previously charged to the income statement.(d)(e)(f)If the above leasehold properties in Singapore and Malaysia had been carried at cost less accumulateddepreciation, the carrying values for the Group would be $11,504,933 (2003 - $8,851,754) and that forthe Company would be $5,126,567 (2003 - $4,845,240).The leasehold property at Pontian, Malaysia is mortgaged for a long-term loan from a financial institution(Note 8).The two parcels of freehold land held by the wholly owned subsidiary company, IR Engineering Sdn Bhd,comprise:58 inter-roller engineering limited annual report2004

Notes to the Financial Statements11 Property, plant and equipment (Cont’d)Lot No. Area Address Description1833 2.5065 PTD 2447 Mukim Api-Api, 82010 Agriculture landhectaresPontian, Johore, Malaysia1834 1.1786 PTD 2447 Mukim Api-Api, 82010 Agriculture landhectaresPontian, Johore, Malaysia(g)(h)(i)The cost of fully depreciated property, plant and equipment still in use at 31 December 2004 amountedto $3,821,527 (2003 - $3,166,314) for the Group and $3,729,267 (2003 - $3,166,314) for the Companyrespectively.The net book value of property, plant and equipment of the Group purchased under hire purchase is$85,648 (2003 - $Nil).Motor vehicles costing $489,117 (2003 - $489,117) for the Group and for the Company are registered inthe name of certain directors and senior executives. These are held in trust for the Group and for theCompany.12 Long-term investmentsThe GroupThe Company2004 2003 2004 2003$ $ $ $Unquoted equity shares, at cost 10,000 10,000 10,000 10,000Club membership rights, at cost 102,817 103,203 93,000 93,000112,817 113,203 103,000 103,000Less:Provision for impairment in value (41,000) (41,000) (41,000) (41,000)71,817 72,203 62,000 62,000inter-roller engineering limited annual report2004 59

Notes to the Financial Statements13 Other receivablesThe GroupThe Company2004 2003 2004 2003$ $ $ $Staff loans 91,950 132,770 91,950 132,770- repayable after one year (41,540) (59,820) (41,540) (59,820)- repayable within one year 50,410 72,950 50,410 72,950Prepayments 169,808 99,150 112,775 63,549Deposits 150,534 37,767 77,631 37,767Sundry debtors 417,666 535,511 417,666 535,391Less:788,418 745,378 658,482 709,657Provision for doubtful debt:Balance at beginning of year 254,545 254,545 254,545 254,545Provision no longer required (10,221) - (10,221) -Provision for the year 9,093 - 9,093 -Provision written offduring the year (244,324) - (244,324) -Balance at end of year 9,093 254,545 9,093 254,545779,325 490,833 649,389 455,112Staff loans are granted to employees mainly to assist them with the purchase of motor vehicles. The loans areinterest-free, unsecured and are repayable in monthly instalments ranging from $730 to $1,190.14 InventoriesThe GroupThe Company2004 2003 2004 2003$ $ $ $Inventory under construction, at cost 1,593 3,260 1,593 324Raw materials, at cost 1,539,221 1,792,030 1,009,535 1,489,045Raw materials, at net realisable value 23,893 24,401 23,893 24,4011,564,707 1,819,691 1,035,021 1,513,770During the year, provision for obsolete inventories of $482 (2003 - $58,833) for the Group and the Companywas written back to the income statement due to the recovery in net realisable value of these inventories.60 inter-roller engineering limited annual report2004

Notes to the Financial Statements15 Contract work-in-progressThe GroupThe Company2004 2003 2004 2003$ $ $ $Costs 68,601,764 40,329,234 60,683,455 37,252,189Attributable profit 29,817,630 18,734,267 27,323,294 17,708,585Gross contract work-in-progress 98,419,394 59,063,501 88,006,749 54,960,774Progress billings (59,247,292) (45,008,776) (51,050,470) (41,251,728)39,172,102 14,054,725 36,956,279 13,709,046Contract revenue recognised duringthe year 69,855,950 52,874,362 68,244,184 52,864,40616 Trade receivablesThe GroupThe Company2004 2003 2004 2003$ $ $ $External parties 3,576,242 3,703,173 3,576,242 3,681,055Retentions 485,301 1,507,299 485,301 1,507,2994,061,543 5,210,472 4,061,543 5,188,354Less:Provision for doubtful debts (348,163) (261,347) (348,163) (261,347)3,713,380 4,949,125 3,713,380 4,927,00717 Short-term investments2004 2003The Group $ $Quoted equity shares in corporations, at cost 379,836 2,032,831Provision for diminution in value - (275,613)379,836 1,757,218Market value of quoted equity shares 461,439 2,462,614inter-roller engineering limited annual report2004 61

Notes to the Financial Statements17 Short-term investments (Cont’d)Short-term investments are stated after providing for diminution in value as follows:Provision for diminution in valueBalance at beginning 275,613 433,328Provision no longer required (Note 19) (275,613) (157,715)Balance at end - 275,61318 Cash and cash equivalentsThe GroupThe Company2004 2003 2004 2003$ $ $ $Cash and bank balances 1,543,222 6,220,039 608,207 6,026,102For the purpose of the consolidated cash flow statement, the year end cash and cash equivalents comprise thefollowing:2004 2003The Group $ $Cash and bank balances 1,543,222 6,220,039Bank overdraft - unsecured (Note 8) (72,371) -1,470,851 6,220,03919 Profit before taxationThe GroupThe Company2004 2003 2004 2003Note $ $ $ $Profit before taxation has beenarrived at after charging:Bad debt - trade 133,180 - 133,180 -Central Provident Fund and equivalentfund contributions 904,397 884,500 825,804 836,94862 inter-roller engineering limited annual report2004

Notes to the Financial Statements19 Profit before taxation (Cont’d)The GroupThe Company2004 2003 2004 2003Note $ $ $ $Directors’ fee- directors of the Company 206,400 210,000 191,400 170,000- directors of the subsidiary companies 8,900 6,257 - -Directors’ remuneration other than fee- directors of the Company 1,714,723 1,178,687 1,714,723 1,178,687- directors of a subsidiary company 89,997 87,327 - -Depreciation of property, plantand equipment 11 1,112,072 1,001,579 904,240 818,402Exchange loss 105,609 - 75,507 -Interest expense- bank loans 129,312 93,821 100,432 29,106- overdrafts 10,778 2,341 8,826 -- hire purchase 3,142 1,668 - -Loss on disposal of property, plantand equipment 28 - 28 -Operating lease rentals 204,863 204,863 204,863 204,863Property, plant and equipment written off - 3,562 - 3,562Provision for warranty claims 9 142,000 251,000 142,000 251,000Provision for employee leavecompensation 9 37,652 56,177 37,652 56,177and crediting:Gross dividend income fromequity investments 102,471 106,129 55,000 -Exchange gain - 185,053 - 115,196Profit on disposal of property, plantand equipment 16,689 3,408 - 3,408Profit on disposal of short-term quotedequity investments 450,884 347,097 - -Provision for diminution in value ofshort-term quoted equityinvestments no longer required 17 275,613 157,715 - -Provision for obsolete inventoryno longer required 14 482 58,833 482 58,833Reversal of deficit on revaluation inprevious year resulting from currentyear’s surplus 124,988 - - -inter-roller engineering limited annual report2004 63

Notes to the Financial Statements20 TaxationThe GroupThe Company2004 2003 2004 2003$ $ $ $Current taxation 1,717,000 1,247,445 1,300,945 1,175,979Utilisation of tax benefitsarising from unabsorbed taxlosses brought forward (334,194) (217,959) - (217,959)Deferred taxation (Note 6) (26,900) 158,554 (26,900) 158,5541,355,906 1,188,040 1,274,045 1,116,574(Over)/underprovision in respect of prior year- current taxation - 24 - -- deferred taxation (Note 6) (112,301) - (112,301) -1,243,785 1,188,064 1,161,744 1,116,574The tax expense on the results of the financial year varies from the amount of income tax determined byapplying the Singapore statutory rate of income tax on the Group’s and the Company’s profits as a result of thefollowing:The GroupThe Company2004 2003 2004 2003$ $ $ $Profit before taxation 11,518,217 7,765,532 9,058,570 7,285,260Tax at statutory rate of 20% (2003 - 22%) 2,303,643 1,708,417 1,811,714 1,602,757Tax effect on non-deductible expenses 95,305 118,899 49,945 62,152Tax effect on non-taxable income (204,749) (22,812) (11,000) (15,400)Development expansion scheme taxincentive (561,383) (466,615) (561,383) (466,615)Singapore statutory incomeexemption (21,000) (23,100) (10,500) (11,550)Deferred tax assets on temporarydifferences not recognised - 163,189 - 163,189Difference in foreign tax rates 83,015 - - -Change in tax rate of 2% (2003 - Nil%) (4,731) - (4,731) -Utilisation of deferred tax assets ontemporary differences not recognisedin prior year (334,194) (289,938) - (217,959)1,355,906 1,188,040 1,274,045 1,116,57464 inter-roller engineering limited annual report2004

Notes to the Financial Statements20 Taxation (Cont’d)Subject to agreement with the relevant tax authorities, the Group has unabsorbed capital allowances and taxlosses as at 31 December 2004 of $350,000 (2003 - $1,732,000) and $588,500 (2003 - $221,000) respectivelyavailable for offsetting against future taxable profits provided that the provisions of the relevant country’slegislation are complied with. The related tax benefits have not been recognised as there is no reasonablecertainty of its realisation in future periods.As at end of the year, the Company has accumulated tax-exempt profit of $905,256 which are available fordistribution as tax-exempt dividends to shareholders.As the Company has paid taxes in previous years, it has accumulated a Section 44 balance of $1,469,895 at 31December 2004 that can be used to frank dividends. Directors have decided to utilise $1,148,219 from thisaccount to frank the final dividend payment of 5 cents per share less tax of 20%. This leaves a balance of$321,676 for future dividend payment in 2005.21 Dividends2004 2003The Group and The Company $ $Ordinary dividends paid2002 first and final tax exempt dividend of 1.2 cents per sharepaid on 71,983,754 shares - 863,8052003 interim tax exempt dividend of 1.0 cent per share paidon 73,802,454 shares - 738,0232003 second and final tax exempt dividend of 4.0 cents pershare paid on 75,977,954 shares 3,039,118 -2004 first and interim tax exempt dividend of 2.0 cents per sharepaid on 76,297,954 shares 1,525,959 -4,565,077 1,601,828Ordinary dividends proposed2003 second and final tax exempt dividend of 4.0 cents pershare proposed on 74,335,954 shares (Note 5) - 2,973,4382004 second and final dividend of 5.0 cents per share lesstax of 20% proposed on 76,547,954 sharesand rights issue of 38,273,997 shares (Notes 5) 4,592,877 -4,592,877 2,973,438inter-roller engineering limited annual report2004 65

Notes to the Financial Statements22 Earnings per shareThe earnings per share is calculated based on the consolidated profit after taxation attributable to members ofthe Company of $10,274,432 (2003 - $6,577,468) on the weighted average number of shares in issue of75,805,037 (2003 - 72,629,871) shares during the financial year.Fully diluted earnings per share is calculated on the consolidated profit after taxation attributable to members of$10,274,432 (2003 - $6,577,468) divided by 75,882,467 (2003 - 73,510,520) ordinary shares in issue.The earnings per share restated for the rights issue (Note 30) is 10.7 cents.23 Related party transactionsIn addition to the related party information disclosed elsewhere in the financial statements, the following aresignificant transactions with related parties at mutually agreed amounts:The GroupThe Company2004 2003 2004 2003$ $ $ $(a)(b)(c)Purchase of materials and suppliesfrom a company whose shareholderand director is also a shareholderand director of the Company 851 30,266 851 30,266Fee paid to a firm in which adirector is a member 19,171 7,776 19,171 7,776Works subcontracted to asubsidiary company - - 6,362,263 2,961,154(d) Sales to a subsidiary company - - 3,928,208 4,968(e)(f)Rental of equipment to asubsidiary company - - 23,170 23,170Technical and drawing fees chargedto a subsidiary company - - 12,541 48,56424 Capital commitments2004 2003The Group and The Company $ $Capital commitments not provided for in thefinancial statements are as follows:Expenditure contracted for purchase of property,plant and equipment 205,708 21,25066 inter-roller engineering limited annual report2004

Notes to the Financial Statements25 Operating lease commitments (Non-cancellable)The Group and The CompanyAt the balance sheet date, the Group and the Company were committed to making payments under noncancellablelease for its industrial land with a term of more than one year:2004 2003$ $Not later than one year 208,304 239,279Later than one year and not later than five years 833,217 1,094,784Later than five years 8,262,732 11,175,920The leases on the industrial land on which rentals are payable will expire on 1 November 2019 and 15 December2088, subject to an option to renew for another 30 years for the Company’s industrial land use. The currentrent payable is $17,359 per month which is subject to revision on renewal.26 Contingent liabilitiesThe Company(a)The Company has given a letter of financial support for a wholly owned subsidiary company, Inter-RollerEngineering Services Pte Ltd (formerly known as Refine Technology Pte Ltd), with a total net deficit ofapproximately $171,993 (2003 - $168,224) to continue to operate as a going concern and to meet itsrespective obligations as and when they fall due.(b) The Company has given corporate guarantees in favour of two banks for credit facilities of $3,248,500(2003 - $3,270,400) granted by the banks to a subsidiary company.27 Statement of operations by segmentsThe Group operates from its facilities in Singapore, Malaysia and United Arab EmiratesThe Group2004 2003Geographical Segments - by location of facilities $ $TurnoverSingapore 68,244,184 52,864,406Malaysia 7,115,475 3,429,924Other Countries 4,402,024 -Less: Inter-segment sales (9,905,733) (3,419,968)Consolidated turnover 69,855,950 52,874,362Operating profitSingapore 9,788,201 7,670,825Malaysia 912,370 94,707Other Countries 817,646 -Profit before taxation 11,518,217 7,765,532inter-roller engineering limited annual report2004 67

Notes to the Financial Statements27 Statement of operations by segments (Cont’d)The Group2004 2003Geographical Segments - by location of facilities (Cont’d) $ $Total assetsSingapore 56,590,340 42,230,508Malaysia 9,532,638 5,691,584Other Countries 1,892,834 -Consolidated total assets 68,015,812 47,922,092Total liabilitiesSingapore 27,879,792 13,574,323Malaysia 1,425,468 1,501,935Other Countries 7,974 -Consolidated total liabilities 29,313,234 15,076,258Other informationAdditions to property, plant and equipmentSingapore 1,584,968 708,849Malaysia 2,882,151 432,167Depreciation expenseSingapore 904,556 818,402Malaysia 207,516 183,177Provision for warrantiesSingapore 142,000 251,000Provision for employee leave entitlementSingapore 37,652 56,177The Group’s products and services are sold to customers in different industries. Besides the customers in theairport related industry, sales to customers in other industries are not significant individually. All property, plantand equipment and capital expenditure incurred in the year are common for all business segments and cannotbe reasonably allocated.The Group2004 2003Business Segments - by industry types $ $TurnoverAirport logistics 67,604,037 51,458,571Industrial automation logistics 2,251,913 1,415,791Consolidated turnover 69,855,950 52,874,36268 inter-roller engineering limited annual report2004

Notes to the Financial Statements27 Statement of operations by segments (Cont’d)The Group2004 2003Business Segments - by industry types $ $Carrying amount of segment assetsAirport logistics 39,425,084 15,449,354Industrial automation logistics 1,311,725 425,06240,736,809 15,874,416Property, plant and equipment, investments, fixed depositsand other unallocated assets 27,279,003 32,047,676Consolidated total assets 68,015,812 47,922,092Other informationTurnover by location of customersSingapore 24,478,490 32,529,659Other Asean countries 29,715,080 6,195,738China 5,846,431 8,043,567Australia - 2,747,451Middle East 5,120,872 -Africa 2,377,881 -Europe 753,720 441,691Others (including India) 1,563,476 2,916,256Consolidated turnover 69,855,950 52,874,362Segment RevenueAll segment revenue is directly attributable to the segments.Segment Assets and LiabilitiesSegment assets include all operating assets used by a segment and consist principally of operating cash,receivables, inventory, contract work-in-progress and property, plant and equipment, net of allowances andprovisions. While most such assets can be directly attributed to individual segments, the carrying amount ofcertain assets used jointly by two or more segments is allocated to the segments on a reasonable basis.Segment liabilities include all operating liabilities and consist principally of accounts payables, wages and accruedliabilities. Segment assets and liabilities do not include income tax assets and liabilities.Inter-segment TransfersSegment revenue and segment results include transfer between business segments and between geographicalsegments. Such transfers are accounted for at competitive market prices charged to unaffiliated customersfor similar goods. Those transfers are eliminated on consolidation.28 Financial risk managementThe Group and The CompanyThe Group and the Company are exposed to market risk, including primarily changes in currency rates andinterest rates. The Group and the Company do not hold or issue derivative financial instruments for tradingpurposes.inter-roller engineering limited annual report2004 69

Notes to the Financial Statements28 Financial risk management (Cont’d)28.1 Objective and significant terms and conditionsIn order to manage the risks arising from fluctuations in currency exchange rates and interest rates, the Groupand the Company make use of the following derivative financial instruments.Forward foreign exchange contractsForward foreign exchange contracts are entered into to manage exposure to fluctuations in foreign currencyexchange rates on specific transactions.The Group and the Company operate and sell its products and services in several countries other than Singaporeand transacted in foreign currencies. As a result, the Group is exposed to movements in foreign currencyexchange rates arising from normal trading transactions, primarily with respect to United States Dollars andJapanese Yen. Forward foreign exchange contracts are entered into to manage the exposure to movements inforeign currency exchange rates on specific transactions. The risk management policy is to substantially enterinto forward foreign exchange contracts for receipts anticipated.At 31 December 2004 the settlement dates on open forward foreign exchange contracts ranged from 1 monthto 6 months (2003 - 3 months to 2 years).The Singapore dollar amounts to be received on the contractual exchange rates of outstanding contracts andtheir corresponding favourable and unfavourable fair values at the balance sheet date were:Sell contractsFavourable UnfavourableNotional fair value fair valueprincipal adjustment adjustment2004 2004 2004$ $ $Japanese Yen (at rates averagingYen 100 = S$1.5661) 23,457,661 - (352,796)United States Dollars (at ratesaveraging US$1 = S$1.67) 28,251,012 709,729 -51,708,673 709,729 (352,796)The fair values of forward foreign exchange contracts have been calculated using the rates quoted by Pacific FXDatabase at the balance sheet date.70 inter-roller engineering limited annual report2004

Notes to the Financial Statements28 Financial risk management (Cont’d)28.2 Market riskMarket risk is the risk that the value of a financial instrument will fluctuate due to changes in market priceswhether those changes are caused by factors specific to the individual security or its issuer or factors affectingall securities traded in the market.The Company has entered into open forward contracts to manage its exposure to fluctuations in foreign currencyexchange rates as highlighted above.28.3 Interest rate riskThe Group’s and the Company’s exposure to changes in interest rate primarily to its investment portfolio in fixeddeposits and its debts obligations with financial institutions.The Group has cash balances placed with reputable banks which generate interest income for the Group. TheGroup manages its interest rate risk by placing such balances on varying maturities and interest rate terms.28.4 Credit riskCredit risk from the possibility that the customers may not be able to settle obligations to the group and theCompany within the normal terms of trade. It is the Group’s policy to enter into financial instruments with creditworthy counterparts and the exposure to credit risk is monitored on an on-going basis.Cash is held with financial institutions of good standing and adequate facilities are available for operations.The Group has made provision for potential losses on credit extended, as disclosed on the balance sheet. TheGroup does not expect to incur any further material credit losses on its risk management.28.5 Liquidity riskLiquidity or funding risk is the risk that an enterprise will encounter difficulty in raising funds to meet commitmentsassociated with financial instruments. Liquidity risk may result from an inability to sell a financial assetquickly at close to its fair value.The Company ensures that there are adequate funds to meet all its obligations in a timely and cost-effectivemanner.29 Financial instrumentsFair valuesThe carrying amounts of the financial assets and financial liabilities as reflected in the balance sheet approximatetheir respective net fair values.The derivative instruments referred to above have no significant impact on the Group’s earnings.inter-roller engineering limited annual report2004 71

Notes to the Financial Statements30 Events after balance sheet dateThe Group and The CompanySubsequent to balance sheet date, the Company did a renounceable non-underwritten rights issue of up to38,330,227 new ordinary shares of $0.20 each at an issue price of $0.36 for each rights share, on the basis ofone (1) rights share for every two (2) existing ordinary shares of $0.20 each at book closure date on 30 December2004. The rights issue was successfully completed on 24 January 2005. All the rights were fully subscribedand allotted to our shareholders. Acceptance for rights entitlements and excess applications were 65.3 millionrights shares, which is 1.7 times the total number of rights shares under the Rights Issue. Net proceeds fromthe rights issue amounted to $13.62 million, after deducting expenses of $0.16 million. The net proceedsincreased the Group’s working capital.31 Disclosure of directors’ remunerationThe remuneration of directors of the Company are disclosed in bands as follows:Number of % of RemunerationRemuneration Band directors Fees Salary Bonus Benefits$750,000 and above 1 2% 40% 52% 6%$500,000 to749,999 2 2% 44% 42% 12%$250,000 to $499,999 6 - - - -Below $250,000 - 100% - - -932 Additional information on employee share options2,212,000 (2003 - 3,611,500) share options were exercised during the financial year.Movements in the number of share options held by executive directors and employees are as follows:2004 2003The Company $ $Outstanding options at beginning of year 2,324,000 4,636,000Options issued 1,930,000 1,600,000Options exercised (2,212,000) (3,611,500)Options lapsed - (300,500)Outstanding options at end of year 2,042,000 2,324,000There is no charge to earnings for employee share option awards and the dilutive effect of exercisable outstandingoptions is reflected as additional share dilution in the computation of earnings per share.Additional information on the Inter-Roller Executives’ Share Option Scheme can be found in the Directors’Report.72 inter-roller engineering limited annual report2004

Report on Corporate GovernanceThe Group believes in a high standard of corporate governance, and is committed to maintaining these standards forthe interest of the Company, staff and its shareholders.BOARD OF DIRECTORS - Principles 1 to 6The Board of Directors comprises nine members, six of whom are non-executives. Five of the directors are independentdirectors. The Chief Executive Officer, Mr. Lim Yee Min, is responsible for the day-to-day operation and administrationof the Company. The Chairman, Mr. Lim Yong Wah, and Deputy Chairman, Mr. Yap Lem, who are alsoexecutive directors, focus on strategic issues, succession planning and policies. None of the directors and managementstaff is related to each other.The functions of the Chairman and CEO are separate. The CEO bears executive responsibility for the Company’sbusiness, while the Chairman has responsibility for the Group’s strategies, policies and workings of the Board. TheChairman ensures that board meetings are held when necessary and sets the board meeting agenda in consultationwith the CEO. He reviews the board papers before they are presented to the Board.Details of the directors’ shareholdings in the Company are set out in the Directors’ Report.The Board meets regularly at least on a quarterly basis to review and approve appropriate strategies, policies andfinancial matters. These include approval of published reports of the Group, strategic plans and banking facilities. TheBoard also oversees the process for evaluating the adequacy of internal controls and decides on the appointment andremuneration of key managers and all directors. Each Board member has equal responsibility to oversee the businessand affairs of the Company. Board members also meet informally on an ad hoc basis from time to time. Boardmembers also attend the annual management retreat of the Company together with management staff. The Boardmet on an official basis, five times in the year 2004.Date of First No. of MeetingsName of Directors Appointment AttendedMr. Lim Yong Wah (Chairman) 15.11.1990 5Mr. Yap Lem (Chief Executive Officer) 25.01.1979 5Mr. Lim Yee Min (Managing Director) 26.11.2002 5Mr. Rajan Menon (Independent Director) 18.03.1991 5Mr. Haider M. Sithawalla (Independent Director) 01.11.1995 5Mr. Low Kok Hua (Non-Executive Director) 11.03.1979 5Mr. Chan Chin Hua (Independent Director) – deceased on 27 April 2004 01.07.1987 -Mr. Nicolaas J. Klaver (Independent Director) 16.08.1996 5Mr. Loh Chin Hua (Independent Director) 11.01.2000 5Mr. Lim Hwee Chiang (Independent Director) 09.11.2004 1Two Board Committees continue to undertake specific roles. These are the Nomination and Remuneration Committeeand the Audit Committee.inter-roller engineering limited annual report2004 73

Report on Corporate GovernanceNomination and Remuneration Committee (‘NRC’) - Principles 7 to 9The NRC met 2 times during the year and comprises the following members:Member of Nomination and Remuneration CommitteeNo. of Meetings AttendedMr. Haider M. Sithawalla – Chairman (Independent director) 2Mr. Chan Chin Wah – Member (Independent Director) – deceased on 27 April 2004 -Mr. Low Kok Hua – Member (Non Executive Director) 2Mr. Lim Yong Wah – Member (Executive Director) 1The roles and responsibilities of the NRC are as set out in a written term of reference. In brief, the NRC is charged withthe following functions:(a)Nomination of directorsThe NRC identifies candidates and reviews recommendations for new board members for approval. The NRCmakes recommendations of these appointments to the Board for approval by a resolution. The NRC alsoreviews retiring members for re-election before they are recommended by the full Board to the shareholders forre-election.In accordance with Articles 107 and 110 of the Company’s Articles of Association, all directors shall retire fromoffice once at least 3 years but shall be eligible for re-election at the meeting at which he retires. Each year onethird of the directors will retire by rotation.The retirement of directors is determined on a rotational basis. Directors due for retirement and seeking reelectionare required to submit themselves to the NRC for re-nomination. At the coming annual general meetingto be held in April 2005, Mr. Low Kok Wah, Mr. Loh Chin Hua, Mr. Nicolaas J. Klaver and Mr. Haider M.Sithawalla will be due for retirement and will be eligible for re-election.Name of DirectorsDate of Last Re-electionMr. Lim Yong Wah, Chairman 28.04.04Mr. Yap Lem, Chief Executive Officer 23.05.03Mr. Lim Yee Min, Managing Director 23.05.03Mr. Rajan Menon 28.04.04Mr. Haider M. Sithawalla 28.04.04Mr. Nicolaas J. Klaver 28.05.02Mr. Chan Chin Wah 23.05.03Mr. Low Kok Hua 23.05.03Mr. Loh Chin Hua 23.05.0374 inter-roller engineering limited annual report2004

Report on Corporate Governance(b) Directors’ RemunerationThe NRC reviews and decides on executive directors’ remuneration packages yearly on behalf of the Board.The NRC also reviews the non-executive directors’ remuneration in the form of directors’ fees, having regard tothe roles that the individual directors play. The directors’ fees are submitted for shareholders’ approval at theannual general meeting.The remuneration of directors of the Company is disclosed in bands and more details of the total remunerationof all the executive directors are available in the financial statements. The Board is of the view that based on thesize of the Company, and the number of executive directors and management staff, this is adequate disclosure.The remuneration of the directors in bands is as follows:Number ofOther benefits2004 directors Fees Salaries Bonus in kind$750,000 to $999,000 1 2% 40% 52% 6%$500,000 to $749,999 2 2% 44% 42% 12%Below $250,000 6 100% 0% 0% 0%9Number ofOther benefits2003 directors Fees Salaries Bonus in kind$500,000 to $749,999 1 2% 58% 30% 10%$250,000 to $499,999 2 2% 54% 29% 15%Below $250,000 6 98% 0% 0% 2%9(a)Remuneration of the top five key executives (non-directors)To maintain confidentiality, the remuneration of the top five key executives is disclosed in bands as follows:Number of keyOther benefits2004 executives Salaries Bonus in kind$200,000 to $349,999 5 43% 23% 34%Number of keyOther benefits2003 executives Salaries Bonus in kind$200,000 to $349,999 5 52% 26% 22%(b)Administration of the Executives’ Share Option SchemeThe NRC also administers the Executives’ Share Option Scheme and determines the grant of share options tothe eligible participants. Details of the share options granted to directors during the year are set out in theDirectors’ Report.inter-roller engineering limited annual report2004 75

Report on Corporate GovernanceAudit Committee (“AC”) - Principles 10 to 15The AC comprises of the following members, all of whom are independent directors:Member of Audit CommitteeNo. of Meetings AttendedMr. Rajan Menon, Chairman 5Mr. Haider M. Sithawalla 5Mr. Chan Chin Wah (deceased on 27 April 2004) -Mr. Loh Chin Hua 4The Audit Committee met five times in the financial year 2004 to discharge the following delegated functions:(a)(b)(c)(d)(e)(f)Reviewed with external auditors their audit plan and scope of audit examination;Reviewed with external and internal auditors their evaluation of the Group’s internal controls, together withmanagement response;Reviewed the assistance given to the external and internal auditors by the Company’s officers;Reviewed the financial statements of the Company and the Group before submission to the Board for approvaland the report of the external auditors.Recommended the appointment and the remuneration of external auditors;Reviewed interested person transactions.The AC has full access to and cooperation by management and has full authority to require the attendance of any staffor directors at its meetings. The AC also meets with the external auditors without the presence of management staff.Internal Audit FunctionThe internal auditor performs regular financial audits. Tests are conducted to verify the Company’s assets and liabilities,and also to check for compliance with the Company’s system of internal controls. This comprises the proceduresthat combine to give the Board of Directors reasonable assurance of the maintenance of proper accounting records,and the reliability of financial information used within or published by the Company. The internal auditor reports to theChairman and has full access to the Audit Committee. All reports of the Internal Audit are made available to the AuditCommittee. The Audit Committee has full access to the external and internal auditors and may assign them anyspecific tasks in relation to their functions.ISO 9001 Quality SystemThe Company is ISO 9001 certified since 1996. The system has evolved into the business process approach when itwas fully converted to ISO 9001:2000 in the year 2002. The continuous improvement of our operating systems hasenabled the Company to improve its competitiveness internationally.76 inter-roller engineering limited annual report2004

Report on Corporate GovernanceSecurities TransactionsThe Company has adopted in full the Best Practices Guide on Dealings in Securities issued by the Singapore ExchangeSecurities Trading Limited. This has been incorporated into the Company’s Code of Conduct, which appliesto directors, employees and their immediate families. The Group requires all directors and staff not to trade in Inter-Roller shares during the period beginning one month before the release of the final-year and half-year and quarterlyresults and ending on the date of release of the results itself.Interested Person TransactionsProcedures have been set to ensure that all transactions with interested persons are dealt with on an arms lengthbasis. All interested person transactions are subject to audit by the internal auditor to ensure that the procedures arecomplied with. The Audit Committee reviews these transactions.The following are related party transactions reviewed by internal audit and the Audit Committee:2004 2003Purchases of materials and supplies fromChuan Seng Heng Pte Ltd in which a director,Low Kok Hua is also a director $ 851 $ 30,266Fees paid to Khattar Wong & Partners in whicha director, Rajan Menon is a partner $19,171 $7,776No mandate from the shareholders for the above transactions is required, as the aggregate transaction values do notexceed the threshold limit laid down in the Singapore Exchange Securities Trading Limited Listing Manual.Standard of DisclosureThe Company’s policy is to furnish prompt and complete disclosure in all public announcements, procedures, andcircular to shareholders and annual reports. Announcements and the annual report are also available on the Company’swebsite (http://www.inter-roller.com). We believe that shareholders should be given timely and accurate information.For this reason, the Board of Directors decided to release timely quarterly results starting from the first quarter of 2002.The Board reviews these statements, including financial forecasts and plans before they are announced. In addition,the Group announces significant contracts and Letters of Intent that have been received. The need to disclose Lettersof Intent received for better transparency will have to be balanced with the need for confidentiality during negotiations.We will however continue with this practice of greater disclosure unless it puts us in a disadvantageous position in ournegotiations.The Company Secretaries attend all Board and Board Committee meetings and ensure that all Board procedures andregulations are followed.On behalf of the BoardMr. Lim Yong WahChairman8 March 2005inter-roller engineering limited annual report2004 77

Share Transaction StatisticsSHARE VOLUME MOVEMENT CHART700,000642,263600,000500,000Ordinary Shares (Volume)400,000300,000200,000478,105235,869142,809150,500138,956100,00039,00033,285 36,45458,52369,77247,3800JanuaryFebruaryMarchAprilMayJuneJulyAugustSeptemberOctoberNovemberDecember2004SHARE PRICE CHART1.21.1Share Price (S$)1.00.90.80.70.60.6JanuaryFebruaryMarchAprilMayJuneJulyAugustSeptemberOctoberNovemberDecember200478 inter-roller engineering limited annual report2004

Statistics of Shareholdingsas at 7 March 2005Distribution of ShareholdingsSize of Shareholdings No. of Shareholders % No. of Shares %1 - 999 402 24.69 20,219 0.021,000 - 10,000 727 44.66 3,706,580 3.2010,001 - 1,000,000 483 29.67 33,695,218 29.091,000,001 and above 16 0.98 78,413,414 67.69Total 1,628 100.00 115,835,431 100.00Twenty Largest ShareholdersName No. of Shares %1 Hong Leong Finance Nominees Private Limited 21,000,000 18.132 Yap Lem @ Yap Kee Lum 11,847,755 10.233 Low Kok Hua 9,048,000 7.814 Chan Peck Sim 4,816,165 4.165 United Overseas Bank Nominees Pte Ltd 4,113,591 3.556 Estate of Chan Chin Wah, Deceased 4,005,000 3.467 Lim Yong Wah 3,902,123 3.378 Winmark Investments Pte Ltd 3,759,000 3.259 Tan Suan Keng 3,706,000 3.2010 Tan Seh Mia 2,487,000 2.1511 OCBC Securities Private Ltd 2,414,220 2.0812 DBS Nominees Pte Ltd 1,758,560 1.5213 Cheong Loo Kheng 1,556,000 1.3414 Sng Hee Kwee 1,500,000 1.2915 Lim Yee Min 1,380,000 1.1916 Citibank Nominees Singapore Pte Ltd 1,120,000 0.9717 Sithawalla Haider Mohamedally @ 936,000 0.81Sithawalla Hayder Mohamedally18 Ang Kong Hua 862,500 0.7419 HSBC (Singapore) Nominees Pte Ltd 848,000 0.7320 Ngiam Kia Huat 773,000 0.67Total 81,832,914 70.65Substantial ShareholdersName Direct Indirect Total No.Interest Interest of Shares %Yap Lem @ Yap Kee Lum 11,847,755 9,316,165 21,163,920 18.3Low Kok Hua 9,048,000 9,060,000 18,108,000 15.6inter-roller engineering limited annual report2004 79

Notice of Annual General MeetingNOTICE IS HEREBY GIVEN that the Annual General Meeting of Inter-Roller Engineering Limited will be held at 20Benoi Crescent Singapore 629983 on 22 April 2005 at 10:00 a.m. for the following purposes:AS ORDINARY BUSINESS1. To receive, and if approved, to adopt the Audited Accounts for the year ended 31 December 2004 together withthe Directors’ Report and Auditors’ Report thereon.(Resolution 1)2. To declare a Second and Final NonTax-Exempt Gross Dividend of 25% (5 cents per share less tax at 20%) forthe year ended 31 December 2004.(Resolution 2)3. To approve the proposed Directors’ Fees of S$191,400 (2003: $170,000) for the year ended 31 December2004.(Resolution 3)4. To re-elect the following Directors who are retiring under Article 107 of the Articles of Association and who havesought re-election:a. Mr. Low Kok Huab. Mr. Loh Chin Huac. Mr. Haider M. Sithawalla(Resolution 4)5. To appoint Messrs Foo Kon Tan Grant Thornton as Auditors of the Company and to authorize the Directors tofix their remuneration.(Resolution 5)6. To transact any other business as may be transacted at an Annual General Meeting.(Resolution 6)AS SPECIAL BUSINESSTo consider and, if thought fit, to pass with or without modifications the following ordinary resolution:7. That pursuant to Section 161 of the Companies Act (Cap. 50) and the listing rules of the Singapore ExchangeSecurities Trading Limited, approval be and is hereby given to the Directors to issue shares in the Company atany time to such persons and upon such terms and conditions and for such purposes as the Directors may, intheir absolute discretion deem fit provided that the aggregate number of shares issued pursuant to this Resolutionshall not exceed 50 per centum of the issued share capital of the Company for the time being andprovided further that the aggregate number of shares issued other than on a pro rata basis to the shareholdersof the Company shall not exceed 20% of the issued share capital of the Company for the time being, and unlessrevoked or varied by the Company in general meeting, such authority shall continue in force until the conclusionof the next Annual General Meeting of the Company.(Resolution 7)By Order of The BoardLow Cze SooCompany SecretarySingapore30 March 200580 inter-roller engineering limited annual report2004

Notice of Annual General MeetingNotes:1. A member of the Company entitled to attend and vote at the above meeting is entitled to appoint more than oneproxy to attend and vote on his behalf. A proxy need not be a member.2. The instrument appointing a proxy must be deposited at the Company’s registered office at 20 Benoi Crescent,Singapore 629983 not less than 48 hours before the time of the Meeting.3. Mr. Haider M. Sithawalla and Mr Loh Chin Hua are independent directors and members of the Audit Committee.Resolution 4 as set out above, if passed, will re-elect them as Directors of the Company. They will continueto serve as members of the Audit Committee upon their re-election as Directors of the Company.4. Resolution 7 is to empower the Directors to issue ordinary shares in the capital of the Company up to 50 percentum of the issued share capital of the Company for the time being; and up to 20 per centum of the issuedshare capital of the Company if the shares are not issued on a pro rata basis to the shareholders of theCompany for the time being.inter-roller engineering limited annual report2004 81

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Proxy FormINTER-ROLLER ENGINEERING LIMITEDIMPORTANT:1. For investors who have used their CPF monies to buy IRELtd shares, this Annual Report is forwarded to them at theirCPF Approved Nominees and is sent soleLy FORINFORMATION ONLY.2. This Proxy Form is not valid for use by CPF Investors and shallbe ineffective for all intents and purposes if used or purportedto be used by them.I/Weofbeing a member/members of the above mentioned Company, hereby appointNRIC/Proportion ofName Address Passport No. Shareholdings(%)and/or (delete as appropriate)as my/our proxy/proxies to attend and to vote for me/us on my/our behalf and if necessary, to demand a poll, at the Annual GeneralMeeting to be held at 20 Benoi Crescent, Singapore 629983 on 22 April 2005 at 10:00 a.m. and at any adjournment thereof.(Please indicate with an “X” in the spaces provided whether you wish your vote(s) to be cast for or against the Ordinary Resolutionsas set out in the Notice of Annual General Meeting. In the absence of specific directions, the proxy/proxies will vote or abstain ashe/they think fit, as he/they will on any other matter arising at the Annual General Meeting.Resolutions For AgainstOrdinary Business1. Adoption of Accounts, Directors’ Report and Auditors’ Report2. Declaration of a Second and Final Non Tax-Exempt Gross Dividend of 25%(5 cents per share less tax at 20%)3. Approval of Directors’ Fees4. Re-election of Directors Retiring Under Article 107 and who have sought re-election(a) Mr Low Kok Hua(b) Mr Loh Chin Hua(c) Mr Haider M. Sithawalla5. Re-appointment of Foo, Kon Tan Grant Thornton as Auditors of the company andto authorize the Directors to fix their remuneration6. Any other ordinary businessSpecial Business7. Authority for directors to issue shares pursuant to Section 161 of theCompanies Act, Cap. 50Dated this day of 2005.Total Number of Shares HeldSignature(s) of Member(s) or Common Seal

Notes:-1. Please insert the total number of shares held by you. If you have shares entered against your name in theDepository Register (as defined in Section 130A of the Companies Act, Cap 50 of Singapore), you should insertthat number of shares. If you have shares registered in your name in the Register of Members, you shouldinsert that number of shares. If you have shares entered against your name in the Depository Register andshares registered in your name in the Register of Members, you should insert the aggregate number of shares.If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all theshares held by you.2. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint oneor two proxies to attend and vote instead of him.3. Where a member appoints two proxies, the appointments shall be invalid unless he specifies the proportion ofhis shareholding (expressed as a percentage of the whole) to be represented by each proxy.4. The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 20Benoi Crescent, Singapore 629983, not less than 48 hours before the time appointed for the Annual GeneralMeeting.5. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney dulyauthorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it mustbe executed either under its seal or under the hand of an officer or attorney duly authorised.6. A corporation which is a member may authorise by resolution of its directors or other governing body suchperson as it thinks fit to act as its representative at the Annual General Meeting, in accordance with Section179 of the Companies Act, Cap. 50 of Singapore.7. The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete,improperly completed or illegible or where the true intentions of the appointor are not ascertainable from theinstructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the caseof shares entered in the Depository Register, the Company may reject any instrument appointing a proxy orproxies lodged if the member, being the appointor, is not shown to have shares entered against his name in theDepository Register as at 48 hours before the time appointed for holding the Annual General Meeting, ascertified by the Central Depository (Pte) Limited to the Company.

Calendar of Financial Events15 February 2005• Announcement of Full Year Results for financial year 200430 March 2005• Issue of Annual Report for financial year 200422 April 2005• Annual General MeetingMay 2005• Announcement of First Quarter Results for financial year 2005August 2005• Announcement of First Half Year Results for financial year 2005November 2005• Announcement of Third Quarter Results for financial year 2005Second and Final Non Tax-Exempt GrossDividend of 25% or 5 cents per share less tax28 April 2005• Ex-dividend date3 May 2005 (up to 5 p.m.)• Last day of lodgement and books closure date16 May 2005• Dividend payment date

Inter- Roller Engineering Limited20 Benoi Crescent, Singapore (629983)Telephone: +65 6861 2828 Facsimile: +65 6266 5516Email: ir@irel.com.sg Website: www.inter-roller.comInvestor RelationsTelephone: +65 6663 3445 Facsimile: +65 6266 5516Email: investor@irel.com.sg Website: www.irel.com.sg/investor