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BUILDING SUCCESS UPON SUCCESS

Annual Report 2010

OUR GROWTH
2006-2010

16
Production Facilities, Ofces and Businesses spread across Asia, Latin America, the USA and Europe.

186%
Total Assets increase reects Petra Foods relentless growth as we continuously strive to deliver satisfaction to all of our customers.

>50
Our Brands market share in key Indonesian market.

>20
Master Brands and Key Sub-Brands give us a portfolio to reach out to consumers at all levels in the marketplace.

Revenue has increased three-fold as our businesses have deepened and broadened their global and regional footprints.

US$44.5m
Net Prot in 2010 the highest ever in the history of Petra Foods results from the successful implementation of our strategies.

11

rd

Largest Supplier of cocoa ingredients in the world.

countries

Global Presence of our business in 11 countries, on four continents.

Petra Foods Limited Annual Report 2010

Financial Highlights for FY2010

Petra Foods is a Singapore-based company with global operations. Each of its two Divisions is a leader in its chosen market. Fourth largest cocoa bean grinder. Third largest independent cocoa ingredients supplier. Market leader in South East Asias largest chocolate confectionery market. Signicant size; Revenue of US$1.6 billion, Net Prot of US$44.5 million, Total Assets of US$1.1 billion. Global presence, with operations in 11 countries. Signicant Achievements of the Year Record year for protability, with net prot of US$44.5 million, the highest in the history of the Company. Turning around European operations within the year of investment completion. Strengthened the supply chain through the establishment of the Processors Alliance for Cocoa Traceability and Sustainability (PACTS) joint venture. Successfully executed share placement of US$60 million, further strenghtening our nancial position and preparing us to take advantage of future growth opportunities.

Financial Highlights for FY2010

+26% +81%
Revenue to US$1,566 million Net Profit to US$44.5 million

+61% +67%
EBITDA to US$108.4 million EPS to 7.73 US cents (1) ROE to 17.7%

+42%
DPS to 2.89 US cents (2)

+5.1%pt
Closing Price: S$1.68 (At 31st December 2010)

Share Price Performance

+63%
% 180 Petra Foods STI 160 140 120 100 80

+ 63%

+10%

Contents
1 2 4 6 8 10 12 14 Financial Highlights for FY2010 Petra Foods at a Glance Proven Track Record Momentum for Growth Our Groups Five-Year Financial Highlights Chairmans Letter CEOs Letter Board of Directors 18 20 24 30 32 36 Senior Management Business Review Cocoa Ingredients Division Branded Consumer Division Financial Strategy In Conversation with the CFO Operating and Financial Review Financial Statements

60 Jan 2010 Feb 2010 Mar 2010 Apr 2010 May 2010 Jun 2010 Jul 2010 Aug 2010 Sep 2010 Oct 2010 Nov 2010 Dec 2010

(1) (2)

Earning Per Share (EPS) for 2010 is calculated based on weighted average number of shares of 575,282,808 shares after the Share Placement (532,277,000 2009). Dividend Per Share (DPS) is calculated based on the enlarged Share Capital (after the Share Placement) of 611,157,000 shares (532,277,000 2009).

Petra Foods at a Glance

Petra Foods Limited Annual Report 2010

Petra Foods at a Glance

Our presence
From our origins in South East Asia in 1984, our Group now stretches across four continents with operations in 16 locations to better serve our many international Cocoa Ingredients customers and to satisfy our growing consumer base in South East Asia.

Thailand

The Philippines France Singapore

Germany Mexico The Netherlands United States of America

Malaysia

Brazil Indonesia

Asia

Europe

Latin America

North America

Headquarters Cocoa Ingredients Division Branded Consumer Division

Revenue Breakdown by Business Cocoa Ingredients Division Branded Consumer Division 23%

+26%
Group Revenue up to US$1,566 million

77%

Petra Foods Limited Annual Report 2010

Petra Foods at a Glance

COCOA INGREDIENTS Division


Revenue Growth from 2006 to 2010 (US$ million) +27% +8% +47%

BRANDED CONSUMER Division


Revenue Growth from 2006 to 2010 (US$ million) +22% +19% +23% +5%

+82%

328 2006

597 2007

874 2008

945 2009

1,199 2010

195 2006

240 2007

253 2008

300 2009

367 2010

+266%
Revenue up to US$1,199 million With our world class processing facilities strategically located in Asia, the Americas and Europe, we now have a truly global footprint that allows us to serve all our key customers, fullling their requirements for cocoa ingredients that meet exacting standards of quality, safety, reliability and consistency. Over the last ve years, we have grown the revenues of the Cocoa Ingredients Division by more than 3 times and expanded our global grinding capacity to 370,000 metric tons (mt) per annum.

+88%
Revenue up to US$367 million From a single marketplace business, we have grown the scale of our Branded Consumer business throughout the region with operations in Indonesia, Philippines, Singapore and Malaysia. Over this period, we further strengthened our presence in all our markets and increased the market penetration of our Own Brands by enhancing our brand offerings through new product innovations, extending into new categories, and extending our distribution reach.

PROVEN TRACK RECORD


Successful value creation through business excellence and global presence, to deliver sustainable growth.
RECORD NET PROFIT Petra Foods EBITDA of US$108.4 million and net prot of US$44.5 million represent the highest earnings achieved in the companys history. Compared to 2009, these represent increases of 61.3% in EBITDA and 80.6% in net prot driven by the strong growth in both Divisions. MORE BALANCED CONTRIBUTION FROM BUSINESS DIVISIONS In 2010, each Division contributed 50% of EBITDA, with the substantial increase in EBITDA in Cocoa Ingredients reecting improvements in the operations in Europe. MORE DIVERSIFIED GEOGRAPHICALLY The core market for our Branded Consumer Division is the Indonesian market but the Division also concentrates on the ASEAN region. Within this region we have achieved signicant growth momentum and our sales outside Indonesia have risen to 31.2% of total Branded Consumer sales. We expect this momentum to be sustained in the year to come. And our Cocoa Ingredients Division serves the global market for cocoa ingredient products. KEY PLAYER FOR COCOA INGREDIENTS Our Cocoa Ingredients Division has now grown to be a global organization. We are the worlds fourth largest grinder of cocoa beans, and we are the third largest supplier of cocoa ingredients in the world.

DELIVERING

DOUBLE DIGIT GROWTH AT GROUP & BUSINESS UNIT LEVELS Each of our Divisions has contributed to the record numbers achieved during 2010. Our Branded Consumer Division increased sales by US$67.0 million (22.4%) and EBITDA by US$15.1 million (38.5%) and our Cocoa Ingredients Division increased sales by US$254.5 million or 26.9% and EBITDA by US$26.1 million or 93.5%. Increases in EBITDA during 2010, reect the focus within each Division on protability. CONTINUING IMPROVEMENTS IN PROFITABILITY Branded Consumer focuses on growing our Brands in their marketplaces while balancing raw material cost management with carefully timed price adjustments when necessary, and Cocoa Ingredients manages its EBITDA/mt yield by increasing the proportion of customized products within its sales mix.

MOMENTUM FOR GROWTH


Our solid foundations have led to continued growth in profitability.
GLOBAL REACH WITH SCALABLE SYNERGY Our Cocoa Ingredients business has grown in size and we now have eight factories and three other operations in 11 countries, on four continents. And our Branded Consumer Division has expanded both its manufacturing and its distribution beyond the core market of Indonesia. Each Division leverages on its core competencies to fuel this pattern of growth. RIDING ON OUTSOURCING AND CONSOLIDATION TREND IN THE COCOA INGREDIENTS INDUSTRY The current trend for global food companies to outsource the production of ingredients has helped us to grow our Ingredients business partly through acquisitions and partly because international food companies will only purchase from trusted partners who have proven technologies and capabilities. And the process of consolidation within the global food industry has also helped us to leverage our reputation, our skills and our technology to further grow our business. STRENGTHENED PRESENCE IN EUROPE, THE WORLDS LARGEST COCOA MARKET 2010 was the rst full year of operation of our new factory in Hamburg. During 2010 all of our operations in Europe were able to expand their scale, and the Hamburg factory introduced new customized products. As a result and with the support of our committed team of employees in Europe the European operations turned EBITDA positive during 2010, thereby contributing signicantly to the improved results for Del Cocoa. GROWING IN A FAST-GROWING CONSUMER MARKETPLACE Our Branded Consumer Division will continue to focus on the growth region of South East Asia a region where historical growth rate for chocolate confectionery sales has outpaced that of global growth. We will further grow our Brands in our key markets of Indonesia and Philippines by continuously refreshing our product portfolio and expanding into new product categories, responding to changes in market demographics and tastes, purchasing power and preferences. STRONG PORTFOLIO OF WELL-ESTABLISHED GLOBAL CUSTOMERS Del Cocoas reputation as a solid, reliable partner has led us to be sought-out by many of the leading food companies in the world companies that insist on partnering only with suppliers who can guarantee quality, consistency and food safety in the ingredients which they require. These customers form the bedrock on which we have built our business. And our Branded Consumer Division has been selected as a distribution partner within the ASEAN countries by many of the worlds leading food companies.

BUILDING

Our Groups Five-Year Financial Highlights

Petra Foods Limited Annual Report 2010

Our Groups Five-Year Financial Highlights

Revenue by Division US$ million Cocoa Ingredients Division Branded Consumer Division

EBITDA by Division* US$ million Cocoa Ingredients Division Branded Consumer Division

28.9% 5-year CAGR

1,566

20.0% 5-year CAGR

108

1,245 1,127

367 67

300 837 253 54

59

59 54

523 195

240 26 32 37 39

328 2006

597 2007

874 2008

945 2009

1,199 2010

28 2006

27 2007

22 2008

28 2009

54 2010

Before adjustment

Net Prot after Tax* US$ million

Revenue Breakdown by Geography % ASEAN Europe North America Australia South America Other Asian Countries

15% 13.4% 5-year CAGR 3% 34%

35% 4%
29 2006 26 2007 23 2008 25 2009 44 2010

9%

Before adjustment

Petra Foods Limited Annual Report 2010

Our Groups Five-Year Financial Highlights

Five-Year Financial Highlights


2010 2009 2008 2007 2006

For The Year (US$ million) Revenue Branded Consumer Cocoa Ingredients Group Revenue EBITDA Before Adjustments* Branded Consumer Cocoa Ingredients Group EBITDA Prot before Tax Net Prot before Exceptional Items Exceptional Items Net Prot after Exceptional Items EBITDA After Adjustments* Branded Consumer Cocoa Ingredients Group EBITDA Prot before Tax Net Prot before Exceptional Items Exceptional Items Net Prot after Exceptional Items At Year End (US$ million) Total Assets Total Liabilities Shareholders Funds Total Debt Net Debt Return on Equity (%) Before Adjustments After Adjustments Net Debt to Equity (%) Adjusted Net Debt to Equity (%) excluding Trade Finance and MTN Per Share Data Dividend (US cents) Earnings (US cents) Before Adjustments Basic & Fully Diluted After Adjustments Basic & Fully Diluted Net Tangible Assets (US cents) Operating Statistics EBITDA/mt of Sales Volume Cocoa Ingredients (excluding Adjustments) (US$) Gross Prot Margin Branded Consumer
*

366.9 1,199.1 1,566.0

299.9 944.6 1,244.5

252.8 874.5 1,127.3

239.8 596.8 836.6

195.4 327.5 522.9

54.4 54.0 108.4 58.5 44.5 44.5

39.3 27.9 67.2 27.3 24.6 24.6

36.6 22.4 59.0 21.5 22.9 22.9

31.7 27.6 59.3 31.7 25.6 0.7 26.3

26.6 27.8 54.4 37.3 27.3 1.8 29.1

54.4 54.0 108.4 58.5 44.5 44.5

39.3 27.9 67.2 27.3 24.6 24.6

35.3 13.1 48.4 10.9 14.1 14.1

31.7 27.6 59.3 31.7 25.6 0.7 26.3

26.6 27.8 54.4 37.3 27.3 1.8 29.1

1,053.8 759.7 294.1 549.1 506.3

862.1 642.0 207.7 462.3 444.0

631.1 427.9 183.6 320.4 304.0

536.3 329.8 188.8 225.3 219.0

368.7 196.7 172.0 124.9 114.9

17.7 17.7 172.0 34.0

12.6 12.6 202.0 70.0

12.1 7.6 150.0 66.0

14.6 14.6 106.0 50.0

18.0 18.0 66.8 50.0

2.89

2.04

2.04

2.04

1.97

7.7 7.7 0.45

4.6 4.6 0.35

4.3 2.6 0.30

4.9 4.9 0.31

5.5 5.5 0.30

215 31.1%

119 29.1%

98 30.8%

136 31.3%

204 31.9%

The Adjustments in 2008 pertain to the Hedge Re-designation Charge; the forex losses; and the Fair Value Accounting Charge.

10

Chairmans Letter

Petra Foods Limited Annual Report 2010

Chairmans Letter

Because of our strategic positioning we are optimistic that the growth momentum we have built will allow us to continue to achieve satisfactory growth in the years to come.

Pedro Mata Chairman

US$60m
New capital raised in 2010

+26.4%
Sales CAGR since listing

Petra Foods Limited Annual Report 2010

Chairmans Letter

11

Dear fellow shareholders, When I wrote to you last year I explained that we at Petra Foods were optimistic about the year to come and that we felt that we would be able to maintain the growth momentum which we had built up. I am very pleased to report to you that in 2010 Petra Foods achieved record revenues of US$1.6 billion and record earnings of US$44.5 million representing increases of 25.8% and 80.6% from 2009. Our business model is to nurture the two Divisions which make up Petra Foods our Branded Consumer business and our Cocoa Ingredients business. Together these Divisions constitute our twin-engines of growth, and I am pleased to report that in 2010 both Divisions achieved solid growth and excellent results. Delivering growth Since our listing as a public company in 2004 we have been committed to follow a strategy of growth, and we are gratified that our twin-engines of growth have given us a sturdy platform for long term growth. These twin businesses are complementary and each in its own way contributes to the strength and success of Petra Foods. Both businesses play a role in the Cocoa Value Chain. Each Division is a leader in its chosen market: the Branded Consumer Division dominates the Indonesian chocolate confectionery market and now is a significant player in the ASEAN regional market; and the Cocoa Ingredients Division has now grown to be a global organization. We are the worlds fourth largest grinder of cocoa beans. And we are the third largest supplier of cocoa ingredients in the world. Growth momentum We are optimistic that the growth momentum which we have built up will allow us to continue to achieve satisfactory growth in the year to come. Since our listing as a public company in 2004 we have achieved CAGR growth rates of 26.4% in Sales, 18.1% in EBITDA, and 15.9% in Net Profit. All aspects of our business have grown significantly during this time. In both of our Divisions we have acquired factories, added to our product ranges, increased production capacity, and entered new markets. And we have expanded our ingredients business into Latin America and into Europe. This expansion in our business has been driven by our management team and we have every expectation that they will be able to bring our business to the next level of performance. Part of this confidence is because of the growth momentum we have built up. The Cocoa Ingredients Division now has operations in 11 countries on four continents. The installed capacity to grind cocoa beans has expanded to 370,000 mt/ year, and the completion of the investment programme in Europe allows us to serve customers in the European market the largest market for cocoa ingredients in the world. In 2010 the Division increased its sales volumes by 7.3% and we plan to further increase our bean grinding capacity during 2011. The Branded Consumer Division is firmly rooted in the Indonesian chocolate confectionery market the largest market for chocolate confectionery in the ASEAN region as well as being an important supplier in the ASEAN region. We have a firm position founded on a strong portfolio of consumer products and world-class manufacturing facilities. Overall, the revenues of the Branded Consumer Division expanded by 22.4% in 2010 compared to 2009. Sustaining fundamentals As we look to the future we continue to be optimistic because of where Petra Foods has positioned our two Divisions. The Cocoa Ingredients Division is now a major player in the global food

industry where consolidation and outsourcing are significant realities. Because the major customers are world-class food companies with high standards and exacting requirements, these trends favour suppliers like ourselves who have powerful technical capabilities and who have strong manufacturing systems and discipline. And the Branded Consumer Division has focused its business on the ASEAN region where demand for chocolate confectionery has grown steadily in recent years. Cocoa Value Chain Within their chosen markets, each of our Divisions has considerable depth and reach because of the range of products and services they can offer and because of the geographic coverage they enjoy. Together they cover much of the Cocoa Value Chain which stretches from the farm gate to the final consumer. While we have been active for some time now in the procurement of cocoa beans in origin countries, this year we have extended our activities by helping to set up the PACTS organization (Processors Alliance for Cocoa Traceability and Sustainability). This organization is creating a win-win situation by improving the livelihood of cocoa farmers in origin countries while assuring a flow of high quality, traceable and sustainable cocoa to processors such as our Cocoa Ingredients Division. This is one of the ways we can act to safeguard the interests of our customers and consumers while also helping to safeguard the resources of the Earth. Concern for the future As I write this letter the outcome of the tragic situation in the Ivory Coast is far from clear but we are hopeful that a peaceful resolution of the problems will become evident. We will continue to do all that we can to make cocoa an important source of income for all cocoa farmers and their communities and we hope that increasing incomes and prosperity will help to stabilize the countries where cocoa is grown. We are watching developments with interest but we continue to source cocoa beans from many countries and through the international trade as part of our policy to mitigate risk in our business. Strengthening our company During 2010 we increased the share capital of the company by 14.8% when we issued 78.9 million new shares. We were very pleased that all of the new shares were immediately taken up as this represents a strong testimony of the investors confidence in the future of the Company. The new capital raised (about US$60 million) will be used to fund strategic growth opportunities and to increase our financial resources for Petra Foods current operations. Appreciation In closing I would like to record my sincere appreciation of the efforts and the support of all of the stakeholders in our business. Our team of dedicated employees and managers are tireless in their efforts to allow us to grow our businesses; our suppliers who support our efforts to constantly improve on quality, reliability and food safety issues; our customers and partners who share our vision for quality and consistency in all of our products and services; and you our shareholders who support us with your confidence in our chosen strategies.

Pedro Mata Chairman 24th March 2011

12

CEOs Letter

Petra Foods Limited Annual Report 2010

CEOs Letter

By continually creating reach and scale for each of our businesses our twin engines of growth have allowed us to build success upon success.

+61%
EBITDA growth in 2010

John T.C. Chuang CEO

US$44.5m
Record Net Prot in 2010

Petra Foods Limited Annual Report 2010

CEOs Letter

13

Dear fellow shareholders, During 2010 Petra Foods recorded the highest revenues and the highest earnings in the history of the company. Compared to 2009, revenues grew by 25.8% to US$1.6 billion, earnings grew by 80.6% to US$44.5 million, and at the same time EBITDA grew by 61.3% to US$108.4 million. These successful results have been made possible by the record earnings and strong growth in both Divisions. Record earnings; strong growth Both Divisions achieved record earnings and growth during 2010. Compared to 2009 our Branded Consumer Division increased sales revenues by US$67.1 million or 22.4% and Cocoa Ingredients Division by US$254.5 million or 26.9%. EBITDA increased by US$15.1 million (38.5%) in Branded Consumer and by US$26.1 million (93.5%) in Cocoa Ingredients. A significant factor in the EBITDA improvement in Cocoa Ingredients is the substantial improvements in the operations in Europe which turned EBITDA positive during 2010. Success in 2010 The successes of 2010 reflect the positioning of each of our Divisions during the recent years of growth. The scale and size of the Branded Consumer Division offers opportunities to improve profitability, and our distribution networks and expertise can be leveraged to the advantage of our Own Brands and of the Agency brands which we increasingly include in our distribution mix. The Branded Consumer business is focused on the ASEAN region and here we have achieved significant growth momentum. The Indonesian market is the largest market within the ASEAN region, and in Indonesia our Own Brands have developed scale and a commanding position in the chocolate confectionery market, while our distribution of Agency brands further strengthens our already strong position. Outside Indonesia our business continues to grow significantly, and throughout the ASEAN region we see tremendous growth opportunities. We expect the momentum we have built up will be sustained in the year to come because the appetite for chocolate confectionery continues to increase within the region, while the opportunities for consumption (rising disposable incomes, our powerful and attractive brands, and our carefully priced products that appeal to the mass market) have grown over recent years. Cocoa Ingredients success during 2010 reflects a number of factors. During the year overall sales volumes increased by over 17,000 mt (7.3%) as we continue to take every opportunity to maximize the use of the capacity we have installed. The completion of the investment programme in Europe has given the Division a truly Global reach and scale, allowing us to better serve our customers everywhere that we find them and to continue to grow our presence in all of our markets. And we take every opportunity to raise our EBITDA yield through a higher customized content in our product mix. Additionally, our Global reach enables us to concentrate on improving the service we give our customers through improvements and innovations in the Cocoa Value Chain. Sustaining the Cocoa Value Chain Managing the Cocoa Value Chain has always been key to our success as we concentrate on providing the best service and the best products to our customers. At the beginning of the chain lie the cocoa farmers in the countries of origin. We focus our procurement efforts in various origin countries as a way to improve quality, and an example of these efforts is the PACTS Joint Venture that we formed during 2010.

PACTS is a joint venture in the Ivory Coast, and it operates at the very first link in the Cocoa Value Chain. Sustainability of the supply of cocoa is a critical link in the Cocoa Value Chain and PACTS is intended to ensure this by creating a win-win situation for the cocoa farmers and for our customers. PACTS helps cocoa farmers to improve the quality of the cocoa that they produce through the use of scientific and controlled methods of production and fermentation of cocoa beans. Raising the quality of their harvest allows the farmers to gain more income for themselves, their families and their community. And improvements in the quality of the cocoa help processors such as Petra Foods to provide better products to our customers. Finally, because PACTS serves various local communities in the Ivory Coast it helps us to manage the traceability of the cocoa we process. Traceability is increasingly important to our industrial customers as they in turn respond to the desires of consumers to be assured that the products they consume have been produced in a fair, sustainable and environmentally sensitive way. Expanding and strengthening Petra Foods During 2010 we took an important step to strengthen Petra Foods and another to strengthen our operations. During the month of June 2010 Petra Foods issued 78.9 million new shares and raised approximately US$60 million in new capital. This increase in the capital of the Company (about 15%) was carried out so as to have adequate funds available for strategic growth opportunities, and to increase the financial resources available to fund Petra Foods current operations. In January 2010, for US$13.2 million we acquired the remaining 32% of the shares of our European operations from our Joint Venture partner Armajaro Trading Limited. This change allows us to completely integrate our European operations into our global Cocoa Ingredients business. Looking to the future Because of our strategic positioning we are optimistic that the growth momentum we have already built up will be sustained. Despite the continued economic uncertainties in the world economy, and in particular the tragic unrest that persists today in the Ivory Coast, we find that demand for cocoa ingredients remains very strong and we are convinced that the global network we have been able to put in place will allow us to continue to serve this growing demand efficiently, effectively and competitively. At the same time our technical capabilities and standards allow us to continue to create new products and services tailored to the specific needs of our customers. And the outlook for the Branded Consumer Division remains exciting. Consumer appetite for chocolate confectionery remains strong in the ASEAN region where we have already built a strong brand equity position, and our distribution expertise and reach continually expands. For these reasons we look forward to 2011 with excitement and enthusiasm and we hope to continue to deliver service and satisfaction to our customers and success to you, our fellow shareholders.

John T.C. Chuang Chief Executive Officer 24th March 2011

14

Board of Directors

Petra Foods Limited Annual Report 2010

Board of Directors

At Petra Foods we seek to balance shortterm and longterm objectives, allowing us to deliver record results and achieve a position of leadership in our chosen markets.
Mr Pedro Mata-Bruckmann Independent Director American

Pedro has served as Chairman and Independent Director of our company since 6th July 2001 and 12th June 2001 respectively. Pedro is President of MGS Mata Global Solutions; a senior advisor to Quad-C (a USA based private equity fund); and the CEO of Classic Party Rentals. With its Headquarters in Los Angeles, Classic Party Rentals is the leading US party and event rental company. For 29 years, Pedro served W.R.Grace & Co. as President and CEO of several Divisions, including serving for 6 years as Chief Executive Officer of Grace Cocoa which under his leadership was the worlds largest and premier supplier of cocoa ingredients to the confectionery, dairy, baking and beverage industries. Pedro is the Chairman of our Risk Committee as well as a member of the Audit, Remuneration and Nominating Committees.

The management continues to perform superbly, always looking ahead to anticipate and plan for challenges.

Davinder has served as a Non-Executive Director of our company since 12th June 2001. Recognized as one of Singapores foremost trial and appellate lawyers, Davinder was one of the first Senior Counsel ever to be appointed in Singapore when that position was created in 1997. Davinder serves as the Chief Executive Officer of Drew & Napier LLC, and in December 2008 he was appointed by the Monetary Authority of Singapore to advise on legal issues arising from the Lehman Brothers collapse. A practicing lawyer for over 25 years, Davinder has also been appointed as an arbitrator and mediator. Between 1988 and 2006 Davinder was a Member of Parliament of Singapore. Mr Davinder Singh, s/o Amar Singh Independent Director Singaporean Davinder is the Chairman of our Remuneration Committee as well as a member of the Audit and Nominating Committees.

Petra Foods Limited Annual Report 2010

Board of Directors

15

Like the Del skiers two skis, Petra Foods two businesses complement each other providing support, exibility and the ability to travel at speed.
This picture is for positioning only.

Mike was appointed as an Independent Director of our company on 6th May 2005. Mike has over 25 years of business experience in the investment and finance industries with over 20 of those years being spent in Asia. Between 1997 and 2000 he served as Managing Director of Credit Lyonnais (Singapore) Merchant Bankers Pte Ltd, as well as Director of PPM Ventures (Singapore) Pte Ltd, a private equity investment arm of Prudential Plc, between 2001 and 2004. He is now Group Finance Director of Isis Shipping Limited. Mike is a Fellow of the Institute of Chartered Accountants in England and Wales and a member of the Singapore Institute of Directors. Mike is the Chairman of our Audit Committee as well as a member of the Remuneration, Nominating and Cocoa Risk Committees.

Mr Michael Dean Independent Director British

Petra Foods provides a double dose of satisfaction: the satisfaction of a well-run business and the satisfaction of enjoying one of Natures great pleasures, the smell and taste of chocolate.

On 12th June 2001, Josephine was appointed as Non-Executive Director of our company. Josephine has been based in Hong Kong for over 25 years and is Chief Investment Advisor of Chepstow Capital Advisors Limited, a Hong Kong based Asian private equity firm. Formerly, she served as the Deputy Chief Executive Officer of CLSA Capital Partners which she joined in 1995 to set up its private equity activities. Josephine is a Fellow of the Hong Kong Institute of Directors and a member of the Law Society of England and Wales, and of the Law Society of Hong Kong. Josephine is a member of our Audit and Remuneration Committees and Chair of the Nominating Committee. Ms Josephine Price Independent Director British

16

Board of Directors

Petra Foods Limited Annual Report 2010

Board of Directors

Customer focus and our passion for chocolate and cocoa are the foundations on which we build growth and success.

John founded the company in 1984 and has built Petra Foods from a regional player to be a global company one of the largest cocoa ingredients providers in the world, and a leading chocolate and confectionery company in ASEAN region. He has been CEO of the company since November 2004. John has over 30 years of experience in the chocolate, cocoa and confectionery business. John is a member of our Nominating and Cocoa Risk Committees.

This picture is for positioning only.

Mr John Chuang Tiong Choon Group Chief Executive Officer Singaporean

Our business environment is constantly changing and our reactions must be dynamic and focused. This is what we do all the time.

Joseph was appointed to our Board on 2nd March 1999 as an Executive Director. Joseph has over 30 years of experience in senior management positions within the chocolate, confectionery and cocoa industries. Joseph is responsible for the overall management and business development of the Branded Consumer Division in our core market of Indonesia. The business of the Branded Consumer Division includes the manufacture and distribution of our own branded consumer products, and the distribution of third-party products through our own extensive distribution network.

Mr Joseph Chuang Tiong Liep President Director Branded Consumer Division (Indonesia) Singaporean

Petra Foods Limited Annual Report 2010

Board of Directors

17

Our journey is never ending, but every year we reach new destinations!

William was appointed to our Board on 31st May 2001 as an Executive Director, and as President of Joint Ventures and Chief Operating Officer of our Branded Consumer Division in Indonesia. A graduate of the California State University Long Beach (Business Administration with Finance), William has over 25 years of experience in senior management positions within the chocolate, confectionery and cocoa industries. William is responsible for the overall operations and the management of the Branded Consumer Division in our core market of Indonesia, and he is also responsible for all of the joint ventures of the Branded Consumer Division.

Mr William Chuang Tiong Kie Chief Operating Officer Branded Consumer Division (Indonesia) Singaporean

Customer satisfaction is the key to our growth, the key to our success, and the source of our inspiration.

KC was appointed to our Board on 1st August 2005 as an Executive Director. KCs special focus is the Branded Consumer Division where he is responsible for overseeing the international operations and business development of the Division. KC has over 30 years of experience in the branded chocolate and confectionery and fast moving consumer goods industries. He uses this experience to expand the presence of Petra Foods products and brands in our chosen consumer markets.

Mr Chua Koon Chek (KC) Executive Director Singaporean

18

Senior Management

Petra Foods Limited Annual Report 2010

Senior Management

Edmund Ee Kim Seng President, Cocoa Ingredients Division Edmund has nearly 30 years of cocoa industry experience under his belt, and as President of the Cocoa Ingredients Division, he plays a key leadership role as well as being in charge of the sales and marketing activities of the Division. Edmund first entered into the cocoa industry in 1979 when he joined Allied Chocolate Industries Ltd, subsequently moving to Allied Cocoa Industries Pte Ltd as Sales Manager from 1982 to 1984. Between 1984 and 1989 he was Commercial Manager of De Zaan Far East (S) Pte Ltd, and in 1989 he joined Petra Foods. Chin Koon Yew Chief Financial Officer Chin joined Petra Foods in 2001 as the CFO of Petra Foods, the position he undertakes today. Before he joined Petra Foods, Chin worked for W.R.Grace for 17 years, progressively undertaking more responsibility in various financial and managerial positions and culminating in the role of Chief Financial Officer Asia Pacific in 1998. In 2001 he joined Petra Foods in his current position, and as Chief Financial Officer, Chin is in charge of all of the Petra Foods Groups financial operations. Ben Ryan Director, Business Development and Special Projects Ben joined our Group in 2003, and is responsible for the Groups business development and special projects.

Ben worked for W.R. Grace & Co and ADM International for 23 years between 1976 and 2000 in New York, Paris, Berlin, the Netherlands, and the United Kingdom in various executive positions in financial and information technology roles. Of those years, 15 were associated with the cocoa business. Pontjo Susanto Widjaja Director, Distribution for Nirwana Lestari Susanto has achieved 30 years of operational experience in the cocoa and chocolate industry and 30 years of service within our Group. Susanto joined PT General Food Industry in 1978, bringing with him experience in audit, accounting and administration positions in Drs H. Sudarmin AK and PT Naintex. Susanto has served in various capacities within our Group, and he is currently the Director, Distribution for PT Nirwana Lestari. Ferry Haryanto Director, Commercial for PT Nirwana Lestari Ferry is the Director, Commercial for PT Nirwana Lestari, a position he has undertaken since 1995. Before joining our group, Ferry gained 10 years of experience in sales and marketing roles with PT Gitaswara Indonesia and San Miguel Breweries, and from 1990 until he joined us in 1995 he undertook the position of General Manager (Commercial Division) for PT Gunung Agung Trading. In his current position, Ferry is responsible for the Groups sales and marketing operations for modern trades in Jakarta and Bali.

Petra Foods Limited Annual Report 2010

Senior Management

19

Ridwan C. Kidjo Director, Commercial for PT Perusahaan Industri Ceres Ridwan C. Kidjo is the Director, Commercial for PT Perusahaan Industri Ceres. Ridwan has up to 18 years of experience in diverse operational, managerial, sales and marketing roles within PT Nirwana Lestari and PT Perusahaan Industri Ceres, where Ridwan honed his skills in business development, marketing and brand development. In his current role as Director, Commercial, Ridwan oversees and drives the Groups sales and marketing operations for the Groups proprietary brands, in Indonesia. Nancy Florensia Director, Finance for PT Perusahaan Industri Ceres Nancy joined PT Ceres in 1991 and she is responsible for all of the financial operations in PT Ceres. Prior to joining our Group, Nancy had 10 years of experience in accounting and financial positions in PT Indocement, PT Henoch Jaya and the PT Kedaung Group. Ng Sin Heng Director, Commercial Cocoa Ingredients Division In 1988 Sin Heng joined Petra Foods as the Commodities Manager and in 1996 he became the Director, Commercial of the Cocoa Ingredients Division, the position which he undertakes today. Sin Heng has over 20 years of experience in the commercial aspects of the chocolate, confectionery and cocoa industry, gained from his time with Allied Management and Consultants Pte Ltd, Cocoa Merchants, London, Allied Cocoa Industries Pte Ltd, and De Zaan Far East Pte Ltd.

Lim Seok Bee (SB) Director of Quality Assurance, Technology & Operations SB joined the Group as the Director of Quality Assurance, Technology and Operations in 1991, and has over 30 years of experience in the quality assurance and quality development aspects of the cocoa and chocolate industry. Before joining Petra Foods, SB worked for Chocolate Products (M) Sdn Bhd, in roles encompassing quality control and production, and in De Zaan Far East (S) Pte Ltd as a Quality Assurance and Development Manager, and Vice President (Quality Assurance and External Project Development) in 1989. SB is in charge of the Groups quality assurance management and technological aspects and operations of our Cocoa Ingredients Division. Chris Oo Hoe Hee Regional General Manager, Branded Consumer Division Chris has over 20 years of broad experience in the consumer business in Singapore and the ASEAN region having worked in food manufacturing, distribution, retailing and franchising with both multinational companies and small and medium-sized enterprises. Chris joined Petra Foods on 1st January, 2006 as Regional General Manager for the Branded Consumer Division, with particular focus on our consumer business in the ASEAN markets. Prior to joining Petra Foods, Chris was the Executive Vice President of the consumer business of a public listed company.

20

Business Review Cocoa Ingredients Division

Petra Foods Limited Annual Report 2010

Business Review

US$1.2b
Sales Revenue increased 26.9% to US$1.2 billion.

US$54.0m
EBITDA increased 93.5% to US$54.0 million.

Petra Foods Limited Annual Report 2010

Business Review Cocoa Ingredients Division

21

Cocoa Ingredients Division Building and succeeding

For our Cocoa Ingredients Division known to our customers as Delfi Cocoa 2010 was a year of growth and a year of success. During the year we increased our sales revenues by US$254.5 million or 26.9% to reach a record annual sales total of US$1.2 billion. And during 2010 we increased our EBITDA by US$26.1 million or by 93.5% to reach a total of US$54.0 million. At the same time, the volume of products shipped during the year from our factories grew by a solid 7.3% as our Division stretched to keep up with the demands of our customers for Delfi Cocoas special products. Building our business Ever since we entered the Cocoa Ingredients business way back in 1988, the foundation of our business has rested firstly on our technical capabilities, secondly on the reputation of Delfi Cocoa, and thirdly on the portfolio of customers which we have built. These three factors are completely intertwined. Our technical capabilities enable us to produce customized cocoa ingredient products tailored to the needs and the applications of our customers. Coupled with our strong manufacturing and quality disciplines, this gives us the ability to meet and often to exceed the needs and requirements of our customers, leading to Delfi Cocoas reputation as a solid, reliable partner who is capable of innovation in products and services. As a result, over the years we have been sought-out by many of the leading food companies in the world. These leading companies insist on partnering only with suppliers who can guarantee quality, consistency and food safety in the ingredients which they require, and the support of these premier customers has enabled us to build our business on most solid foundations. Growing our business From our start in 1988, we have continually grown our business both in terms of installed capacity and our geographical coverage. Over the years, the growth in our capacity has been impressive and relentless (since 2002 we have grown our capacity by a CAGR of 17.8%), but this growth has always been demand-led growth. We do not speculatively add extra processing capacity in our factories, hoping to develop new markets to absorb the new capacity. Instead, we continuously respond to the demands of our customers for our top-quality cocoa ingredient products and the increase in our capacity is driven by these customer demands. For this reason our factories are always busy places.

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Business Review Cocoa Ingredients Division

Petra Foods Limited Annual Report 2010

Business Review Cocoa Ingredients Division

Regional presence global network We have also grown the size and shape of our geographic footprint. At first we were happy to be an Asian-focused company, serving the needs of our customers across Asia. But when we had developed our size, scale, and reputation in Asia, we took advantage of opportunities to follow our international customers into their regional markets and to invest in Latin America and Europe. Partly these opportunities arose from the growing trend for major food companies to outsource the production of their key ingredients to trusted partners who have proven technologies and capabilities. And partly these opportunities were sought by us so as to better serve our customers. As a result of this expansion, we have now reached the point where we have eight factories and three other operations in 11 countries, on four continents. Service and opportunities The fruits of our expansion are that we now have the ability to serve our international customers in their important regional markets directly from our factories located in those regions. This is a most necessary ability for a supplier to many of the worlds leading food companies. An added advantage for Delfi Cocoa is the fact that we now have successfully created a global network. This brings us opportunities that up to now were not available to us. It allows us to take advantage of economies of scale when sourcing and transporting our raw materials; it allows us the luxury of specialization in our various factories; it increases the opportunities to better serve our international customers; and it brings opportunities to focus directly on the sourcing processes of our cocoa beans, with a view to ensuring that they are produced in a sustainable and ethical manner.

Cocoa Value Chain For all of the years of our existence, we have been involved in the Cocoa Value Chain. We consider the Cocoa Value Chain to be the process by which cocoa beans are harvested, transported, processed into cocoa ingredients, and converted into consumer products. We visualize this process as a series of links in a chain which stretches from the gate of the farm on which our cocoa is produced right down to the individual consumer of a cocoa or chocolate product. Our experience has been that the better we are able to control and add-value to each link in the Cocoa Value Chain, the better we are able to deliver quality and value to our customers. And maximizing the benefits to our customers is one of our constant objectives. During 2010, we took an important step to strengthen our position in the earliest part of the Cocoa Value Chain by entering into a joint venture which we named PACTS Processors Alliance for Cocoa Traceability and Sustainability. Our partners in this joint venture are the French group CEMOI and the US company Blommer Chocolate. Together we are developing a chain of stations in the Ivory Coast where cocoa can be gathered, fermented, bagged and shipped to processing companies such as Delfi Cocoa. Progress in sustainability The PACTS joint venture is intended to achieve a number of objectives. First and foremost, is the issue of sustainability. Clearly, without an adequate reward to the farmers, the production of cocoa will decline. PACTS looks to create a win-win situation by helping the farmers to improve the quality of their cocoa through the use of scientific and controlled methods of production and fermentation of cocoa beans.

Petra Foods Grinding Capacity 2002-2010 Metric Tons (000)

370
17.8% CAGR

370

310 240

320

200

200

220

100

2002

2003

2004

2005

2006

2007

2008

2009

2010

Starting from our roots in Asia we have expanded into Latin America (in 2003) and Europe (in 2007).

Petra Foods Limited Annual Report 2010

Business Review Cocoa Ingredients Division

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And raising the quality of the cocoa will directly raise the income of the farmers and their communities because processors such as Delfi Cocoa will pay a premium for good quality raw materials. Secondly, the methods to be promoted for raising quality can also be oriented in such a way that they protect the environment the earth on which we all depend, and the social environment in which the community of cocoa farmers exists. Thirdly, the cocoa processed in the PACTS stations is all grown locally. Each processing station is rooted in a village or commune and is intended to be operated for the benefit of the local people. This means that the provenance of the cocoa shipped to the processors can be established and traceability assured an increasingly important factor in todays marketplace. Finally, we are optimistic that the success of the PACTS experience will lead to many further processing stations being established in the Ivory Coast and that the benefits for the cocoa community will become widespread and general. PACTS is one of a series of initiatives in which Delfi Cocoa joins. These include our membership of the World Cocoa Foundation (WCF) which encourages responsible, sustainable cocoa farming and aims to raise the income of cocoa farmers; our sponsorship of the Cocoa Livelihoods Program in West and Central Africa, jointly funded by the WCF and the Bill and Melinda Gates Foundation; and our partnership with the World Banks International Finance Corporation in a program designed to improve returns to cocoa farmers in Indonesia.

Progress in Europe In October 2009 our European flagship factory was officially opened in Hamburg and so 2010 was its first full year of operation. During 2010, all of our operations in Europe were able to expand their scale and the Hamburg factory was able to capitalize on the Delfi technology and disciplines introduced during the construction phase. Particular attention was paid to maximizing the throughput of both of our factories and Hamburg worked hard to introduce new customized products. As a result of these achievements and with the support of our committed team of employees in Europe, the European operations turned EBITDA positive during 2010, thereby contributing significantly to the improved results for Delfi Cocoa. Looking to the future During 2011, we intend to build on the momentum which we have already established and to continue to grow our business. To do this we are not planning any innovations in our strategy or our operations instead we will continue to follow the path which has brought us much success so far. We are planning to expand the installed processing capacity in some of our factories, mainly in Asia, and we will continue to develop new products and new abilities that will meet the special needs of our customers. We will also continue to respect our core values by maintaining our focus on our customers; by continuing to achieve the quality standards which underpin our relationships with our customers; and by continuing to respect and motivate our dedicated team of employees who make all of our dreams and achievements possible.

Production Flow-Chart


Cocoa Beans Cleaning Drying Breaking Winnowing Alkalizing Roasting Grinding Refining Cocoa Liquor Pressing

Cocoa Powder

Products: Chocolate Drinks Chocolate Milk Biscuits and Others

Cocoa Butter

Chocolate

Sugar & Other Ingredients

24

Business Review Branded Consumer Division

Petra Foods Limited Annual Report 2010

Business Review

US$366.9m
Sales Revenue increased 22.4% to US$366.9 million.

US$54.4m
EBITDA increased 38.5% to US$54.4 million.

Petra Foods Limited Annual Report 2010

Business Review Branded Consumer Division

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Branded Consumer Division By continuously investing in our Brands, driving innovation, and growing our distribution capabilities and reach, we have built a robust House of Brands and a Distribution Power House in the region.

From Strength to Strength In 2010, the growth momentum for our Branded Consumer Division was strong despite the global uncertainties and volatile commodity prices. It was a year where our management team successfully guided our House of Brands to another year of record performance. The strong performance was achieved on the back of continued strong market positions achieved by our Core Brands garnered by innovative marketing programmes, product innovation, strong sales and distribution network, and increased operational efficiencies. We achieved revenue growth of 22.4% Year-on-Year (Y-o-Y) to US$366.9 million with an even more impressive EBITDA growth of 38.5% Y-o-Y to US$54.4 million. The strong EBITDA growth of our Branded Consumer Division was driven by the revenue growth of our Own Brands and the Agency Brands we distribute, and the higher margins achieved for our Own Brands. To put this growth into perspective, it has not only been a growth achieved Y-o-Y but multi-year as well. The strong results achieved can be attributed to the solid House of Brands and Distribution Power House we have built and reaffirms our strategies of focusing on our core markets in South East Asia, investing in our Brands constantly, driving innovation, and growing our distribution capabilities and reach. With our rich heritage, our extensive knowledge of the chocolate business coupled with our constantly evolving expertise and our expanding regional footprint, we believe that these are the solid foundations we have built for our Branded Consumer Division that allowed us to grow at such a rapid pace and which will enable the growth to continue. Building growth through our Brands The love for our Brands in our Core Markets of Indonesia and the Philippines have been shared from one generation to the next, leaving our consumers with lasting fond memories. In our core market of Indonesia for example, this translates to a market share of such extraordinary level that it is more than three times that of our nearest competitor. As a successful brand owner, we work to continually satisfy our consumers tastes by harnessing our constantly evolving expertise as brand builders to create and deliver to the market new products that are of the highest quality, a delight to all the senses and which are fun for our consumers to enjoy. Furthermore we understand that while product superiority is essential, we also need to offer a broad range of choices which meets different consumer desires and price points wherever we operate.

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Business Review Branded Consumer Division

Petra Foods Limited Annual Report 2010

Business Review Branded Consumer Division

To achieve this, our team will continue to: 1. Extend and continually energize the brand image of our major brands by delivering to our consumers relevant products and new innovations of unsurpassed quality; 2. Extend and expand our portfolio into new categories of the confectionery chain by utilizing our Brands popularity. Over the last few years, we have expanded our presence from chocolate confectionery into the sugar confectionery category and, more recently, into the beverage segment through our Delfi Hot Cocoa Indulgence; and 3. Focus on design, packaging, marketing and advertising in order to get our products across more persuasively. The way we package our products plays just as important a role in our efforts to build the value of our Brands and to keep our Brands fresh in the minds of our consumers. The objective of our product innovation strategy is to further enchant our consumers to drive continued consumption growth and to continually broaden our marketplace through innovative new products, especially in our core markets of Indonesia and the Philippines. This program remains a key factor in driving our Divisions growth with new products launched over the last 3 years contributing 12.5% of Own Brands sales in 2010. Even going forward, our product pipeline is still overflowing with winning ideas. To further broaden our product portfolio, in March of 2011, we formed a S$1.5 million Joint Venture (JV) with SGX-listed Super Group Limited (Super). We have a 60% share in the JV called Ceres-Super which will market and distribute instant

3-in-1 coffeemix products and other convenience beverages in Indonesia. Our JV partner is the leading brand owner and manufacturer of 3-in-1 instant coffees, beverages and convenience foods in South East Asia. Through this Joint Venture, we are targeting to further broaden our product portfolio and diversify our revenue stream into the vast and fast growing instant 3-in-1 coffeemix segment in Indonesia. Our extensive knowledge of the Indonesian consumer market, our experience and expertise in building a successful portfolio of brands, as well as our extensive distribution network in Indonesia, together with Supers strong capabilities in developing market-leading instant beverages, we believe is the winning combination for the JVs success. With a population of more than 200 million people and a strong coffee drinking culture, Indonesia is now the largest coffee consuming country in South East Asia with overall retail sales value of the coffee market valued at over US$600 million per annum of which the instant coffeemix segment accounts for approximately 30%. More significantly, the growth potential of the instant coffeemix market remains robust given Indonesias relatively young and growing population, coupled with increased urbanization and the growing demand for convenience products. Building growth through distribution strength Just as our Brands extend across multiple product categories and multiple price points, our distribution business model is a multi-dimensional one. We have the distribution expertise to carry our Brands through many different outlets, ranging

Branded Consumer Revenue US$ million

Branded Consumer EBITDA US$ million

21.7% CAGR

24.5% CAGR

195 2006

240 2007

253 2008

300 2009

367 2010

26 2006

32 2007

37 2008

39 2009

54 2010

Petra Foods Limited Annual Report 2010

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from supermarkets, hypermarkets, convenience stores and pharmacies, all the way to owner operated mini markets, the corner mom and pop stores, petrol station kiosks, medical halls and sari sari stores. In our market of Indonesia, the number of retail outlets that our Brands can be found in has more than doubled since 2004, now numbering more than 400,000 outlets. This strength provides us with a significant competitive edge in distributing our Own Brands and when introducing new products into the marketplace. Our distribution expertise and the extensive reach of our network continues to be recognised by many food and beverage companies, ranging from major international food and beverage names to local companies. We now distribute Agency products in Indonesia, the Philippines, Malaysia and Singapore, and, in all, our distribution expertise extends to nine broad categories, extending beyond even the food and beverage category. As sales of our Own Brands have grown over the years, so too has the revenue contribution from the distribution of Agency products. The number of principals we represented has seen a marked increase in the last few years with several big international names signing with us. Their contribution was immediately felt with revenue from 3rd Party products forming 48% of 2010s Branded Consumer revenue. More significantly, as our portfolio of Brands is constantly evolving to generate the long term growth, similarly our distribution expertise is constantly being strengthened to drive our products into the marketplace. With our footprint now firmly entrenched in our four key markets, we have also made significant changes to our distribution infrastructure to keep it relevant in a constantly changing environment.

2011 outlook The Management Team has been able to grow our Branded Consumer Division by successfully building a solid foundation for our business, and looking forward, we will remain focused on our core markets and will continue to strengthen our portfolio of brands within these by using business innovations across all platforms to continuously deliver value to all our consumers/ customers and the Group. As South East Asia continues to offer healthy economic and consumer growth potential, we are optimistic that our strong financial position, strategies of striving for operational excellence and bolstering market leadership through consistent branding efforts should put us in good stead. A major challenge that our Branded Consumer business, and many of its peers, will face in 2011 is the current cost inflationary pressures for its raw materials. Our strategy, which has served us well in the past, to minimize the impact of price fluctuations is to utilize a strategy of establishing a forward cover for our major raw material requirements to lock-in costs and ensure cost visibility, and through selective pricing adjustments if necessary. Therefore, despite the continued global uncertainties, we are confident of delivering further growth in 2011.

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Business Review Branded Consumer Division

Petra Foods Limited Annual Report 2010

Business Review Branded Consumer Division

Extending across a broad spectrum of categories and price points, our portfolio of brands appeals to the different consumer groups in our key markets. Our strong innovative culture allows us to continually create powerful winning ideas that captivate and delight our consumers.

Petra Foods Limited Annual Report 2010

Business Review Branded Consumer Division 29

30

Financial Strategy In Conversation with the CFO

Petra Foods Limited Annual Report 2010

Financial Strategy In Conversation with the CFO

Breakdown of Debt Facilities Working Capital Term Loans & MTN

Floating & Fixed Rate Components of Loan Floating Rate Fixed Rate
49%

Chin Koon Yew CFO

33%

67% 51%

Repayment Schedule of Term Loan & MTN Repayment in 2013 Repayment in 2012 Repayment in 2011
41% 21%

Breakdown of Loans in Respective Currencies USD Euro Others IDR


5% 8% 27%

38%

60%

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Financial Strategy In Conversation with the CFO

31

Maybe you can start with sharing what were the Groups achievements in 2010? From the lows in 2009, the global economies have somewhat recovered although there are still significant uncertainties prevailing. However from the Groups perspective, it was a fantastic year for us in 2010. In addition to the record profit achieved by the Group which resulted in a 5.1 percentage point improvement in our Return on Equity to 17.7%, it was also a year where our financial position was significantly strengthened. Some of our key achievements in 2010 included the successful and well-received Equity Placement of US$60.2 million. The proceeds raised have benefited us on two fronts one is to further strengthen our Balance Sheet while the other allows us to take advantage of future growth opportunities. It is also noteworthy that as a result of the strong earnings coupled with proceeds from the Placement, the Groups gearing ratio improved to 1.72 times at end 2010 from 2.02 times previously. More significantly, our adjusted Net Debt/Equity ratio is reduced to 0.34 times from 0.70 times previously. Over the course of 2010, we also raised our financial headroom (i.e. the unutilized portion of our credit facilities) to US$302 million which we believe puts us in a strong position to deal with any contingencies that may arise. What is your view on the current interest rate environment? There are different schools of thought on how long this low interest rate environment will last. We have adopted initiatives to buffer the Group from a reversal of the current low interest rate environment. On this front, close to 50% of our debt portfolio has already been converted into long term fixed interest rate structures and going into 2011, we will continue to identify windows of opportunities to further increase this percentage. How will the Group deal with the volatility in cocoa bean prices? Will there be any adverse impact on profitability? The volatility and uptrend in prices are not limited to only cocoa beans but to other agricultural commodities as well. Going into 2011, this volatility in raw material prices will persist. For the Group as a whole, it is useful to emphasize to Shareholders that the individual management team for our two Divisions have a strong track record of growing the business in different geographic locations even through periods of political, financial and economic crises as well as volatility in raw material prices and the currency markets. Furthermore for our Cocoa Ingredients Division, given our robust Cost Pass Through model coupled with strict hedging policy, we have been successful in mitigating the effect of cocoa bean price fluctuations.

For Branded Consumer business, our strategy to deal with them includes pricing adjustments, establishing forward cover which provides us with cost visibility, and new product launches, especially in the premium segment. This strategy has been effective in continually mitigating higher raw material costs and protecting our Gross Profit Margin. In terms of how we handle our raw material requirements and supply risks, the sourcing strategy of our Cocoa Ingredients business is to source from multiple origin countries through a number of reputable suppliers. Essentially the objective and strategy is to mitigate any supply risk, especially with cocoa beans being grown in regions which are less stable politically. For example, at time of writing the political upheaval in the Ivory Coast is currently underway. We have put in place contingent sourcing plans should it turn out to be an extended affair. Going forward, we need to look beyond our current structure on how we can continue to fulfill our growing requirements. On this front, our participation in the PACTS Joint Venture is just one of the many initiatives to further reduce our supply risk in a sustainable manner. Our direct sourcing initiative in key origin locations not only strengthens our control over the supply chain but also enables the Group to derive lower cost benefits and assure ourselves of improved quality of beans. Likewise, how does the Group handle the volatility in the currency markets? Although the Groups operations currently span different geographic zones, we simplify our business models such that the impact of volatility in the currency markets is minimized. We do this by matching the borrowings of the units with the functional currency revenue. For example, the borrowings of our Cocoa Ingredients in Asia are in USD to match its functional currency, while our European Cocoa Ingredients operations have Euro revenue and Euro borrowings. Likewise, for our Branded Consumer business, borrowings are in local currency to match its revenue. What is your focus in the current financial year? One of our key areas of focus is to continue to maintain strong positive Free Cash Flow by tight working capital management and rigorous assessment of capital expenditure. In 2011, the Group will be looking to add additional capacity in some of our key strategic locations which will be funded through our strong Cash Flow generation. To further support our long term growth, one of the Groups financial strategies is to further increase our Financial Headroom which will provide us with the financial resources to pursue growth opportunities and a cushion to weather any contingencies, including further spikes in bean prices.

32

Operating and Financial Review

Petra Foods Limited Annual Report 2010

Operating and Financial Review

Financial Highlights of Petra Foods FY 31 December (US$ million) Cocoa Ingredients Branded Consumer Total Revenue Cocoa Ingredients Branded Consumer EBITDA Prot before Tax Net Prot attributable to Shareholders Earnings per share At Year End (US$ million) Total Assets Total Liabilities Total Shareholders Equity Total Debt Net Debt Return on Equity Net Debt to Equity Adjusted Net Debt to Equity (%) excluding Trade Finance and MTN
2010 2009 % chg

1,199.1 366.9 1,566.0 54.0 54.4 108.4 58.5 44.5 7.73


2010

944.7 299.8 1,244.5 27.9 39.3 67.2 27.3 24.6 4.63


2009

26.9 22.4 25.8 93.5 38.5 61.3 114.0 80.6 67.1


% chg

1,053.8 759.7 294.1 549.1 506.3 17.7 172.0 34.0

862.1 642.0 207.7 462.3 444.0 12.6 202.0 70.0

22.3 18.4 41.6 18.8 14.0 5.1% pt

Petra Foods Limited Annual Report 2010

Operating and Financial Review

33

Branded Consumer Division Key Financial Highlights FY 31 December (US$ million)


2010 2009 % chg Year-on-Year

Indonesia The Regional Markets Branded Consumer Revenue Gross Prot Margin (%) Total EBITDA

252.4 114.5 366.9 31.1% 54.4

198.2 101.6 299.8 29.1% 39.3

27.3 12.6 22.4 2.0% pt 38.5

Cocoa Ingredients Division Key Financial Highlights FY 31 December (US$ million) Revenue EBITDA EBITDA/mt (6 months moving average) in US$ Sales Volume (mt)
2010 2009 % chg

1,199.1 54.0 215 250,949

944.6 27.9 119 233,860

26.9 93.5 80.7 7.3

The year 2010 will be remembered as a year in which the global economy rebounded amidst uneven growth throughout the emerging and developing economies. Despite this, the Group achieved record net profit attributable to equity holders of US$44.5 million in 2010, representing Year-on-Year (Y-o-Y) growth of 80.6%. The Groups strong 2010 performance can be attributed to: 1. The positive business environment for our two Core Businesses with strong demand globally for customized cocoa ingredients and strong regional consumption; and 2. The successful execution of the Groups growth strategy with higher sales, higher unit pricing and higher margins achieved by the Cocoa Ingredients and Branded Consumer Divisions. Another contributor to the Groups strong financial performance was the significant improvement in the performance of our European Cocoa Ingredients operations. A key point to highlight is that the European operations turned profitable in 4Q 2010 at the net level.

The higher sales volumes and higher unit pricing achieved generated revenues of US$1.6 billion for 2010, representing Y-o-Y growth of 25.8%. In addition to the higher revenue, the higher margins/yields achieved by our two business units, despite the volatile commodity prices, drove the Groups EBITDA higher Y-o-Y by 61.3% for 2010. Branded Consumer Division A very strong performance was achieved in 2010 for Own Brands and Agency (or 3rd Party) Brands sales with Revenue and EBITDA growing by 22.4% and 38.5% respectively. Note that adjusted for the stronger regional currencies in 2010, the Branded Consumer Divisions revenue growth was 8.7% Y-o-Y. Revenue Performance by Markets Indonesia Our key brands (eg. SilverQueen, Cha Cha and Ceres Meises) in 2010 continued to generate double digit revenue growth as a result of the stronger domestic economy, our robust marketing support behind priority brands as well as strong gains from new products launched over the last 18 months. For Agency Brands, the strong double digit revenue growth was driven mainly by organic sales growth achieved by existing agencies.

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Operating and Financial Review

Petra Foods Limited Annual Report 2010

Operating and Financial Review

The Regional Markets of the Philippines, Malaysia and Singapore For 2010, regional markets formed 31.2% of the Divisions revenue with Own Brands achieving revenue growth of 23.0% Y-o-Y, reflecting the stronger domestic economies and the success of the Divisions strategy of growing Own Brands, especially in the Philippines. For Agency Brands distribution in our regional markets, the strong revenue growth was on the back of not only new agencies secured but also from growth in existing agencies and our success in gaining greater penetration into the different channels and regions.

Y-o-Y which reflected the Divisions focus on premium products and Europes turnaround. The key drivers of volume growth are continued strong demand from global customers and new customers secured. It should be pointed out that our Cocoa Ingredients business model is essentially a cost pass-through model, allowing us to mitigate the impact of periods of bean price volatility. With our European operations now in full commercial operations, continued improvement in EBITDA yield was achieved with a positive EBITDA yield generated in 2010. To recap, our state-of-the-art cocoa ingredients processing facility in Hamburg commenced commercial production in May 2009 and we began ramping up production. During this period, we have already received quality accreditations (which are a necessary precursor to selling meaningful quantities of customized higher margin products) from some of our major customers and we are working to secure more customer approvals. More importantly, with Europe now fully integrated into the Divisions global platform, our competitive position to supply our global customers has been significantly strengthened. Cash Flow Generation and Capital Expenditure During the course of 2010, the Group generated Free Cash Flow of US$7.4 million on the back of the strong operating Cash Flow of US$33.7 million. The positive Free Cash Flow was generated notwithstanding higher working capital requirements due to higher cocoa inventory values and the acquisition of the remaining minority interest in Delfi Cocoa Europe.

Profit Performance The EBITDA growth of 38.5% was driven primarily by the revenue growth of Own Brands and Agency Brands, the higher margin achieved and the stronger regional currencies. The Branded Consumer Divisions 2010 gross profit margin was higher by 2.0 percentage points over 2009 driven mainly by higher Own Brands margin as a result of the price increase implemented in January 2010 and cost containment initiatives. Furthermore, the strong local currency appreciation, especially for the Indonesian Rupiah, in 2010 translated to lower input costs. Cocoa Ingredients Division For the Cocoa Ingredients Division, the strong 2010 EBITDA growth of 93.5% Y-o-Y was due to the higher sales volume and the higher EBITDA yield achieved. All regions contributed to the significantly higher EBITDA yield of US$215/mt, up 80.7%

Branded Consumer Divisions Gross Prot Margin Trend

28.5 1Q09

28.2 2Q09

29.8 3Q09

29.8 4Q09

29.1 FY 2009

30.2 1Q10

30.3 2Q10

31.4 3Q10

32.4 4Q10

31.1 FY2010

Petra Foods Limited Annual Report 2010

Operating and Financial Review

35

Capital expenditure in 2010 totalled US$14.5 million, which is significantly lower compared to the US$41.3 million utilized in the previous year. This apparent lower capital expenditure in 2010 compared to 2009 is due to the completion of the investment programme for the Hamburg Cocoa Ingredients operations, which accounted for a large portion of the 2009 capital expenditure. Balance Sheet As at 31 December 2010, total shareholders equity increased to US$294.1 million, an increase of US$86.4 million. This has also resulted in an improved gearing ratio (Net Debt to Equity) at end 2010 of 1.72x from 2.02x. The reduction in the gearing ratio was due to: 1. The higher net profit of US$44.5 million generated; and 2. The Equity Placement of US$60.2 million. Total assets also grew by US$192.3 million with the increase mainly attributable to: 1. Additional receivables of US$30.9 million in line with higher revenue growth; and 2. Increased inventories of US$136.6 million arising from higher beans inventory carried for the Groups enlarged capacity and cocoa inventories, compounded by the surge in bean prices. The higher working capital was funded through a combination of operating Cash Flow, MTN, trade finance and short term advances. More significantly, if the financing of cocoa inventories is excluded, the adjusted Net Debt to Equity ratio decreases considerably to 0.34x (end-2009: 0.70x).

Outlook Despite the continuing uncertain global environment, we expect the operating environment for our Core Businesses to remain strong. To further capitalize on the growth opportunities, our strategy is to: 1. Further grow our key markets to capitalize on the strong demand for high-end customized products and the strong regional consumption growth; 2. Further stimulate consumer demand by driving growth of our current portfolio of products (especially in the higher margined segment); launching of new products and expanding into new product categories; 3. Invest in additional production and distribution capacity to capture this growth opportunity; 4. Strengthen our global supply chain for Cocoa Ingredients through increased sourcing initiatives in key origin locations to mitigate supply risk, drive cost benefits, and improve the quality of beans; and 5. Form strategic sourcing alliances with partners in origin countries. With the continued momentum of our Core Businesses, the Group is going into 2011 well-positioned to tackle the continuing global uncertainties, including volatile raw material prices, and therefore, barring unforeseen circumstances, we are looking forward to another year of growth.

Cocoa Ingredients Divisions EBITDA/mt of Sales Volume (6-month moving average)

107 1Q09

113 2Q09

121 3Q09

128 4Q09

119 FY 2009

156 1Q10

198 2Q10

223 3Q10

231 4Q10

215 FY2010

Financial Statements

Contents
37 46 50 51 52 53 54 55 Corporate Governance Report Directors Report Statement by Directors Independent Auditors Report Consolidated Income Statement Consolidated Statement of Comprehensive Income Balance Sheets Consolidated Statement of Changes in Equity 56 57 118 129 130 137 138 139 Consolidated Cash Flow Statement Notes to the Financial Statements Appendix (Shareholders Mandate) Annexure Disclosure Under SGX-ST Listing Manual Requirements Shareholding Statistics Substantial Shareholders Interests Notice of Annual General Meeting Proxy Form

Petra Foods Limited Annual Report 2010

Corporate Governance Report

37

Corporate Governance Report

We strongly believe in corporate governance being rmly embedded and integrated within Petra Foods (Petra Foods or Company ) businesses, systems, processes and operations. Our belief is that good and strong corporate governance is effective only with integrity, excellence and commitment from our people. These key values have helped us formulate and uphold our internal controls and governance practices which we feel have helped enhance the Groups development, performance and growth.
All references to Petra Foods or Company refers to the Petra Foods Group or the Group which is inclusive of all its subsidiary companies.

Our annual corporate governance practices review is conducted bearing in mind that our corporate governance standards are grounded in our values, policies, best practices and internal controls, which we acknowledge are elements that will help us create long term value for our shareholders. We welcome the high standards in corporate governance and we are committed to upholding the Code of Corporate Governance 2005 (the Code). The Board meets regularly and are provided with relevant updates and information. The Board comprises a healthy and well balanced mix of entrepreneurs, professionals and commercial expertise. Half of the Board comprises non-executive directors; and three nonexecutive directors are independent directors, with one non-independent director. There is a clear separation of the role of the Chief Executive Ofcer (CEO) and the Chairman; and one of our four executive directors serves as the rst among equals, in his capacity as CEO and Managing Director (MD). In addition, Board meetings are convened when there are urgent commercial matters to be discussed or decided upon. All directors are expected to act in good faith, provide advice and insights and have in mind at all times the interests of Petra Foods and its shareholders. The Board is supported by the Audit Committee, Remuneration Committee, Nominating Committee and the Cocoa Risk Committee. The committees provide independent supervision of Management. Additional committees may be formed as and when business exigencies require. Our corporate governance practices are given below with specic references to the Code. (I) BOARD MATTERS AND CONDUCT OF ITS AFFAIRS Principle 1: Every company should be headed by an effective Board to lead and control the Company. The Board is collectively responsible for the success of the Company. The Board works with Management to achieve this and Management remains accountable to the Board.

Policy and Practice Each director contributes his or her own brand of expertise, competencies, leadership, skills and a diversity of knowledge and experience to the Board. The Board provides executive leadership in Petra Foods. The Board together with each director are obliged to act in good faith and in the best interests of the Company. The key functions of our Board are to focus on three key areas namely: (a) (b) (c) setting the corporate strategy and direction; ensuring effective leadership and management; and supervising the proper conduct of the Groups businesses.

The Board comprises eight directors of whom three are non-executive independent directors, one non-executive non-independent director and four are executive directors. The independent directors are Ms Josephine Price, Mr Michael Dean, and Mr Pedro Mata-Bruckmann, who is also the Chairman of the Company. Mr Davinder Singh is a non-executive non-independent director. Mr Chuang Tiong Choon (John Chuang) is the CEO and MD. Proles of the directors are found on page 14. Notwithstanding that Mr Davinder Singh is deemed a non-executive non-independent director for the nancial year ended 31 December 2010 and nancial year ending 31 December 2011, by virtue of his relationship with the Company in respect of Guideline 2.1 (d) and his position as Managing Director of Drew and Napier LLC and director of DrewCorp Services Pte Ltd, which have collectively rendered professional services to the Company in fees aggregating more than S$200,000 (in 2010), the Board is condent that Mr Davinder Singh is able to exercise strong independent judgment in the best interests of the Company. It follows that the Board is unanimous in its view that he has maintained a high standard of conduct, care and duty and has observed the ethical standards of his profession and is conscious of the need to disclose any conict of interests arising from any other engagements. The strategic policies of the Group and signicant business transactions are reviewed and deliberated by the Board; and the Board also approves the annual budget, reviews the performance of the business and approves the release of the quarterly and full year nancial results at its regular Board meetings. The Board has delegated its authority to the Audit Committee to review and recommend to the Board the release of the quarterly and full year nancial results.

38

Corporate Governance Report

Petra Foods Limited Annual Report 2010

Corporate Governance Report

(I)

BOARD MATTERS AND CONDUCT OF ITS AFFAIRS (CONTINUED) The Board delegates specic responsibilities to committees namely: (a) (b) (c) (d) (e) the Audit Committee, the Nominating Committee; the Remuneration Committee; the Executive Committee; and the Cocoa Risk Committee.

The attendance of the Board and committee members at meetings to discharge their duties during the nancial year is given in the matrix below:Committees Nominating Remuneration A B A B

Board A B A

Audit B

Cocoa Risk A B

Pedro Mata-Bruckmann Chuang Tiong Choon Chuang Tiong Liep Chuang Tiong Kie Michael Dean Davinder Singh Josephine Price Chua Koon Chek

6 6 6 6 6 6 6 6

6 6 6 6 6 5 6 6

4 4 n.a. n.a. 4 4 4 n.a.

4 3* n.a. n.a. 4 3 4 n.a.

1 1 n.a. n.a. 1 1 1 n.a.

1 1 n.a. n.a. 1 1 1 n.a.

2 2 n.a. n.a. 2 2 2 n.a

2 2* n.a. n.a. 2 2 2 n.a.

3 3 n.a. n.a. 3 n.a. n.a. n.a.

3 3 n.a. n.a. 3 n.a. n.a. n.a.

Note: A represents number of meetings held; and B represents number of attendance. * by invitation

In the best interests of the Company and our businesses, we regularly supplement our Board meetings by providing for the attendance of directors at meetings through videoconferencing or teleconferencing, enabling the Board to provide direction, guidance and advice to Management quickly and sometimes at short notice (as and when the need arises). Attendance at meetings via audio visual means is provided for in our Articles of Association. The Boards adaptability and response has often allowed Petra Foods to grapple with business and corporate matters adequately and effectively in an increasingly competitive business environment. All our directors often make themselves available and accessible to Management for discussion and consultation outside the framework of formal Board, committees and Management meetings. The Cocoa Risk Committee which, works closely with Management in effectively managing and grappling with the risks, exposure and dynamics of a highly competitive cocoa ingredients industry; oversees the Groups framework and guidelines to ensure adequacy, care and diligence in complying with the guidelines; and generally advising the Board on cocoa related issues and risks. The attendance matrix illustrates the attendance of our directors in Board meetings and committee work, the contribution of our directors goes beyond attendance at formal Board and committee meetings. The matrix alone is not altogether a fair reection of the true value and substance of their contributions. Directors contribute by providing the Company with guidance, advice and counsel on the strategic direction of the Companys businesses and operations. The Board enjoys relevant information and updates on the Companys policies and procedures relating to governance, disclosure of interests in securities and restrictions on disclosure of price sensitive information.

Petra Foods Limited Annual Report 2010

Corporate Governance Report

39

Corporate Governance Report

(I)

BOARD MATTERS AND CONDUCT OF ITS AFFAIRS (CONTINUED) Board Composition and Balance Principle 2: There should be a strong and independent element on the Board, which is able to exercise objective judgment on corporate affairs independently, in particular, from Management. No individual or small group of individuals should be allowed to dominate the Boards decision making.

Policy and Practice The Board comprises eight directors, three of whom are non-executive independent directors, one non-executive nonindependent director and four executive directors. The combined expertise in business, commerce, nance and law, as well as the diverse experience of the directors, provides for intelligent discussions and lively exchanges of ideas that no doubt have a profound impact on the quality and fabric of the Groups business, corporate strategy and the systems and processes. Over the years, we have forged and reinforced a strong professional relationship between the Board and Management. All these elements add to the richness of the Companys efciency, commercial prowess and effectiveness. The Board is supported by key committees to provide proper oversight of the Board itself and Management. The Audit Committee, the Nominating Committee and Cocoa Risk Committee, are each chaired by independent directors and the Remuneration Committee is chaired by a non-executive non-independent director. Committees or sub-committees may be formed from time to time to address specic areas as and when the need arises. Membership of the committees is thought through, considered carefully and managed to ensure that responsibility amongst the directors is equitably distributed, to elicit the best possible involvement, participation and contributions from the directors to enhance the Boards effectiveness. Chairman and Chief Executive Ofcer Principle 3: There should be a clear division of responsibilities at the top of the Company; the working of the Board and the executive responsibility of the Companys business; which will ensure a balance of power and authority, such that no one individual represents a considerable concentration of power.

Policy and Practice The Chairman acts independently in the best interests of the Company and its shareholders. The Chairman helps ensure that there is harmony within the Board, and he also ensures that the Board gels with Management to engage in fruitful discussions on strategic, business and planning issues key to the Groups success. There is a clear separation of power between the Chairman and the CEO. Mr Pedro Mata-Bruckmann, an independent director, has been our Chairman since 6 July 2001, and he is responsible for the Board. Mr John Chuang is our CEO and MD. The CEO together with the Chairman schedules regular Board and committees meetings as and when required and he formulates the agenda. He is responsible for the Groups businesses with full executive responsibilities over the business and operational decisions in the Company. The CEO oversees the compliance with the corporate governance guidelines. He makes sure that the information shared is adequate and is of the requisite quality and standing for the Board to discharge its duties and responsibilities effectively. He also oversees the timely ow of information to the Board, and ensures that the information is adequate and is of the requisite quality and standard for the Board to discharge its duties and responsibilities effectively.

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Petra Foods Limited Annual Report 2010

Corporate Governance Report

(I)

BOARD MATTERS AND CONDUCT OF ITS AFFAIRS (CONTINUED) Board Membership Principle 4: There should be a formal and transparent process for the appointment of new directors to the Board.

Policy and Practice Nominations and appointments of directors are within the rights of the shareholders. Every director in the Company will be due for re-election at least once every three years. The Companys Articles of Association requires one-third of the directors to retire and submit themselves for re-election by the shareholders at every annual general meeting (AGM). Board renewal ensures the benet of good corporate governance and the relevance, adaptability and effectiveness of the Board amidst a challenging business environment and changing business needs. The Nominating Committee (NC) oversees the nomination of our directors for election or re-election. The NC ensures that the Board and its committees comprise individuals who are best able to discharge their duties and responsibilities as directors with regard to the highest standards of corporate governance. As and when necessary, the NC extends this role to include reviewing candidates for key appointment within the Company. Board Performance Principle 5: There should be a formal assessment of the effectiveness of the Board as a whole and the contribution by each director to the effectiveness of the Board.

Policy and Practice The Chairperson of the NC is Ms Josephine Price. The NC comprising Mr John Chuang, Mr Pedro Mata-Bruckmann, Mr Davinder Singh, Ms Josephine Price and Mr Michael Dean, was established on 13 July 2004. The NC applies objective performance criteria, for the purpose of assessing the performance and contributions of individual directors and the Board, which was accepted and endorsed by the Board as a means of self assessment and evaluation. The directors were aware that they are duty bound to act in good faith, with care and due diligence in the best interests of the Company and its shareholders. The nancial indicators set out in the Code to serve as a guide for the evaluation of the Board appears to be fashioned for assessing the contributions of Management, and may be less suitable for assessing directors and the Board. We feel that nancial indicators are a snapshot only of the Companys past performance and are not indicative of the long term growth or value creation of the Company. Having said that, the performance of our executive directors are benchmarked against protability, income of the Group as well as other factors such as strategy development and succession. Under the mentorship of our Chairman and the guidance of the NC, the Board conducted a self assessment both individually as well as collectively at the beginning of and the end of nancial year 2010, applying the following criteria:1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Contribution towards development of company strategy Constructive discussion/interaction amongst directors Boards response to urgent matters/issues Protability Return on Investments/Sales Attendance at Board meetings No. of meetings held in a year Understanding the macro-environment (countries & sector) Understanding & monitoring risks Compliance & governance Board/Management succession planning Communication between Directors and Management

Petra Foods Limited Annual Report 2010

Corporate Governance Report

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Corporate Governance Report

(I)

BOARD MATTERS AND CONDUCT OF ITS AFFAIRS (CONTINUED) The NC has ensured that each director brings unique contributions to the Board by way of a fresh or independent perspective to facilitate well thought through and balanced decisions in the best interests of the Company. The NC reviewed the Boards composition as a whole with a view to ensuring that there is a blend of talent, expertise, knowledge and experience in commercial, nancial and management skills much needed for the successful running of the Companys businesses. Each member of the NC shall abstain from voting on any resolutions in respect of the assessment of his/her performance or renomination as a director. Access to Information Principle 6: In order to full their responsibilities, Board members should be provided with complete, adequate and timely information prior to Board meetings and on an on-going basis.

Policy and Practice The Board is consistently made aware that they have full and free access to Management, the Company Secretaries and any information the Board requires. If required, the Board has access to independent advice to help them full their responsibilities and duties. Management attends to directors individually and accord them individual attention upon their request, to make sure that all their questions are answered and that pertinent issues are grappled with sufciently. Management constantly keeps in touch with the Board of directors to ensure that they are provided with timely, accurate and comprehensive data and information on matters which requires the Boards decision, on matters of importance which the Board should have knowledge of and reports that relate to the nancial and operational performance of the Company. We do this as and when necessary or upon the request of our directors. If a Board meeting is not possible, the Company communicates with the Board through electronic means, which includes electronic mail, teleconferencing and video conferencing. The Chairman and directors of the Audit Committee make it a point to meet the external auditors at least once a year without the presence of the CEO and other members of the Management team, with the intent of upholding our policy of a free and unfettered ow of information within the Group, for the benet of our directors.

42

Corporate Governance Report

Petra Foods Limited Annual Report 2010

Corporate Governance Report

(II)

REMUNERATION MATTERS Principle 7: There should be a formal and transparent procedure for developing policy on executive remuneration and for xing the remuneration packages of individual directors. No director should be involved in deciding his own remuneration. The level of remuneration should be appropriate to attract, retain and motivate the directors needed to run the company successfully but companies should avoid paying more than is necessary for this purpose. A signicant proportion of the executive directors remuneration should be structured so as to link rewards to corporate and individual performance.

Principle 8:

Policy and Practice The Remuneration Committee (RC) comprises three independent non-executive directors and one non-executive nonindependent director. The RC is chaired by Mr Davinder Singh, and comprises Mr Pedro Mata-Bruckmann, Ms Josephine Price and Mr Michael Dean. The RC has access to expert professional advice on human resource matters and it takes into consideration industry practices and norms in determining compensation. The RC is keen to see that talent should be nurtured and groomed, and it takes the lead in upholding the remuneration policies of the Company which seeks to ensure that the Board and Management tap the leadership, drive and expertise needed to sustain the Companys success and global businesses. The CEO, Mr John Chuang works closely with the RC and attends the RC meetings as an advisor as this enables Mr Chuang to contribute to the RC in respect of human resource policies, compensation and staff issues for members of the senior management team and key staff, and major compensation or incentive policies such as staff salaries framework, share option schemes, framework for bonus and other incentive schemes. The RC also reviews the remuneration of each of the directors, executive ofcers and other employees and makes recommendations to the Board for approval. Each member of the RC abstains from voting on any resolutions in respect of his/her remuneration package or fees. The RC sets short and long-term incentive compensation for our executive ofcers and key employees. Disclosure on Remuneration Principle 9: Each company should provide clear disclosure of its remuneration policy, level and mix of remuneration, and the procedure for setting remuneration in the Companys annual report. It should provide disclosure in relation to its remuneration policies to enable investors to understand the link between remuneration paid to directors and key executives, and performance.

Policy and Practice The executive directors do not receive any directors fees, and the directors fees are set in accordance with a framework of basic fees. A breakdown (in percentage terms) showing the level and mix of each key executive and directors remuneration paid and payable for this nancial year as recommended in the Code is set out in the directors report and audited Financial Statements at page 131 to 132.

Petra Foods Limited Annual Report 2010

Corporate Governance Report

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Corporate Governance Report

(III) ACCOUNTABILITY AND AUDIT Principle 10: The Board should present a balanced and understandable assessment of the Companys performance, position and prospects.

Policy and Practice We intend to build on the good relationship we have nurtured over the years with our shareholders, and we will keep them informed updated with balanced, informative and understandable assessments of the Companys results. This is overseen by the Investor Relations and Corporate Communications, headed by the Group Chief Financial Ofcer. Investor Relations communicates with investors on a regular basis and attend to their queries. All shareholders of the Company receive the annual report and a notice of AGM; and the notice is advertised in the newspapers. Brieng sessions and meetings with the investment community are held quarterly either at the same time when the Companys nancial results are announced to the Singapore Exchange Securities Trading Limited (SGX-ST) or just after such announcements. These meetings and brieng sessions allow us to shed light on how the Companys business initiatives are translated, implemented and turned into results. Audit Committee Principle 11: The Board should establish an Audit Committee with written terms of reference which clearly set out its authority and duties.

Policy and Practice The members of the Audit Committee (AC) are Mr Michael Dean (Chairman), Mr Pedro Mata-Bruckmann, Mr Davinder Singh and Ms Josephine Price. The AC was formed on 6 July 2001 under a written charter, and it comprises three independent directors and one non-executive non-independent director who possess a wealth of corporate, nancial, investment, legal and commercial expertise to discharge their duties and responsibilities effectively. The ACs functions are as follows: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) review and evaluate nancial and operating results and accounting policies; review the audit plan of external auditors, their evaluation of the system of internal accounting controls and their audit report; review the Groups nancial results and the announcements before submission to the Board for approval; review the assistance given by the Management to external auditors; consider the appointment/re-appointment of external auditors; review interested person transactions; review and direct the audit plan of the internal auditors; recommend the appointment of an independent nancial advisor where necessary, in respect of any transaction, matter or other corporate action taken by the Group; meet annually with the external and internal auditors without the presence of Management; and review matters raised by staff about possible concerns of improprieties in matters of nancial reporting or other matters.

The AC Charter sets out its functions and responsibilities in greater detail.

44

Corporate Governance Report

Petra Foods Limited Annual Report 2010

Corporate Governance Report

(III) ACCOUNTABILITY AND AUDIT (CONTINUED) The AC meets regularly and holds informal discussions and meetings with Management from time to time or when the need arises, in order to discharge its responsibilities. The AC has full discretion to invite any director or executive ofcer to attend its meetings. Access to and co-operation of the Companys Management has been accorded to the AC who have been given the resources required to discharge its functions properly. In addition, the external auditors have unrestricted access to the AC; and the AC members meet at least once each year on their own to discuss matters concerning the Company without Management being present. The Company observes vigilance, transparency and checks & balances in upholding corporate governance principles. KPMG LLP (KPMG) helps us drive these principles by fullling the Internal Audit role and function. (Please also see Principle 13 below). In keeping with this mindset and approach, the AC meets and interfaces with both the internal and external auditors without the presence of Management to discuss the results of their audit and ndings. The AC is pleased to recommend the re-appointment of the external auditors PricewaterhouseCoopers LLP, after having reviewed the volume of non-audit services to the Group by the external auditors, and being satised that the nature and extent of such services will not prejudice the professionalism, independence and objectivity of the external auditors. Internal Controls and Internal Audit Principle 12: The Board should ensure that the Management maintains a sound system of internal controls to safeguard the shareholders investments and the companys assets. The Company should establish an internal audit function that is independent of the activities it audits.

Principle 13:

Policy and Practice KPMG works closely with the Company in managing the internal audit framework which safeguards the Companys rights and interests in the internal audit function. The framework is closely monitored by our Internal Auditors who report directly to the Chairman of the AC on audit matters, and to the Group Chief Financial Ofcer on administrative matters. The AC also reviews the internal audit programme, the scope and ndings of internal audit procedures, and ensures that internal audits are adequately resourced and has appropriate standing within the Group. Ultimate responsibility for overseeing the overall internal control framework needed to safeguard the shareholders investments and the assets of the Company rests on the shoulders of the Board. The Board reviews the effectiveness of all internal controls, including operational controls regularly. It is noted however that no cost effective internal control system will preclude all errors and irregularities because the system is designed to manage rather than to totally eliminate the risk of failure to achieve business objectives, and can provide only reasonable and not absolute safeguards against material damage, loss or misstatement.

Petra Foods Limited Annual Report 2010

Corporate Governance Report

45

Corporate Governance Report

(IV) COMMUNICATION WITH SHAREHOLDERS Principle 14: The Company should engage in regular, effective and fair communication with shareholders.

Policy and Practice The Company conveys our nancial performance, position and prospects on a quarterly basis via announcements to the SGX-ST and the Companys website. We hold brieng sessions with the investment community when nancial results are announced. Our view is that we prefer regular communication with our shareholders as this enhances transparency and openness. This practice is in tandem with our long term strategy of growing and consolidating our businesses globally. In accordance with applicable regulations, all nancial results comprising nancial performance, position and prospects as well as price sensitive information are released through various media including press releases, SGXNET and/or the Companys website at http://www.petrafoods.com. The Companys Investor Relations Team meets with key investors regularly and answers queries from shareholders; and the Team also holds brieng sessions with the investment community when nancial results are announced. The Company prohibits selected employees from trading in its securities for a period commencing 1 month before the announcement of full year nancial results and two weeks from the release of quarterly nancial results. The Company has clear policies and guidelines for dealings in securities of the Company by directors and ofcers, which are in conformity with the rules relating to dealings in securities in Rule 1207(18) of the Listing Manual. Greater Shareholder Participation Principle 15: Companies should encourage greater shareholder participation at AGMs, and allow shareholders the opportunity to communicate their views on various matters affecting the Company.

Policy and Practice Our directors attended our annual general meeting held last year on the 28 April 2010. All of our directors will endeavour to attend the annual general meeting, and shareholders will be given the chance to share their thoughts and ideas or ask questions relating to the resolutions to be passed or on other corporate and business issues. The Chairman of the AC, the RC and the Chairperson of the NC, as well as the external auditors will be present and on hand to address all issues raised and questions at these meetings. We are in favour of encouraging greater shareholder participation.

46

Directors Report

Petra Foods Limited Annual Report 2010

Directors Report
for the nancial year ended 31 December 2010

The directors present their report to the members together with the audited nancial statements of the Group for the nancial year ended 31 December 2010 and the balance sheet of the Company as at 31 December 2010. DIRECTORS The directors of the Company in ofce at the date of this report are as follows: Pedro Mata-Bruckmann (Chairman) Chuang Tiong Choon Chuang Tiong Liep Chuang Tiong Kie Chua Koon Chek Anthony Michael Dean Davinder Singh Josephine Price ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES AND DEBENTURES Neither at the end of nor at any time during the nancial year was the Company a party to any arrangement whose object was to enable the directors of the Company to acquire benets by means of the acquisition of shares in, or debentures of, the Company or any other body corporate, other than as disclosed in this report. DIRECTORS INTERESTS IN SHARES OR DEBENTURES (a) According to the register of directors shareholdings, none of the directors holding ofce at the end of the nancial year had any interest in the shares or debentures of the Company or related corporations, except as follows:
Holdings registered in the name of a director or nominee At 31.12.2010 At 1.1.2010 Holdings in which a director is deemed to have an interest At 31.12.2010 At 1.1.2010

The Company (Ordinary shares) Pedro Mata-Bruckmann Chuang Tiong Choon Chuang Tiong Liep Chuang Tiong Kie Chua Koon Chek Anthony Michael Dean Davinder Singh Josephine Price

277,000 50,000 110,000 700,000 50,000 100,000 319,000

277,000 50,000 110,000 700,000 50,000 100,000 319,000

311,799,000 308,741,000

311,799,000 308,741,000

Petra Foods Limited Annual Report 2010

Directors Report

47

Directors Report
for the nancial year ended 31 December 2010

DIRECTORS INTERESTS IN SHARES OR DEBENTURES (CONTINUED)


Holdings registered in the name of a director or nominee At 31.12.2010 At 1.1.2010 Holdings in which a director is deemed to have an interest At 31.12.2010 At 1.1.2010

Siam Cocoa Products Co. Ltd (Ordinary shares of Baht 100 each) Chuang Tiong Choon Cocoa Specialities, Inc. (Ordinary shares of Pesos 100 each) Chuang Tiong Choon DCMX Cocoa, S.A. de C.V. (Ordinary shares of Peso 1 each) Chuang Tiong Choon Del Foods, Inc. (Ordinary shares of Peso 1 each) Chuang Tiong Choon Del Marketing, Inc. (Ordinary shares of Pesos 100 each) Chuang Tiong Choon Chuang Tiong Liep Fremont Investment Limited^ (Ordinary shares of US$1 each) Chuang Tiong Choon Chuang Tiong Liep Chuang Tiong Kie Springbright Investments Limited^ (Ordinary shares of US$1 each) Chuang Tiong Choon Chuang Tiong Liep Chuang Tiong Kie Berlian Enterprises Limited (Ordinary shares of US$1 each) Chuang Tiong Choon Chuang Tiong Liep Chuang Tiong Kie Aerodrome International Limited* (Ordinary shares of US$1 each) Chuang Tiong Choon
^

1 1

1 1

NA NA NA

19

NA NA NA

51 30

51 30 19

NA NA NA

19

19

51 30

51 30

100

On 19 March 2010, Fremont Investment Limited (Fremont) transferred all its shares in the Company to Springbright Investments Limited and Fremont ceased to be a related corporation of the Company. Aerodrome International Limited (AIL) is currently held by Johnsonville Assets Limited (JAL) (70%) and Johnsonville Holdings Limited (JHL) (30%). Credit Suisse Trust Limited (CST) is a Singapore registered public trust company. CSTs deemed interest arises from its 100% shareholding in AIL as the trustee of JAL and JHL. Mdm Lim Mee Len (wife of Mr Chuang Tiong Choon) is the beneciary of JAL. Mdm Lim Mee Len and Mr Chuang Tiong Choon are beneciaries of JHL.

48

Directors Report

Petra Foods Limited Annual Report 2010

Directors Report
for the nancial year ended 31 December 2010

DIRECTORS INTERESTS IN SHARES OR DEBENTURES (CONTINUED) (b) Chuang Tiong Choon and Chuang Tiong Liep who by virtue of their interest of not less than 20% of the issued capital of the Company, are deemed to have interests in the whole of the share capital of the Companys wholly-owned subsidiaries. The directors interests in the shares of the Company as at 21 January 2011 were the same as those as at 31 December 2010 for all the directors.

(c)

DIRECTORS CONTRACTUAL BENEFITS Since the end of the previous nancial year, no director has received or become entitled to receive a benet by reason of a contract made by the Company or a related corporation with the director or with a rm of which he is a member or with a company in which he has a substantial nancial interest, except as disclosed in the accompanying nancial statements and in this report. SHARE OPTIONS Share-based incentive schemes The Petra Foods Employees Share Option Scheme and the Petra Foods Share Incentive Plan (collectively, the Schemes) were approved by the shareholders at an Extraordinary General Meeting of the Company held on 22 September 2005. The Schemes are administered by the Remuneration Committee of the Board comprising the following directors: Davinder Singh (Chairman) Pedro Mata-Bruckmann Josephine Price Anthony Michael Dean The Schemes will provide an opportunity for executive directors, non-executive directors, and employees of the Company, its subsidiaries and associated companies (the Group Employees) who have contributed signicantly to the growth and performance of the Group to participate in the equity of the Company. The Schemes, which form an integral and important component of a compensation plan, are designed to reward and retain Group employees whose services are vital to the Groups well-being and success. Participants To participate in the Schemes, Group employees must attain the age of 21 years on or prior to the relevant offer date and, must have been in the employment of the Group for a period of at least twelve months, or such shorter period as the Remuneration Committee may determine. Exercise price The options that are granted under the Share Option Scheme, have an exercise price, which at the Remuneration Committees discretion, is either set at a price (the Market Price) equal to the average of the last dealt prices for the Companys shares published on the SGX-ST daily ofcial list for the ve consecutive market days immediately preceding the date of grant of the relevant option or at a discount to the Market Price (subject to a maximum discount of 20%). Exercise period Options granted under the Share Option Scheme which are xed at the Market Price may be exercisable after the rst anniversary of the date of grant of such options while options exercisable at a discount to the Market Price may be exercised after the second anniversary from the date of grant of the options. Options granted under the Share Option Scheme to Group Employees (other than non-executive directors and/or employees of associated companies) will have a life span of ten years from the date of grant and options granted to non-executive directors and/or employees of associated companies will have a life span of ve years from the date of grant. Grant of options Options may be granted at any time during the period when the Share Option Scheme is in force, except that no options shall be granted during the period of 30 days immediately preceding the date of announcement of the Company's interim or nal results. In the event that an announcement on any matter of an exceptional nature involving unpublished price sensitive information is imminent, offers may only be made after the second market day from the date on which the aforesaid announcement is made.

Petra Foods Limited Annual Report 2010

Directors Report

49

Directors Report
for the nancial year ended 31 December 2010

SHARE OPTIONS (CONTINUED) Awards under the Share Incentive Plan The Remuneration Committee shall at its discretion at any time during the period when the plan is in force grant an Award to any participant. An Award represents the right of a participant to receive fully paid ordinary shares of the Company, their equivalent cash value or combinations thereof, free-of-charge. The Remuneration Committee shall at its discretion decide at the point of an Award of shares, the grant date, the vesting period, the number of ordinary shares to be awarded and the retention period. New ordinary shares allotted and issued on the release of an Award shall rank pari passu in all respects with the previously issued shares. There were no options granted during the nancial year to subscribe for unissued shares of the Company or any subsidiary. There was no Award under the Share Incentive Plan granted during the nancial year. AUDIT COMMITTEE All members of the Audit Committee were non-executive directors. The members of the Audit Committee at the end of the nancial year were: Anthony Michael Dean (Chairman) Josephine Price Pedro Mata-Bruckmann Davinder Singh The Audit Committee performs its functions in accordance with section 201B of the Singapore Companies Act, Cap 50, the SGX-ST Listing Manual, and the Code of Corporate Governance 2005. The Audit Committee has reviewed the overall scope of both internal and external audits and the assistance given by the Companys ofcers to the auditors. It has met the Companys internal and independent auditors to discuss the results of their respective examinations and their evaluation of the Companys system of internal accounting controls. The Audit Committee has also reviewed the balance sheet of the Company and the consolidated nancial statements of the Group for the nancial year ended 31 December 2010 as well as the independent auditors report thereon prior to their submission to the Board of Directors for approval. The Company renewed its Shareholders Mandate for it to enter into certain categories of transactions with specied classes of the Companys Interested Persons. The Audit Committee has also reviewed the interested person transactions of the Group during the nancial year in accordance with established procedures. The Audit Committee has nominated PricewaterhouseCoopers LLP for re-appointment as independent auditor of the Company at the forthcoming Annual General Meeting. The Audit Committee has conducted an annual review of non-audit services to satisfy itself that the nature and extent of such services will not prejudice the independence and objectivity of the independent auditor. INDEPENDENT AUDITOR The independent auditor, PricewaterhouseCoopers LLP, has expressed its willingness to accept re-appointment. On behalf of the directors

Chuang Tiong Choon Director 24 March 2011

Chuang Tiong Kie Director

50

Statement by Directors

Petra Foods Limited Annual Report 2010

Statement by Directors

In the opinion of the directors, (a) the balance sheet of the Company and the consolidated nancial statements of the Group as set out on pages 52 to 117 are drawn up so as to give a true and fair view of the state of affairs of the Company and of the Group as at 31 December 2010 and of the results of the business, changes in equity and cash ows of the Group for the nancial year then ended; and at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.

(b)

On behalf of the directors

Chuang Tiong Choon Director 24 March 2011

Chuang Tiong Kie Director

Petra Foods Limited Annual Report 2010

Independent Auditors Report

51

Independent Auditors Report


to the members of Petra Foods Limited

REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying nancial statements of Petra Foods Limited (the Company) and its subsidiaries (the Group) set out on pages 52 to 117, which comprise the consolidated balance sheet of the Group and the balance sheet of the Company as at 31 December 2010, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash ows of the Group for the nancial year then ended, and a summary of signicant accounting policies and other explanatory information. MANAGEMENTS RESPONSIBILITY FOR THE FINANCIAL STATEMENTS Management is responsible for the preparation of nancial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act (the Act) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufcient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition that transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair prot and loss accounts and balance sheets and to maintain accountability of assets. AUDITORS RESPONSIBILITY Our responsibility is to express an opinion on these nancial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the nancial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the nancial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entitys preparation of nancial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the nancial statements. We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our audit opinion. OPINION In our opinion, the consolidated nancial statements of the Group and the balance sheet of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2010, and the results, changes in equity and cash ows of the Group for the nancial year ended on that date; and REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors, have been properly kept in accordance with the provisions of the Act.

PricewaterhouseCoopers LLP Public Accountants and Certied Public Accountants Singapore, 24 March 2011

52

Consolidated Income Statement

Petra Foods Limited Annual Report 2010

Consolidated Income Statement


for the nancial year ended 31 December 2010

The Group Notes 2010 US$000 2009 US$000

Revenue Cost of sales Gross prot Other operating income Selling and distribution costs Administrative expenses Finance costs Other operating expenses Share of results of associated companies Prot before income tax Income tax expense Total prot Prot attributable to: Equity holders of the Company Non-controlling interest

4 5

1,566,020 (1,366,417) 199,603 5,670 (84,516) (35,288) (25,891) (1,415) 58,163 298 58,461 (13,988) 44,473

1,244,469 (1,102,284) 142,185 4,690 (67,448) (32,996) (18,171) (1,263) 26,997 322 27,319 (7,582) 19,737

19 9

44,473 44,473

24,625 (4,888) 19,737

Earnings per ordinary share 1 (expressed in US cents per share) Basic and Diluted
1

11

7.73

4.63

Diluted earnings per share for nancial years 2010 and 2009 are the same as basic earnings per share as there were no potentially dilutive ordinary shares.

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

Petra Foods Limited Annual Report 2010

Consolidated Statement of Comprehensive Income

53

Consolidated Statement of Comprehensive Income


for the nancial year ended 31 December 2010

The Group 2010 US$000 2009 US$000

Prot for the year Other comprehensive income: Cash ow hedges: Fair value gains Transfer to income statement Tax on fair value adjustments

44,473

19,737

15,412 (21,776) 553 (5,811) 1,117 (4,694) 39,779

10,981 (15,757) 2,430 (2,346) 10,369 8,023 27,760

Currency translation differences Other comprehensive (expense)/income, net of tax Total comprehensive income for the year Total comprehensive income attributable to: Equity holders of the Company Non-controlling interest

39,779 39,779

35,069 (7,309) 27,760

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

54

Balance Sheets

Petra Foods Limited Annual Report 2010

Balance Sheets
as at 31 December 2010

The Group Notes 2010 US$000 2009 US$000

The Company 2010 US$000 2009 US$000

ASSETS Current assets Cash and cash equivalents Derivative assets Trade receivables Inventories Tax recoverable Other current assets Receivables from subsidiaries

12 15 13 14 9 17 20

42,782 11,451 164,964 491,362 9,205 33,518 753,282

18,338 4,509 134,022 354,796 5,323 32,009 548,997

27,375 11,451 251,304 9,397 12,968 312,495

6,759 4,087 183,034 7,066 17,806 10,000 228,752

Non-current assets Investments in subsidiaries Investments in associated companies and joint venture Receivables from subsidiaries Loan to associated company Property, plant and equipment Intangible assets Deferred income tax assets Other non-current assets Total assets LIABILITIES Current liabilities Trade payables Other payables Current income tax liabilities Derivative liabilities Borrowings

18 19 20 21 22 23 9 25

3,065 2,531 255,604 21,105 17,464 798 300,567 1,053,849

2,363 2,411 270,049 22,032 14,805 888 312,548 861,545

124,092 3,265 74,956 1,175 1,784 21 205,293 517,788

103,114 3,000 54,519 1,134 1,784 163,551 392,303

26 27 9 15 28

122,317 55,960 5,149 10,975 441,524 635,925

115,028 38,326 4,815 5,607 295,931 459,707

51,713 11,920 7,000 161,585 232,218

34,246 10,545 2,116 5,257 85,430 137,594

Non-current liabilities Borrowings Deferred income tax liabilities Provisions for other liabilities and charges Total liabilities NET ASSETS EQUITY Capital and reserves attributable to the equity holders of the Company Share capital Foreign currency translation reserve Other reserves Retained earnings Non-controlling interest TOTAL EQUITY

28 9 30

107,591 5,917 10,314 123,822 759,747 294,102

166,376 7,046 8,347 181,769 641,476 220,069

70,073 330 70,403 302,621 215,167

101,102 1,051 102,153 239,747 152,556

31 32 33

155,951 (1,962) (1,115) 141,228 294,102 294,102

95,767 (3,079) 5,270 109,735 207,693 12,376 220,069

155,951 (227) 59,443 215,167 215,167

95,767 4,903 51,886 152,556 152,556

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

Petra Foods Limited Annual Report 2010

Consolidated Statement of Changes in Equity

55

Consolidated Statement of Changes in Equity


for the nancial year ended 31 December 2010

Share capital US$000

Attributable to equity holders of the Company Foreign currency Cash ow translation hedge General Retained reserve reserve reserve earnings US$000 US$000 US$000 US$000

Total US$000

Noncontrolling interest US$000

Total equity US$000

The Group Balance at 1 January 2010 Total comprehensive income for the year Issue of shares Share issue expenses Acquisition of additional interest in a subsidiary Transfer to general reserve Final dividend relating to 2009 paid Interim dividend relating to 2010 paid Balance at 31 December 2010 Balance at 1 January 2009 Total comprehensive income for the year Transfer to general reserve Final dividend relating to 2008 paid Interim dividend relating to 2009 paid Balance at 31 December 2009

95,767 61,143 (959) 155,951

(3,079) 1,117 (1,962)

3,651 (5,811) (378) (2,538)

1,619 (433) 237 1,423

109,735 44,473 (237) (5,429) (7,314) 141,228

207,693 39,779 61,143 (959) (811) (5,429) (7,314) 294,102

12,376 (12,376)

220,069 39,779 61,143 (959) (13,187) (5,429) (7,314) 294,102

95,767 95,767

(13,089) 10,010 (3,079)

3,217 434 3,651

1,538 81 1,619

96,129 24,625 (81) (5,429) (5,509) 109,735

183,562 35,069 (5,429) (5,509) 207,693

19,685 (7,309) 12,376

203,247 27,760 (5,429) (5,509) 220,069

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

56

Consolidated Cash Flow Statement

Petra Foods Limited Annual Report 2010

Consolidated Cash Flow Statement


for the nancial year ended 31 December 2010

Notes

2010 US$000

2009 US$000

Cash ows from operating activities Prot before tax Adjustments: Depreciation and amortisation Property, plant and equipment written off (Gain)/loss on disposal of property, plant and equipment Interest income Interest expense Fair value of derivatives Net foreign exchange (gain)/loss Share of prots from associated companies Operating cash ow before working capital changes Change in working capital: Inventories Trade and other receivables Trade and other payables Cash used in operations Interest received Income tax paid Net cash used in operating activities Cash ows from investing activities Purchases of property, plant and equipment Acquisition of remaining interest in a subsidiary Investment in joint venture Payments for patents and trademarks Proceeds from disposal of property, plant and equipment Net cash used in investing activities Cash ows from nancing activities Proceeds from issuance of shares - net Proceeds from term loans Proceeds from trade nance and short term advances Proceeds from issuance of Medium Term Notes Repayment of term loans Repayment of lease liabilities Interest paid Dividends paid to equity holders of the Company Net cash provided by nancing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents Beginning of nancial year Effects of currency translation on cash and cash equivalents End of nancial year

58,461
22, 23(b) & 23(c)

27,319 21,545 15 135 (182) 18,112 (3,834) 59 (322) 62,847

4 7 7 19

23,668 565 (622) (249) 26,197 4,701 (306) (298) 112,117

(136,566) (40,268) 28,914 (35,803) 249 (21,615) (57,169)

(134,409) (48,676) 72,118 (48,120) 182 (16,908) (64,846)

9(b)

18 19

(13,499) (13,187) (265) (53) 748 (26,256)

(39,574) (74) 319 (39,329)

34

60,184 938 104,410 7,179 (31,261) (1,102) (26,197) (12,743) 101,408 17,983

29,264 101,109 15,972 (25,904) (1,335) (18,955) (10,938) 89,213 (14,962)

12 12

(28,046) 5,430 (4,633)

(14,301) 1,217 (28,046)

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

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements

57

Notes to the Financial Statements


for the nancial year ended 31 December 2010

These notes form an integral part of and should be read in conjunction with the accompanying nancial statements. 1. GENERAL Petra Foods Limited (the Company) is incorporated and domiciled in Singapore and is publicly traded on the Singapore Exchange Securities Trading Limited. The address of its registered ofce is 111 Somerset Road, #16-01 TripleOne Somerset, Singapore 238164. The principal activities of the Company consist of manufacturing and marketing of cocoa ingredients and consumer chocolate confectionery products and investment holding. The principal activities of each of the subsidiaries are set out in Note 18. 2. SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation These nancial statements have been prepared in accordance with Singapore Financial Reporting Standards (FRS). The nancial statements have been prepared under the historical cost convention, except as disclosed in the accounting policies below. The preparation of nancial statements in conformity with FRS requires management to exercise its judgement in the process of applying the Groups accounting policies. It also requires the use of critical accounting estimates and assumptions. Although these estimates are based on managements best knowledge of current events and actions, actual results may ultimately differ from those estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are signicant to the nancial statements, are disclosed in Note 3. Interpretations and amendments to published standards effective in 2010 On 1 January 2010, the Group adopted the new or amended FRS and Interpretations to FRS (INT FRS) that are mandatory for application from that date. Changes to the Groups accounting policies have been made, as required, in accordance with the transitional provisions in the respective FRS and INT FRS. The adoption of these new or amended FRS and INT FRS did not result in substantial changes to the Groups and Companys accounting policies and had no material effect on the amounts reported for the current or prior nancial years except as disclosed below: FRS 103 (revised) Business Combinations (Effective for annual periods beginning on or after 1 July 2009) Please refer to Note 2.2(a)(ii) for the revised accounting policy on business combinations. As the changes have been implemented prospectively, no adjustments were necessary to any of the amounts previously recognised in the nancial statements. FRS 27 (revised) Consolidated and Separate Financial Statements (Effective for annual periods beginning on or after 1 July 2009) The revisions to FRS 27 principally change the accounting for transactions with non-controlling interests. Please refer to Note 2.2(a)(iii) for the revised accounting policy on changes in ownership interest that results in a lost of control and Note 2.2(b) for that on changes in ownership interests that do not result in lost of control, which the Group has applied for the acquisition of the remaining 32% of the issued share capital of Petra Europe Holdings Pte Ltd on 29 January 2010 (Note 18). As the changes have been implemented prospectively, no adjustments were necessary to any of the amounts previously recognised in the nancial statements.

58

Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

2.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.2 Group accounting (a) Subsidiaries (i) Consolidation Subsidiaries are entities over which the Group has power to govern the nancial and operating policies so as to obtain benets from its activities, generally accompanied by a shareholding giving rise to a majority of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date on which control ceases. In preparing the consolidated nancial statements, transactions, balances and unrealised gains on transactions between group entities are eliminated. Unrealised losses are also eliminated but are considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Non-controlling interests are that part of the net results of operations and of net assets of a subsidiary attributable to the interests which are not owned directly or indirectly by the equity holders of the Company. They are shown separately in the consolidated statement of comprehensive income, statement of changes in equity and balance sheet. Total comprehensive income is attributed to the non-controlling interests based on their respective interests in a subsidiary, even if this results in the non-controlling interests having a decit balance. (ii) Acquisition of businesses The acquisition method of accounting is used to account for business combinations by the Group. The consideration transferred for the acquisition of a subsidiary comprises the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred. Identiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree at the date of acquisition either at fair value or at the non-controlling interests proportionate share of the acquirees net identiable assets. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisitiondate fair value of any previous equity interest in the acquiree over the fair value of the net identiable assets acquired is recorded as goodwill. Please refer to the paragraph Intangible assets - Goodwill for the subsequent accounting policy on goodwill. (iii) Disposals of subsidiaries or businesses When a change in the Companys ownership interest in a subsidiary results in a loss of control over the subsidiary, the assets and liabilities of the subsidiary including any goodwill are derecognised. Amounts recognised in other comprehensive income in respect of that entity are also reclassied to prot or loss or transferred directly to retained earnings if required by a specic Standard. Any retained interest in the entity is remeasured at fair value. The difference between the carrying amount of the retained investment at the date when control is lost and its fair value is recognised in prot or loss. Please refer to Note 2.10 for the Companys accounting policy on investments in subsidiaries.

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements

59

Notes to the Financial Statements


for the nancial year ended 31 December 2010

2.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.2 Group accounting (continued) (b) Transactions with non-controlling interests Changes in the Companys ownership interest in a subsidiary that do not result in a loss of control over the subsidiary are accounted for as transactions with equity owners of the Group. Any difference between the change in the carrying amounts of the non-controlling interests and the fair value of the consideration paid or received is recognised in a separate reserve within equity attributable to the equity holders of the Company. (c) Associated companies Associated companies are entities over which the Group has signicant inuence, but not control, generally accompanying a shareholding giving rise to between and including 20% and 50% of the voting rights. Investments in associated companies are accounted for in the consolidated nancial statements using the equity method of accounting less impairment losses, if any. Investments in associated companies are initially recognised at cost. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Goodwill on associated companies represents the excess of the cost of acquisition of the associate over the Groups share of the fair value of the identiable net assets of the associate and is included in the carrying amount of the investments. In applying the equity method of accounting, the Groups share of its associated companies post-acquisition prots or losses are recognised in prot or loss and its share of post-acquisition other comprehensive income is recognised in other comprehensive income. These post-acquisition movements and distributions received from associated companies are adjusted against the carrying amount of the investment. When the Groups share of losses in an associated company equals or exceeds its interest in the associated company, including any other unsecured non-current receivables, the Group does not recognise further losses, unless it has obligations or has made payments on behalf of the associated company. Unrealised gains on transactions between the Group and its associated companies are eliminated to the extent of the Groups interest in the associated companies. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associated companies have been changed where necessary to ensure consistency with the accounting policies adopted by the Group. Gains and losses arising from partial disposals or dilutions in investments in associated companies are recognised in prot or loss. Investments in associated companies are derecognised when the Group loses signicant inuence. Any retained interest in the entity is remeasured at its fair value. The difference between the carrying amount of the retained investment at the date when signicant inuence is lost and its fair value is recognised in prot or loss. Please refer to Note 2.10 for the Companys accounting policy on investments in associated companies.

60

Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

2.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.2 Group accounting (continued) (d) Joint ventures The Groups joint ventures are entities over which the Group has contractual arrangements to jointly share the control over the economic activities of the entities with one or more parties. The Groups interest in joint ventures are accounted for in the consolidated nancial statements using the equity method of accounting less impairment losses, if any. Investments in joint ventures are initially recognised at cost. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. In applying the equity method of accounting, the Groups share of its joint ventures post-acquisition prots or losses are recognised in prot or loss and its share of post-acquisition movements in reserves are recognised in equity directly. These post-acquisition movements are adjusted against the carrying amount of the investment. When the Groups share of losses in a joint venture equals or exceeds its interest in the joint venture, including any other unsecured non-current receivables, the Group does not recognise further losses, unless it has obligations or has made payments on behalf of the joint venture. Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Groups interest in the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of joint ventures have been changed where necessary to ensure consistency with the accounting policies adopted by the Group. Dilution gains and losses arising from investments in joint ventures are recognised in prot or loss. Please refer to Note 2.10 for the Companys accounting policy on investments in joint ventures. 2.3 Foreign currency translation (a) Functional and presentation currency Items included in the nancial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (functional currency). The consolidated nancial statements are presented in United States Dollars, which is the Companys functional and presentation currency. (b) Transactions and balances Transactions in a currency other than the functional currency (foreign currency) are translated into the functional currency using the exchange rates at the dates of the transactions. Currency translation differences resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the closing rates at the balance sheet date are recognised in prot or loss, unless they arise from borrowings in foreign currencies and other currency instruments designated and qualifying as net investment hedges and net investment in foreign operations. Non-monetary items measured at fair values in foreign currencies are translated using the exchange rates at the date when the fair value measurements are determined. (c) Translation of Group entities nancial statements The results and nancial position of all the Group entities (none of which has the currency of a hyperinationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: (i) Assets and liabilities are translated at the closing exchange rates at the reporting date. (ii) Income and expenses are translated at average exchange rates (unless the average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated using the exchange rates at the dates of the transactions); and (iii) All resulting currency translation differences are recognised in the foreign currency translation reserve.

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements

61

Notes to the Financial Statements


for the nancial year ended 31 December 2010

2.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.4 Revenue and other operating income recognition Revenue for the Group comprises the invoiced amount, at fair value, for the sale of goods and rendering of services, net of value added tax, rebates and discounts, and after eliminating sales within the Group. Revenue is recognised as follows: (a) Sale of goods Revenue from sales of goods is recognised when signicant risks and rewards of ownership of the goods are transferred to the buyer and collectibility of the related receivables is reasonably assured. (b) Rendering of services processing fees Revenue from the processing arrangements is recognised at the time when the services are rendered. Interest income Interest income is recognised on a time-proportion basis, using the effective interest method. 2.5 Borrowing costs Borrowing costs incurred to nance the development of property, plant and equipment are capitalised during the period of time that is required to complete and prepare the asset for its intended use. Other borrowing costs are recognised in the prot or loss using the effective interest method. 2.6 Income taxes Current income tax for current and prior periods is recognised at the amount expected to be paid or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred income tax is recognised for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the nancial statements except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable prot or loss at the time of the transaction. A deferred income tax liability is recognised on temporary differences arising on investments in subsidiaries and associated companies and joint venture, except where the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. A deferred income tax asset is recognised to the extent that it is probable that future taxable prot will be available against which the deductible temporary differences and tax losses can be utilised. Deferred income tax is measured: (i) at the tax rates that are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date; and based on the tax consequence that will follow from the manner in which the Group expects, at the balance sheet date, to recover or settle the carrying amounts of its assets and liabilities.

(ii)

Current and deferred income taxes are recognised as income or expenses in prot or loss, except to the extent that the tax arises from a business combination or a transaction which is recognised directly in equity. Deferred income tax on temporary differences arising from the fair value gains and losses on cash ow hedges are charged or credited directly to equity in the same period the temporary differences arise. Deferred income tax arising from a business combination is adjusted against goodwill on acquisition.

62

Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

2.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.7 Cash and cash equivalents For the purpose of presentation in the consolidated cash ow statement, cash and cash equivalents include cash on hand, deposits with nancial institutions which are subject to an insignicant risk of change in value and bank overdrafts but exclude bank balances that are pledged as security for nancing facilities. Bank overdrafts are presented as current borrowings on the balance sheet. 2.8 Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less allowance for impairment. An allowance for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. The amount of the allowance is the difference between the assets carrying amount and the present value of estimated future cash ows, discounted at the original effective interest rate. The amount of the allowance is recognised in prot or loss. 2.9 Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined on a weighted average basis and includes all costs in bringing each product to its present location and condition. Inventories comprise manufactured and purchased inventories. The cost of manufactured inventories includes raw material cost, direct labour cost and production overheads based on the normal level of activity but excludes borrowing costs. The raw material cost, which comprises primarily cocoa beans and cocoa butter, includes their purchase price, inward shipping costs and import duties and charges. Direct labour cost comprises primarily manufacturing staff cost. Production overheads comprise primarily utilities charges, rental costs, depreciation of plant and machinery and indirect costs relating to the manufacturing of the inventories. Work-in-progress inventories include direct material cost and direct labour cost incurred to the date of the nancial statements. The amount also includes an allocated amount of production overheads by applying an overhead rate to the estimated stage of completion. The cost of goods purchased includes their purchase price, inward shipping costs and import duties and charges. Net realisable value is the estimated selling price in the ordinary course of business, less the costs of completion and selling expenses. 2.10 Investments in subsidiaries, associated companies and joint ventures Investments in subsidiaries, associated companies and joint ventures are stated at cost less accumulated impairment losses (Note 2.13(c)) in the Companys balance sheet. On disposal of investments in subsidiaries, associated companies and joint ventures, the difference between disposal proceeds and the carrying amount of the investments are recognised in prot or loss. 2.11 Property, plant and equipment (a) Measurement (i) Property, plant and equipment All items of property, plant and equipment are initially recognised at cost and subsequently carried at cost less accumulated depreciation and accumulated impairment losses (Note 2.13(c)). (ii) Components of costs The cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Cost also includes borrowing costs that are directly attributable to the construction of qualifying assets, and any fair value gains or losses on qualifying cash ow hedges of property, plant and equipment that are transferred from the hedging reserve. The projected cost of dismantlement, removal or restoration is also included as part of the cost of property, plant and equipment if the obligation for the dismantlement, removal or restoration is incurred as a consequence of acquiring or using the assets.

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements

63

Notes to the Financial Statements


for the nancial year ended 31 December 2010

2.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.11 Property, plant and equipment (continued) (b) Depreciation Freehold land and construction work-in-progress are not depreciated. Depreciation on other items of property, plant and equipment is calculated using the straight-line method to allocate their depreciable amounts over their estimated useful lives. The estimated useful lives are as follows:
Useful lives

Leasehold land, buildings and improvements Machinery and equipment Motor vehicles Ofce equipment

10 50 years 10 15 years 5 years 5 10 years

The residual values, estimated useful lives and depreciation method of property, plant and equipment are reviewed, and adjusted as appropriate, at each balance sheet date. The effects of any revision are recognised in prot or loss when the changes arise. (c) Subsequent expenditure Subsequent expenditure relating to property, plant and equipment that has already been recognised is added to the carrying amount of the asset when it is probable that future economic benets associated with the item will ow to the Group and the cost can be reliably measured. All other repair and maintenance expenses are recognised in prot or loss when incurred. (d) Disposal On disposal of an item of property, plant and equipment, the difference between the disposal proceeds and its carrying amount is recognised in prot or loss within Other (loss)/gain - net. 2.12 Intangible assets (a) Goodwill on acquisitions Goodwill represents the excess of the cost of acquisition of subsidiaries or associated companies or joint ventures over the fair value of the Groups share of the identiable net assets and contingent liabilities of the acquired subsidiaries or associated companies or joint ventures at the date of acquisition. Goodwill is recognised separately as an intangible asset and is tested at least annually for impairment and carried at cost less accumulated impairment losses (Note 2.13(a)). Prior to 1 January 2001, goodwill on acquisitions was adjusted against retained earnings in the year of acquisition. Negative goodwill represents the excess of the fair value of the identiable net assets of subsidiaries or associated companies or joint ventures when acquired over the cost of acquisition. Negative goodwill is recognised immediately in prot or loss. Gains and losses on disposal of an entity include the carrying amount of goodwill relating to the entity sold. (b) Brands, patents and trademarks Brands acquired as part of business combinations are recognised when they arise from contractual or other legal rights, or are separable. Such brands are recognised at their fair values at the acquisition date and subsequently carried at cost (i.e. the fair values at initial recognition) less accumulated amortisation and accumulated impairment losses. Brands that are regarded as having indenite useful lives are not amortised and are subsequently tested for impairment annually (Note 2.13(b)). Brands that are regarded as having limited useful lives are stated at cost less accumulated amortisation and accumulated impairment losses (Note 2.13(c)). Amortisation is calculated using the straight-line method to allocate the cost of brands over their estimated useful lives.

64

Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

2.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.12 Intangible assets (continued) (b) Brands, patents and trademarks (continued) Patents and trademarks are stated at cost less accumulated amortisation and accumulated impairment losses (Note 2.13(c)). Amortisation is calculated using the straight-line method to allocate the cost of patents and trademarks over their estimated useful lives of up to 5 years. The useful lives of brands, patents and trademarks are assessed at each balance sheet date and adjustments are included in the prot or loss for the nancial year in which the changes arise. (c) Customer lists Customer lists are acquired as part of business combinations and are recognised at their fair values at the acquisition date and subsequently carried at cost (i.e. the fair values at initial recognition) less accumulated amortisation and accumulated impairment losses. Amortisation is calculated using the straight-line method to allocate the cost of customer lists over their estimated useful lives. 2.13 Impairment of non-nancial assets (a) Goodwill Goodwill is tested for impairment annually, and whenever there is indication that the goodwill may be impaired. For the purpose of impairment testing of goodwill, goodwill is allocated to each of the Groups cash-generating-units (CGU) expected to benet from synergies of the business combination. An impairment loss is recognised in prot or loss when the carrying amount of the CGU, including the goodwill, exceeds the recoverable amount of the CGU. Recoverable amount of the CGU is the higher of the CGUs fair value less cost to sell and value-in-use. The total impairment loss of a CGU is allocated rst to reduce the carrying amount of goodwill allocated to the CGU and then to the other assets of the CGU pro-rata on the basis of the carrying amount of each asset in the CGU. An impairment loss on goodwill is recognised as an expense and is not reversed in a subsequent period. (b) Brands Brands that are regarded as having indenite useful lives are tested annually for impairment, as well as when there is any indication that the carrying amounts may not be recoverable. An impairment loss is recognised in prot or loss when the carrying amount of the acquired brand exceeds the recoverable amount of the acquired brand. Recoverable amount of the brand is the higher of a brands fair value less cost to sell and value-in-use. An impairment loss on brand is recognised as an expense and is reversed if, and only if, there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the brands carrying amount does not exceed the carrying amount that would have been determined, if no impairment loss had been recognised.

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements

65

Notes to the Financial Statements


for the nancial year ended 31 December 2010

2.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.13 Impairment of non-nancial assets (continued) (c) Other intangible assets Property, plant and equipment Investments in subsidiaries, associated companies and joint ventures Other intangible assets, property, plant and equipment and investments in subsidiaries, associated companies and joint ventures are tested for impairment whenever there is any objective evidence or indication that these assets may be impaired. If any such indication exists, the recoverable amount (i.e. the higher of the fair value less cost to sell and value-in-use) of the asset is estimated to determine the amount of impairment loss. For the purpose of impairment testing of these assets, recoverable amount is determined on an individual asset basis unless the asset does not generate cash ows that are largely independent of those from the other assets. If this is the case, recoverable amount is determined for the CGU to which the asset belongs. If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. The difference between the carrying amount and recoverable amount is recognised as an impairment loss in prot or loss. An impairment loss for these assets is reversed if, and only if, there has been a change in the estimates used to determine the assets recoverable amount since the last impairment loss was recognised. The carrying amount of this asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for these assets other than goodwill is recognised in prot or loss. 2.14 Derivative nancial instruments and hedging activities Derivatives are used by the Group to manage exposure to foreign exchange, interest rate and cocoa bean price risks arising from operational and nancing activities. Derivatives are initially recognised at fair value on the dates the contracts are entered into and are subsequently carried at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. At the inception of a hedge relationship, the Group formally designates and documents the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash ows of hedged items. Where the derivative qualies for hedge accounting, recognition of any resultant gain or loss is based on the nature of the item being hedged. The Group designates certain derivatives as either (1) hedges of the fair value of recognised assets or liabilities or a rm commitment (fair value hedge); or (2) hedges of highly probable forecast transactions (cash ow hedge). Cash ow hedges refer to hedges against exposure to variability in cash ows that is either attributable to a particular risk associated with a recognised asset or liability, or a highly probable forecast transaction. Fair value hedges are intended to hedge changes in fair value attributable to a particular risk inherent in the qualied hedged item. Hedge accounting is discontinued prospectively when the hedging instrument expires or is sold, terminated or exercised, or no longer qualies for hedge accounting. Upon discontinuation of hedge accounting, any cumulative gains or losses on the hedging instrument that remain recognised in the cash ow hedge reserve from the period when the hedge was effective should remain in equity until the forecast transactions occurs. If the forecast transaction is no longer expected to occur, the net cumulative gain or loss is immediately recognised in prot or loss.

66

Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

2.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.14 Derivative nancial instruments and hedging activities (continued) (a) Cocoa Bean Futures The Group enters into exchange traded cocoa bean futures to hedge the cocoa bean price risk arising from its forcasted purchases of cocoa beans and forecasted sales of cocoa ingredients. The Group applies cash ow hedge (CFH) accounting whereby the cocoa bean futures are designated as the hedging instruments to the underlying forecasted sale or purchase contracts to hedge the variability in cash ow that is attributable to the risk of cocoa bean price movement. The fair values of the effective portion of the cocoa bean futures designated as cash ow hedges are recognised in the cash ow hedge reserve and transferred to prot or loss in the periods when the forecast transactions are recognised in prot or loss. The fair values of the ineffective portion of the cocoa bean futures are recognised immediately in prot or loss. The fair values of the cocoa bean futures are determined based on the quoted closing prices on the relevant Exchange as at balance sheet date. (b) Foreign Exchange Forward and Futures Contracts The Group enters into foreign exchange forward and futures contracts to hedge the currency risk arising from its forecasted purchase of cocoa beans and forecasted sales transactions as well as rm commitments for purchases and sales denominated in foreign currencies. The Group designates its foreign exchange forwards and futures as cash ow hedges. Under the CFH accounting, the foreign exchange forwards and futures are designated as hedging instruments to the underlying forecasted sales or purchase contracts to hedge the variability in cash ow that is attributable to the foreign exchange risk. The fair value changes on the effective portion of the foreign exchange forwards or futures designated as cash ow hedge are recognised in the cash ow hedge reserve and transferred to prot or loss in the periods when the forecast transactions are recognised in prot or loss. The fair value of the ineffective portion of the foreign exchange forwards or futures are recognised immediately in prot or loss. The fair value of foreign exchange forward and future contracts are determined using forward exchange market rates at the balance sheet date. (c) Interest Rate Swaps The Group has entered into interest rate swaps (IRSs) to hedge the Groups exposure to interest rate risk on its oating rate borrowings. These IRSs entitle the Group to receive interest at oating rates on the notional principal amounts and oblige the Group to pay xed rate interest on the same notional principal amounts, thus allowing the Group to raise borrowings at oating rates and swap them into xed rates. For interest rate swaps which qualify as cash ow hedges, the fair value changes on the effective portion of interest rate swaps are recognised in the cash ow hedge reserve and reclassied to prot or loss (as part of nance costs) when the interest expense on the borrowings are recognised in prot or loss. The fair value changes on the ineffective portion of interest rate swaps are recognised immediately in prot or loss. The fair value of the interest rate derivatives is calculated at the present value of the estimated future cash ows discounted at actively quoted interest rates.

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements

67

Notes to the Financial Statements


for the nancial year ended 31 December 2010

2.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.14 Derivative nancial instruments and hedging activities (continued) (d) Cross Currency Interest Rate Swaps The Group issued medium term notes (MTNs) which are denominated in Singapore Dollars (SGD). To hedge against the currency risk and interest rate risk arising from these MTNs, the Group entered into cross currency interest rate swaps which enable the Group to receive principal and interest payments in SGD and pay its xed rate principal and interest in United States Dollars. These cross currency interest rate swaps have been designated as hedging instruments under cash ow hedge accounting whilst the SGD principal and interest cash ow payments are designated as the hedged items. The fair value change on the effective portion of the cross currency interest rate swaps designated as cash ow hedge is recognised in the cash ow hedge reserve and reclassied to prot or loss when currency translation gains/losses and interest expense on the borrowing is recognised in prot or loss. The fair value of the cross currency interest rate swaps is determined using discounted cash ow analysis based on the appropriate interest rates and forward exchange rates. (e) Derivatives that are not designated or do not qualify for hedge accounting Fair value changes on those derivatives are recognised in prot or loss when the changes arise. 2.15 Trade and other payables Trade and other payables are initially recognised at fair value, and subsequently measured at amortised cost using the effective interest method. 2.16 Provisions for other liabilities and charges Provisions for other liabilities and charges are recognised when the Group has a present legal or constructive obligation as a result of past events; it is more likely than not that an outow of resources will be required to settle the obligation; and the amount can be reliably estimated. 2.17 Financial guarantees The Company has issued corporate guarantees to banks for bank borrowings of its subsidiaries. These guarantees are nancial guarantees as they require the Company to reimburse the banks if the subsidiaries fail to make principal or interest payments when due in accordance with the terms of their borrowings. Financial guarantees are initially recognised at their fair value plus transaction costs in the Companys balance sheet. Financial guarantees are subsequently amortised to prot or loss over the period of the subsidiaries borrowings, unless it is probable that the Company will reimburse the bank for an amount higher than the unamortised amount. In this case, the nancial guarantee shall be carried at the expected amount payable to the bank in the Companys balance sheet. Intragroup transactions are eliminated on consolidation. 2.18 Borrowings Borrowings are recognised initially at fair value (net of transaction costs) and subsequently carried at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in prot or loss over the period of the borrowings using the effective interest method. Borrowings which are due to be settled within 12 months after the balance sheet date are presented as current borrowings.

68

Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

2.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.19 Leases Finance leases Leases where the Group assumes substantially all risks and rewards incidental to ownership of the leased assets are classied as nance leases. The leased assets and the corresponding lease liabilities (net of nance charges) under nance leases are recognised on the balance sheet as plant and equipment and borrowings respectively, at the inception of the leases based on the lower of the fair value of the leased assets and the present value of the minimum lease payments. Each lease payment is apportioned between the nance expense and the reduction of the outstanding lease liability. The nance expense is recognised in prot or loss on a basis that reects a constant periodic rate of interest on the nance lease liability. Operating leases Leases where substantially all risks and rewards incidental to ownership are retained by the lessor are classied as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are taken to prot or loss on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place. 2.20 Employee benets (a) Dened benet plans Dened benet plans are post-employment benet plans under which the Group pays xed contributions into separate entities such as the Central Provident Fund on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The liability recognised in the balance sheet in respect of dened benet pension plans is the present value of the dened benet obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognised actuarial gains or losses and unrecognised past service costs. The dened benet obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the dened benet obligation is determined by discounting the estimated future cash outows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benets will be paid, and that have terms to maturity approximating to the terms of the related pension liability. Actuarial gains and losses are recognised as income or expense when the net cumulative unrecognised actuarial gains and losses for each individual plan at the end of the previous reporting year exceeded 10% of the higher of the dened benet obligation and the fair value of plan assets at that date. These gains or losses are recognised over the expected average remaining working lives of the employees participating in the plans. Past-service costs are recognised immediately in income, unless the changes to the pension plan are conditional on the employees remaining in service for a specied period of time (the vesting period). In this case, the past-service costs are amortised on a straight-line basis over the vesting period. (b) Dened contribution plans Dened contribution plans are post-employment benet plans under which the Group pays xed contributions into separate entities such as the Central Provident Fund. The Groups obligation, in regard to the dened contribution plans, is limited to the amount it contributes to the fund. The Groups contributions to dened contribution plans are recognised in the nancial year to which they relate. (c) Employee leave entitlement Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the balance sheet date.

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements

69

Notes to the Financial Statements


for the nancial year ended 31 December 2010

2.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.20 Employee benets (continued) (d) Termination benets Termination benets are those benets which are payable when employment is terminated before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benets. The Group recognises termination benets when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benets as a result of an offer made to encourage voluntary redundancy. Benets falling due more than 12 months after balance sheet date are discounted to present value. 2.21 Share capital Ordinary shares are classied as equity. Incremental costs directly attributable to the issuance of new ordinary shares are deducted against the share capital account. 2.22 Dividends Interim dividends are recorded in the nancial year in which they are declared payable. Final dividends are recorded in the nancial year in which the dividends are approved by the shareholders. 2.23 Segment reporting Operating segments are reported in a manner consistent with the internal reporting to the Executive Committee whose members are responsible for allocating resources and assessing performance of the operating segments. 2.24 Fair value estimation of nancial assets and liabilities The carrying amounts of current nancial assets and liabilities, carried at amortised cost approximate their fair values. The fair values of nancial liabilities carried at amortised cost are estimated by discounting the future contractual cash ows at the current market interest rates that are available to the Group for similar nancial liabilities. 2.25 Government grants Grants from the government are recognised as a receivable at their fair value when there is reasonable assurance that the grant will be received and the Group will comply with all the attached conditions. Government grants receivable are recognised as income over the periods necessary to match them with the related costs which they are intended to compensate, on a systematic basis. Government grants relating to expenses are deducted against the related expenses. 3. CRITICAL ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGEMENTS Estimates, assumptions and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by denition, seldom exactly equal the related actual results. The estimates and assumptions that have a signicant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next nancial year are discussed below. (i) Estimated impairment of goodwill and brands Goodwill and brands with indenite useful lives are tested for impairment annually, in accordance with the accounting policy stated in Note 2.13. The recoverable amount of these brands and cash generating units comprising goodwill have been determined based on Royalty Relief Approach and Value-In-Use calculations respectively. Estimating the recoverable amounts requires the Group to estimate future cash ows and suitable royalty and discount rates in order to calculate the present value of those cash ows (Note 24).

70

Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

3.

CRITICAL ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGEMENTS (CONTINUED) (i) Estimated impairment of goodwill and brands (continued) If managements estimated pre-tax discount rate applied to the discounted cash ows at 31 December 2010 is raised by 1%, the recoverable amount of goodwill and one of the brands will be reduced by US$8,539,000 and US$337,000 respectively. However, this change in assumption will not cause the carrying amount of goodwill and one of the brands to exceed their recoverable amount. If managements estimated royalty rate of certain brands at 31 December 2010 is lowered by 1%, the recoverable amount of brands will be reduced by US$2,715,000. However, this change in assumption will not cause the carrying amount of brands to exceed their recoverable amount. (ii) Income taxes The Group is subject to income taxes in numerous jurisdictions. In determining the income tax liabilities, management is required to estimate the amount of capital allowances and the deductibility of certain expenses (uncertain tax positions) at each tax jurisdiction. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax based on estimates of whether additional taxes will be due. Where the nal tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred income tax provisions in the period in which such nal determination is made. The carrying amount of the Groups income tax recoverable (net of tax payable) at 31 December 2010 was US$4,056,000 (2009: US$508,000). (iii) Deferred income tax assets The Group recognises deferred income tax assets on carried forward tax allowances and tax losses to the extent there are sufcient estimated future taxable prots and/or temporary differences against which the tax credit can be utilised and the Group is able to satisfy any relevant legislation affecting the ability of the losses to be carried forward. As of 31 December 2010, the Group recognised deferred tax assets of US$17,464,000 (2009: US$14,805,000) relating to certain entities based on the anticipated future use of tax allowances and tax losses carried forward by those entities. If those entities are unable to generate sufcient taxable prots to utilise the tax allowances and tax losses, the deferred income tax assets will have to be written off against income tax expense. (iv) Tax recoverable The Group had made instalment payments amounting to Indonesian Rupiah (IDR) 71.9 billion (approximately US$7.4 million) in relation to an additional tax assessment arising from one of the Indonesian subsidiaries. These payments are recorded as tax recoverable in the balance sheet. Based on advice from Indonesian tax advisers, the Group has valid grounds to contest the additional tax assessment and has led an appeal with the Indonesian Tax Court against this additional tax assessment. The recoverability of the tax paid or any provision for additional tax liability is dependent on the courts decision (Note 16). (v) Fair valuation for derivative nancial instruments The Group carries derivatives at fair value, which requires extensive use of valuation techniques or dealer quotes for similar instruments. This determination requires signicant judgement and the use of observable market data. The fair value of these derivatives would differ if the Group used different base of fair valuation, which would affect the nancial performance of the Group.

4.

REVENUE AND OTHER OPERATING INCOME


The Group 2010 US$000 2009 US$000

Sales of goods Processing fees Total revenue Other operating income: Interest income Miscellaneous income Total other operating income

1,547,341 18,679 1,566,020 249 5,421 5,670 1,571,690

1,228,205 16,264 1,244,469 182 4,508 4,690 1,249,159

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements

71

Notes to the Financial Statements


for the nancial year ended 31 December 2010

5.

COST OF SALES
The Group 2010 US$000 2009 US$000

Cost of goods sold Cost of processing services rendered

1,373,253 15,131 1,388,384 (18,874) 1,369,510 (6,805) 5,123 (1,411) 1,366,417

1,089,373 12,652 1,102,025 (16,137) 1,085,888 10,865 5,592 (61) 1,102,284

Transfer from cash ow hedge reserve cocoa bean and foreign exchange derivatives Other adjustments to cost of sales: Fair value (gain)/loss on cocoa bean derivatives Fair value loss on foreign exchange derivatives Net foreign exchange gain

6.

EMPLOYEE BENEFITS EXPENSES


The Group 2010 US$000 2009 US$000

Wages and salaries Employers contribution to dened contribution plans, including Central Provident Fund Dened benet plans (Note 30(a)) Less: Government grant Jobs credit scheme

64,358 3,846 2,321 (80) 70,445

55,869 2,625 2,935 (389) 61,040

The Jobs Credit Scheme is a cash grant introduced in the Singapore Budget 2009 to help businesses preserve jobs in the economic downturn. The amount an employer can receive depends on the fullment of the conditions as stated in the scheme. The Jobs Credit Scheme ended on 30 June 2010. 7. FINANCE COSTS
The Group 2010 US$000 2009 US$000

Interest expense: bank loans and overdrafts trade nance and short term advances medium term notes nance lease liabilities Transfer from cash ow hedge reserve interest rate swaps Less: Interest costs capitalised as cost of property, plant and equipment Net foreign exchange (gain)/loss

8,168 10,086 4,231 72 22,557 3,640 26,197 26,197 (306) 25,891

7,742 5,288 3,210 72 16,312 2,324 18,636 (524) 18,112 59 18,171

72

Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

8.

EXPENSES BY NATURE
The Group 2010 US$000 2009 US$000

Other fees paid/payable to: Auditor of the Company Current nancial year Under provision of prior nancial year Other auditors * Amortisation of intangible assets (Note 23(b) & 23(c)) Allowance made for inventory obsolescence Cost of purchases recognised as an expense Depreciation of property, plant and equipment (Note 22) Employee benets expenses (Note 6) Fair value loss on interest rate derivatives not designated for hedge accounting Foreign exchange loss/(gain) Transfer from cash ow hedge reserve cross currency interest rate swaps (Gain)/loss on disposal of property, plant and equipment Inventories written off Inventory written down to net realisable value Impairment loss on trade receivables Logistics and insurance Professional fees Rental on operating leases Travelling expenses
* Includes the network of member rms of PricewaterhouseCoopers International Limited

33 10 43 433 3,258 1,347,910 23,235 70,445 345 4,340 (6,542) (2,202) (622) 2,668 81 33,099 1,829 4,430 4,448

127 1 20 148 483 1,849 1,040,172 21,062 61,040 428 (28) (1,944) (1,972) 135 808 1,317 140 24,322 2,036 3,867 3,547

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements

73

Notes to the Financial Statements


for the nancial year ended 31 December 2010

9.

INCOME TAX (a) Income tax expense


The Group 2010 US$000 2009 US$000

Tax expense attributable to prot is made up of: Current income tax Singapore Foreign Deferred income tax Under/(over) provision in preceding nancial years: Current income tax Deferred income tax

17,806 17,806 (3,300) 14,506 102 (620) 13,988

2,068 10,597 12,665 (5,772) 6,893 670 19 7,582

The tax expense on prot differs from the amount that would arise using the Singapore standard rate of income tax due to the following:
The Group 2010 US$000 2009 US$000

Prot before tax Tax calculated at a tax rate of 17% (2009: 17%) Tax concessions Effects of: Change in tax rates Different tax rates in other countries Income not subject to tax Expenses not deductible for tax purposes Withholding tax on dividends paid by foreign subsidiaries Deferred tax assets not recognised Utilisation of previously unrecognised tax losses and tax allowances Tax charge

58,461 9,939 (3,506) 118 5,155 (581) 1,642 1,879 215 (355) 14,506

27,319 4,644 (2,918) (282) 2,006 (255) 2,335 1,629 445 (711) 6,893

74

Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

9.

INCOME TAX (CONTINUED) (b) Movements in current income tax liabilities (net of tax recoverable)
The Group 2010 US$000 2009 US$000 The Company 2010 2009 US$000 US$000

Beginning of nancial year Currency translation differences Income tax paid Tax payable on prot for the current nancial year Under provision in preceding nancial years End of nancial year The amounts are shown in the balance sheets as follows:

(508) 159 (21,615) 17,806 102 (4,056)

2,719 346 (16,908) 12,665 670 (508)

2,116 (5,388) 3,086 186

1,476 (3,845) 4,453 32 2,116

The Group 2010 US$000 2009 US$000

The Company 2010 2009 US$000 US$000

Tax recoverable (Note 16) Current income tax liabilities (c) Deferred income taxes

9,205 5,149

5,323 4,815

2,116

Deferred income tax assets and deferred income tax liabilities are offset when there is a legally enforceable right to offset current income tax assets against current income tax liabilities and when the deferred income taxes relate to the same scal authority. The amounts, determined after appropriate offsetting, are shown in the balance sheets as follows:
The Group 2010 US$000 2009 US$000 The Company 2010 2009 US$000 US$000

Deferred income tax assets Deferred income tax liabilities

17,464 5,917

14,805 7,046

330

1,051

Deferred income tax assets are recognised for tax allowances and tax losses carried forward to the extent that realisation of the related tax benets through future taxable prots is probable. The Group has unrecognised tax allowances of US$2,146,000 (2009: US$13,443,000) and unrecognised tax losses of US$6,283,000 (2009: US$6,211,000) at the balance sheet date, which can be carried forward and used to offset against future taxable income subject to meeting certain statutory requirements in the respective countries of incorporation of those companies with unrecognised tax allowances and tax losses. These tax allowances and tax losses do not have any expiry dates, except for tax losses of US$945,000 (2009: US$1,665,000) incurred by certain subsidiaries which will expire between 2011 and 2019. The movement in the deferred income tax (assets)/liabilities account is as follows:
The Group 2010 US$000 2009 US$000 The Company 2010 2009 US$000 US$000

Beginning of nancial year Effect of change in tax rates Tax (credited)/charged to: Prot or loss Equity Currency translation differences End of nancial year

(7,759) 118 (4,038) (553) 685 (11,547)

966 (282) (5,471) (2,430) (542) (7,759)

1,051 (163) (558) 330

418 (33) (93) 759 1,051

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements

75

Notes to the Financial Statements


for the nancial year ended 31 December 2010

9.

INCOME TAX (CONTINUED) (c) Deferred income taxes (continued) The movement in the deferred income tax assets and liabilities (prior to offsetting of balances within the same tax jurisdiction) during the year is as follows: The Group Deferred income tax liabilities
Fair value gains US$000 Accelerated tax depreciation US$000 Other taxable temporary differences US$000

Total US$000

At 1 January 2010 Charged/(credited) to: Prot or loss Equity Currency translation differences At 31 December 2010 At 1 January 2009 Effect of change in tax rates Credited to: Prot or loss Equity Currency translation differences At 31 December 2009 Deferred income tax assets
Fair value losses US$000

546 (64) 482 2,567 (2,019) (2) 546

11,669 1,460 108 13,237 14,673 (365) (3,439) 800 11,669

314 991 22 1,327 404 (23) (68) 1 314

12,529 2,451 (64) 130 15,046 17,644 (388) (3,507) (2,019) 799 12,529

Unutilised tax losses & Provisions tax allowances US$000 US$000

Unrealised exchange losses US$000

Total US$000

At 1 January 2010 Effect of change in tax rates Credited to: Prot or loss Equity Currency translation differences At 31 December 2010 At 1 January 2009 Effect of change in tax rates Charged/(credited) to: Prot or loss Equity Currency translation differences At 31 December 2009

(635) 1 (489) 21 (1,102) (213) (411) (11) (635)

(3,485) (962) (92) (4,539) (1,440) 48 (1,744) (349) (3,485)

(15,832) 117 (5,135) 642 (20,208) (12,955) 56 (2,624) (309) (15,832)

(336) (392) (16) (744) (2,070) 2 2,404 (672) (336)

(20,288) 118 (6,489) (489) 555 (26,593) (16,678) 106 (1,964) (411) (1,341) (20,288)

76

Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

9.

INCOME TAX (CONTINUED) (c) Deferred income taxes (continued) The Company Deferred income tax liabilities
Fair value gains US$000 Accelerated tax depreciation US$000 Other taxable temporary differences US$000

Total US$000

At 1 January 2010 (Credited)/charged to: Prot or loss Equity At 31 December 2010 At 1 January 2009 Effect of change in tax rate Charged/(credited) to: Prot or loss Equity At 31 December 2009 Deferred income tax assets

546 (546) 546 546

336 4 340 338 (15) 13 336

214 (161) 53 332 (19) (99) 214

1,096 (157) (546) 393 670 (34) (86) 546 1,096

Fair value losses US$000

Provisions US$000

Total US$000

At 1 January 2010 Credited to: Prot or loss Equity At 31 December 2010 At 1 January 2009 Effect of change in tax rate Charged/(credited) to: Prot or loss Equity At 31 December 2009

(12) (12) (213) 213

(45) (6) (51) (39) 1 (7) (45)

(45) (6) (12) (63) (252) 1 (7) 213 (45)

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements

77

Notes to the Financial Statements


for the nancial year ended 31 December 2010

10. EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (EBITDA) EBITDA is a measure of prot determined by management as follows:
The Group 2010 US$000 2009 US$000

Prot before tax Adjustments for: Fair value loss on interest rate derivatives not designated for hedge accounting (Note 8) Interest expense (Note 7) Interest income (Note 4) Depreciation of property, plant and equipment (Note 22) Amortisation of intangible assets (Note 23(b) & 23(c)) EBITDA 11. EARNINGS PER SHARE (a) Basic earnings per share

58,461

27,319

345 26,197 (249) 23,235 433 108,422

428 18,112 (182) 21,062 483 67,222

Basic earnings per share is calculated by dividing the net prot attributable to equity holders of the Company by the weighted average number of ordinary shares on issue during the nancial year.
The Group 2010 2009

Net prot attributable to equity holders of the Company (US$000) Weighted average number of ordinary shares (000) Basic earnings per share (US cents) (b) Diluted earnings per share

44,473 575,283 7.73

24,625 532,277 4.63

Diluted earnings per share for nancial years 2010 and 2009 are the same as basic earnings per share as there were no potentially dilutive ordinary shares.

78

Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

12. CASH AND CASH EQUIVALENTS


The Group 2010 US$000 2009 US$000 The Company 2010 2009 US$000 US$000

Cash at bank and on hand Short-term bank deposits

20,822 21,960 42,782

11,527 6,811 18,338

14,275 13,100 27,375

928 5,831 6,759

The carrying amounts of cash and cash equivalents approximate their fair values. For the purposes of presenting the consolidated cash ow statement, the consolidated cash and cash equivalents comprise the following:
The Group 2010 US$000 2009 US$000

Cash and bank balances (as above) Less: Bank overdrafts (Note 28) Cash and cash equivalents per consolidated cash ow statement 13. TRADE RECEIVABLES
The Group 2010 US$000 2009 US$000

42,782 (47,415) (4,633)

18,338 (46,384) (28,046)

The Company 2010 2009 US$000 US$000

Trade receivables third parties subsidiaries associated companies related parties Less: Accumulated impairment loss third parties

161,552 3,686 165,238

131,945 106 2,212 134,263

36,305 214,999 251,304

31,521 151,518 183,039

(274) 164,964

(241) 134,022

251,304

(5) 183,034

Related parties represent corporations in which certain directors have substantial nancial interests. The carrying amounts of current trade receivables approximate their fair values. Trade receivables of US$36,043,000 (2009: US$20,495,000) of the Group have been pledged as security for loans and trade nance obtained from banks for its European operations. No trade receivables of the Company were pledged.

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements

79

Notes to the Financial Statements


for the nancial year ended 31 December 2010

14. INVENTORIES
The Group 2010 US$000 2009 US$000 The Company 2010 2009 US$000 US$000

Raw materials Work-in-progress Finished goods Packaging materials & others

212,104 11,206 241,900 26,152 491,362

152,448 8,653 172,524 21,171 354,796

9,397 9,397

1,162 5,904 7,066

As at 31 December 2010, there was no write down of nished goods to net realisable value (2009: US$1,317,000). The cost of purchases recognised as an expense and included in cost of sales amounted to US$1,347,910,000 (2009: US$1,040,172,000). Inventories of US$94,484,000 (2009: US$90,505,000) of the Group have been pledged as security for loans and trade nance obtained from banks and other creditors for its European operations. No inventories of the Company were pledged. Forward purchase and sales commitments As at 31 December 2010, the forward purchases of cocoa beans and forward sales of cocoa products relating to price-xed contracts are as follows:
The Group 2010 US$000 2009 US$000 The Company 2010 2009 US$000 US$000

Forward purchases: cocoa beans from third parties cocoa products from subsidiaries* Forward sales: cocoa products to third parties cocoa beans to subsidiaries*

134,556

92,613

63,310 125,313

60,078 107,354

275,873

137,059

114,455 63,310

67,889 60,078

* The forward purchases of beans by the Company will be sold to its subsidiaries for processing into cocoa products. The Company commits to purchase these cocoa products from subsidiaries in order to support the Companys forward sales commitments.

80

Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

15. DERIVATIVE FINANCIAL INSTRUMENTS Derivative assets or derivative liabilities represent the fair values on the following outstanding derivatives.
The Group Fair Values Assets Liabilities US$000 US$000 The Company Fair Values Assets Liabilities US$000 US$000

2010 (a) Foreign exchange forwards Cash ow hedge Not designated for hedge accounting Interest rate derivatives (i) Cross currency interest rate swaps Cash ow hedge (ii) Interest rate swaps Cash ow hedge Not designated for hedge accounting Total 2009 (a) Foreign exchange forwards Cash ow hedge Not designated for hedge accounting (b) Interest rate derivatives (i) Cross currency interest rate swaps Cash ow hedge Not designated for hedge accounting (ii) Interest rate swaps and caps Cash ow hedge Not designated for hedge accounting Total (b)

2,540 2,759

502 1,036

10,889 562 11,451

3,984 1,692 10,975

10,889 562 11,451

3,770 1,692 7,000

76 1,226

880

2,860 139 208 4,509

4,142 1,465 5,607

2,860 139 208 4,087

3,792 1,465 5,257

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements

81

Notes to the Financial Statements


for the nancial year ended 31 December 2010

15. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED) (a) Foreign exchange forwards The notional amounts of the Groups and the Companys foreign exchange forwards denominated in the following currencies are as follows:
The Group 2010 US$000 2009 US$000 The Company 2010 2009 US$000 US$000

Sterling Pound Long Short Euro Long Short Australian Dollar Long Short Swiss Franc Long Short USD Long Short Others Short (b) Interest rate derivatives

216,464 103,943

47,497 7,590

42,639 1,646

16,220 61,540

14,048 61,211

15,596 60,706

14,048 61,211

170 2,081

1,697

2,081

1,697

6,967 29,798

13,687

2,458

1,573

13,506 31,548

14,015 12,021

1,917

The notional amount and maturity dates of the respective interest rate derivative instruments are as follows:
The Group 2010 Notional Amount US$000 Maturity Dates Notional Amount US$000 2009 Maturity Dates

Cross currency interest rate swaps cash ow hedge not designated for hedge accounting Interest rate swaps cash ow hedge not designated for hedge accounting Interest rate caps not designated for hedge accounting 186,357 20,000 2011 2017 2013 117,084 20,000 2011 2013 2013 72,337 2011 2013 65,158 4,846 2011 2012 2010

20,000

2010

82

Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

15. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED) (b) Interest rate derivatives (continued)
The Company 2010 Notional Amount US$000 Maturity Dates Notional Amount US$000 2009 Maturity Dates

Cross currency interest rate swaps cash ow hedge not designated for hedge accounting Interest rate swaps cash ow hedge not designated for hedge accounting Interest rate caps not designated for hedge accounting (c) Cocoa bean futures and foreign exchange futures

72,337

2011 2013

65,158 4,846

2011 2012 2010

107,385 20,000

2011 2017 2013

64,000 20,000

2011 2013 2013

20,000

2010

The net amounts receivable or payable with brokers are included in other third party receivables (Note 17) or other third party payables (Note 27). These reect changes in fair values of exchange traded futures contracts used for hedging, which are subject to daily mark-to-market valuation, and are offset against margin or credit lines maintained with brokers. The notional amounts of exchange traded futures contracts of the Group and the Company are as follows:
The Group 2010 US$000 2009 US$000 The Company 2010 2009 US$000 US$000

Exchange traded cocoa bean futures purchases Exchange traded cocoa bean futures sales Foreign exchange futures purchases sales

696,041 500,552 154,280 128,587

280,080 337,731 63,145 24,710

382,247 352,764 154,280 128,587

148,585 184,704 63,145 24,710

For accounting of cocoa bean futures and foreign exchange futures, please refer to Note 2.14(a) and 2.14(b). 16. TAX RECOVERABLE The Groups tax recoverable mainly relates to instalment payments amounting to IDR71.9 billion, approximately US$7.4 million (2009: IDR42.7 billion, approximately US$4.1 million) by one of the Indonesian subsidiaries to its local tax authority. In 2009, the Indonesian Director General of Taxation (DGT) imposed an additional tax assessment amounting to IDR71.9 billion (approximately US$7.4 million) on PT General Food Industries (GFI), a wholly owned Indonesian subsidiary of the Company, pertaining to the issue of transfer pricing. GFI is contesting this additional tax assessment on the grounds that the transfer pricing between GFI and the Company is done at arms length based on the methods prescribed in the OECD Transfer Pricing Guidelines. GFI has been advised by its Indonesian tax advisers that there are valid grounds to contest the additional tax assessment by DGT. Accordingly, GFI has led an appeal with the Indonesian Tax Court against this additional assessment and has not made any provision in its accounts with respect to this additional tax liability. The proceedings ended in September 2010 and are now pending the courts decision. As of balance sheet date, it is still too preliminary to provide an assessment of the outcome.

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements

83

Notes to the Financial Statements


for the nancial year ended 31 December 2010

17. OTHER CURRENT ASSETS


The Group 2010 US$000 2009 US$000 The Company 2010 2009 US$000 US$000

Other receivables third parties subsidiaries (non-trade) associated companies (non-trade) related parties (non-trade) Less: Accumulated impairment loss third parties Deposits Prepayments

22,912 131 305 23,348

26,304 84 26,388

611 11,620 12,231

2,136 15,308 17,444

(36) 23,312 2,049 8,157 33,518

(33) 26,355 1,511 4,143 32,009

12,231 1 736 12,968

17,444 8 354 17,806

Other non-trade receivables due from subsidiaries, associated companies and related parties are unsecured, interest free and repayable upon demand. The carrying amounts of other receivables and deposits approximate their fair values. 18. INVESTMENTS IN SUBSIDIARIES
The Company 2010 2009 US$000 US$000

Equity investments, at cost Impairment charge End of nancial year

126,368 (2,276) 124,092

105,390 (2,276) 103,114

On 29 January 2010, the Company acquired the remaining 32% of the issued share capital of Petra Armajaro Holdings Pte Ltd from its non-controlling shareholder for a cash consideration of EUR 9.4 million (US$13,187,000). As a result, the Groups effective interest in Del Cocoa (Europe) B.V., Del Cocoa (Europe) GmbH and Del Nord Cacao SAS has also increased from 68% to 100%. On 5 May 2010, Petra Armajaro Holdings Pte Ltd changed its name to Petra Europe Holdings Pte Ltd. On 29 November 2010, the Company increased its investment in its wholly owned subsidiary, Del Cocoa Investments 1 Pte Ltd (DCI 1) by US$5,991,000 through capitalising part of the amount owed by DCI 1 to the Company. On 17 December 2010, a subsidiary, Del Marketing Inc. (DMI) increased its paid up capital by PHP79 million through issuing 790,000 new ordinary shares. The Company subscribed for 790,000 ordinary shares in DMI for a cash consideration of US$1,800,000. The subscription was funded through internal nancial resources.

84

Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

18. INVESTMENTS IN SUBSIDIARIES (CONTINUED) The details of subsidiaries are as follows:


Name of subsidiary/ Country of incorporation Country of business Equity holding 2009 2010 % %

Principal activities

Held by the Company McKeeson Consultants Private Limited ^ (Singapore) PT Perusahaan Industri Ceres* (Indonesia) PT General Food Industries* (Indonesia) PT Nirwana Lestari* (Indonesia) Del Cocoa (Malaysia) Sdn. Bhd.* (Malaysia) Ceres Sime Confectionery Sdn Bhd (Malaysia) Cocoa Specialities, Inc.* (Philippines) Siam Cocoa Products Co. Ltd* (Thailand) Del Chocolate Manufacturing S.A.* (Switzerland) Petra-SPT Marketing Pte Ltd ^ (Singapore) Del Cocoa Investments 1 Pte Ltd ^ (Singapore) Del Cocoa USA, Inc. + (USA) Del Singapore Pte Ltd ^ (Singapore) Management consultants Investment holding, manufacturing and marketing of consumer confectionery Manufacturing and marketing of industrial cocoa ingredients Marketing and distribution of chocolate confections and other consumer products Manufacturing and marketing of industrial cocoa ingredients Dormant Manufacturing and marketing of industrial cocoa ingredients Manufacturing and marketing of industrial cocoa ingredients Administrative services Dormant Investment holding Marketing of industrial cocoa ingredients Marketing and distribution of healthcare, liquor and other consumer products Singapore Indonesia Indonesia Indonesia Malaysia Malaysia Philippines Thailand Switzerland Singapore Singapore USA Singapore 100 99.999 99.998 99.990 100 100 100 100 100 100 100 100 100 100 99.999 99.998 99.990 100 100 100 100 100 100 100 100 100

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements

85

Notes to the Financial Statements


for the nancial year ended 31 December 2010

18. INVESTMENTS IN SUBSIDIARIES (CONTINUED)


Name of subsidiary/ Country of incorporation Principal activities Country of business Equity holding 2009 2010 % %

Del Marketing Sdn Bhd* (Malaysia) Del Foods, Inc.* (Philippines) Del Marketing, Inc.* (Philippines)

Marketing and distribution of healthcare and Malaysia other consumer products Manufacturing of nished chocolate confectionery products Marketing and distribution of chocolate confections and other consumer products Philippines Philippines Singapore

100 100 100 100

100 100 100 68

Petra Europe Holdings Pte Ltd ^ (formerly Investment holding known as Petra Armajaro Holdings Pte Ltd) (Singapore) Held by Ceres Sime Confectionery Sdn Bhd Brands of Hudsons Sdn Bhd (Malaysia) Marketing of consumer confectionery

Malaysia

100

100

Held by Del Cocoa Investments 1 Pte Ltd DCMX Cocoa, S.A. de C.V.* (Mexico) Manufacturing and marketing of industrial cocoa ingredients Mexico Mexico Brazil 100 100 100 100 100 100

Petra Management Services, S.A. de C.V.* Provision of manpower services (Mexico) Del Cacau Brasil Ltda.* (Brazil) Held by Petra Europe Holdings Pte Ltd Del Cocoa (Europe) B.V.* (Netherlands) Held by Del Cocoa (Europe) B.V. Del Cocoa (Europe) GmbH* (Germany) Del Nord Cacao SAS* (France) Marketing of industrial cocoa ingredients Manufacturing and marketing of industrial cocoa ingredients

Netherlands

100

100

Manufacturing of industrial cocoa ingredients Germany Manufacturing of industrial cocoa ingredients France

100 100

100 100

Held by McKeeson Consultants Private Limited PT Perusahaan Industri Ceres* (Indonesia) PT General Food Industries* (Indonesia) PT Nirwana Lestari* (Indonesia)
^ * +

Investment holding, manufacturing and marketing of consumer confectionery Manufacturing and marketing of industrial cocoa ingredients Marketing and distribution of chocolate confections and other food products

Indonesia Indonesia Indonesia

0.001 0.002 0.010

0.001 0.002 0.010

Audited by PricewaterhouseCoopers LLP, Singapore. Audited by PricewaterhouseCoopers rms outside Singapore. Audited by Ernst & Young, Malaysia. Not required to be audited by law in country of incorporation.

86

Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

19. INVESTMENTS IN ASSOCIATED COMPANIES AND JOINT VENTURE


The Group 2010 US$000 2009 US$000 The Company 2010 2009 US$000 US$000

Equity investments, at cost Beginning of nancial year Currency translation differences Investment in joint venture Share of prots End of nancial year 2,363 139 265 298 3,065 1,773 268 322 2,363

3,265

3,000

The summarised nancial information of associated companies, not adjusted for the proportion ownership interest held by the Group, is as follows:
2010 US$000 2009 US$000

Assets Liabilities Revenue Net prot

12,320 (6,732) 10,854 582

11,049 (6,256) 7,550 622

The details of the associated companies are as follows:


Name of company Country of incorporation Principal activities Equity holding 2010 2009 % %

Held by the Company PT Ceres Meiji Indotama *#

Indonesia

Manufacturing and marketing of snacks and food products

40

40

Held by Cocoa Specialities, Inc. Alsa Industries, Inc. Philippines


* #

Leasing of property

40

40

Audited by PricewaterhouseCoopers rms outside Singapore. The Groups effective interest is 50%, including 10% held by PT Perusahaan Industri Ceres.

The summarised nancial information of the joint venture, not adjusted for the proportion ownership interest held by the Group, is as follows:
2010 US$000 2009 US$000

Current assets The details of the joint venture are as follows:


Name of company Country of incorporation Principal activities

795

Equity holding 2010 2009 % %

Held by the Company PACTS SA

Switzerland

Quality and supply control of high quality fermented cocoa beans

33.33

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements

87

Notes to the Financial Statements


for the nancial year ended 31 December 2010

19. INVESTMENTS IN ASSOCIATED COMPANIES AND JOINT VENTURE (CONTINUED) On 19 May 2010, the Company entered into a joint venture agreement with Blommer Chocolate Company and Cemoi SAS to build, own and operate 30 cocoa bean fermentation centres in the Ivory Coast over a 3-year period. On 19 November 2010, the Company subscribed to 1,000 shares in PACTS SA (PACTS), a new company formed in Switzerland under the joint venture agreement for a cash consideration of US$265,000 (EUR195,000) This represents 33.33% of the share capital of PACTS. 20. RECEIVABLES FROM SUBSIDIARIES Current
The Company 2010 2009 US$000 US$000

Loans to subsidiaries Non-current

10,000

The Company 2010 2009 US$000 US$000

Loans to a subsidiary

74,956

54,519

The loans to a subsidiary are unsecured and repayable from 2014 to 2017. The loans bear interest at variable rates, and the weighted average effective interest rate as at balance sheet date is 3.6796% (2009: 3.142%) per annum. The interest charges were waived during the year. The loans to a subsidiary of US$74,956,000 (2009: US$54,519,000) are subordinated to bank borrowings of the subsidiary. The carrying amounts of the loans approximate their fair values. 21. LOAN TO ASSOCIATED COMPANY The loan to an associate is unsecured and not expected to be repaid within the next 12 months. The loan bears interest at 2.5% (2009: 2.5%) per annum. The carrying amount approximates its fair value.

88

Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

22. PROPERTY, PLANT AND EQUIPMENT


Buildings & Land improvements US$000 US$000 Machinery & equipment US$000 Motor vehicles US$000 Ofce equipment US$000 Construction in progress US$000 Total US$000

The Group Cost At 1 January 2010 Currency translation differences Additions Disposals/written off Reclassication At 31 December 2010 Accumulated depreciation At 1 January 2010 Currency translation differences Disposals/written off Depreciation charge Reclassication At 31 December 2010 Net book value At 31 December 2010 Cost At 1 January 2009 Currency translation differences Additions Disposals/written off Reclassication At 31 December 2009 Accumulated depreciation At 1 January 2009 Currency translation differences Disposals/written off Depreciation charge Reclassication At 31 December 2009 Net book value At 31 December 2009

17,036 (18) 355 177 17,550

83,586 (1,578) 1,511 (65) 2,020 85,474

242,108 (3,178) 3,074 (1,086) 7,499 248,417

7,680 226 1,846 (1,593) (8) 8,151

17,140 449 1,453 (151) 317 19,208

5,227 (13) 6,249 (6) (10,005) 1,452

372,777 (4,112) 14,488 (2,901) 380,252

576 (24) 405 (351) 606

13,062 132 (62) 3,326 351 16,809

71,824 269 (519) 16,174 87,748

5,125 141 (1,481) 1,106 4,891

12,141 377 (148) 2,224 14,594

102,728 895 (2,210) 23,235 124,648

16,944

68,665

160,669

3,260

4,614

1,452

255,604

11,410 711 4,246 669 17,036

54,826 3,136 5,506 (32) 20,150 83,586

176,514 10,142 6,923 (1,192) 49,721 242,108

6,744 629 939 (632) 7,680

14,701 1,223 1,179 (56) 93 17,140

52,916 397 22,547 (70,633) 5,227

317,111 16,238 41,340 (1,912) 372,777

398 11 167 576

9,621 502 (11) 2,950 13,062

55,138 2,725 (815) 14,771 5 71,824

4,297 404 (564) 988 5,125

9,106 908 (54) 2,186 (5) 12,141

78,560 4,550 (1,444) 21,062 102,728

16,460

70,524

170,284

2,555

4,999

5,227

270,049

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements

89

Notes to the Financial Statements


for the nancial year ended 31 December 2010

22. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)


Buildings & improvements US$000 Machinery & equipment US$000 Motor vehicles US$000 Ofce equipment US$000 Construction in progress US$000 Total US$000

The Company Cost At 1 January 2010 Additions Disposals Reclassication At 31 December 2010 Accumulated depreciation At 1 January 2010 Disposals Depreciation charge At 31 December 2010 Net book value At 31 December 2010 Cost At 1 January 2009 Additions Disposals At 31 December 2009 Accumulated depreciation At 1 January 2009 Disposals Depreciation charge At 31 December 2009 Net book value At 31 December 2009 (a)

395 11 406

70 (2) 68

1,163 618 (510) 1,271

2,780 59 (41) 87 2,885

87 (87)

4,495 688 (553) 4,630

319 21 340

59 (1) 2 60

753 (436) 212 529

2,230 (41) 337 2,526

3,361 (478) 572 3,455

66

742

359

1,175

395 395

70 70

1,232 242 (311) 1,163

2,745 63 (28) 2,780

13 74 87

4,455 379 (339) 4,495

227 92 319

56 3 59

824 (260) 189 753

1,827 (26) 429 2,230

2,934 (286) 713 3,361

76

11

410

550

87

1,134

Included in the carrying amount of land of the Group is the cost of freehold land amounting to US$3,623,000 (2009: US$5,219,000). In 2010, the additions of plant and equipment under nance leases (where the Group is the lessee) amounted to US$989,000 (2009: US$1,766,000). The carrying amount of plant and equipment of the Group and the Company held under nance leases at 31 December 2010 amounted to US$3,761,000 (2009: US$2,762,000) and US$731,000 (2009: US$411,000) respectively. Bank borrowings are secured on property, plant and equipment of the Group with a carrying value of US$112,332,000 (2009: US$120,606,000). The borrowing costs capitalised as cost of plant and equipment of the Group during the year ended 31 December 2010 were nil (2009: US$524,000).

(b)

(c)

(d)

(e)

90

Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

23. INTANGIBLE ASSETS


The Group 2010 US$000 2009 US$000 The Company 2010 2009 US$000 US$000

Goodwill arising on consolidation (Note (a)) Brands, patents and trademarks (Note (b)) Customer list (Note (c))

10,841 8,155 2,109 21,105

10,841 8,564 2,627 22,032

1,784 1,784

1,784 1,784

(a)

Goodwill arising on consolidation Cost Beginning and end of nancial year Accumulated impairment Beginning and end of nancial year Net book value

11,196

11,196

(355) 10,841

(355) 10,841

(b)

Brands, patents and trademarks Beginning of nancial year Additions Currency translation differences Amortisation End of nancial year Cost Accumulated amortisation Net book value 8,564 53 (369) (93) 8,155 9,079 (924) 8,155 8,408 74 209 (127) 8,564 9,171 (607) 8,564 1,784 1,784 1,784 1,784 1,784 1,784 1,784 1,784

Brands that are regarded as having indenite useful lives are not amortised and are tested for impairment annually (Note 2.13(b)). These brands have a long heritage and are protected in all of the markets where they are sold by trademarks, which are renewed indenitely without involvement of signicant cost. (c) Customer list Beginning of nancial year Currency translation differences Amortisation End of nancial year Cost Accumulated amortisation Net book value (d) Amortisation expense included in the income statement
The Group 2010 2009 US$000 US$000

2,627 (178) (340) 2,109 3,420 (1,311) 2,109

2,907 76 (356) 2,627 3,655 (1,028) 2,627

Other operating expense

433

483

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements

91

Notes to the Financial Statements


for the nancial year ended 31 December 2010

24. IMPAIRMENT TESTS (a) Goodwill Goodwill acquired through business combinations has been allocated to two individual cash-generating units (CGU) for impairment testing as follows: Far East; and Latin America

Carrying amount of goodwill is allocated to each of the Groups CGUs as follows:


Far East 2010 US$000 2009 US$000 Latin America 2010 US$000 2009 US$000 2010 US$000 Total 2009 US$000

Carrying amount of goodwill

3,355

3,355

7,486

7,486

10,841

10,841

The recoverable amounts of both CGUs are determined based on value-in-use calculations. These calculations use discounted cash ow projections based on nancial budgets approved by management covering a 4-year period. Cash ows beyond the 4th year are extrapolated using estimated growth rates. The growth rate does not exceed the long-term average growth rate for the cocoa business in which the CGU operates. Key assumptions used for value-in-use calculations:
2010 2009

Far East Latin America % %

Far East Latin America % %

Gross margin 1 Growth rate 2 Discount rate 3


1 2 3

4.0 2.5 10.0

6.7 2.5 8.9

6.7 2.8 10.1

6.7 2.5 9.5

Budgeted gross margin Weighted average growth rate used to extrapolate cash ows beyond the budget period Based on weighted average cost of capital

These assumptions have been used for the analysis of each CGU within the business segment. Management determined budgeted gross margin based on past performance and its expectations of market development. The weighted average growth rates used are consistent with the forecasts included in industry reports. The discount rates used are pre-tax and reect specic risks relating to the segments. (b) Brands The carrying value of brands that are regarded as having indenite useful lives is US$7,469,000 (2009: US$7,469,000). The recoverable amounts of these brands are determined based on the Royalty Relief Approach. Key assumptions used for the Royalty Relief Approach:
2010 % 2009 %

Royalty rates Growth rate 1 Discount rate 2


1 2

0.2 to 4.1 1.5 to 3.0 9.3 to 11.4

0.2 to 4.1 1.5 to 3.0 8.0 to 11.1

Weighted average growth rate used to extrapolate cash ows beyond the budget period Based on weighted average cost of capital, adjusted for country risk premium and brand risk premium

Management determined a royalty rate for each brand based on a benchmarking study of royalty agreements in the confectionery and food processing sector by an independent valuer. The weighted average growth rates used are consistent with the forecasts included in industry reports. The discount rates used are pre-tax and reect specic risks relating to the principal countries of the brands.

92

Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

25. OTHER NON-CURRENT ASSETS These comprise principally long term prepaid operating rentals. 26. TRADE PAYABLES
The Group 2010 US$000 2009 US$000 The Company 2010 2009 US$000 US$000

Trade payables: third parties subsidiaries associated companies related parties non-controlling interest

119,575 1,056 1,686 122,317

84,102 656 1,006 29,264 115,028

33,676 18,037 51,713

24,374 9,872 34,246

Related parties represent corporations in which certain directors have substantial nancial interests. The carrying amounts of current trade payables approximate their fair values. 27. OTHER PAYABLES
The Group 2010 US$000 2009 US$000 The Company 2010 2009 US$000 US$000

Other payables: third parties subsidiaries related parties Accrued operating expenses

25,669 25,669 30,291 55,960

10,567 319 10,886 27,440 38,326

2,424 2,920 5,344 6,576 11,920

993 2,828 3,821 6,724 10,545

Related parties represent corporations in which certain directors have substantial nancial interests. The carrying amounts of other payables approximate their fair values.

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements

93

Notes to the Financial Statements


for the nancial year ended 31 December 2010

28. BORROWINGS Current


The Group 2010 US$000 2009 US$000 The Company 2010 2009 US$000 US$000

Secured Bank borrowings Finance lease liabilities (Note 29) Trade nance and short term advances

20,597 943 143,564 165,104

19,935 971 84,698 105,604

155 155

132 132

Unsecured Bank overdrafts Bank borrowings Medium term notes Trade nance and short term advances

47,415 33,279 29,406 166,320 276,420 441,524

46,384 23,166 120,777 190,327 295,931

672 18,467 29,406 112,885 161,430 161,585

580 5,848 78,870 85,298 85,430

Total borrowings (current) Non-current

The Group 2010 US$000 2009 US$000

The Company 2010 2009 US$000 US$000

Secured Bank borrowings Finance lease liabilities (Note 29)

27,437 726 28,163

43,187 800 43,987

411 411

203 203

Unsecured Bank borrowings Medium term notes

11,311 68,117 79,428 107,591 549,115

38,805 83,584 122,389 166,376 462,307

1,545 68,117 69,662 70,073 231,658

17,315 83,584 100,899 101,102 186,532

Total borrowings (non-current) Total borrowings

94

Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

28. BORROWINGS (CONTINUED) The exposure of the borrowings of the Group and of the Company to interest rate changes and the contractual repricing dates at the balance sheet dates are as follows:
The Group 2010 US$000 2009 US$000 The Company 2010 2009 US$000 US$000

6 months or less 6 12 months 1 5 years Over 5 years

419,864 19,117 110,068 66 549,115

302,065 31 160,211 462,307

141,350 19,113 71,129 66 231,658

79,471 22 107,039 186,532

To hedge the cash ow interest rate risk and foreign exchange risk arising from borrowings, the Group entered into interest rate swaps and cross currency interest rate swaps (Note 15(b)). These interest rate derivatives enable the Group to effectively swap its oating rate borrowings into xed rate borrowings. (a) Security granted Bank borrowings of certain subsidiaries are secured by inventories, trade receivables, and property, plant and equipment. Finance lease liabilities of the Group are secured by the rights to the leased property, plant and equipment (Note 22), which would revert to the lessor in the event of default by the Group. (b) Maturity of non-current borrowings The non-current borrowings (excluding nance lease liabilities (Note 29)) have the following maturity:
The Group 2010 US$000 2009 US$000

Between one to two years Between two to ve years

68,047 38,817 106,864

68,473 97,103 165,576

(c)

Carrying amounts and fair value The fair value is determined from discounted cash ows analysis using discount rates ranging from 3.48% to 4.24% (2009: 6.00% to 6.36%) based on the borrowing rates which the directors expect to be available to the Group at the balance sheet date. The carrying amounts of borrowings approximate their fair values.

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements

95

Notes to the Financial Statements


for the nancial year ended 31 December 2010

29. FINANCE LEASE LIABILITIES


The Group 2010 US$000 2009 US$000 The Company 2010 2009 US$000 US$000

Minimum lease payment due: Not later than one year Between two to ve years Later than ve years Less: Future nance charges Present value of nance lease liabilities The present value of nance lease liabilities is analysed as follows:

989 751 16 1,756 (87) 1,669

1,020 834 1,854 (83) 1,771

176 425 16 617 (51) 566

145 215 360 (25) 335

The Group 2010 US$000 2009 US$000

The Company 2010 2009 US$000 US$000

Not later than one year Between two to ve years Later than ve years

943 711 15 1,669

971 800 1,771

155 396 15 566

132 203 335

30. PROVISIONS FOR OTHER LIABILITIES AND CHARGES Non-current


The Group 2010 US$000 2009 US$000

Employee post-employment benet plans (Note (a)) Others

9,188 1,126 10,314

7,659 688 8,347

(a)

Employee post-employment benet plans Certain subsidiaries of the Group operate dened benet pension plans for severance and service benets required under the labour laws of the country in which they operate. These pension plans are unfunded. The amounts recognised in prot or loss are as follows:
The Group 2010 US$000 2009 US$000

Current service cost Interest cost Amortisation of past service costs Actuarial loss recognised during the year Total, included in employee benets expenses (Note 6)

946 951 1,897 284 140 2,321

718 593 1,311 1,600 24 2,935

96

Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

30. PROVISIONS FOR OTHER LIABILITIES AND CHARGES (CONTINUED) (a) Employee post-employment benet plans (continued) The movement in the liability recognised in the balance sheet:
The Group 2010 US$000 2009 US$000

Beginning of nancial year Total, included in employee benets expenses (Note 6) Benets paid Currency translation differences End of nancial year The amounts recognised in the balance sheet are determined as follows:

7,659 2,321 (1,164) 372 9,188

4,113 2,935 (294) 905 7,659

The Group 2010 US$000 2009 US$000

Present value of unfunded obligations Unrecognised past service costs Unrecognised actuarial losses Liability in balance sheet
2010 US$000 2009 US$000 2008 US$000

11,326 (125) (2,013) 9,188


2007 US$000

9,048 (468) (921) 7,659


2006 US$000

As at 31 December

Present value of unfunded obligations

11,326

9,048

5,225

5,339

4,359

The principal actuarial assumptions used were as follows:


The Group 2010 % 2009 %

Discount rates (per annum) Future salary increases (per annum) 31. SHARE CAPITAL

4.5 to 9.4 1.2 to 9.0

6.0 to 11.0 2.0 to 10.0

Issued share capital Number Share of shares capital 000 US$000

2010 Beginning of nancial year Shares issued Share issue expenses

532,277 78,880 611,157

95,767 61,143 (959) 155,951

2009 Beginning and end of nancial year All issued shares are fully paid. There is no par value for these ordinary shares.

532,277

95,767

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements

97

Notes to the Financial Statements


for the nancial year ended 31 December 2010

31. SHARE CAPITAL (CONTINUED) On 16 June 2010, the Company issued 78,880,000 ordinary shares for a total cash consideration of US$61,143,000. The cash proceeds provide the Group with nancial capacity to pursue strategic growth opportunities and to increase its nancial resources for current operations. The intention is to use about 50% of the net proceeds to pursue strategic alliances, mergers and acquisitions, joint ventures and investments as and when they may arise; and the remaining for working capital and general purposes of the Group. As at balance sheet date, pending utilisation of proceeds allocated for strategic alliances, mergers and acquisitions, joint ventures or investments, the Group has utilised all proceeds to reduce bank borrowings. The newly issued shares rank pari passu in all respects with the previously issued shares. 32. FOREIGN CURRENCY TRANSLATION RESERVE
The Group 2010 US$000 2009 US$000

Beginning of nancial year Net currency translation differences of nancial statements of foreign subsidiaries End of nancial year 33. RETAINED EARNINGS

(3,079) 1,117 (1,962)

(13,089) 10,010 (3,079)

Subsidiaries in France, Indonesia and Thailand are required under their local laws to set aside an amount from their net prot to a general reserve until this reserve accumulates to amounts ranging from 10% to 20% of their fully paid capital. Such reserves are not distributable. (a) Retained earnings of the Group and the Company are distributable except for retained earnings of certain subsidiaries amounting to US$3,341,000 (2009: US$3,586,000) which are included in the Groups retained earnings. Movement in retained earnings for the Company is as follows:
The Company 2010 2009 US$000 US$000

(b)

Beginning of nancial year Prot for the year Dividends paid (Note 34) End of nancial year

51,886 20,300 (12,743) 59,443

32,524 30,300 (10,938) 51,886

Movement in retained earnings for the Group is shown in the Consolidated Statement of Changes in Equity.

98

Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

34. DIVIDENDS
The Group 2010 US$000 2009 US$000

Declared and paid during the year Final dividend for 2009: 1.02 US cents or 1.43 Singapore cents (2009: 1.02 US cents) per share Interim dividend for 2010: 1.17 US cents or 1.60 Singapore cents (2009: 1.02 US cents) per share

5,429 7,314 12,743

5,429 5,509 10,938

At the forthcoming Annual General Meeting on 28 April 2011, a nal dividend of 1.72 US cents or 2.18 Singapore cents per share amounting to a total of US$10.5 million will be recommended. These nancial statements do not reect this dividend, which will be accounted for in shareholders equity as an appropriation of retained earnings in the nancial year ending 31 December 2011. 35. IMMEDIATE AND ULTIMATE HOLDING CORPORATIONS The Companys immediate and intermediate holding corporations are Springbright Investment Limited and Aerodrome International Limited respectively. Both corporations are incorporated in the British Virgin Islands. The Companys ultimate holding corporation is Credit Suisse Trust Limited, incorporated in Singapore, in its capacity as trustee of Johnsonville Assets Limited and Johnsonville Holdings Limited. 36. CONTINGENT LIABILITIES As of balance sheet date, the Company has issued corporate guarantees for the amount of US$74,268,000 (2009: US$58,785,000) to banks for its subsidiaries bank borrowings.

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements

99

Notes to the Financial Statements


for the nancial year ended 31 December 2010

37. COMMITMENTS FOR EXPENDITURE (a) Capital commitments Capital expenditures contracted for at the balance sheet date but not recognised in the nancial statements are as follows:
The Group 2010 US$000 2009 US$000 The Company 2010 2009 US$000 US$000

Expenditure for property, plant and equipment Approved and contracted for (b) Operating lease commitments

6,318

566

32

The Group and the Company lease various factories, warehouses and ofce premises under operating lease agreements. The leases have varying terms and renewal rights. The future aggregate minimum lease payments under non-cancellable operating leases contracted for at the reporting date but not recognised as liabilities, are as follows:
The Group 2010 2009 US$000 US$000 The Company 2010 2009 US$000 US$000

Not later than one year Later than one year but not later than ve years Later than ve years

2,344 2,111 168 4,623

1,993 3,299 339 5,631

685 652 1,337

549 1,203 1,752

100 Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

38. FINANCIAL RISK MANAGEMENT Overview The Groups activities expose it to a variety of nancial risks, including the effect of changes in foreign currency exchange rates, interest rates and cocoa bean prices. The Groups overall risk management strategy seeks to minimise adverse effects from the unpredictability of nancial markets on the Groups nancial performance. The Group uses derivative nancial instruments such as foreign exchange forwards and futures contracts, cross currency interest rate swaps, exchange traded cocoa bean futures contracts, interest rate swaps and interest rate caps to manage certain risk exposures. Derivatives are used strictly for risk management purposes and where they meet hedge accounting requirements under Singapore accounting standards, they are designated as hedging instruments. Derivatives that do not qualify for hedge accounting are designated as fair value through prot or loss. Risk management is carried out jointly by the Commercial Department which is primarily responsible for hedging price risk and the Treasury Department which is responsible for hedging foreign currency and interest rate risk in accordance with established policies and guidelines. Both departments identify, evaluate and hedge commodity price risk and nancial risks in close co-operation with the Groups operating units. The Board provides written principles for overall risk management, as well as written policies covering specic areas, such as foreign exchange risk, interest rate risk, credit risk, and the use of derivative and non-derivative nancial instruments. The nance team measures the actual exposures against the limits set and prepares regular reports for review by senior management. (a) Market risk (i) Foreign exchange risk The Group operates globally and, therefore, has various currency exposures, primarily with respect to Singapore Dollar (SGD), Sterling Pound (GBP), Euro (EUR), Australian Dollar (AUD), Indonesian Rupiah (IDR), Thailand Baht (THB), Philippine Peso (PHP), Mexican Peso (MXP) and Brazilian Reais (BRL). Currency risk arises when transactions are denominated in a currency that is not the entitys functional currency. The Group manages its foreign exchange exposure on a net basis by monitoring the receipts and payments in each individual currency. The Treasury Department also uses foreign exchange forward contracts to hedge certain net currency exposure arising from transactions denominated in foreign currencies. Such contracts allow the Group to sell or buy currencies at pre-determined forward rates, depending on forecast requirements, with a tenure of up to a maximum of 6 months. The Company also entered into cross currency interest rate swaps to hedge against the currency risks and interest rate risks arising from its Singapore Dollar medium term notes. This involves an exchange of principal and interest receipts in the foreign currency in which the borrowing is denominated, for principal and interest payments in the Companys functional currency. In addition, the Group is exposed to currency translation risk on the net assets of its foreign operations. Currency exposure arising from the Groups foreign operations in Indonesia, the Philippines and Europe are managed primarily through borrowings denominated in the relevant foreign currencies.

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements 101

Notes to the Financial Statements


for the nancial year ended 31 December 2010

38. FINANCIAL RISK MANAGEMENT (CONTINUED) (a) Market risk (continued) (i) Foreign exchange risk (continued) The Groups currency exposure based on the information provided to key management is as follows:
USD US$000 GBP US$000 SGD US$000 BRL US$000 EUR US$000 Others US$000 Total US$000

At 31 December 2010 Financial assets Financial liabilities Net nancial (liabilities)/ assets Less: Net nancial liabilities denominated in own/ functional currency Currency exposure of nancial (liabilities)/assets net of those denominated in the respective entities functional currencies Firm commitments in foreign currencies Derivative nancial instruments Cross currency interest rate swaps Exchange traded cocoa bean futures/foreign exchange futures Foreign exchange forwards Currency Exposure At 31 December 2009 Financial assets Financial liabilities Net nancial (liabilities)/ assets Less: Net nancial liabilities denominated in own/ functional currency Currency exposure of nancial (liabilities)/assets net of those denominated in the respective entities functional currencies Firm commitments in foreign currencies Derivative nancial instruments Cross currency interest rate swaps Exchange traded cocoa bean futures/foreign exchange futures Foreign exchange forwards Currency Exposure

300,964 (516,685) (215,721)

58,267 (42,317) 15,950

10,161 (100,827) (90,666)

16,909 (12,992) 3,917

150,958 (342,893) (191,935)

110,850 648,109 (137,908) (1,153,622) (27,058) (505,513)

215,450

1,304

248,359

34,927

500,040

(271) 20,216

15,950 (9,511)

(89,362) (74)

3,917

56,424 (19,777)

7,869 30,914

(5,473) 21,768

85,200

85,200

(2,889) (17,717) (661)

(146,485) 136,261 (3,785)

(4,236)

3,917

(43,652) (7,005)

(28,333) 10,450

(149,374) 46,559 (1,320)

217,084 (408,793) (191,709)

44,018 (73,818) (29,800)

8,199 (90,901) (82,702)

9,518 (9,165) 353

152,750 (256,953) (104,203)

81,614 (120,576) (38,962)

513,183 (960,206) (447,023)

182,855

1,223

149,817

43,209

377,104

(8,854) (4,113)

(29,800) (13,953)

(81,479) (40)

353

45,614 15,109

4,247 21,577

(69,919) 18,580

76,385

76,385

(300) 1,994 (11,273)

12,708 39,907 8,862

(5,134)

353

(47,163) 13,560

(15,383) 10,441

12,408 (20,645) 16,809

102 Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

38. FINANCIAL RISK MANAGEMENT (CONTINUED) (a) Market risk (continued) (i) Foreign exchange risk (continued) The Companys currency exposure based on the information provided to key management is as follows:
USD US$000 GBP US$000 SGD US$000 Others US$000 Total US$000

At 31 December 2010 Financial assets Financial liabilities Net nancial assets/(liabilities) Less: Net nancial assets denominated in functional currency Currency exposure of nancial assets/ (liabilities) net of those denominated in functional currency Firm commitments in foreign currencies Derivative nancial instruments Cross currency interest rate swaps Exchange traded cocoa bean futures/foreign exchange futures Foreign exchange forwards Currency Exposure At 31 December 2009 Financial assets Financial liabilities Net nancial assets/(liabilities) Less: Net nancial assets denominated in functional currency Currency exposure of nancial assets/ (liabilities) net of those denominated in functional currency Firm commitments in foreign currencies Derivative nancial instruments Cross currency interest rate swaps Exchange traded cocoa bean futures/foreign exchange futures Foreign exchange forwards Currency Exposure

254,501 (160,521) 93,980 (93,980)

32,852 (30,042) 2,810

3,003 (92,195) (89,192)

76,095 (17,975) 58,120

366,451 (300,733) 65,718 (93,980)

2,810 (11,070)

(89,192)

58,120 (7,930)

(28,262) (19,000)

(63,900) 66,686 (5,474)

85,200 (3,992)

(49,649) 541

85,200 (63,900) 17,037 (8,925)

187,683 (124,731) 62,952 (62,952)

28,049 (18,690) 9,359

2,056 (83,310) (81,254)

57,176 (9,846) 47,330

274,964 (236,577) 38,387 (62,952)

9,359 (19,728)

(81,254)

47,330 2,912

(24,565) (16,816)

12,935 2,566

76,385 (4,869)

(50,433) (191)

76,385 12,935 (50,433) (2,494)

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements 103

Notes to the Financial Statements


for the nancial year ended 31 December 2010

38. FINANCIAL RISK MANAGEMENT (CONTINUED) (a) Market risk (continued) (i) Foreign exchange risk (continued) Sensitivity Analysis to foreign exchange movement Assuming that all other variables, in particular interest rates, remain constant, a strengthening of United States Dollar against the following currencies and a strengthening of Euro against the Sterling Pound at reporting date would increase/ (decrease) equity and prot/(loss) after tax by the amounts shown below.
2010 Prot/(loss) after tax US$000 Equity US$000 Prot/(loss) after tax US$000 2009 Equity US$000

The Group USD against GBP strengthened 2% (2009: 4%) weakened 2% (2009: 4%) USD against BRL strengthened 2% (2009: 3%) weakened 2% (2009: 3%) USD against EUR strengthened 3% (2009: 3%) weakened 3% (2009: 3%) USD against SGD strengthened 2% (2009: 2%) weakened 2% (2009: 2%) EUR against GBP strengthened 4% (2009: 6%) weakened 4% (2009: 6%) The Company USD against GBP strengthened 2% (2009: 4%) weakened 2% (2009: 4%) USD against SGD strengthened 2% (2009: 2%) weakened 2% (2009: 2%) USD against EUR strengthened 3% (2009: 3%) weakened 3% (2009: 3%)

695 (695)

(2,722) 2,722

(1,581) 1,581

(461) 461

(78) 78

(11) 11

257 (257)

713 (713)

1 (1)

114 (114)

(58) 58

120 (120)

(70) 70

(96) 96

(2,316) 2,316

1,081 (1,081)

(1,071) 1,071

693 (693)

(2,722) 2,722

(1,602) 1,602

(461) 461

66 (66)

(58) 58

88 (88)

(70) 70

(42) 42

(233) 233

(106) 106

104 Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

38. FINANCIAL RISK MANAGEMENT (CONTINUED) (a) Market risk (continued) (ii) Price risk The manufacturing of the Groups cocoa ingredients products require raw materials such as cocoa beans and cocoa butter. The Group seeks to protect itself from the volatility of cocoa bean price risk through the use of cocoa bean futures contracts in a cost effective manner. On an ongoing basis the Group carries sufcient stock of cocoa beans to ensure that there is un-interrupted supply to its facilities for the manufacture of cocoa ingredients for delivery. The Group uses cocoa bean futures to manage its price risk pertaining to forecasted requirements (including cost of carry) and uses cocoa bean futures and foreign exchange futures to manage the inter market price differentials. For cocoa bean futures accounted for as cash ow hedges, an increase of cocoa bean price by 5% at the reporting date would increase the Groups and the Companys equity (net of tax) by US$7,181,000 and US$4,455,000 respectively (2009: increase the Groups and the Companys equity (net of tax) by US$795,000 and US$1,221,000 respectively). For cocoa bean futures not designated for hedge accounting as at the reporting date, an increase of cocoa bean price by 5% at the reporting date would decrease the Groups and the Companys prot after tax by US$2,993,000 and US$3,380,000 respectively (2009: decrease the Groups and the Companys prot after tax by US$3,550,000 and US$3,093,000 respectively). For the above, a decrease by 5% would have an equal but opposite effect. The analysis assumes all other variables, in particular, foreign exchange rates, remain constant. (iii) Cash ow and fair value interest rate risks As the Group has no signicant interest-bearing assets, the Groups income and operating cash ows are substantially independent of changes in market interest rates. The Groups interest rate risks arise primarily from its debt obligations. Borrowings are mainly at variable rates and these expose the Group and the Company to cash ow interest rate risk. Generally, the Group manages its interest rate risk from its borrowings subject to oating rates by entering into interest rate derivatives. These interest rate derivatives have the economic effect of protecting the Group against rising interest rates on variable rate borrowings by placing a limit on maximum interest rates payable by the Group. Sensitivity Analysis to variable interest rate movements For borrowings and loans to a subsidiary at oating interest rates The Groups and Companys borrowings at variable rates on which effective hedges have not been entered into, are denominated mainly in US Dollar, Euro and Indonesian Rupiah. The Company has loans to a subsidiary at variable rates which are denominated in Euro and the interest charges were waived during the nancial year ended 31 December 2010. Assuming all other variables including tax rates are held constant, a 50 basis points increase in interest rates will lower the Groups and Companys prot after tax by US$805,000 (2009: US$909,000) and US$29,000 (2009: increased by US$65,000) respectively. Conversely, a decrease in interest rates by 50 basis points would have an equal but opposite effect. For interest rate swaps and caps not designated for hedge accounting Assuming all other variables including tax rate are held constant, a 50 basis points increase in interest rates will increase the Groups and Companys prot after tax by US$228,000 (2009: US$360,000). A decrease in interest rates by 50 basis points would lower the Groups and Companys prot after tax by US$232,000 (2009: US$254,000).

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements 105

Notes to the Financial Statements


for the nancial year ended 31 December 2010

38. FINANCIAL RISK MANAGEMENT (CONTINUED) (a) Market risk (continued) (iii) Cash ow and fair value interest rate risks (continued) Sensitivity Analysis to variable interest rate movements (continued) For interest rate swaps accounted for as cash ow hedges Assuming all other variables including tax rate are held constant, a 50 basis points increase in interest rates will increase the Groups and Companys equity (net of tax) by US$2,200,000 (2009: US$1,470,000) and US$1,652,000 (2009: US$1,090,000) respectively. A decrease in interest rates by 50 basis points would lower the Groups and Companys equity (net of tax) by US$3,004,000 (2009: US$1,220,000) and US$2,363,000 (2009: US$839,000) respectively. For cross currency interest rate swaps accounted for as cash ow hedges Assuming all other variables including tax rate are held constant, a 50 basis points increase in oating interest rates will increase the Groups and Companys equity (net of tax) by US$53,000 (2009: US$91,000). A decrease in interest rates by 50 basis points would lower the Groups and Companys equity (net of tax) by US$78,000 (2009: US$89,000). (b) Credit risk Credit risk refers to the risk that a customer or counterparty will default on its contractual obligations resulting in nancial loss to the Group. For trade receivables, the Group has policies in place to ensure that sales of products and services are made to customers with an appropriate credit history, and where possible, the Group has obtained sufcient security to mitigate credit risk. Concentrations of credit risk with respect to trade receivables are limited due to the Groups customers being internationally dispersed and having a variety of end markets in which they sell. Due to these factors, management believes that no additional credit risk beyond the amount of allowance for impairment made is necessary. The credit exposure and credit terms granted to our customers are continuously monitored at the entity level by the respective management and at the Group level by the Treasury Department. For derivatives, the Group adopts the policy of entering into derivative transactions only with high credit quality nancial institutions. The Group has policies that limit the amount of credit exposure to any nancial institution. The maximum exposure to credit risk for each class of nancial instruments is the carrying amount of that class of nancial instruments presented on the balance sheet, except as follows:
The Company 2010 2009 US$000 US$000

Corporate guarantees provided to banks on subsidiaries loans

74,268

58,785

The Groups and Companys major classes of nancial assets are bank deposits and trade receivables.

106 Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

38. FINANCIAL RISK MANAGEMENT (CONTINUED) (b) Credit risk (continued) The credit risk for trade receivables based on the information provided to key management is as follows:
The Group 2010 US$000 2009 US$000 The Company 2010 2009 US$000 US$000

By geographical areas Indonesia Japan Singapore Philippines Thailand Malaysia China Middle East Other countries in Asia Europe Australia North America South America Africa

34,022 4,757 9,489 11,923 4,425 19,771 4,763 4,999 2,769 28,448 1,652 10,804 23,759 3,383 164,964

28,864 2,983 9,777 11,113 3,323 16,985 2,187 3,907 1,047 25,119 3,863 7,243 15,461 2,150 134,022

15 3,445 2,559 11,169 19,606 133,168 4,763 4,999 2,767 10,327 1,652 14,092 39,359 3,383 251,304

2,983 4,035 6,817 14,402 77,450 2,187 3,907 1,031 4,618 3,863 10,490 49,101 2,150 183,034

By types of customers Subsidiaries Related parties and associated companies Non-controlling interests Non-related parties: International Food and Beverage Companies Retail Chains Wholesalers & Distributors Others

3,686 93,137 31,890 30,147 6,104 164,964

2,316 2 59,676 27,137 38,574 6,317 134,022

214,999 25,505 10,800 251,304

151,518 17,184 14,332 183,034

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements 107

Notes to the Financial Statements


for the nancial year ended 31 December 2010

38. FINANCIAL RISK MANAGEMENT (CONTINUED) (b) Credit risk (continued) (i) Financial assets that are neither past due nor impaired Bank deposits that are neither past due nor impaired are mainly deposits with banks with high credit ratings assigned by international credit-rating agencies. Trade receivables that are neither past due nor impaired are substantially companies with a good collection track record with the Group. (ii) Financial assets that are past due and/or impaired There is no other class of nancial assets that is past due and/or impaired except for trade receivables. The age analysis of trade receivables past due but not impaired is as follows:
The Group 2010 US$000 2009 US$000 The Company 2010 2009 US$000 US$000

Past due 0 to 1 month Past due 1 to 3 months Past due 3 to 6 months Past due over 6 months

46,323 10,344 1,492 949 59,108

35,620 6,729 658 606 43,613

37,997 41,334 6,753 6,366 92,450

35,943 13,366 4,971 23,257 77,537

The carrying amount of trade receivables individually determined to be impaired and the movement in the related allowance for impairment are as follows:
The Group 2010 US$000 2009 US$000 The Company 2010 2009 US$000 US$000

Gross amount Less: Allowance for impairment

274 (274) 241 19 81 (67) 274

241 (241) 112 7 140 (18) 241

5 (5)

5 (5) 5 5

Beginning of nancial year Currency translation difference Allowance made Allowance utilised End of nancial year

108 Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

38. FINANCIAL RISK MANAGEMENT (CONTINUED) (b) Credit risk (continued) Trade receivables that are individually determined to be impaired at the balance sheet date relate to debtors that are in signicant nancial difculty and have defaulted on payments. These receivables are not secured by collaterals or credit enhancement. (c) Liquidity risk Due to the dynamic nature of the underlying business, the Group adopts prudent liquidity risk management policies by maintaining sufcient cash and having an adequate amount of committed credit facilities to meet the forecast net cash requirement of the Groups operations. The table below analyses the Groups and Companys non-derivative nancial liabilities into relevant maturity groupings based on the remaining period from the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash ows. Balances due within 12 months equal their carrying balances as the impact of discounting is not signicant.
Less than 1 year US$000 Between 1 and 2 years US$000 Between 2 and 5 years US$000 Over 5 years US$000

Total US$000

The Group At 31 December 2010 Trade and other payables Borrowings

(175,220) (449,799) (625,019)

(71,377) (71,377)

(40,108) (40,108)

(16) (16)

(175,220) (561,300) (736,520)

At 31 December 2009 Trade and other payables Borrowings

(150,647) (304,119) (454,766)

(76,075) (76,075)

(101,040) (101,040)

(150,647) (481,234) (631,881)

The Company At 31 December 2010 Trade and other payables Borrowings Financial guarantee contracts

(61,633) (166,159) (74,268) (302,060)

(49,780) (49,780)

(22,884) (22,884)

(15) (15)

(61,633) (238,838) (74,268) (374,739)

At 31 December 2009 Trade and other payables Borrowings Financial guarantee contracts

(42,814) (90,229) (58,785) (191,828)

(46,783) (46,783)

(60,442) (60,442)

(42,814) (197,454) (58,785) (299,053)

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements 109

Notes to the Financial Statements


for the nancial year ended 31 December 2010

38. FINANCIAL RISK MANAGEMENT (CONTINUED) (c) Liquidity risk (continued) The table below analyses the Groups and the Companys derivative nancial instruments for which contractual maturities are essential for an understanding of the timing of the cash ows into relevant maturity groupings based on the remaining period from the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash ows. Balances due within 12 months equal their carrying balances as the impact of discounting is not signicant.
Less than 1 year US$000 Between 1 and 2 years US$000 Between 2 and 5 years US$000 Over 5 years US$000

Total US$000

The Group At 31 December 2010 Net-settled interest rate swap Gross-settled foreign exchange forwards and cross currency interest rate swaps Payments Receipts

(3,278)

(2,423)

(624)

432

(5,893)

(516,818) 514,423 (5,673)

(40,737) 48,188 5,028

(7,358) 7,952 (30)

432

(564,913) 570,563 (243)

At 31 December 2009 Net-settled interest rate swap Gross-settled foreign exchange forwards and cross currency interest rate swaps Payments Receipts

(3,375)

(1,837)

(315)

414

(5,113)

(172,477) 172,850 (3,002)

(36,962) 37,327 (1,472)

(40,375) 43,908 3,218

414

(249,814) 254,085 (842)

The Company At 31 December 2010 Net-settled interest rate swap Gross-settled foreign exchange forwards and cross currency interest rate swaps Payments Receipts

(3,021)

(2,201)

(624)

432

(5,414)

(156,229) 157,601 (1,649)

(40,736) 48,188 5,251

(7,358) 7,952 (30)

432

(204,323) 213,741 4,004

At 31 December 2009 Net-settled interest rate swap Gross-settled foreign exchange forwards and cross currency interest rate swaps Payments Receipts

(2,843)

(1,855)

(517)

414

(4,801)

(86,315) 86,501 (2,657)

(29,604) 29,864 (1,595)

(40,375) 43,908 3,016

414

(156,294) 160,273 (822)

110 Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

38. FINANCIAL RISK MANAGEMENT (CONTINUED) (d) Capital risk The Groups objectives when managing capital are to minimise overall cost of capital and to achieve an optimal capital structure so as to maximise shareholder value. The Group leverages on its credit prole and business standing in broadening its nancing options to include the capital markets. In December 2006, the Company established a S$300 million Multicurrency Medium Term Note (MTN) programme which enabled the Group to reduce dependence on bank nancing; provide exibility and currency-matched nancing of short and long term assets and reduce effective interest cost over the longer term. As at 31 December 2010, US$97,523,000 (2009: US$83,584,000) has been drawn down from the MTN programme (Note 28). Management monitors capital based on gearing ratio. The gearing ratio is calculated as net debt divided by the Groups total equity. Net debt is calculated as borrowings less cash and cash equivalents. As it is a common feature in the cocoa industry to carry inventory levels of cocoa beans that are sufcient to mitigate the impact of seasonality and varieties of crops, the bean inventory is nanced through trade nance and working capital facilities. The interest cost of this is recouped and imputed through cocoa product pricing. During the year, the Company repaid a portion of its working capital facilities from the funds obtained from the issuance of MTNs (Note 28). In order to better reect the Groups gearing position, the net debt is adjusted to exclude trade nance and short term advances and MTNs which are used to nance cocoa bean/raw material inventories.
The Group 2010 US$000 2009 US$000 The Company 2010 2009 US$000 US$000

Net debt Adjusted net debt Total equity Gearing ratio (times) Adjusted gearing ratio (times)

506,333 98,927 294,102 1.72 0.34

443,969 154,910 220,069 2.02 0.70

204,283 (6,125) 215,167 0.95 NM

179,773 17,319 152,556 1.18 0.11

The Group and the Company are in compliance with all externally imposed capital requirements for the nancial years ended 31 December 2010 and 2009. (e) Fair value measurements Effective 1 January 2010, the Group adopted the amendment to FRS 107 which requires disclosure of fair value measurements by level of the following fair value measurement hierarchy: (i) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1); (ii) inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as is prices) or indirectly (i.e. derived from prices) (Level 2); (iii) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements 111

Notes to the Financial Statements


for the nancial year ended 31 December 2010

38. FINANCIAL RISK MANAGEMENT (CONTINUED) (e) Fair value measurements (continued) The following table presents the assets and liabilities measured at fair value:
Level 1 US$000 Level 2 US$000 Level 3 US$000 Total US$000

The Group At 31 December 2010 Assets Derivative assets Cross currency interest rate swaps Interest rate swaps

10,889 562 11,451

10,889 562 11,451

Liabilities Derivative liabilities Foreign exchange forwards Interest rate swaps

5,299 5,676 10,975

5,299 5,676 10,975

At 31 December 2009 Assets Derivative assets Foreign exchange forwards Cross currency interest rate swaps Interest rate swaps and caps

1,302 2,999 208 4,509

1,302 2,999 208 4,509

Liabilities Derivative liabilities Interest rate swaps and caps The Company At 31 December 2010 Assets Derivative assets Cross currency interest rate swaps Interest rate swaps

5,607

5,607

10,889 562 11,451

10,889 562 11,451

Liabilities Derivative liabilities Foreign exchange forwards Interest rate swaps

1,538 5,462 7,000

1,538 5,462 7,000

At 31 December 2009 Assets Derivative assets Foreign exchange forwards Cross currency interest rate swaps Interest rate swaps and caps

880 2,999 208 4,087

880 2,999 208 4,087

Liabilities Derivative liabilities Interest rate swaps and caps

5,257

5,257

112 Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

38. FINANCIAL RISK MANAGEMENT (CONTINUED) (e) Fair value measurements (continued) The fair value of nancial instruments that are not traded in an active market is determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date. The fair value of interest rate swaps is calculated at the present value of the estimated future cash ows discounted at actively quoted interest rates. The fair value of cross currency interest rate swaps is determined using the discounted cash ow analysis based on the appropriate interest rates and forward exchange rates. The fair value of foreign exchange forward contracts is determined using forward exchange rates at the balance sheet date. These instruments are included in Level 2. There are no nancial instruments classied as Level 3 as the Group has not applied valuation techniques that are based on signicant unobservable inputs. (f) Financial instruments by category The carrying amount of the different categories of nancial instruments is as disclosed on the face of the balance sheets and in Note 15 to the nancial statements, except for the following:
The Group 2010 US$000 2009 US$000 The Company 2010 2009 US$000 US$000

Loans and receivables Financial liabilities at amortised cost 39. RELATED PARTY TRANSACTIONS (a) Sales and purchases of goods and services

235,638 726,849

182,637 614,578

365,867 294,725

271,764 230,988

In addition to other related party information included elsewhere in the nancial statements, the following related party transactions took place between the Group and related parties during the nancial year:
The Group 2010 US$000 2009 US$000

Revenue: Sales to associated companies Sales to related parties Sales to a non-controlling shareholder who had signicant inuence in a subsidiary Interest income from associated companies Other income from a related party Expenditure: Purchases from associated companies Purchases from related parties Purchases from a non-controlling shareholder who had signicant inuence in a subsidiary Purchase of xed asset from related party Rental payable to associated companies Rental payable to related parties Professional fees paid to a rm/company in which a director is a member Directors fees

23,206 8,047 61 1,350

4 14,585 17,232 58 317

9,091 12,293 23,748 10 64 85 306

5,995 7,618 251,840 6 127 48 257

Related parties represent corporations in which certain directors have substantial nancial interests. The related party transactions between the Group and related parties were conducted at arms length and on normal commercial terms. The non-controlling shareholder who had signicant inuence in a subsidiary ceased to be a shareholder after the Company acquired the remaining 32% of the issued share capital of the subsidiary (Note 18).

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements 113

Notes to the Financial Statements


for the nancial year ended 31 December 2010

39. RELATED PARTY TRANSACTIONS (CONTINUED) (b) Key management compensation Key management compensation is as follows:
The Group 2010 US$000 2009 US$000

Salaries and other short-term employee benets Post employment benets contribution to CPF Dened benet plans

5,351 32 91 5,474

4,867 32 4,899

Included above is total compensation to directors of the Company amounting to US$2,064,000 (2009: US$1,746,000). 40. SEGMENT INFORMATION Management has determined the operating segments based on the reports reviewed by the Executive Committee that are used to make strategic decisions. The Executive Committee comprises the Executive Directors. The Executive Committee considers the business from both a geographical and business segment perspective. Inter-segment transactions are determined on an arms length basis. The revenue from external parties reported to the Executive Committee is measured in a manner consistent with that in the income statement. Management manages and monitors its business in two main reportable segments: Cocoa ingredients manufacture and marketing of a wide range of speciality cocoa butter, liquor and powder under the Del brand; and Branded consumer manufacture and marketing of chocolate confectionery products under a variety of brands and distribution of a wide range of food and other consumer products, including third party brands.

Segment assets The amounts provided to the Executive Committee with respect to total assets are measured in a manner consistent with that of the nancial statements. For the purposes of monitoring segment performance and allocating resources between segments, the Executive Committee monitors the property, plant and equipment, intangible assets, inventories, receivables and operating cash attributable to each segment. All assets are allocated to reportable segments other than deferred income tax assets and tax recoverable. Segment liabilities The amounts provided to the Executive Committee with respect to total liabilities are measured in a manner consistent with that of the nancial statements. These liabilities are allocated based on the operation of the segment. All liabilities are allocated to the reportable segments other than income tax liabilities and borrowings. Capital expenditure Capital expenditure comprises mainly additions to property, plant and equipment directly attributable to the segment.

114 Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

40. SEGMENT INFORMATION (CONTINUED) The segment information provided to the Executive Committee for the reportable segments for the year ended 31 December 2010 is as follows:
Cocoa ingredients US$000 Branded consumer US$000

Total US$000

Sales: Total segment sales Inter-segment sales Sales to external parties EBITDA Finance costs Share of prot of associated companies Income tax expense Assets and liabilities Segment assets Associated companies and joint venture Unallocated assets Consolidated total assets Segment liabilities Unallocated liabilities Consolidated total liabilities Other segment information Depreciation and amortisation Capital expenditure Sales of Branded Consumer is analysed as: Own Brand Third Party Total

1,225,288 (26,152) 1,199,136 53,978

366,884 366,884 54,444

1,592,172 (26,152) 1,566,020 108,422 (25,891) 298 (13,988)

806,792

217,323

1,024,115 3,065 26,669 1,053,849 199,566 560,181 759,747

141,586

57,980

16,944 7,977

6,724 6,511

23,668 14,488

192,066 174,818 366,884

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements 115

Notes to the Financial Statements


for the nancial year ended 31 December 2010

40. SEGMENT INFORMATION (CONTINUED) The segment information provided to the Executive Committee for the reportable segments for the year ended 31 December 2009 is as follows:
Cocoa ingredients US$000 Branded consumer US$000

Total US$000

Sales: Total segment sales Inter-segment sales Sales to external parties EBITDA Finance costs Share of prot of associated companies Income tax expense Non-controlling interest Assets and liabilities Segment assets Associated companies Unallocated assets Consolidated total assets Segment liabilities Unallocated liabilities Consolidated total liabilities Other segment information Depreciation and amortisation Capital expenditure Sales of Branded Consumer is analysed as: Own Brand Third Party Total

965,408 (20,782) 944,626 27,902

299,843 299,843 39,320

1,265,251 (20,782) 1,244,469 67,222 (18,171) 322 (7,582) 4,888

639,673

199,381

839,054 2,363 20,128 861,545 167,308 474,168 641,476

108,594

58,714

15,855 32,369

5,690 8,971

21,545 41,340

156,033 143,810 299,843

Sales between segments are carried out at arms length. The revenue from external parties reported to the Executive Committee is measured in a manner consistent with that in the income statement.

116 Notes to the Financial Statements

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements


for the nancial year ended 31 December 2010

40. SEGMENT INFORMATION (CONTINUED) A reconciliation of EBITDA to prot before tax is set out below:
The Group 2010 US$000 2009 US$000

EBITDA Adjustments for: Fair value loss on interest rate derivatives not designated for hedge accounting (Note 8) Interest expense (Note 7) Interest income (Note 4) Depreciation of property, plant and equipment (Note 22) Amortisation of intangible assets (Note 23(b) & 23(c)) Prot before tax Geographical information

108,422

67,222

(345) (26,197) 249 (23,235) (433) 58,461

(428) (18,112) 182 (21,062) (483) 27,319

Sales are based on the country in which the customer is located. Capital expenditure is shown by the geographical area where the assets are located. The Groups two reportable segments operate in the following main geographical areas:
Revenue 2010 US$000 2009 US$000 Capital expenditure 2010 2009 US$000 US$000

Indonesia Singapore Philippines Thailand Malaysia Japan China Middle East Other countries in Asia Australia Europe North America South America Africa

306,848 67,293 61,636 23,655 84,234 63,513 34,689 56,371 36,926 54,246 529,563 68,567 136,887 41,592 1,566,020

232,211 77,021 44,673 13,543 58,663 72,639 19,311 40,165 18,023 42,308 438,776 64,139 101,601 21,396 1,244,469

6,687 690 441 190 976 4,833 3 668 14,488

8,920 443 432 237 4,008 26,630 1 669 41,340

Petra Foods Limited Annual Report 2010

Notes to the Financial Statements 117

Notes to the Financial Statements


for the nancial year ended 31 December 2010

41. EVENT OCCURRING AFTER BALANCE SHEET DATE On 10 February 2011, the Company issued a 3-year xed rate S$52 million Medium Term Note to renance its borrowings due in 2011. The Note is swapped into US$40.6 million bearing a xed interest rate of 4.88% per annum and due in 2014. 42. NEW OR REVISED ACCOUNTING STANDARDS AND INTERPRETATIONS Below are the mandatory standards, amendments and interpretations to existing standards that have been published, and are relevant for the Groups accounting periods beginning on or after 1 January 2011 or later periods and which the Group has not early adopted: Amendments to FRS 24 Related party disclosures (effective for annual periods beginning on or after 1 January 2011) Amendments to FRS 32 Financial instruments: Presentation classication of rights issues (effective for annual periods beginning on or after 1 February 2010) Amendments to INT FRS 114 Prepayments of a minimum funding requirement (effective for annual periods commencing on or after 1 January 2011) INT FRS 119 Extinguishing nancial liabilities with equity instruments (effective for annual periods commencing on and after 1 July 2010)

The management anticipates that the adoption of the above FRSs, INT FRSs and amendments to FRS in the future periods will not have a material impact on the nancial statements of the Group and of the Company in the period of their initial adoption. 43. AUTHORISATION OF FINANCIAL STATEMENTS These nancial statements were authorised for issue in accordance with a resolution of the Board of Directors of Petra Foods Limited on 24 March 2011.

118 Appendix (Shareholders Mandate)

Petra Foods Limited Annual Report 2010

Appendix (Shareholders Mandate)

This Appendix is circulated to Shareholders of Petra Foods Limited together with the Companys annual report. Its purpose is to provide Shareholders with the relevant information relating to, and to seek Shareholders approval to renew the Shareholders Mandate to be tabled at the Annual General Meeting to be held on 28 April 2011 at 2:00 p.m. at Grand Hyatt Singapore, Magnolia 4, Level 3, 10 Scotts Road, Singapore 228211. The Notice of Annual General Meeting and a Proxy Form are enclosed with the Annual Report. The Singapore Exchange Securities Trading Limited takes no responsibility for the correctness of any of the statements made, reports contained/referred to, or opinions expressed, in this Appendix.

PETRA FOODS LIMITED


(Incorporated in the Republic of Singapore) Company Registration Number: 198403096C

APPENDIX IN RELATION TO THE PROPOSED RENEWAL OF THE SHAREHOLDERS MANDATE FOR INTERESTED PERSON TRANSACTIONS

Petra Foods Limited Annual Report 2010

Appendix (Shareholders Mandate) 119

Appendix (Shareholders Mandate)

DEFINITIONS In this appendix (Appendix), the following denitions apply throughout unless otherwise stated: AGM Audit Committee CDP Company Companies Act Directors Executive Directors Group Independent Director(s) Interested Person Interested Person Transaction John Chuang Joseph Chuang Latest Practicable Date Listing Manual Rp or Rupiah Securities Account SGX-ST Shareholders : The annual general meeting of the Company to be convened on 28 April 2011, notice of which is set out in the Annual Report 2010 despatched together with this Appendix; : An audit committee of the Company comprising of Mr Anthony Michael Dean (Chairman), Ms Josephine Price, Mr Pedro Mata-Bruckmann and Mr Davinder Singh; : The Central Depository (Pte) Limited; : Petra Foods Limited; : Companies Act, Chapter 50 of Singapore; : The directors of the Company as at the date of this Appendix; : The executive directors as at the date of this Appendix, unless otherwise stated; : The Company and its subsidiaries; : The independent director(s) of the company as at the date of this Appendix unless otherwise stated; : A director, chief executive ofcer or controlling shareholder of the Company or an associate of such director, chief executive ofcer or controlling shareholder; : A transaction proposed to be entered into between the Group and any Interested Person; : Chuang Tiong Choon also known as Ma Wei Lin : Chuang Tiong Liep also known as Chit Ko Ko : The latest practicable date prior to the printing of this Appendix, being 17 March 2011; : The listing manual of the SGX-ST; : Indonesian Rupiah; : A securities account maintained by a Depositor with CDP but does not include a securities sub-account; : Singapore Exchange Securities Trading Limited; : Registered holders of Shares, except that where the registered holder is CDP, the term Shareholders shall, where the context admits, mean the Depositors whose Securities Accounts are credited with Shares; : Ordinary shares in the capital of the Company; : A person who has an interest in Shares which is 5% or more of the total votes attached to all the voting ; : Singapore Dollars; : United States Dollars and Cents, respectively; : Chuang Tiong Kie also known as Maung Lu Win; and : Per centum or percentage.

Shares Substantial Shareholder S$ US$ and cents William Chuang % or per cent.

The terms Depositor and Depository Register shall have the meanings ascribed to them respectively in Section 130A of the Companies Act. Words importing the singular shall, where applicable, include the plural and vice versa. Words importing the masculine gender shall, where applicable, include the feminine and neuter genders. References to persons shall include corporations. Any reference in this Appendix to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word dened under the Companies Act, the Listing Manual or any modication thereof and not otherwise dened in this Appendix shall have the same meaning assigned to it under the Companies Act, the Listing Manual or any modication thereof, as the case may be. Any reference to a time of day in this Appendix is made by reference to Singapore time unless otherwise stated.

120 Appendix (Shareholders Mandate)

Petra Foods Limited Annual Report 2010

Appendix (Shareholders Mandate)

1.

INTRODUCTION The purpose of this Appendix is to provide Shareholders with the relevant information relating to, and to seek Shareholders approval at the AGM to renew the general mandate (Shareholders Mandate) that will enable the Group to enter into transactions with the Interested Persons in compliance with Chapter 9 of the Listing Manual. Chapter 9 of the Listing Manual applies to transactions which a listed company or any of its subsidiaries or associated companies propose to enter into with an interested person of the listed company. An interested person is dened as a director, chief executive ofcer or controlling shareholder of the listed company or an associate of such director, chief executive ofcer or controlling shareholder. Chapter 9 of the Listing Manual allows a listed company to seek a Shareholders Mandate for recurrent transactions of a revenue or trading nature or those necessary for its day-to-day operations, which may be carried out with the listed companys interested persons. The Shareholders Mandate was approved at the annual general meeting of the Company held on 28 April 2010 and will be effective until the next annual general meeting is held or required by law to be held, whichever is the earlier. Accordingly, the Directors propose that the general mandate be renewed at the AGM to be held on 28 April 2011, to take effect until the next annual general meeting of the Company. General information relating to Chapter 9 of the Listing Manual, including the meanings of terms such as interested person, associate, associated company and controlling shareholder, are set out in the Annexure of this Appendix.

2.

THE RENEWAL OF THE SHAREHOLDERS MANDATE FOR INTERESTED PERSON TRANSACTIONS

2.1 Classes of Interested Persons The Shareholders Mandate will apply to the Groups interested person transactions including PT Tri Keeson Utama, PT Fajar Mataram Sedayu, PT Freyabadi Indotama and PT Sederhana Djaja and each of their associates. Please refer to the section Potential Conicts of Interest in the Companys prospectus dated 28 October 2004 for more details. Transactions with Interested Persons which do not fall within the ambit of the proposed Shareholders Mandate shall be subject to the relevant provisions of Chapter 9 of the Listing Manual of the SGX-ST. 2.2 Scope of Interested Person Transactions The interested persons transactions with the Interested Persons which will be covered by the Shareholders Mandate are the following:(a) Transactions with PT Tri Keeson Utama By virtue of their aggregate interest in 99.9% of the shareholding in PT Sederhana Djaja, the Executive Directors, Mr John Chuang, Mr Joseph Chuang and Mr William Chuang are deemed to be interested in 100.0% of the issued share capital of PT Tri Keeson Utama held by PT Sederhana Djaja. Please refer to the section Potential Conicts of Interest in the Companys Prospectus dated 28 October 2004 for more details. Accordingly, transactions between the Group and PT Tri Keeson Utama are deemed to be interested person transactions. PT Tri Keeson Utama is principally engaged in the business of mixing and blending cocoa cakes and cocoa powder. The Companys subsidiary, PT General Food Industries, has been selling cocoa products such as cocoa powder and cocoa cakes to PT Tri Keeson Utama. The value of the Companys sales to PT Tri Keeson Utama for the period from 1 January 2010 up to the Latest Practicable Date are as set out below:For the period from 1 January 2010 up to the Latest Practicable Date

Value of sales to PT Tri Keeson Utama (US$000)

13,764

These transactions were entered into on a willing buyer and willing seller basis. The provision of cocoa products to PT Tri Keeson Utama is a recurrent interested person transaction. The Company intends to continue providing the Companys cocoa products to PT Tri Keeson Utama.

Petra Foods Limited Annual Report 2010

Appendix (Shareholders Mandate) 121

Appendix (Shareholders Mandate)

2.

THE RENEWAL OF THE SHAREHOLDERS MANDATE FOR INTERESTED PERSON TRANSACTIONS (CONTINUED)

2.2 Scope of Interested Person Transactions (continued) (b) Transactions with PT Fajar Mataram Sedayu By virtue of their indirect interest in 99.9% of the shareholding in PT Sederhana Djaja, the Executive Directors, Mr John Chuang, Mr Joseph Chuang and Mr William Chuang are deemed to be interested in 51.0% of the issued share capital of PT Fajar Mataram Sedayu. The Companys Executive Ofcer, Mr Poritjo Susanto Widjaja, has an interest of 5.0% in PT Fajar Mataram Sedayu. The remaining shareholding interest in PT Fajar Mataram Sedayu is held by unrelated third parties. Please refer to the section Potential Conicts of Interest in the Companys Prospectus dated 28 October 2004 for more details. Accordingly, transactions between the Group and PT Fajar Mataram Sedayu are deemed to be interested person transactions. PT Fajar Mataram Sedayu is principally engaged in the manufacture and sale of compound chocolate rice primarily for industrial use, as well as the manufacture and sale of consumer chocolate targeted at the lower segment of the Indonesian consumer chocolate market. (i) Sale of materials by the Group to PT Fajar Mataram Sedayu The Companys subsidiaries, PT Perusahaan Industri Ceres and PT General Food Industries, have been undertaking the sale of products such as cocoa liquor, cocoa butter and vegetable fats to PT Fajar Mataram Sedayu. The value of the Companys sales to PT Fajar Mataram Sedayu for the period from 1 January 2010 up to the Latest Practicable Date are as set out below:For the period from 1 January 2010 up to the Latest Practicable Date

Value of sales to PT Fajar Mataram Sedayu (US$000)

376

These transactions were entered into on a willing buyer and willing seller basis. The provision of products such as cocoa liquor, cocoa butter and vegetable fats to PT Fajar Mataram Sedayu is a recurrent interested person transaction. The Company intends to continue providing the Companys products to PT Fajar Mataram Sedayu. (ii) Purchase of goods from PT Fajar Mataram Sedayu The Companys subsidiary, PT Nirwana Lestari, has been undertaking the purchase of products from PT Fajar Mataram Sedayu, for distribution in Bali, Indonesia. PT Nirwana Lestari intends to continue purchasing such products from PT Fajar Mataram Sedayu. The quantum of the Companys purchases from PT Fajar Mataram Sedayu for the period 1 January 2010 to the Latest Practicable Date are set out below:For the period from 1 January 2010 up to the Latest Practicable Date

Value of purchases from PT Fajar Mataram Sedayu (US$000) (c) Transactions with PT Freyabadi Indotama

563

By virtue of their aggregate interest in 100% of the shareholding in Berlian Enterprises Limited, the Executive Directors, Mr John Chuang, Mr Joseph Chuang and Mr William Chuang are deemed to be interested in 49% of the issued share capital of PT Freyabadi Indotama held in aggregate by McKeeson Investments and PT Sederhana Djaja. Accordingly, transactions between the Group and PT Freyabadi Indotama are deemed to be interested person transactions. PT Freyabadi Indotama is a joint venture entity, in which Fuji Oil Ltd, an unrelated third party, McKeeson Investments and PT Sederhana Djaja own 51.0%, 30.0% and 19.0% of its issued share capital respectively. PT Freyabadi Indotama is principally engaged in the manufacture and sale of industrial chocolate.

122 Appendix (Shareholders Mandate)

Petra Foods Limited Annual Report 2010

Appendix (Shareholders Mandate)

2.

THE RENEWAL OF THE SHAREHOLDERS MANDATE FOR INTERESTED PERSON TRANSACTIONS (CONTINUED)

2.2 Scope of Interested Person Transactions (continued) (c) Transactions with PT Freyabadi Indotama (continued) (i) Sale of materials by the Group to PT Freyabadi Indotama The Companys subsidiaries, PT Perusahaan Industri Ceres and PT General Food Industries have been undertaking the sale of products such as cocoa powder, cocoa butter, chocolate rice, cocoa liquor and other products to PT Freyabadi Indotama. The value of the Companys sales to PT Freyabadi Indotama for the period from 1 January 2010 up to the Latest Practicable Date are set out below:For the period from 1 January 2010 up to the Latest Practicable Date

Revenue received from PT Freyabadi Indotama (US$000)

10,416

These transactions were entered into on a willing buyer and willing seller basis. The provision of products such as cocoa powder, cocoa butter, chocolate rice, cocoa liquor and other products to PT Freyabadi Indotama is a recurrent interested person transaction. The Company intends to continue providing the Companys products to PT Freyabadi Indotama. (ii) Purchase of products from PT Freyabadi Indotama The Companys subsidiaries, PT Nirwana Lestari, PT Perusahaan Industri Ceres and associated company, PT Ceres Meiji Indotama, have been undertaking the purchase of chocolate coating and plastic packaging products from PT Freyabadi Indotama. The value of the Companys purchases from PT Freyabadi Indotama for the period from 1 January 2010 up to the Latest Practicable Date are as set out below:For the period from 1 January 2010 up to the Latest Practicable Date

Purchases from PT Freyabadi Indotama (US$000)

13,262

These transactions were entered into on a willing buyer and willing seller basis. The purchase of chocolate coating and plastic packaging products from PT Freyabadi Indotama is a recurrent interested person transaction. The Company intends to continue purchasing such products from PT Freyabadi Indotama. (d) Transactions with PT Sederhana Djaja By virtue of their aggregate interest in 100% of the shareholding in Berlian Enterprises Limited, the Executive Directors, Mr John Chuang, Mr Joseph Chuang and Mr William Chuang are deemed to be interested in 99.9% of the issued share capital of PT Sederhana Djaja held by McKeeson Investments. Accordingly, transactions between the Group and PT Sederhana Djaja are deemed to be interested person transactions. PT Sederhana Djaja is an investment holding company. The Group has entered into various lease agreements with PT Sederhana Djaja in relation to the properties described below. Please refer to Appendix B Properties and Fixed Assets in the Companys Prospectus dated 28 October 2004 for more details.
Land area Present annual (sq m) rental (Rp)

Name of property

US$

Four Seasons Apartment Jakarta, Indonesia Kondominium Simpruk Teras Jakarta, Indonesia

200

390,000,000

42,801 1

228

240,000,000

25,710

Notes: 1 The conversion of Indonesian Rupiah into US Dollars is based on the weighted average exchange rate of Rp9,112 per US Dollar as at the Latest Practicable Date.

Petra Foods Limited Annual Report 2010

Appendix (Shareholders Mandate) 123

Appendix (Shareholders Mandate)

2.

THE RENEWAL OF THE SHAREHOLDERS MANDATE FOR INTERESTED PERSON TRANSACTIONS (CONTINUED)

2.2 Scope of Interested Person Transactions (continued) (d) Transactions with PT Sederhana Djaja (continued) The total annual rental paid by the Group to PT Sederhana Djaja for the period from 1 January 2010 up to the Latest Practicable Date are as set out below:For the period from 1 January 2010 up to the Latest Practicable Date

Total annual rental paid to PT Sederhana Djaja (US$000)

69

These transactions were entered into on a willing buyer and willing seller basis. The Company intends to continue with the lease of these properties from PT Sederhana Djaja. 2.3 Rationale for and Benets of the Shareholders Mandate Shareholders Mandate In the ordinary course of the Groups business activities, the Group and the Interested Persons may enter into transactions with each other from time to time. Further, it is likely that such transactions will occur with some degree of frequency and could arise at any time. The Directors are of the view that it will be benecial to the Group to transact or continue to transact with the Interested Persons, especially since the transactions are to be entered into on normal commercial terms. Due to the time-sensitive nature of commercial transactions, the Company is seeking Shareholders approval pursuant to Chapter 9 of the Listing Manual for the renewal of the Shareholders Mandate to enable the Group to enter into transactions with the Interested Persons, provided that such transactions are entered into in the Groups ordinary course of business, are on normal commercial terms and are not prejudicial to the interests of the Company and its minority Shareholders. The Shareholders Mandate is intended to enhance the Groups ability to pursue business opportunities which are time-sensitive in nature, and will eliminate the need for the Company to announce, or to announce and convene separate general meetings on each occasion to seek Shareholders prior approval for the entry by the Group into such transactions. This will substantially reduce administrative time and expenses associated with the making of such announcements or the convening of general meetings from time to time, and allow resources to be focused towards other corporate and business opportunities. The Shareholders Mandate will not cover any transactions between the Group and the Interested Persons which have a value below S$100,000 as the threshold and aggregation requirements under Chapter 9 of the Listing Manual do not apply to such transactions. In addition, the transactions will not include the purchase or sale of assets, undertakings or businesses that are not in the Groups ordinary course of business. Transactions with the Interested Persons that do not fall within the ambit of the Shareholders Mandate will be subject to the provisions of Chapter 9 and/or other applicable provisions of the Listing Manual. If approved at the AGM, the Shareholders Mandate will take effect from the date of the passing of the resolution to be proposed at the AGM and will continue to be in force until the next annual general meeting. The Company will seek the approval of Shareholders for the renewal of the Shareholders Mandate annually. Pursuant to Rule 920(1)(a) of the Listing Manual, the Company is required to:(a) disclose the Shareholders Mandate in the Companys annual report, giving details of the aggregate value of transactions conducted pursuant to the Shareholders Mandate during the nancial year under review, (in the form set out in Rule 907 of the Listing Manual); and announce the aggregate value of transactions conducted pursuant to the Shareholders Mandate for the nancial periods which it is required to report on within the time period required for the announcement of the nancial results of the Group (in the form set out in Rule 907 of the Listing Manual).

(b)

124 Appendix (Shareholders Mandate)

Petra Foods Limited Annual Report 2010

Appendix (Shareholders Mandate)

2.

THE RENEWAL OF THE SHAREHOLDERS MANDATE FOR INTERESTED PERSON TRANSACTIONS (CONTINUED)

2.4 Review Procedures for Interested Person Transactions The Company has established the following guidelines and procedures to ensure that all Interested Persons Transactions are made on the Companys normal commercial terms and are consistent with the Groups usual business practices and policies, which are generally no more favourable to the Interested Person than those extended to unrelated third parties:(a) All Interested Person Transactions will be documented and submitted periodically to the Audit Committee for their review to ensure that such transactions are carried out on an arms length basis and on normal commercial terms and are not prejudicial to the Company. In the event that a member of the Audit Committee is deemed to have an interest in an Interested Person Transaction, he will abstain from reviewing that particular transaction. The Audit Committee will include the review of Interested Person Transactions as part of the standard procedures during the Audit Committees examination of the adequacy of the Groups internal controls. In respect of any purchase of products or procurement of services from Interested Persons, quotes received from at least two unrelated third parties in respect of the same or substantially the same types of transactions are to be used as a comparison wherever possible. The Audit Committee will review these comparables, taking into account pertinent factors, including but not limited to: (i) whether the pricing is in accordance with the Companys usual business practice and policies; (ii) quality of the products offered; (iii) delivery time; (iv) track record; and (v) whether the terms are no more favourable to the Interested Persons than those extended by unrelated third parties. In cases where it is not possible to obtain comparables from other unrelated third parties, the Company may enter into the transaction with the Interested Person provided that the price and terms received from the Interested Person are no less favourable than those extended by the Interested Person to the unrelated third parties, taking into account all pertinent factors including, but not limited to business practices, industry norms, volume, quality, delivery time and track record. (c) In respect of any sale of products to Interested Persons, the Audit Committee will review the terms of the sale to ensure that they are not prejudicial to the interest of the Shareholders, taking into account pertinent factors, including but not limited to whether transactions with Interested Persons have been carried out at the prevailing market rates or prices on terms which are no more favourable to the Interested Person than the usual commercial terms extended to unrelated third parties. Where the prevailing market rates or prices are not available due to the nature of the product to be sold, the Company may enter into the transaction with the Interested Person provided that the pricing policies are consistent with the usual margin obtained by the Group for the same or substantially similar type of transaction with unrelated third parties. In determining the transaction price payable by Interested Persons for such products, factors such as, but not limited to, quantity, volume, consumption, customer requirements, specications and duration of contract will be taken into account.

(b)

Petra Foods Limited Annual Report 2010

Appendix (Shareholders Mandate) 125

Appendix (Shareholders Mandate)

2.

THE RENEWAL OF THE SHAREHOLDERS MANDATE FOR INTERESTED PERSON TRANSACTIONS (CONTINUED)

2.4 Review Procedures for Interested Person Transactions (continued) The Group will implement the following procedures for the identication of interested persons and the recording of all the Companys interested person transactions: (aa) By the tenth day of each month, the heads of the various departments are required to submit details of all Interested Person Transactions entered into during the previous month to the Chief Financial Ofcer, such as the actual value of the transactions. A nil return is expected if there are no Interested Person Transactions for the month; (bb) the Chief Financial Ofcer will maintain a register of interested person transactions carried out with Interested Persons; and (cc) following the review of the list by the Chief Financial Ofcer, the list will be submitted to the Companys Chief Executive Ofcer for approval prior to the submission to the Audit Committee for review and approval. The Directors will ensure that all disclosure requirements on the Interested Person Transactions, including those required by prevailing legislation, the Listing Manual and accounting standards, are complied with. In addition, such transactions will be subject to Shareholders approval if required by the Listing Manual. The Company will disclose in its Annual Report the aggregate value of the Interested Person Transactions conducted during the nancial year. The Company will maintain a register of transactions carried out with the Interested Persons pursuant to the Shareholders Mandate (recording the basis, including the quotations obtained to support such basis, on which they were entered into), and the Companys internal audit plan will incorporate a review of all transactions entered into in the relevant nancial year pursuant to the Shareholders Mandate. The Audit Committee shall review these internal audit reports on the Interested Person Transactions annually to ascertain that the established review procedures to monitor the Interested Person Transactions have been complied with. If, during these periodic reviews by the Audit Committee, the Audit Committee is of the view that the review procedures as stated above have become inappropriate or insufcient in view of changes to the nature of, or the manner in which, the business activities of the Group are conducted, the Company will revert to Shareholders for a fresh mandate based on new guidelines and review procedures to ensure that Interested Person Transactions will be conducted at arms length, on normal commercial terms and not prejudicial to the interests of the Company and its minority Shareholders.

126 Appendix (Shareholders Mandate)

Petra Foods Limited Annual Report 2010

Appendix (Shareholders Mandate)

DIRECTORS AND SUBSTANTIAL SHAREHOLDERS INTERESTS The interests of the Directors and the substantial Shareholders in Shares as at the Latest Practicable Date are set out below:
Direct Interest Number of Shares % Deemed Interest Number of Shares %

Substantial Shareholders Lim Mee Len John Chuang Credit Suisse Trust Limited Johnsonville Assets Limited Johnsonville Holdings Limited Aerodrome International Limited Joseph Chuang Maplegold Assets Limited Berlian Enterprises Limited Springbright Investments Limited Genesis Asset Management LLP Mason Hill Advisors, LLC Tiger Global Management, LLC Charles P. Coleman III Directors Pedro Mata-Bruckmann John Chuang Joseph Chuang William Chuang Anthony Michael Dean Davinder Singh Josephine Price Chua Koon Chek

270,000 52,000 70,000

0.04 0.008 0.011

311,557,000 1 311,999,000 2 311,407,000 3 311,407,000 4 311,407,000 5 311,407,000 6 308,741,000 7 308,741,000 8 308,741,000 9 291,964,000 10 31,902,000 11 38,684,285 12 39,100,000 13 39,100,000 14

50.97 51.05 50.95 50.95 50.95 50.95 50.51 50.51 50.51 47.77 5.21 6.32 6.39 6.39

52,000 70,000 110,000 100,000 55,000 700,000

0.008 0.011 0.01 0.01 0.008 0.11

277,000 15 311,999,000 2 308,741,000 7 50,000 15 264,000 15

0.04 51.05 50.51 0.008 0.04

Petra Foods Limited Annual Report 2010

Appendix (Shareholders Mandate) 127

Appendix (Shareholders Mandate)

DIRECTORS AND SUBSTANTIAL SHAREHOLDERS INTERESTS (CONTINUED)


Notes: 1 Mdm Lim Mee Len (wife of Mr John Chuang) is deemed to be interested in the Shares held by Aerodrome International Limited (Aerodrome), Berlian Enterprises Limited (Berlian), Springbright Investments Limited (Springbright), McKeeson Investments Pte Ltd (McKeeson) and Honeychurch International Limited (Honeychurch). Mdm Lims interests arise as she is the beneciary of the Johnsonville Asset Trust (JAT) and Johnsonville Holdings Trust (JHT) of which Credit Suisse Trust Limited (CST) has been appointed as the trustee. CST owns 100% of Johnsonville Asset Limited (JAL) and Johnsonville Holdings Limited (JHL), which in turns own (70%) and (30%) of the issued and paid-up share capital of Aerodrome. Accordingly, she is deemed to be interested in all the shares held (directly & indirectly) by Aerodrome and Honeychurch. 2 Mr John Chuang is deemed to be interested in all the shares held (directly and indirectly) by his wife, Mdm Lim Mee Len, including his shares which are held by his nominee, United Overseas Bank Nominees Pte Ltd. He is also one of the beneciaries of JHL. 3 CST is a Singapore registered public trust company and deemed interest arises from its 100% shareholding of Aerodrome as the trustees of JAL and JAH. Accordingly, CST is deemed to be interested in all the shares held indirectly by Aerodrome. 4 JAL has a 70% shareholding in Aerodrome. Accordingly, JAL is deemed to be interested in all the shares held (directly & indirectly) by Aerodrome. 5 JHL has a 30% shareholding in Aerodrome. Accordingly, JHL is deemed to be interested in all the shares held (directly & indirectly) by Aerodrome. 6 Aerodrome is the holding company of Berlian Enterprises Limited (Berlian). Accordingly, Aerodrome is deemed to be interested in all the shares held (directly & indirectly) by Berlian. 7 Mr Joseph Chuang is the sole shareholder of Maplegold Assets Limited (Maplegold). Accordingly, he is deemed to be interested in all the shares held (directly and indirectly) by Maplegold. 8 Maplegold has a 30% shareholding in Berlian. Accordingly, Maplegold is deemed to be interested in all the shares held (directly & indirectly) by Berlian. 9 Berlian is the sole shareholder of McKeeson and Springbright. Accordingly, Berlian is deemed to be interested in all the shares held (directly and indirectly) by McKeeson and Springbright. In addition, Berlians shares in the Company are held by its nominee, Citibank Nominees Singapore Private Limited. 10 Springbrights shares in the Company are held by its nominee, HSBC (Singapore) Nominees Pte Ltd. 11 Genesis Asset Management, LLP is deemed to be interested in the shares held by Genesis Smaller Companies, SICAV and Genesis Smaller Companies. 12 Mason Hill Advisors, LLC is deemed to be interested in the shares held by Equinox Partners, LP and Kuroto Fund, LP. 13 Tiger Global Management, LLC is deemed to be interested in the shares held by Tiger Global, L.P., Tiger Global Master Fund, L.P. and Tiger Global II SPV II, Ltd. 14 Charles P. Coleman III is deemed to be interested in the shares held by Tiger Global, L.P., Tiger Global Master Fund, L.P. and Tiger Global II SPV II, Ltd. 15 Mr Pedro Mata-Bruckmanns and Mr Anthony Michael Deans shares in the Company are held by their nominees, Merrill Lynch (Singapore) Pte Ltd and DBS Nominees Pte Ltd, respectively. Ms Josephine Prices shares in the Company are held by her nominees, Kim Eng Securities Pte. Ltd. and OCBC Securities Private Ltd.

128 Appendix (Shareholders Mandate)

Petra Foods Limited Annual Report 2010

Appendix (Shareholders Mandate)

4.

AUDIT COMMITTEES STATEMENT The Audit Committee has reviewed the terms of the Shareholders Mandate subject to the renewal. Having considered, inter alia, the scope, the guidelines on review procedures, the rationale and the benets of the Shareholders Mandate, the Audit Committee conrms that (a) the review procedures for determining the prices of Interested Person Transactions have not changed since approval for the Shareholders Mandate was last given; and (b) the review procedures set out in paragraph 2.4 of this Appendix are sufcient to ensure that the Interested Person Transactions will be transacted on normal commercial terms and will not be prejudicial to the interests of the Company and its minority Shareholders. If, during the periodic reviews by the Audit Committee, it is of the view that the established review procedures are no longer appropriate or adequate to ensure that the Interested Person Transactions will be transacted on normal commercial terms and will not be prejudicial to the interests of the Company and minority Shareholders, the Company will seek a fresh mandate from Shareholders based on new review procedures.

5.

DIRECTORS RECOMMENDATIONS The Independent Directors are of the opinion that the entry into of the Interested Person Transactions by the Group in the ordinary course of its business will enhance the efciency of the Group and is in the best interests of the Company. For the reasons set out in paragraph 2.3 of this Appendix, the Independent Director recommends that Shareholders vote in favour of Resolution 11, being the Ordinary Resolution relating to the proposed renewal of the Shareholders Mandate at the forthcoming AGM.

6.

ANNUAL GENERAL MEETING The AGM, notice of which is set out in the Annual Report 2010 of the Company, will be held on 28 April 2011 at Grand Hyatt Singapore, Magnolia 4, Level 3, 10 Scotts Road, Singapore 228211 at 2:00 p.m. for the purpose of considering and, if thought t, passing with or without any modications, the Ordinary Resolution relating to the renewal of the Shareholders Mandate at the AGM as set out in the Notice of AGM.

7.

ACTION TO BE TAKEN BY SHAREHOLDERS If a Shareholder is unable to attend the AGM and wishes to appoint a proxy to attend and vote on his behalf, he should complete, sign and return the Proxy Form attached to the Notice of AGM in accordance with the instructions printed thereon as soon as possible and, in any event, so as to reach the Company at 111 Somerset Road, #16-01 TripleOne Somerset, Singapore 238164, not later than 48 hours before the time xed for the AGM. Completion and return of the Proxy Form by a Shareholder will not prevent him from attending and voting at the AGM if he so wishes.

8.

INSPECTION OF DOCUMENTS Copies of the audited nancial statements of the Company for the last two nancial years ended 31 December 2009 and 2010 are available for inspection at the registered ofce of the Company at 111 Somerset Road, #16-01, TripleOne Somerset Singapore 238164, during normal business hours from the date of this Appendix up to the date of the AGM.

9.

DIRECTORS RESPONSIBILITY STATEMENT The Directors collectively and individually accept full responsibility for the accuracy of the information given in this Appendix and conrm, having made all reasonable enquiries, that to the best of their knowledge and belief, the facts stated and the opinions expressed in this Appendix are fair and accurate and that there are no material facts the omission of which would make any statement in this Appendix misleading.

Petra Foods Limited Annual Report 2010

Annexure 129

Annexure
General information relating to Chapter 9 of the Listing Manual

SCOPE Chapter 9 of the Listing Manual applies to transactions which a listed company or any of its subsidiaries (which are not listed on the SGX-ST or an approved stock exchange) or associated companies (which are not listed on the SGX-ST or an approved stock exchange, provided that the listed group, or the listed group and its interested person(s) has control over) proposes to enter into with a counter-party which is an interested person of the listed company. DEFINITIONS An interested person means a director, chief executive ofcer or controlling shareholder of the listed company or an associate of such director, chief executive ofcer or controlling shareholder. An associate includes an immediate family member (that is, the spouse, child, adopted child, stepchild, sibling or parent) of such director, chief executive ofcer or controlling shareholder, and any company in which the director/his immediate family, the chief executive ofcer/his immediate family or controlling shareholder/his immediate family has an aggregate interest (directly or indirectly) of 30% or more, and, where a controlling shareholder is a corporation, its subsidiary or holding company or fellow subsidiary or a company in which it and/or they have (directly or indirectly) an interest of 30% or more. An associated company means a company in which at least 20% but not more than 50% of its shares are held by the listed company or the group. A controlling shareholder means a person who holds (directly or indirectly) 15% or more of the nominal amount of all voting shares in the listed company or one who in fact exercises control over the listed company. GENERAL REQUIREMENTS Except for certain transactions which, by reason of the nature of such transactions, are not considered to put the listed company at risk to its interested persons and are hence excluded from the ambit of Chapter 9 of the Listing Manual, immediate announcement or, immediate announcement and shareholders approval would be required in respect of transactions with interested persons if certain nancial thresholds (which are based on the value of the transaction as compared with the listed companys latest audited consolidated NTA), are reached or exceeded. In particular, shareholders approval is required where: (a) the value of such transaction when aggregated with the value of all other transactions previously entered into with the same interested person in the same nancial year of the listed company is equal to or exceeds 5% of the latest audited consolidated NTA of the listed company; or the value of such transaction is equal to or exceeds 5% of the latest audited consolidated NTA of the listed company.

(b)

Immediate announcement of a transaction is required where: (a) the value of such transaction when aggregated with the value of all other transactions previously entered into with the same interested person in the same nancial year of the listed company is equal to or exceeds 3% of the latest audited consolidated NTA of the listed company; or the value of such transaction is equal to or exceeds 3% of the latest audited consolidated NTA of the listed company.

(b)

GENERAL MANDATE A listed company may seek a general mandate from its shareholders for recurrent transactions of a revenue or trading nature or those necessary for its day-to-day operations such as the purchase and sale of supplies and materials but not in respect of the purchase or sale of assets, undertakings or businesses. A general mandate is subject to annual renewal.

130 Disclosure Under SGX-ST Listing Manual Requirements

Petra Foods Limited Annual Report 2010

Disclosure Under SGX-ST Listing Manual Requirements


for the nancial year ended 31 December 2010

ADDITIONAL SINGAPORE EXCHANGE SECURITIES TRADING LISTING MANUAL REQUIREMENTS (a) Corporate information Company Secretaries Chuang Yok Hoa, ACIS Lian Kim Seng, ACIS Registered Ofce 111 Somerset Road #16-01 TripleOne Somerset Singapore 238164 Tel: (65) 6477 5600 Fax: (65) 6887 5181 Email address: enquiry@petrafoods.com Registrar and Share Transfer Ofce M & C Services Private Limited 138 Robinson Road #17-00 The Corporate Ofce Singapore 068906 Auditors PricewaterhouseCoopers LLP 8 Cross Street #17-00 PWC Building Singapore 048424 Partner-in-charge (since 2006): Deborah Ong (b) Material contracts Chuang Tiong Choon, Chuang Tiong Liep and Chuang Tiong Kie who are the Companys executive directors, are deemed to have an aggregate interest of 49.0% in the issued share capital of PT Freyabadi Indotama (Freyabadi) held in aggregate by McKeeson Investments Pte Ltd and PT Sederhana Djaja by virtue of their aggregate interest in 100% of the shareholding in Berlian Enterprises. Chuang Tiong Kie is also the President Director of Freyabadi. By virtue of their aggregate interest in 99.9% of the shareholding in PT Sederhana Djaja, Chuang Tiong Choon, Chuang Tiong Liep and Chuang Tiong Kie who are the Companys executive directors, are deemed to be interested in 100% of the issued share capital of PT Tri Keeson Utama (TKU) held by PT Sederhana Djaja. (i) Call Option Agreement On 22 September 2004, the Company entered into a call option agreement with PT Sederhana Djaja and McKeeson Investments Pte Ltd (collectively, the Grantors) pursuant to which the Grantors granted to the Company the right to require the Grantors to sell to the Company ordinary shares, representing 49%, 100% and 51% of the issued and paid-up share capital of Freyabadi, TKU and PT Fajar Mataram Sedayu (FMS) respectively. (ii) Deed of Undertaking On 22 September 2004, each of Chuang Tiong Choon, Chuang Tiong Liep and Chuang Tiong Kie (the Covenantors) entered into a deed of undertaking with the Company to undertake and agree to dispose of their respective shareholding interests in Freyabadi, TKU and FMS in the event that the Audit Committee determines that a potential conict of interest may arise between the Group, Freyabadi and TKU and between the Group and FMS; and the Groups acquisition of each Covenantors shareholding interests in Freyabadi, TKU and FMS is not in the Groups commercial interest.

Petra Foods Limited Annual Report 2010

Disclosure Under SGX-ST Listing Manual Requirements 131

Disclosure Under SGX-ST Listing Manual Requirements


for the nancial year ended 31 December 2010

ADDITIONAL SINGAPORE EXCHANGE SECURITIES TRADING LISTING MANUAL REQUIREMENTS (CONTINUED)) (c) Directors remuneration A breakdown showing the level and mix of each directors remuneration (including salary, bonus, directors fees and benets in kind) paid and payable for this nancial year is as follows:
Directors Fee (%) Basic Salary (%) Variable or Bonuses (%)

Directors

Total (%)

S$1,250,000 and S$1,499,999 Chuang Tiong Choon S$750,000 to S$999,999 Chuang Tiong Liep S$250,000 to S$499,999 Chuang Tiong Kie Below S$250,000 Chua Koon Chek Anthony Michael Dean Pedro Mata-Bruckmann Davinder Singh Josephine Price

64

36

100

65

35

100

72

28

100

100 100 100 100

80

20

100 100 100 100 100

Number of directors of the Company receiving remuneration from the Group during the nancial year:
Remuneration bands 2010 2009

Executive S$1,250,000 to S$1,499,999 S$1,000,000 to S$1,249,999 S$750,000 to S$999,999 S$500,000 to S$749,999 S$250,000 to S$499,999 Below S$249,999 Non-executive Below S$250,000

1 1 1 1

1 1 1 1

4 8

4 8

132 Disclosure Under SGX-ST Listing Manual Requirements

Petra Foods Limited Annual Report 2010

Disclosure Under SGX-ST Listing Manual Requirements


for the nancial year ended 31 December 2010

ADDITIONAL SINGAPORE EXCHANGE SECURITIES TRADING LISTING MANUAL REQUIREMENTS (CONTINUED) (c) Directors remuneration (continued) Remuneration of executive ofcers
Year ended 31 December 2010 1 Year ended 31 December 2009 1

Ee Kim Seng Chin Koon Yew Francis Benedict Ryan Susanto Widjaja Nancy Florensia Susanto Purwo 2 Ferry Haryanto Ng Sin Heng Lim Seok Bee Chris Oo Hoe Hee Marc Donaldson 3
Notes: 1 Remuneration bands: A refers to remuneration below S$250,000 B refers to remuneration between S$250,000 and S$499,999 C refers to remuneration between S$500,000 and above 2 With effect from 1 July 2010, Susanto Purwo retired and ceased to be an Executive Ofcer of the Company 3 With effect from 31 October 2009, Marc Donaldson ceased to be an Executive Ofcer of the Company

C C B B C A B C C B NA

B B B B B A B B B B B

The Company does not have any employee who is an immediate family member of a Director or Chief Executive Ofcer and whose remuneration exceeded S$150,000.

Petra Foods Limited Annual Report 2010

Disclosure Under SGX-ST Listing Manual Requirements 133

Disclosure Under SGX-ST Listing Manual Requirements


for the nancial year ended 31 December 2010

ADDITIONAL SINGAPORE EXCHANGE SECURITIES TRADING LISTING MANUAL REQUIREMENTS (CONTINUED) (d) Properties of the Group
Held by Location Land Area (sq m) Tenure Existing use

Leasehold Land and Buildings PT Perusahaan Industri Ceres Village: Pasawahan, Sub district: Dayeuh Kolot, No. 92 Regency: Bandung, Province: West Java Indonesia Village: Pasawahan, Sub district: Dayeuh Kolot, No. 92 Regency: Bandung, Province: West Java Indonesia Village: Pasawahan, Sub district: Dayeuh Kolot, No. 88 Regency: Bandung, Province: West Java Indonesia Village: Pasawahan, Sub district: Dayeuh Kolot, No. 94 Regency: Bandung, Province: West Java Indonesia Village: Pasawahan, Sub district: Dayeuh Kolot, No. 86 Regency: Bandung, Province: West Java Indonesia Village: Pasawahan, Sub district: Dayeuh Kolot, No. 90 Regency: Bandung, Province: West Java Indonesia 4,378 30 years from February 2003 Chocolate factory, warehouse, ofce

24,185

30 years from September 2004

Chocolate factory, warehouse, ofce

3,840

30 years from November 2008

Raw material warehouse

14,610

30 years from March 2009

Factory

15,750

30 years from March 2009

Factory

9,900

30 years from March 2009

Factory

134 Disclosure Under SGX-ST Listing Manual Requirements

Petra Foods Limited Annual Report 2010

Disclosure Under SGX-ST Listing Manual Requirements


for the nancial year ended 31 December 2010

ADDITIONAL SINGAPORE EXCHANGE SECURITIES TRADING LISTING MANUAL REQUIREMENTS (CONTINUED) (d) Properties of the Group (continued)
Held by Location Land Area (sq m) Tenure Existing use

Leasehold Land and Buildings PT Nirwana Lestari Village: Bojong Menteng Sub District: East Bekasi, Jln Raya Narogong, Km 7 Regency: Bekasi Province: West Java Indonesia Denpasar, Bali 80116 Jl. Cargo Permai I no.188 PT General Food Industries Village: Pasawahan Sub District: Dayeuh Kolot No. 1, Jln Mengger, Regency: Bandung Province: West Java Indonesia Village: Pasawahan, Sub district: Wates No. 84, Jln Raya Dayeuh Kolot Regency: Bandung, Province: West Java Indonesia Del Cocoa (Malaysia) Sdn Bhd PLO No. 700, Pasir Gudang Johor Malaysia PLO No. 732, Pasir Gudang Johor Malaysia 19,450 20 years from December 2008 Ofce, warehouse

1,515

27 years from May 2002 30 years leasehold from November 2007

Warehouse

25,190

Factory, warehouse

8,075

20 years from January 2008

Factory, warehouse, ofce

40,469

60 years from December 2000

Manufacturing plant

16,186

60 years from April 2009

Manufacturing plant

Petra Foods Limited Annual Report 2010

Disclosure Under SGX-ST Listing Manual Requirements 135

Disclosure Under SGX-ST Listing Manual Requirements


for the nancial year ended 31 December 2010

ADDITIONAL SINGAPORE EXCHANGE SECURITIES TRADING LISTING MANUAL REQUIREMENTS (CONTINUED) (d) Properties of the Group (continued)
Held by Location Land Area (sq m) Tenure Existing use

Freehold Land and Buildings DCMX Cocoa S.A. de C.V. Lago Muritz No. 55, 61, 63, 65, 67, 73 and 228 Col. Anahuac, Delegacion Miguel Hidalgo, Mexico, Federal District 6,096 Freehold Manufacturing plant

Cocoa Barrio Guyong, Sta. Maria, Specialities Inc. Bulacan 118 Herrera St., Legaspi Village, Makati Siam Cocoa Products Inc. Land title deed no.11164 Tambol Takam (North Bangpakong), Amphur Bangkapong, Chachoengsao province Land title deed no. 11234 Tambol Takam (North Bangpakong), Amphur Bangpakong, Chachoengsao province Del Cacau Brasil Ltda. Del Foods, Inc. Itabuna, Bahia

6,913

Freehold

Manufacturing plant

426

Freehold

Ofce

6,424

Freehold

Manufacturing plant

1,236

Freehold

Manufacturing plant

68,139

Freehold

Production & storage facilities Factory, warehouse and ofce building Manufacturing plant

Barangay Parang, Marikina City, Metro Manila, Philippines Einsiedeldeich 7-9 20539 Hamburg, Germany ZI La Leurette Route du Developpement 59820 Gravelines, France

25,296

Freehold

Del Cocoa (Europe) GmbH

10,404

Freehold

Del Nord Cacao SAS

31,639

Freehold

Factory, warehouse and ofce building

136 Disclosure Under SGX-ST Listing Manual Requirements

Petra Foods Limited Annual Report 2010

Disclosure Under SGX-ST Listing Manual Requirements


for the nancial year ended 31 December 2010

ADDITIONAL SINGAPORE EXCHANGE SECURITIES TRADING LISTING MANUAL REQUIREMENTS (CONTINUED) (e) Interested person transactions and conicts of interest (IPT) Pursuant to Rule 920(2) of the Listing Manual, the Company has obtained a Shareholders Mandate for it to enter into certain categories of interested person transactions with PT Tri Keeson Utama, PT Fajar Mataram Sedayu, PT Freyabadi Indotama and PT Sederhana Djaja and each of their associates. Transactions with interested persons which do not fall within the Shareholders Mandate shall be subject to the relevant provisions of Chapter 9 of the Listing Manual of the SGX-ST. As at 31 December 2010, the total IPT of US$38.5 million was recorded, as shown below.
1 Aggregate value of all interested person transactions during the nancial year under review (excluding transactions conducted under shareholders mandate pursuant to Rule 920) 2010 US$000

1 Aggregate value of all interested person transactions conducted under a shareholders mandate pursuant to Rule 920 2010 US$000

PT Freyabadi Indotama Sales of goods Purchase of products

10,416 13,262 23,678

PT Tri Keeson Utama Sales of goods PT Fajar Mataram Sedayu Sales of goods Purchase of goods

13,764

376 563 939

PT Sederhana Djaja Lease of properties Megawati Leman Lease of premises PT Freyabadi Indotama Purchase of property, plant and equipment
1

69

16

10

Includes transactions less than S$100,000

(f)

Compliance with Rule 716 of the Listing Rules of SGX-ST Both Audit Committee and Board are satised that the appointment of different auditors of its subsidiaries would not compromise the standard and effectiveness of the audit of the Company. Accordingly, the Company is in compliance with Rule 716 of the Listing Rules of the SGX-ST.

Petra Foods Limited Annual Report 2010

Shareholdings Statistics 137

Shareholdings Statistics
as at 17 March 2011

Total number of ordinary shares Total number of voting shares Total issued and paid-up capital Class of shares Voting rights ANALYSIS OF SHAREHOLDINGS
Size of Shareholdings

: 611,157,000 : 611,157,000 : S$247,805,757.00 : Ordinary shares : 1 vote per ordinary share

Total number of treasury shares held : Nil

No. of Shareholders

No. of Shares

1 999 1,000 10,000 10,001 1,000,000 1,000,001 and above

15 263 127 14 419

3.58 62.77 30.31 3.34 100.00

1,076 1,116,256 10,297,453 599,742,215 611,157,000

0.00 0.18 1.69 98.13 100.00

TOP 21 SHAREHOLDERS
No. Name of Shareholder No. of Shares %

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

HSBC (Singapore) Nominees Pte Ltd Citibank Nominees Singapore Pte Ltd DBS Nominees Pte Ltd Rafes Nominees (Pte) Ltd BNP Paribas Securities Services Singapore Morgan Stanley Asia (S) Securities Pte Ltd United Overseas Bank Nominees Pte Ltd Mckeeson Investments Pte Ltd DBSN Services Pte Ltd Kie Saw Sim UOB Kay Hian Pte Ltd Chuang Yok Hoa Merrill Lynch (S) Pte Ltd Chuang Mying Hwa Chin Koon Yew Chua Koon Chek Mayban Nominees (S) Pte Ltd DBS Vickers Securities (S) Pte Ltd Ang Lily Nova Tjie Tjie Nancy Florensia

341,261,200 73,076,472 66,644,243 50,547,000 20,994,000 13,084,000 9,332,000 6,000,000 4,933,000 3,708,000 3,037,000 2,800,000 2,497,300 1,828,000 910,000 700,000 700,000 676,000 471,000 318,000 318,000 603,835,215

55.84 11.96 10.91 8.27 3.44 2.14 1.53 0.98 0.81 0.61 0.50 0.46 0.41 0.30 0.15 0.11 0.11 0.11 0.08 0.05 0.05 98.82

SHAREHOLDINGS HELD IN HANDS OF PUBLIC Based on information available to the Company, approximately 29.10% of the Companys shares listed on the Singapore Exchange Securities Trading Limited were held in the hands of the public. Therefore the Company has complied with Rule 723 of the Listing Manual.

138 Substantial Shareholders Interests

Petra Foods Limited Annual Report 2010

Substantial Shareholders Interests


as at 17 March 2010 (As recorded in the Register of Substantial Shareholders)

Direct Interest Number of Shares %

Deemed Interest Number of Shares %

Substantial Shareholders Lim Mee Len John Chuang Credit Suisse Trust Limited Johnsonville Assets Limited Johnsonville Holdings Limited Aerodrome International Limited Joseph Chuang Maplegold Assets Limited Berlian Enterprises Limited Springbright Investments Limited Genesis Asset Management LLP Mason Hill Advisors, LLC Tiger Global Management, LLC Charles P. Coleman III

270,000 52,000 70,000

0.04 0.008 0.011

311,557,000 1 311,999,000 2 311,407,000 3 311,407,000 4 311,407,000 5 311,407,000 6 308,741,000 7 308,741,000 8 308,741,000 9 291,964,000 10 31,902,000 11 38,684,285 12 39,100,000 13 39,100,000 14

50.97 51.05 50.95 50.95 50.95 50.95 50.51 50.51 50.51 47.77 5.21 6.32 6.39 6.39

Notes: 1 Mdm Lim Mee Len (wife of Mr John Chuang) is deemed to be interested in the Shares held by Aerodrome International Limited (Aerodrome), Berlian Enterprises Limited (Berlian), Springbright Investments Limited (Springbright), McKeeson Investments Pte Ltd (McKeeson) and Honeychurch International Limited (Honeychurch). Mdm Lims interests arise as she is the beneciary of the Johnsonville Asset Trust (JAT) and Johnsonville Holdings Trust (JHT) of which Credit Suisse Trust Limited (CST) has been appointed as the trustee. CST owns 100% of Johnsonville Asset Limited (JAL) and Johnsonville Holdings Limited (JHL), which in turns own (70%) and (30%) of the issued and paid-up share capital of Aerodrome. Accordingly, she is deemed to be interested in all the shares held (directly & indirectly) by Aerodrome and Honeychurch. 2 Mr John Chuang is deemed to be interested in all the shares held (directly and indirectly) by his wife, Mdm Lim Mee Len, including his shares which are held by his nominee, United Overseas Bank Nominees Pte Ltd. He is also one of the beneciaries of JHL. 3 CST is a Singapore registered public trust company and deemed interest arises from its 100% shareholding of Aerodrome as the trustees of JAL and JAH. Accordingly, CST is deemed to be interested in all the shares held indirectly by Aerodrome. 4 JAL has a 70% shareholding in Aerodrome. Accordingly, JAL is deemed to be interested in all the shares held (directly & indirectly) by Aerodrome. 5 JHL has a 30% shareholding in Aerodrome. Accordingly, JHL is deemed to be interested in all the shares held (directly & indirectly) by Aerodrome. 6 Aerodrome is the holding company of Berlian Enterprises Limited (Berlian). Accordingly, Aerodrome is deemed to be interested in all the shares held (directly & indirectly) by Berlian. 7 Mr Joseph Chuang is the sole shareholder of Maplegold Assets Limited (Maplegold). Accordingly, he is deemed to be interested in all the shares held (directly and indirectly) by Maplegold. 8 Maplegold has a 30% shareholding in Berlian. Accordingly, Maplegold is deemed to be interested in all the shares held (directly & indirectly) by Berlian. 9 Berlian is the sole shareholder of McKeeson and Springbright. Accordingly, Berlian is deemed to be interested in all the shares held (directly and indirectly) by McKeeson and Springbright. In addition, Berlians shares in the Company are held by its nominee, Citibank Nominees Singapore Private Limited. 10 Springbrights shares in the Company are held by its nominee, HSBC (Singapore) Nominees Pte Ltd. 11 Genesis Asset Management, LLP is deemed to be interested in the shares held by Genesis Smaller Companies, SICAV and Genesis Smaller Companies. 12 Mason Hill Advisors, LLC is deemed to be interested in the shares held by Equinox Partners, LP and Kuroto Fund, LP. 13 Tiger Global Management, LLC is deemed to be interested in the shares held by Tiger Global, L.P., Tiger Global Master Fund, L.P. and Tiger Global II SPV II, Ltd. 14 Charles P. Coleman III is deemed to be interested in the shares held by Tiger Global, L.P., Tiger Global Master Fund, L.P. and Tiger Global II SPV II, Ltd.

Petra Foods Limited Annual Report 2010

Notice of Annual General Meeting 139

Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN that the Annual General Meeting of PETRA FOODS LIMITED (Company) will be held at Grand Hyatt Singapore, Magnolia 4, Level 3, 10 Scotts Road, Singapore 228211 on Thursday, 28 April 2011 at 2:00 p.m. for the following purposes:AS ORDINARY BUSINESS 1. 2. To receive and adopt the directors report and audited accounts for the year ended 31 December 2010, together with the auditors report thereon. (Resolution 1) To re-elect the following directors who are retiring by rotation under article 104 of the Companys Articles of Association and who, being eligible, offer themselves for re-election:a. Ms Josephine Price b. Mr Chuang Tiong Liep c. Mr Chuang Tiong Kie (See explanatory notes.) 3. 4. 5. 6. To approve directors fees of US$276,000 for the year ending 31 December 2011. (2010: US$276,000) (Resolution 2) (Resolution 3) (Resolution 4) (Resolution 5)

To declare a tax exempt one-tier nal dividend of 1.72 US cents or 2.18 Singapore cents per ordinary share for the year ended 31 December 2010 (FYE 2009: 1.02 US cents or 1.43 Singapore cents). (Resolution 6) To re-appoint Messrs PricewaterhouseCoopers LLP as auditors of the Company for the nancial year ending 31 December 2011 and to authorise the directors to x their remuneration. (Resolution 7) To transact any other ordinary business that may properly be transacted at an annual general meeting.

AS SPECIAL BUSINESS To consider and, if thought t, to pass, with or without, modications, the following resolutions as ordinary resolutions:7. Authority to allot and issue shares (Resolution 8)

That, pursuant to section 161 of the Companies Act, Chapter 50 (Act) and the Listing Manual of the Singapore Exchange Securities Trading Limited (SGX-ST), authority be and is hereby given to the directors of the Company to:(a) (i) issue shares in the Company (Shares) whether by way of rights, bonus or otherwise; and/or (ii) make or grant offers, agreements, or options (collectively, Instruments) that might or would require Shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) warrants, debentures or other instruments convertible or exchangeable into Shares, at any time and upon such terms and conditions and for such purposes and to such persons as the directors may in their absolute discretion deem t; and (b) (notwithstanding that the authority conferred by this resolution may have ceased to be in force) issue Shares in pursuance of any Instrument made or granted by the directors while this Resolution was in force,

provided that:(1) the aggregate number of Shares to be issued pursuant to this resolution (including Shares to be issued in pursuance of the Instruments, made or granted pursuant to this Resolution) does not exceed 50 per cent of the total number of issued Shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of Shares to be issued other than on a pro rata basis to shareholders of the Company (including Shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution) does not exceed 20 per cent of the Companys total number of issued Shares (excluding treasury shares) (as calculated in accordance with sub-paragraph (2) below); (subject to such manner of calculation and adjustments as may be prescribed by the SGX-ST) for the purpose of determining the aggregate number of Shares that may be issued under sub-paragraph (1) above, the total number of issued Shares (excluding treasury shares, if any) shall be calculated based on the total number of issued Shares excluding treasury shares at the time of the passing of this Resolution, after adjusting for:(a) new Shares arising from the conversion or exercise of convertible securities; (b) new Shares arising from the exercise of share options or vesting of share awards which are outstanding or subsisting at the time this Resolution is passed; and (c) any subsequent bonus issue, consolidation or subdivision of Shares;

(2)

140 Notice of Annual General Meeting

Petra Foods Limited Annual Report 2010

Notice of Annual General Meeting

7.

Authority to allot and issue shares (continued) (3) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Act, the Listing Manual of the SGX-ST for the time being in force (unless such compliance has been waived by the SGX-ST) and the articles of association for the time being of the Company; and (unless revoked or varied by the Company in general meeting) the authority conferred by this Resolution shall continue in force until the conclusion of the next annual general meeting of the Company or the date by which the next annual general meeting of the Company is required by law to be held, whichever is the earlier.

(4)

8.

Authority to grant and issue shares under the Petra Foods Share Option Scheme and Petra Foods Share Incentive Plan (Resolution 9) That approval be and is hereby given to the directors:(i) (ii) to offer and grant options and/or awards from time to time in accordance with the provisions of the Petra Foods Share Option Scheme and Petra Foods Share Incentive Plan (Petra Schemes); and pursuant to section 161 of the Act, to allot and issue from time to time such number of shares in the capital of the Company as may be required to be issued pursuant to the exercise of options and/or to the vesting of awards under the Petra Schemes, provided that the aggregate number of new shares to be issued pursuant to the Petra Schemes, shall not exceed 10 per cent of the total number of issued shares (excluding treasury) shares from time to time.

9.

Authority to allot and issue new ordinary shares under the Petra Foods Limited Scrip Dividend Scheme (Resolution 10) That pursuant to section 161 of the Act, authority be and is hereby given to the directors to allot and issue from time to time such number of new ordinary shares in the capital of the Company as may be required to be allotted and issued pursuant to the Petra Foods Limited Scrip Dividend Scheme.

10. The Proposed Renewal of the Mandate for Interested Person Transactions That:(a)

(Resolution 11)

approval be and is hereby given (IPT Mandate), for the purposes of Chapter 9 of the Listing Manual of the SGX-ST, for the Company, its subsidiaries and its associated companies which are entities at risk as dened in Chapter 9 of the Listing Manual of the SGX-ST, or any of them, to enter into any of the transactions falling within the types of interested person transactions, particulars of which are set out in the Annual Report of the Company for the nancial year ended 31 December 2010 (Appendix) with any person who falls within the class of interested persons described in the Appendix, provided that such transactions are made at arms length and on normal commercial terms, will not be prejudicial to the interests of the Company and its minority shareholders, and will be subject to the review procedures for interested person transactions as set out in the Appendix; the IPT Mandate shall, unless revoked or varied by the Company in general meeting, continue in force until the next annual general meeting of the Company is held or is required by law to be held, whichever is the earlier; and the directors of the Company be and are hereby authorised to do all such acts and things (including, without limitation, executing all such documents as may be required) as they may consider expedient or necessary in the interests of the Company to give effect to the IPT Mandate and/or this Resolution.

(b) (c)

By Order of the Board of Directors Lian Kim Seng / Chuang Yok Hoa Company Secretaries Singapore, 12 April 2011
Notes: (1) A member of the Company entitled to attend and vote at the above meeting may appoint not more than two proxies to attend and vote on his behalf. (2) A proxy need not be a member of the Company and where there is more than one proxy, the proportion (expressed as a percentage of the whole) of his shareholding to be represented by each proxy must be stated. (3) The instrument appointing a proxy must be deposited at the registered ofce of the Company at 111 Somerset Road, #16-01, TripleOne Somerset, Singapore 238164, not less than 48 hours before the time appointed for holding the meeting.

Petra Foods Limited Annual Report 2010

Notice of Annual General Meeting 141

Notice of Annual General Meeting

EXPLANATORY NOTES & STATEMENT PURSUANT TO ARTICLE 64 OF THE COMPANYS ARTICLES OF ASSOCIATION Ordinary Resolution 2: If re-elected, Ms Josephine Price, an independent director, shall remain as Chairperson of the Nominating Committee, a member of the Audit Committee and Remuneration Committee of the Company. Ordinary Resolution 3: If re-elected, Mr Chuang Tiong Liep, an executive director, shall remain as a member of the Executive Committee of the Company. Ordinary Resolution 4: If re-elected, Mr Chuang Tiong Kie, an executive director, shall remain as a member of the Executive Committee of the Company. Ordinary Resolution 8: The proposed Resolution 8, if passed, will empower the directors, from the date of the Annual General Meeting until the next annual general meeting, to issue Shares and/or Instruments up to an aggregate number not exceeding 50 per cent of the total number of issued Shares excluding treasury shares, with a sub-limit of 20 per cent for Shares issued other than on a pro rata basis to Shareholders. Ordinary Resolution 9: The proposed Resolution 9, if passed, will empower the directors to offer and grant options and/or awards under the Petra Schemes (which was approved at the extraordinary general meeting of the Company held on 22 September 2004) and to allot and issue shares in the capital of the Company, pursuant to the exercise of options and/or awards under the Petra Schemes, provided that the aggregate number of shares to be issued under the Petra Schemes does not exceed 10 per cent of the total number of issued shares excluding treasury shares of the Company for the time being. Ordinary Resolution 10: The proposed Resolution 10, if passed, will empower the directors to allot and issue shares in the Company pursuant to the Petra Foods Limited Scrip Dividend Scheme to members who, in respect of a qualifying dividend, have elected to receive scrip in lieu of the cash amount of that qualifying dividend. Ordinary Resolution 11: The proposed Resolution 11, if passed, will renew the IPT Mandate (which was approved at the annual general meeting of the Company held on 28 April 2010) to facilitate the Company, its subsidiaries and associated companies which are entities at risk as dened in Chapter 9 of the Listing Manual of the SGX-ST, to enter into Interested Persons Transactions, the details of which are set out in the Annual Report. The authority pursuant to the renewed IPT Mandate will, unless revoked or varied by the Company in general meeting, expire at the conclusion of the next annual general meeting of the Company, or the date by which the next annual general meeting is required by law to be held, whichever is the earlier.

142 Notice of Annual General Meeting

Petra Foods Limited Annual Report 2010

Notice of Annual General Meeting

NOTICE OF BOOKS CLOSURE AND PAYMENT DATE FOR FINAL DIVIDEND NOTICE IS ALSO HEREBY GIVEN that, subject to the approval of the shareholders to the nal dividend at the Companys annual general meeting held on 28 April 2011, the Transfer Books and the Register of Members of the Company will be closed at 5:00 p.m. on 6 May 2011 (Books Closure Date) for the preparation of dividend warrants. Duly completed registrable transfers received by the Companys Share Registrar, M&C Services Private Limited, at 138 Robinson Road, #17-00 The Corporate Ofce, Singapore 068906 up to 5:00 p.m. on the Books Closure Date will be registered to determine shareholders entitlements to the nal dividend. In respect of ordinary shares in securities accounts with The Central Depository (Pte) Limited (CDP), the nal dividend will be paid by the Company to CDP which will, in turn, distribute the nal dividend entitlements to the CDP account holders in accordance with its normal practice. The nal dividend, if so approved by shareholders, will be paid on 20 May 2011. By Order of the Board of Directors Lian Kim Seng / Chuang Yok Hoa Company Secretaries Singapore, 12 April 2011

Petra Foods Limited


Registration No. 198403096C (Incorporated In the Republic of Singapore)

Proxy Form
(Please see notes overleaf before completing this Form) I/We

IMPORTANT 1. For investors who have used their CPF monies to buy the Companys shares, this Report is forwarded to them at the request of their CPF approved nominees and is sent solely FOR THEIR INFORMATION ONLY. 2. This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them.

(NRIC / Passport No.)

of (Address)

being a member/members of Petra Foods Limited (Company), hereby appoint:Name Address NRIC/Passport Number Proportion of Shareholdings (%)

And/or (delete as appropriate)

as my/our proxy/proxies to attend and vote for me/us on my/our behalf and if necessary, to demand a poll, at the AGM of the Company to be held at Grand Hyatt Singapore, Magnolia 4, Level 3, 10 Scotts Road, Singapore 228211 on Thursday, 28 April 2011 at 2:00 p.m. and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the Resolutions to be proposed at the AGM as indicated hereunder. If no specic direction as to voting is given or in the event of any event of any other matter arising at the AGM and at any adjournment thereof, the proxy/proxies will vote or abstain from voting at his/their discretion. (If you wish to exercise all your votes For or Against, please tick with within the box provided. Alternatively, please indicate the number of votes For or Against each resolution.)

No.

Resolutions

For

Against

Ordinary Business 1. 2. 3. 4. 5. 6. 7. To adopt Directors Report and Audited Accounts for the year ended 31 December 2010. To re-elect Ms Josephine Price as a Director. To re-elect Mr Chuang Tiong Liep as a Director. To re-elect Mr Chuang Tiong Kie as a Director. To approve Directors fees for the year ending 31 December 2011. To declare a nal dividend. To re-appoint Messrs PricewaterhouseCoopers LLP as auditors and to authorise Directors to x their remuneration. To authorise Directors to issue shares and/or Instruments pursuant to Section 161 of the Companies Act, Chapter 50. To authorise Directors to offer and grant options and/or awards and to issue shares pursuant to the Petra Foods Share Option Scheme and Petra Foods Share Incentive Plan. To authorise Directors to issue new ordinary shares pursuant to the Petra Foods Limited Scrip Dividend Scheme. To renew the Mandate for Interested Person Transactions.

Special Business 8. 9. 10. 11.

Dated this

day of

2011

Total number of Shares in:

No. of Shares

(a) CDP Register (b) Register of Members Total Signature(s) of member(s)/Common Seal IMPORTANT PLEASE READ NOTES OVERLEAF

Proxy Form

Notes:1. A member should insert the total number of ordinary shares in the capital of the Company (Shares) held. If the member has Shares entered against his name in the Depository Register (as dened in Section 130A of the Companies Act, Cap. 50), he should insert that number of Shares. If the member has Shares registered in his name in the Register of Members, he should insert that number of Shares. If a member has Shares entered against his name in the Depository Register and Shares registered in his name in the Register of Members, he should insert the aggregate number of Shares entered against his name in the Depository Register and registered in his name in the Register of Members. If no number is inserted, this instrument appointing a proxy or proxies will be deemed to relate to all Shares held by the member. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend and vote instead of him. A proxy need not be a member of the Company. Where a member appoints two proxies, the appointments shall be invalid unless he species the proportion of his shareholding (expressed as a percentage of the whole) to be represented by each proxy. This instrument appointing a proxy or proxies must be deposited at the registered ofce of the Company at 111 Somerset Road, #16-01, TripleOne Somerset, Singapore 238164 not less than 48 hours before the time appointed for the Annual General Meeting. The instrument appointing a proxy or proxies must be under the hand of the appointer or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under the hand of an ofcer or attorney duly authorised. A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks t to act as its representative at the Annual General Meeting, in accordance with Section 179 of the Companies Act, Cap. 50. 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 appointer are not ascertainable from the instructions of the appointer specied in this instrument appointing a proxy or proxies. In the case of members whose Shares are entered against their names in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if such members are not shown to have Shares entered against their names in the Depository Register as at 48 hours before the time appointed for holding the Annual General Meeting as certied by The Central Depository (Pte) Limited to the Company.

2.

3.

4.

5.

6.

7.

8.

Financial Calendar

Annual General Meeting Payment of Final Dividend Announcement of First Quarter Results Announcement of Half Year Results Announcement of Third Quarter Results

April 2011 May 2011 May 2011 August 2011 November 2011

Corporate Information
Registered Office TripleOne Somerset 111 Somerset Road, #16-01 Singapore 238164 Auditors PricewaterhouseCoopers LLP 8 Cross Street #17-00 PWC Building Singapore 048424 Partner-in-charge (since 2006): Deborah Ong Stock Codes SGX: Petra Bloomberg: PETRA SP Reuters: PEFO.SI Company Secretaries Chuang Yok Hua, ACIS Lian Kim Seng, ACIS Principal Bankers BNP Paribas 20 Collyer Quay #03-00 Tung Centre Singapore 049319 United Overseas Bank Limited 80 Raffles Place UOB Plaza Singapore 048624 Rabobank International 77 Robinson Road #09-00 SIA Building Singapore 068896 PT Bank Central Asia Tbk Wisma BCA / Lantai 11 Jl Jend Sudirman Kav 22-23 Jakarta 12920, Indonesia Malayan Banking Berhad Menara Maybank 100 Jalan Tun Perak 50050 Kuala Lumpur Malaysia DBS Bank Ltd 6 Shenton Way #23-03 DBS Building Tower One Singapore 068809 ABN-AMRO (Nederland) N.V. P.O. Box 293 1000 AG Amsterdam The Netherlands KBC Bank Nederland N.V. Watermanweg 92 3067 GG Rotterdam The Netherlands Registrar and Share Transfer Office M&C Services Private Limited 138 Robinson Road #17-00 The Corporate Office Singapore 068906 Website http://www.petrafoods.com

Locations
Singapore TripleOne Somerset 111 Somerset Road, #16-01 Singapore 238164 7 Gul Circle, #02-01 Keppel Districentre Singapore 629563 Indonesia Bandung Jln Raya Dayeuhkolot no. 84 Pesawahan, Kabupaten Bandung 40256, Indonesia Jln Raya Dayeuhkolot no. 92 Pesawahan, Kabupaten Bandung 40256, Indonesia Bekasi Jln Raya Narogong Km 7, Bojong Menteng Bekasi 17117, Jawa Barat, Indonesia Malaysia Kuala Lumpur Level 10, West Wing, Wisma Consplant 2, 47500 Subang Jaya, Selangor, Malaysia Johor 523706, PLO 700, Jalan Keluli 8, Kawasan Perindustrian, Pasir Gudang 81700 Pasir Gudang, Johor Darul Tazin, Malaysia The Philippines No. 23 M. Tuazon St., Parang, Marikina City 1809, Philippines Unit 004 Luwasan Street Brgy Guyong Sta Maria Bulacan 3022, Philippines Unit 501, Prestige Tower Don Francisco Ortigas Jr. Road Ortigas Center, 1605 Pasig City, Philippines Thailand 140 Soi Thong Lor 4, Sukhumvit 55 Road, Klongton Nua Subdistrict, Wattana District, Bangkok Mexico Lago Muritz #73 Col Anahuac Delegacion Miguel Hidalgo Mexico DF CP 11320 Brazil Rod. BR-415 KM 36 45600-000 Itabuna, BA Brazil United States Panther Valley Village Square Route 517, Allamuchy, NJ 07820 France Route de Developpement Site Industriel Leurette 59820 Gravelines France Germany Einsiedeldeich 7-9 20539 Hamburg Germany The Netherlands Provincialeweg 33C 1506 MA Zaandam The Netherlands

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Petra Foods Limited 111 Somerset Road TripleOne Somerset #16-01 Singapore 238164 Phone +65 6477 5600 Fax +65 6887 5181 enquiry@petrafoods.com Company Registration No.: 198403096 (Incorporated in the Republic of Singapore) www.petrafoods.com