Notes to Financial Statements

Mission & VisionThe Building Problem SolverContributing to a greener future, we are committedto providing the best greening concepts, qualityproducts and services to protect and enhance thebuilt environment.ContentsCorporate Profile 01Chairman’s Message 02Financial Highlights 04Financial Review 05Services 06Products 07Corporate Structure 08Distribution Network 09Board of Directors 10Management Team 13Corporate Information 14Corporate Governance Report and 15Financial Statements

Middle East Development Singapore Ltd.Annual Report 20080Financial ReviewThe Group revenue for FY 2008 amounted to S$11.19 million, a marginal drop of 5.2%, ascompared to that reported for FY 2007. The Group revenue was generated mainly by ourwaterproofing business. Continual delays in the construction projects in which we were awardedmanagement projects, have resulted in no corresponding income recognised.Geographically, our Singapore operations continued to be the major revenue contributor. For thefinancial year under review, revenue from Singapore amounted to S$8.52 million, as comparedto S$8.11 million in FY 2007. Our operations in China and Malaysia registered decline in revenue.Revenue from our China operations amounted to S$0.85 million in FY 2008, as compared toS$1.56 million in FY 2007, while our Malaysia operations, in FY 2008, generated revenue ofS$1.81 million, as compared to S$2.14 million in FY 2007.FY 2008’s loss for the year was S$5.15 million. A provision for foreseeable loss of S$0.93 million,coupled with administrative expenses of S$4.72 million incurred in FY 2008 contributed mainly tothe loss for the year.The Group’s cash position, as at 30 June 2008, remained healthy. As at 30 June 2008, the cashand cash equivalents amounted to S$9.29 million, as compared to S$13.49 million, as at 30 June2007.As at 30 June 2008, the Group’s total assets amounted to S$18.57 million, as compared toS$23.98 million, as at 30 June 2007. This is due mainly to lower current assets of S$17.78 million,as compared to S$22.97 million, as at 30 June 2007. The decrease is largely due to lower cashand cash equivalents of S$9.29 million as at 30 June 2008, as compared to S$13.49 million, asat 30 June 2007. The decrease in trade and other receivables by S$1.41 million, a resultant oflower revenue for the FY 2008, also contributed to the lower current assets.The Group’s total liabilities, as at 30 June 2008, amounted to S$5.31 million, a marginal decreaseof S$0.12 million, as compared to S$5.43 million, as at 30 June 2007.The Group’s total equity as at 30 June 2008, due to the loss for the year, amounted to S$13.26million, as compared to S$18.55 million, as at 30 June 2007.

0Middle Middle East East Development Singapore Ltd. Ltd.Annual Annual Report Report 2008 2008ServicesWe provide a variety of quality building protection solutions. We are engaged in every level of the buildingprotection business to serve the various needs of our customers in the building industry.The solutions we offer include:• Roof, basement and wall waterproofing systems• Decorative and weather-resistance coatings• Chemical-resistant wall and floor finishes• Structural and waterproofing grouting systems• Concrete repair and protection systems• Concrete joint treatments• Roof Gardens SystemsOur Roof Garden Systems business is complementary and is synergistic with our waterproofing andcoating businesses.We are involved in the following activities:• Research & Development• Manufacturing• Marketing & Distribution• Application of Waterproofing Systems & Coatings• Concrete Repair and Grouting• Maintenance & Defects Investigation• Technical Consultation & ServicesWe were among the first in the industry to be ISO certified for our quality management services. All ofour products are based on research, experiment and field trials by our R&D team to ensure durability andreliability. These products are also subjected to stringent quality control so that they can best suit localrequirements. In addition, all products are fully warranted.The Green Label certification by Singapore Green Labelling Scheme who is a member of the InternationalGlobal Eco-Labelling Network, bears testimony to our continuing drive to protecting and enhancing thebuilt environment. Our products that have Green Label are Traffigard, Formak 629, Formdex Uniflexand Sealflex.

Middle East Development Singapore Ltd.Annual Report 20080ProductsOur complete protection service means that one complete building project can be contracted under one specification,undertaken by one applicator and covered by one overall warranty.Specialty Products• Formrok 220• Formrok 335• Flexin Injection System• Vandex Expaseal Expanding WaterstopBasement Waterproofing• Formdex Cementitious Systems• Vandex Super• Vandex BB75Non-insulated DeckLiquid Membrane• Formdex Uniflex• Formak 629 Elastomeric WaterproofMembranePreformed Membrane• Formceal 3000X• Formceal P-3-PL• NuraplanWall Waterproofing• Sealflex ElastomericWaterproofing System• Formwal 622 CoatingSystemDaku Roof Garden• Nuraplan WaterproofingMembrane• Daku Element• Daku Stabilfilter• Daku SubstrateSwimming Pools &Water Tanks• FormdexCementitiousSystems• Vandex BB75Roof WaterproofingLiquid Membrane• Traffigard Waterproofing System• Formak 629 ElastomericWaterproof Membrane• Metalcoat M80Preformed Membrane• Formceal P-3-PL/PLAWaterproofing System• Formceal 3000X WaterproofingSystem• Nuraplan• KB-LenSewage Treatment• Vandex Unimortar 1 Z• Vandex BB75 Z• Vandex Polycem ZToilets and Wet Areas• Formdex Cementitious Systems

0Middle East Development Singapore Ltd.Annual Report 2008Corporate StructureHitchinsInternationalPte LtdMEDSProjectManagementPte LtdMEDSInvestmentPte LtdAeroroofSdn BhdHitchinsBorneoSendirianBerhadManufacturingHitchins-Da Sheng HoldingsPte LtdShanghai Hitchins Da ShengWaterproofing Materials Co., LtdMarketing• Hitchins (F.E.) Marketing Pte Ltd• Hitchins (Malaysia) Sendirian Berhad• Daku Asia Pte LtdInstallation• CRG Contractors Pte Ltd• Renesco Injection (Waterproofing)Pte Ltd• Ampero (Malaysia) Sdn Bhd

Middle East Development Singapore Ltd.Annual Report 20080Distribution NetworkChinaBangladeshHong KongUAEIndiaMyanmarThailandLaosCambodiaVietnamPhilippinesSri LankaMalaysiaBruneiHeadquartersSingaporeApplicatorOfficeIndonesiaSINGAPORECorporate Office80 Raffles Place #22-21UOB Plaza 2Singapore 048624Telephone: (65) 6438 2286Facsimile: (65) 6438 9789Waterproofing Division30 Toh Guan Road #07-01ODC DistricentreSingapore 608840Telephone: (65) 6861 1177Facsimile: (65) 6863 4240Email: hitchins@hitchins.comResearch & Development51 Science Park Road #04-16The AriesSingapore Science Park IISingapore 117586Telephone: (65) 6872 9272Facsimile: (65) 6872 0493Email: lab@hitchins.comBRUNEIHitchins (Borneo) Sendirian BerhadP.O. Box 1675Bandar Seri Begawan 1916Telephone: (673-2) 65 2561Facsimile: (673-2) 65 2563MALAYSIAHitchins (Malaysia) Sendirian BerhadNo. 26, Jalan 4/10BSpring Crest Industrial Park68100 Batu CavesSelangor, MalaysiaTelephone: (60-3) 6185 8888Facsimile: (60-3) 6185 0668Email: hitchins@streamyx.comCHINAShanghai Hitchins Da ShengWaterproofing Materials Co., LtdNo. 58, 699 Nong,Bei Qing Gong Lu Hua Cao Zhen,Ming Hang QuShanghai, P.R. ChinaPost Code 201107Telephone: (86-21) 6221 9815/7/9Facsimile: (86-21) 6221 9812Email: samkim@hitchins.comShanghai Branch OfficeNo. 37, 380 Nong,Tian Yao Qiao Lu Room803 Nan Xi Gong YuShanghai, P.R. ChinaPost Code 200030Telephone: (86-21) 6486 4399Facsimile: (86-21) 6486 4812Dalian Branch OfficeNo.1, Xing Gong Nan We JieUnit 1-12-1-2Block D Xin Tian Di Guang ChangSha He Kou QuDalian, P.R. ChinaPost Code 116021Telephone: (86-411) 8389 5105Facsimile: (86-411) 8389 5165Beijing Branch OfficeNo.2, Tian Shui Yuan East StreetRoom B-406Tian Shui Yuan Business CentreChao Yang DistrictBeijing, P.R. ChinaPost Code 100026Telephone: (86-10) 6506 0317Facsimile: (86-10) 6506 0316

10Middle East Development Singapore Ltd.Annual Report 2008Board of DirectorsDr. Oussama Al-DimashkiExecutive Chairman andChief Executive OfficerDr. Al-Dimashki was first appointed to theBoard of Directors on 18 January 2007and was last re-elected on 26 October2007. Dr Al-Dimashki has tendered hisresignation and will be stepping downfrom the Board on 1 November 2008.Dr. Al-Dimashki has more than 17 yearsof experience in teaching, research,public policies, consultancy and realestate development in North Americaand the Middle East. He was theManaging Director of M.E. DevelopmentL.L.C.Dr. Al-Dimashki was educated at theUniversity of Nebraska-Lincoln, USA,where he graduated with a Bachelorof Science, a Master of Science and aDoctorate in the field of International andAgricultural Economics.Mr. Ong Soon TeikExecutive Director andChief Operating OfficerMr. Ong was first appointed to the Boardof Directors on 2 September 2008 andhas been proposed for re-election at theCompany’s forthcoming Annual GeneralMeeting on 23 October 2008.Mr. Ong, appointed Chief OperatingOfficer on 16 June 2008, has more than 20years of experience in corporate financeand financial consultancy services,focusing on mergers and acquisitions,corporate restructuring and advisoryservices and fund raising transactions.Before joining the Company, Mr. Ongheld the position of Senior Vice Presidentand Head of Corporate Finance in HongLeong Finance Limited and prior to thathe had worked at several internationalfinancial institutions and consultanciesin Singapore, Hong Kong and Thailand.Mr. Ong, a CFA charterholder, holdsa Master of Applied Finance fromMacquarie University, Australia, aMaster of Accounting from CurtinUniversity of Technology (Australia) anda Bachelor of Social Science (2nd UpperHonours) from the National University ofSingapore.Mr. Kim Leng ChoonExecutive DirectorMr. Kim was first appointed to the Boardof Directors on 16 December 2002and was last re-elected on 26 October2007.Mr. Kim has more than 15 years ofexperience in construction relatedindustry. Mr. Kim is currently the GeneralManager of Shanghai Hitchins DaSheng Waterproofing Materials Co.,Ltd. He was involved in the draftingof a National Standard (GB 18445-2001, Cementitious capillary crystallinewaterproofing materials) under theNational Materials Quality Control andTesting Authority, PRC. This NationalStandard has been adopted throughoutChina. Prior to joining the Company in1996, Mr. Kim was an entrepreneur,running his own businesses in China.

Middle East Development Singapore Ltd.Annual Report 2008 11Mr. Ng Tian HuatNon-Executive DirectorMr. Issam Farid HalabiNon-Executive DirectorMR. TAN SONG KOONIndependent DirectorMr. Ng was first appointed to the Boardof Directors on 1 February 1990 andwas last re-elected on 24 October 2005.On 31 May 2008, Mr. Ng resigned asExecutive Director but remained as Non-Executive Director of the Company. Hehas been proposed for re-election at theCompany’s forthcoming Annual GeneralMeeting on 23 October 2008.Mr. Ng has more than 30 years ofexperience in the building related industry.He has held various positions in theCompany, including as Business DevelopmentDirector of the waterproofingdivision.Mr. Ng holds a Technician Diplomain Civic Engineering from SingaporePolytechnic.Mr. Halabi was first appointed to theBoard of Directors on 24 August 2007and was last re-elected on 26 October2007.Mr. Halabi has more than 30 years ofexperience in project management,planning and engineering for largeprojects in the hospitality, education,health and infrastructure sectors.These include the Conference Centrein Kuwait, Teebah Hospital in SaudiArabia and the Gresik Power Station inIndonesia. He is the Vice President forTechnical Affairs of M.E. DevelopmentL.L.C.Mr. Halabi has a Bachelor of Sciencedegree in Construction Engineeringand a Master of Science in Civil Engineeringwith Honours from BrusselsUniversity. He is a member of the MiddleEast Shopping Council, ConstructionManagement Association of Americaand the UAE Society of Engineers.Mr. Tan was first appointed to the Boardof Directors on 18 January 2007 and waslast re-elected on 26 October 2007.He is the Chairman of the Audit Committeeand sits on the Nominating andRemuneration Committees.Mr. Tan has more than 28 years ofhands-on and overall managementexperience in business development,manufacturing operations, new businessstart-up and corporate finance. He iscurrently an Executive Director of FujiOffset Plates Manufacturing Limitedand its subsidiaries. Mr. Tan also holdsdirectorships in Fujian Zhenyun PlasticsIndustry Co Ltd, Time Watch InvestmentsLimited, Jurong Technologies IndustrialCorpn. Ltd, as well as in Super MultiVending Pte Ltd and Super VendingPte Ltd which are subsidiaries of SuperCoffeemix Manufacturing Ltd and TMCBakelite Sdn. Bhd.Mr. Tan holds a Bachelor of Commercefrom Nanyang University, majoring inEconomics, Banking and Finance.

12Middle East Development Singapore Ltd.Annual Report 2008Board of DirectorsMr. Hoon Tai MengIndependent DirectorMr. Hoon was first appointed to the Board ofDirectors on 18 January 2007 and was lastre-elected on 26 October 2007. He has beenproposed for re-election at the Company’sforthcoming Annual General Meeting on 23October 2008.He is the Chairman of the Nominating Committeeand sits on the Audit and RemunerationCommittees.An advocate and solicitor by training, he iscurrently a partner with KhattarWong. Besideshaving more than 12 years of experience in lawpractice, Mr. Hoon also has some 20 years ofexperience in financial planning and management,audit, tax and corporate secretarial functions. Mr.Hoon also holds directorships in Chip Eng SengCorporation, Federal International (2000) Ltd,Intraco Limited, Equation Corp Limited, Sin GheeHuat Corporation Ltd, Time Watch InvestmentsLimited and Yangtze China Investment Limited.Mr. Hoon has a Bachelor of Commerce degreein accountancy from Nanyang University and aLLB (Honours) from University of London. He is aFellow of the Chartered Institute of ManagementAccountants (United Kingdom), a Fellow of theAssociation of Chartered Certified Accountants(United Kingdom), a Fellow Certified PublicAccountant (Singapore) and a Barrister-at-Law(Middle Temple).Mr. Tee Tua BaIndependent DirectorMr. Tee was first appointed to the Board ofDirectors on 18 January 2007 and was last reelectedon 26 October 2007.He is the Chairman of the RemunerationCommittee and sits on the Audit and NominatingCommittees.Mr. Tee is currently the Ambassador (Non-Resident) to the United Arab Emirates. He hasheld various appointments within the Ministry ofHome Affairs, including as the Commissioner ofPolice. Throughout his career with the Ministryof Home Affairs, he has received many awards,among them the Public Administration Medal(Silver) in 1974, the Public Administration Medal(Gold) in 1981 and the Meritorious ServiceMedal in 1998. Mr. Tee was also awarded “TanSri” title by the Malaysian Government uponbeing conferred the Panglima Setia Mahkota(PSM) in 1994 and the Royal Malaysia PoliceOrder of Valour Medal in 1996. He has beenthe Ambassador to the Arab Republic ofEgypt, the Ambassador to Jordan as well asHigh Commissioner to Cyprus and to Bruneirespectively.Mr. Tee holds a degree in LLB (Honours) fromthe University of Singapore. He was admittedto the Supreme Court of Singapore in 1967.

Middle East Development Singapore Ltd.Annual Report 2008 13Management TeamDR. OUSSAMA AL-DIMASHKIChief Executive OfficerDr. Al-Dimashki was appointed CEO of the Company in January2007. He is also the Executive Director of the Company. He isresponsible for the overall planning of the business and corporatedevelopment of the Group. Dr. Al-Dimashki will be relinquishing hisrole on 1 November 2008.MR. ONG SOON TEIKChief Operating OfficerSoon Teik was appointed Chief Operating Officer in June 2008. Hebecame an Executive Director of the Company in September 2008.He is also a Director of Hitchins International Pte Ltd, a subsidiaryof the Company.He assists our Chief Executive Officer and is responsible for theGroup’s business development and for the evaluation of the Group’sstrategic investment portfolio. Soon Teik is also responsible for theoperations of the Group.MS. ONG CHYE HONGChief Financial OfficerChye Hong joined the Company in July 2008 and is responsible forthe Group’s financial and management reporting functions.Chye Hong has hands-on financial and corporate experience,having assumed the role of financial controllership in various listedcompanies, in the manufacturing and construction industries. Priorto joining the Company, Chye Hong was the Financial Controller ofMiyoshi Precision Limited.Chye Hong is a Fellow of the Association of Chartered CertifiedAccountants (United Kingdom) and a Fellow of the Institute ofCertified Public Accountants (Singapore).MR. KHOO KOH SEONGProject DirectorKoh Seong joined the Group in May 2007 and he oversees theGroup’s Project Management and Development business. He sitson the Boards of the various subsidiaries of the Company.MR. YEO HOON SENGManaging Director, Waterproofing DivisionHoon Seng joined the Group in 1994 and oversees theGroup’s waterproofing business. He sits on the Boards ofthe various subsidiaries of the Company.Hoon Seng has about 25 years of experience in theinstallation operations of the waterproofing business.Hoon Seng is a member of the Marketing Institute ofSingapore as well as a member of the Chartered Instituteof Marketing, United Kingdom. He holds a TechnicianDiploma in Building from Singapore Polytechnic, a Diplomain Marketing from Chartered Institute of Marketing, UnitedKingdom and a Diploma in Sales & Marketing fromMarketing Institute of Singapore.MR. KIM LENG CHOONDirector, China OperationsLeng Choon joined the Group in 1996 and is responsiblefor the Group’s manufacturing and marketing operationsin China.Leng Choon is also the Executive Director of the Companyand sits on the Boards of the various subsidiaries of theCompany.MR. NG KIM KHUANDirector, Malaysia OperationsKim Khuan joined the Group in 1989 and he sits on theBoards of the various subsidiaries of the Company.With 25 years of commercial experience, Kim Khuan isresponsible for the Group’s operations in Malaysia.Kim Khuan has a Master (Honours) in BusinessAdministration from Oklahoma City University. He alsoholds a Diploma from The Chartered Institute of Marketingand a Graduate Diploma from The Institute of CommercialManagement in United Kingdom.Koh Seong, a Chartered Civic Engineer, having worked with majorconstruction companies, has extensive regional experience inproject management and construction. Prior to joining the Group,he has assumed the roles of Executive Director and ManagingDirector respectively, in LKN Construction Pte Ltd.Koh Seong has a Bachelor of Science (Honours) in Civil Engineeringfrom the University of Strathclyde, Glasglow, in United Kingdom. Heis a member of the Institute of Engineers in Singapore, Malaysia andis a member of the Institute of Civil Engineers in United Kingdom.He is also a registered Professional Engineer in Malaysia.

14Middle East Development Singapore Ltd.Annual Report 2008Corporate InformationDirectorsExecutive:Dr. Oussama Al-DimashkiChairman & Chief Executive OfficerMr. Ong Soon TeikChief Operating OfficerMr. Kim Leng ChoonDirector, China OperationsNon-Executive:Mr. Ng Tian HuatMr. Issam Farid HalabiIndependent:Mr. Tan Song KoonMr. Hoon Tai MengMr. Tee Tua BaAudit CommitteeMr. Tan Song KoonChairmanMr. Hoon Tai MengMr. Tee Tua BaNominating CommitteeMr. Hoon Tai MengChairmanMr. Tee Tua BaMr. Tan Song KoonCompany SecretaryMr. Chew Kok LiangRegistered Office80 Raffles Place #22-21UOB Plaza 2Singapore 048624Tel: (65) 6438 2286Fax: (65) 6438 9789Website: www.meds.sgShare RegistrarBoardroom Corporate Advisory Services Pte. Ltd.3 Church Street #08-01Samsung HubSingapore 049483AuditorsDeloitte & Touche LLPCertified Public Accountants6 Shenton Way #32-00DBS Building Tower TwoSingapore 068809Partner-in-charge: Mr. Xu Jun(Appointed on 18 January 2008)Principal BankersUnited Overseas Bank LimitedRemuneration CommitteeMr. Tee Tua BaChairmanMr. Hoon Tai MengMr. Tan Song Koon

Middle East Development Singapore Ltd.Annual Report 2008 15Corporate Governance Reportand Financial StatementsReport of Directors’ 27Independent Auditors’ Report 31Balance Sheets 32Consolidated Profit And Loss Statement 33Statements of Changes in Equity 34Consolidated Cash Flow Statement 36Notes to Financial Statements 38Statement of Directors 75Notice of Annual General Meeting 78Proxy Form

16Middle East Development Singapore Ltd.Annual Report 2008Corporate Governance ReportGood corporate governance ensures that the interests of shareholders are protected and enhances corporate performanceand accountability.Middle East Development Singapore Ltd. (the “Company”) and its subsidiaries (the “Group”) aspires to the highest standardsof corporate governance and, to this end, has put in place various self-regulatory and monitoring mechanisms which are inline with the recommendations of the Code of Corporate Governance 2005 (the “Code”).This statement sets out the Group’s main corporate governance practices that were in place throughout the fi nancial yearor which will be implemented and where appropriate, we have provided explanation for deviation from the Code.(A)BOARD MATTERSBoard’s Conduct of Its AffairsPrinciple 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 Managementto achieve this and the Management remains accountable to the Board.The Board oversees the business and corporate affairs of the Group.The principal duties of the Board include the following:• Protecting and enhancing long-term value and return to its shareholders;• Providing leadership and guidance on corporate strategy, business directions, risk management policy andimplementation of corporate objectives;• Establishing, reviewing and approving the annual budget, corporate policies, strategies and objectives for theGroup;• Ensuring the effectiveness and integrity of Management;• Monitoring the Management’s achievement of these goals;• Conducting periodic reviews of the Group’s fi nancial performance, internal controls and reporting compliance;• Approving nominations to the Board and appointment of key executives;• Ensuring the Group’s compliance with all relevant and applicable laws and regulations; and• Assuming responsibility for the corporate governance of the Group.To assist the Board in the execution of its responsibilities, the Board is supported by three committees, namelythe Audit Committee, the Nominating Committee and the Remuneration Committee. Each Committee has its owndefi ned terms of reference and operating procedures.Formal Board meetings are held at least twice a year to approve the half-yearly results announcement and tooversee the business affairs of the Group. The Board is free to seek clarifi cation and information from Managementon all matters within their purview. Ad-hoc meetings are convened at such other times as may be necessary toaddress any specifi c signifi cant matters that may arise. Important matters concerning the Group are also put to theBoard for its decision by way of written resolutions. Meetings via telephone or video conference are permitted by theCompany’s Articles of Association.

Middle East Development Singapore Ltd.Annual Report 2008 17Corporate Governance ReportThe number of Board and Board Committee meetings held during the fi nancial year and the attendance thereat areas follows:BoardAuditCommitteeNominatingCommitteeRemunerationCommitteeNo. of No. of No. of No. of No. of No. of No. of No. ofmeetings meetings meetings meetings meetings meetings meetings meetingsNameHeld Attended Held Attended Held Attended Held AttendedDr. Oussama Al-Dimashki 3 3 – – – – – –Mr. Huang Wooi Teik (1) 2 2 – – – – – –Mr. Wong Seong Khuen (2) 3 3 – – – – – –Mr. Kim Leng Choon 3 2 – – – – – –Mr. Toh Wing Yew (3) 3 3 – – – – – –Mr. Ong Soon Teik (4) – – – – – – – –Mr. Ng Tian Huat 3 3 – – – – – –Mr. Issam Farid Halabi (5) 2 – – – – – – –Mr. Hoon Tai Meng 3 3 3 3 1 1 2 2Mr. Tan Song Koon 3 3 3 3 1 1 2 2Mr. Tee Tua Ba 3 2 3 2 1 1 2 2(1) Resigned on 24 September 2007(2) Resigned on 29 August 2008(3) Resigned on 1 September 2008(4) Appointed on 2 September 2008(5) Appointed on 24 August 2007Appropriate briefi ng and orientation would be arranged for newly appointed Directors to familiarise with the Group’sbusiness operations, strategic directions, directors’ duties and responsibilities and the corporate governancepractices. They will also be given opportunities to visit the Group’s operational facilities and meet management staffso as to gain a better understanding of the Group’s business. The Company has an on-going training budget for theexisting Directors to fund the Directors’ training when the need arises.To keep pace with changes in regulations and accounting standards which have a signifi cant bearing on thedisclosure obligations of the Company or its Directors, Directors are kept informed of such changes throughcirculated updates or briefings during Board meetings or at specially-convened sessions conducted byprofessionals.Training for DirectorsRelevant training will be provided to familiarise the Board with the roles and responsibilities of a director of a publiclisted company in Singapore. Management would conduct briefi ngs and orientation programmes to familiarise newlyappointed Directors with the various businesses and operations of the Group.

18Middle East Development Singapore Ltd.Annual Report 2008Corporate Governance ReportBoard Composition and BalancePrinciple 2: There should be a strong and independent element on the Board, which is able to exerciseobjective judgement on corporate affairs independently, in particular, from Management. No individual orsmall group of individuals should be allowed to dominate the Board’s decision-making.Presently the Board comprises three Executive Directors, two Non-Executive Directors and three IndependentDirectors:-Executive DirectorsDr. Oussama Al-DimashkiMr. Ong Soon TeikMr. Kim Leng ChoonChairman and Chief Executive Offi cerChief Operating Offi cerNon-Executive DirectorsMr. Ng Tian HuatMr. Issam Farid HalabiIndependent DirectorsMr. Hoon Tai MengMr. Tan Song KoonMr. Tee Tua BaThe Nominating Committee considers an “independent” Director as one who has no relationship with the Company,its related corporation or its offi cers that could interfere or be reasonably perceived to interfere, with the exercise ofthe Director’s independent business judgment.The Nominating Committee has reviewed the independence of each Independent Director and is of the view thatthese Directors are independent.Non-Executive and Independent Directors exercise no management functions in the Group. Although all the Directorshave equal responsibility for the performance of the Group, the role of the Non-Executive and Independent Directorsis particularly important in ensuring that the strategies proposed by Management are fully discussed and rigorouslyexamined and take into account the long-term interests, not only the shareholders, but also of the employees,customers, suppliers and the communities in which the Group conducts its business. The Nominating Committeeconsiders its Non-Executive and Independent Directors to be of suffi cient calibre and number and their views to beof suffi cient weight that no individual or small group of individuals dominates the Board’s decision-making process.The Board comprises directors who as a group, has core competencies and diversity of experience to enable themto lead and control the Group effectively. Such competencies and experiences include industry knowledge, strategicplanning, business and general management, legal and fi nance.The Nominating Committee has reviewed the size and composition of the Board. It is satisfi ed that after takinginto account, the scope and nature of operations of the Group in the year under review, the current Board size isappropriate and effective.Chairman and Chief Executive OfficerPrinciple 3: There should be a clear division of responsibilities at the top of the company – the workingof the Board and the executive responsibility of the company’s business – which will ensure a balance ofpower and authority, such that no one individual represents a considerable concentration of power.Dr. Oussama Al-Dimashki (“Dr. Oussama”) is currently the Chairman of the Board and Chief Executive Offi cer of theCompany.The Board is of the view that there is already a suffi ciently strong independent element on the Board to enable theindependent exercise of objective judgement on corporate affairs of the Group by members of the Board.

Middle East Development Singapore Ltd.Annual Report 2008 19Corporate Governance ReportAs the Chairman of the Board, Dr. Oussama ensures that Board meetings are held as and when necessary and thateach Board member is provided with complete, adequate and timely information.As the Chief Executive Offi cer, Dr. Oussama assumes full responsibilities over the business directions and operationaldecisions of the Group.Dr. Oussama will be stepping down as the Chairman and Chief Executive Offi cer on 1 November 2008.NOMINATING COMMITTEEBoard MembershipPrinciple 4: There should be a formal and transparent process for the appointment of new directorsto the Board. As a principle of good corporate governance, all directors should be required to submitthemselves for re-nomination and re-election at regular intervals.The Nominating Committee comprises the following members:Mr. Hoon Tai MengMr. Tee Tua BaMr. Tan Song KoonChairman (Independent Director)Member (Independent Director)Member (Independent Director)The Nominating Committee is scheduled to meet at least once every fi nancial year.Its role is to establish a formal and transparent process for:(1) Reviewing and making recommendations to the Board on all candidates nominated for appointment to theBoard;(2) Reviewing and recommending to the Board on an annual basis, the Board structure, size and composition,taking into account, the balance between Executive, Non-Executive and Independent Directors and havingregard at all times, to the principles of corporate governance and the Code;(3) Procuring that at least one-third of the Board shall comprise Independent Directors;(4) Identifying and making recommendations to the Board as to which Directors are to retire by rotation and tobe put forward for re-election at each Annual General Meeting (“AGM”) of the Company, having regard to theDirectors’ contribution and performance, including Independent Directors;(5) Determining whether a Director is independent (taking into account the circumstances set out in the Codeand other salient factors); and(6) Proposing a set of objective performance criteria to the Board for approval and implementation, to evaluatethe effectiveness of the Board as a whole and the contribution of each Director to the effectiveness of theBoard.New Directors, if any, are appointed by way of a board resolution, after the Nominating Committee has approvedtheir nominations. Such new Directors submit themselves for re-election at the next AGM. The Company’s Articlesof Association requires one-third of the Board (except for the Managing Director) to retire by rotation at every AGM.Directors, who retire, are eligible to offer themselves for re-election.In making their recommendations, the Nominating Committee evaluates each Director’s contribution andperformance, such as his attendance at meetings of the Board or Board Committees, where applicable,participation, candor and any special contributions.The Nominating Committee (except for Mr. Hoon Tai Meng who has been abstained from recommending his ownnomination) has recommended to the Board that Mr. Hoon Tai Meng, Mr. Ng Tian Huat and Mr. Ong Soon Teik benominated for re-election at the forthcoming AGM. The Board has accepted the recommendations and the retiringDirectors would be offering themselves for re-election.

20Middle East Development Singapore Ltd.Annual Report 2008Corporate Governance ReportFor the fi nancial year under review, the Nominating Committee is of the view that the Independent Directors of theCompany are independent (as defi ned in the Code) and are able to exercise judgement on the corporate affairs ofthe Group independent of the Management.Despite some of the Directors having other board representations, the Nominating Committee is satisfi ed that theseDirectors are able to and have adequately carried out their duties as Directors of the Company.The Nominating Committee reviews and assesses candidates for directorships (including executive directors) beforerecommending to the Board for appointment. Candidates are selected for their character, judgement, businessexperience and acumen.Key information on Directors of the Company can be found on Page 10 of the Annual Report.Board PerformancePrinciple 5: There should be a formal assessment of the effectiveness of the Board as a whole and thecontribution by each director to the effectiveness of the Board.The Nominating Committee strives to ensure that Directors on the Board possess the experience and knowledgethat are critical to the Group’s business, and that each Director brings to the Board, an independent and objectiveperspective to enable balanced and well-considered decisions to be made.The Nominating Committee reviews and evaluates the performance and effectiveness of the Board as a whole foreach fi nancial year, and submits its report to the Board. The review parameters for evaluating each director include,inter alia, the following:(a)(b)(c)Attendance at the Board and/or Committee meetings;Participation and contributions at these meetings; andAvailability for consultation and advice, when required.Each Director shall abstain from voting on any resolutions and making any recommendations and/or participate inany deliberations of the Nominating Committee in respect of the assessment of his performance or re-nomination asa Director.Access to InformationPrinciple 6: In order to fulfill their responsibilities, Board members should be provided with complete,adequate and timely information prior to Board meetings and on an on-going basis.To enable the Board to fulfi ll its responsibility, Management strives to provide Board members with adequate andtimely information for Board and Committee meetings on an on-going basis. Board and Committee papers areprepared for each meeting and are disseminated to the members before the meetings. Board and Committeepapers include fi nancial, business and corporate matters of the Group so as to enable Directors to be properlybriefed on matters to be considered at the Board and Committee meetings.Directors are given separate and independent access to the Group’s key executives and Company Secretary toaddress any enquiries.The Company Secretary or his representatives attends all Board and Committee meetings and is responsible forensuring that proper procedures at such meetings are followed. Together with the Company’s management, theyare responsible for ensuring that the Company complies with the requirements of the Singapore Companies Act, theListing Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST”) and other rules and regulations thatare applicable to the Company.The appointment and removal of the Company Secretary are subject to the approval of the Board.Where decisions to be taken require specialised knowledge or expert opinion, the Board has adopted a policy toseek independent professional advice, at the Company’s expense.

Middle East Development Singapore Ltd.Annual Report 2008 21Corporate Governance Report(B)REMUNERATION MATTERSREMUNERATION COMMITTEEProcedures for Developing Remuneration PoliciesPrinciple 7: There should be formal and transparent procedures for developing policy on executiveremuneration and for fixing the remuneration packages of individual directors. No director should beinvolved in deciding his own remuneration.The Remuneration Committee comprises the following members:Mr. Tee Tua BaMr. Hoon Tai MengMr. Tan Song KoonChairman (Independent Director)Member (Independent Director)Member (Independent Director)The Remuneration Committee is scheduled to meet at least once every fi nancial year.The key duties of the Remuneration Committee, inter alia, are:(a)(b)(c)To review and submit its recommendations for endorsement by the Board, a framework of remuneration andthe specifi c remuneration packages and terms of employment (where applicable) for each Director (includingChief Executive Offi cer) and key executives;To review and approve annually the total remuneration of the Directors and key executives; andTo review and submit its recommendations for endorsement by the Board, the awards to be granted underthe Middle East Development Singapore Share Plan or any long term incentive schemes which maybe set upfrom time to time and to do all acts necessary in connection therewith.No Director will be involved in determining his own remuneration.The Remuneration Committee has full authority to engage any external professional advice on matters relating toremuneration as and when the need arises.Level and Mix of RemunerationPrinciple 8: The level of remuneration should be appropriate to attract, retain and motivate the directorsneeded to run the company successfully but companies should avoid paying more than necessary forthis purpose. A significant proportion of executive directors’ remuneration should be structured so as tolink rewards to corporate and individual performance.The Remuneration Committee will take into account, the industry norms, the Group’s performance as well as thecontribution and performance of each Director when determining remuneration packages.The Independent Directors receive directors’ fees and will be entitled to share awards under the Middle EastDevelopment Singapore Share Plan, in accordance with their contributions, taking into account factors such as effortand time spent, responsibilities of the Directors and the need to pay competitive fees to attract, retain and motivatethe Directors. The Independent Directors shall not be over-compensated to the extent that their independencemaybe compromised.The remuneration for the Executive Directors and certain key executives comprise basic salary component andan annual bonus, variable component, namely the performance bonus, the share options under the HitchinsEmployees’ Share Option Scheme and the share awards under the Middle East Development Singapore Share Plan.The performance bonus, the share options and the share awards are based on the performance of the Group as awhole as well as the performance of the individuals.

22Middle East Development Singapore Ltd.Annual Report 2008Corporate Governance ReportDisclosure on RemunerationPrinciple 9: Each company should provide clear disclosure of its remuneration policy, level and mix ofremuneration, and the procedure for setting remuneration in the company’s annual report. It shouldprovide disclosure in relation to its remuneration policies to enable investors to understand the linkbetween remuneration paid to directors and key executives, and performance.a) Details of the remuneration of the Company’s Directors and of the Group’s fi ve key executives for the fi nancialyear ended 30 June 2008 are as follows:Remuneration Band andName of DirectorsSalary(%)Bonus(%)Fees(%)Benefits(%)Total(%)$250,000 to $499,999Dr Oussama Al-Dimashki 89 11 – – 100Below $250,000Mr. Huang Wooi Teik (1) 88 9 – 3 100Mr. Wong Seong Khuen (2) 85 7 – 8 100Mr. Kim Leng Choon 87 7 – 6 100Mr. Ng Tian Huat (3) 73 9 – 18 100Mr. Toh Wing Yew (4) 87 8 2 3 100Mr. Ong Soon Teik (5) – – – – –Mr. Issam Farid Halabi (6) – – 100 – 100Mr. Hoon Tai Meng – – 100 – 100Mr. Tan Song Koon – – 100 – 100Mr. Tee Tua Ba – – 100 – 100(1) Resigned on 24 September 2007(2) Resigned on 29 August 2008(3) Resigned as an Executive Director and re-designated as a Non-Executive Director on 1 June 2008(4) Resigned on 1 September 2008(5) Appointed on 2 September 2008(6) Appointed on 24 August 2007Remuneration Band andName of Key Executives Salary Bonus Fees Benefits Total% % % % %Below $250,000Mr. Ong Soon Teik 92 – – 8 100Mr. Liew Bo Chuan John 96 – – 4 100Mr. Khoo Koh Seong 92 4 – 4 100Mr. Yeo Hoon Seng 84 7 – 9 100Mr. Ng Kim Khuan 82 7 – 11 100b) Details of share options granted are to key executive as follows:Number of share options to subscribe for theCompany’s Ordinary Shares of $0.08 eachAt date of grant At 30 June 2008Mr. Liew Bo Chuan John 905,000 –Summarised details of the Hitchins Employees’ Share Option Scheme are included in paragraph 5 of theDirectors’ Report.

Middle East Development Singapore Ltd.Annual Report 2008 23Corporate Governance Reportc) Summarised details of the Middle East Development Singapore Share Plan are included in paragraph 5 of theDirectors’ Report.d) There are no employees who are related to the Chief Executive Offi cer or a Director whose remunerationexceeds $150,000 in the Group’s employment during the fi nancial year.(C)ACCOUNTABILITY AND AUDITAccountabilityPrinciple 10: The Board should present a balanced and understandable assessment of the company’sperformance, position and prospects.In presenting the annual fi nancial statements and announcement on half yearly results to the shareholders, it isthe aim of the Board to provide the shareholders with a balanced and comprehensive assessment of the Group’sperformance, position and prospects. Management provides the Audit Committee and the Board with balanced andunderstandable management accounts of the Company’s and of the Group’s performance, position and prospectson a regular basis.Audit CommitteePrinciple 11: The Board should establish an Audit Committee with written terms of reference whichclearly set out its authority and duties.The Audit Committee comprises the following members:Mr. Tan Song KoonMr. Hoon Tai MengMr. Tee Tua BaChairman (Independent Director)Member (Independent Director)Member (Independent Director)The Company has adopted and has complied with the principles of corporate governance under the Code in relationto the roles and responsibilities of the Audit Committee.The Board is of the view that the members of the Audit Committee are appropriately qualifi ed, having the necessaryaccounting or related fi nancial management expertise to discharge their responsibilities.The Audit Committee meets at least half-yearly, and when circumstances require.The Audit Committee, which has written terms of reference, performs the following delegated functions:(i)To review with the external auditors:-(a)(b)(c)(d)(e)(f)(g)the audit plan, including the nature and scope of the audit before the audit commences,their evaluation of the system of internal accounting controls,their audit report,the assistance given to them by the Company’s offi cers,the scope and results of the internal audit procedures,the balance sheet and profi t and loss account of the Company,their management letter and Management’s response, and

24Middle East Development Singapore Ltd.Annual Report 2008Corporate Governance Report(h)any suspected fraud, irregularity or infringement of any Singapore law, rule or regulation, which has oris likely to have a material impact on the Company’s operations, results or fi nancial position.(ii)(iii)(iv)(v)(vi)(vii)(viii)(ix)(x)(xi)to discuss with the external auditors any problems or concerns arising from their interim and fi nal audits, andany other matters which the external auditors may wish to discuss;to ensure co-ordination where more than one audit fi rm is involved;to monitor the scope and results of the external audit, its cost effectiveness and the independence andobjectivity of the external auditors and give recommendations to the Board and the Company in generalmeeting regarding the appointment, re-appointment or removal of the external auditors;to ensure that the internal audit function has adequate resources and appropriate standing within theCompany;to appoint any person(s) to carry out the internal audit function;to ensure that the internal auditor meets or exceeds the standards set by nationally or internationallyrecognised professional bodies including the Standards for the Professional Practice of Internal Auditing setby the Institute of Internal Auditors;to review the quarterly, half-yearly and full year fi nancial statements of the Company and of the Group,including announcements relating thereto, to shareholders and the SGX-ST, and thereafter to submit them tothe Board for approval;to review interested person transactions (as defi ned in the Listing Manual) and report its fi ndings to theBoard;to undertake such other reviews and projects as may be requested by the Board or as the Committee mayconsider appropriate; andto undertake such other functions and duties as may be required by law or by the Listing Manual, asamended from time to time.Apart from the duties listed above, the Audit Committee is given the task of commissioning investigations intomatters where there is suspected fraud or irregularity, or failure of internal controls or infringement of any law, rule orregulation which has or is likely to have a material impact on the Company’s operating results or fi nancial position,and to review its fi ndings.The Audit Committee has also put in place a whistle-blowing policy, whereby staff of the Group may raise concernsabout possible improprieties in matters of fi nancial reporting, fraudulent acts and other matters and ensure thatarrangements are in place for independent investigations of such matters and appropriate follow up actions.The Audit Committee has full access to and co-operation of Management, and has full discretion to invite anyDirector or executive to attend its meetings. It also has reasonable resources to enable it to discharge its functions.The Audit Committee will meet with the external auditors, without the presence of Management, when necessary, toreview the adequacy of audit arrangement, with emphasis on the scope and quality of their audit, the independence,objectivity and observations of the auditors. The Audit Committee is satisfi ed with the independence and objectivityof the external auditors and has confi rmed that there were no provisions of non-audit services performed by externalauditors during the fi nancial year.

Middle East Development Singapore Ltd.Annual Report 2008 25Corporate Governance ReportInternal ControlsPrinciple 12: The Board should ensure that the Management maintains a sound system of internalcontrols to safeguard the shareholders’ investments and the company’s assets.The Board acknowledges its responsibilities for the Group’s system of internal controls to safeguard the Group’sassets. The system of internal controls is designed to manage rather than eliminate the risk of failure to achievebusiness objectives. It can only provide reasonable and not absolute assurance against material misstatementor loss. The Directors regularly review the effectiveness of all internal controls, including fi nancial, operational andcompliance controls, and risk management.The Company’s external auditors conduct an annual review of the effectiveness of the Company’s material internalcontrols. Any material non-compliance or failures in internal controls and recommendations for improvements arereported to the Audit Committee.The Board believes that in the absence of any evidence to the contrary and from due enquiry, the system of internalcontrols that has been maintained by the Group’s management throughout the fi nancial year is adequate to meetthe needs of the Group in its current business environment.Internal AuditPrinciple 13: The Company should establish an internal audit function that is independent of theactivities it audits.The Company is in the process of outsourcing its internal audit functions to an external consultant fi rm (“InternalAuditor”). The Internal Auditor reports directly to the Chairman of the Audit Committee on internal audit matters. TheAudit Committee will review and approve the Internal Auditor’s plans and its resources to adequately perform itsfunctions.(D)COMMUNICATION WITH SHAREHOLDERSPrinciple 14: Companies should engage in regular, effective and fair communication with shareholders.GREATER SHAREHOLDER PARTICIPATIONPrinciple 15: Companies should encourage greater shareholder participation at AGMs, and allowshareholders the opportunity to communicate their views on various matters affecting the company.In line with the continuous disclosure obligations of the Company and pursuant to the Listing Manual of the SGX-STand the Companies Act, Cap. 50 of Singapore, the Board strives to ensure timely disclosure of material businessmatters affecting the Group. All announcements, including half and full year fi nancial results, are made throughSGXNET and press releases as well as on investor relations channels.At the Annual General Meeting, shareholders are encouraged to participate in the question and answer session. TheChairman of the Audit Committee, of the Nominating Committee and of the Remuneration Committee, the Directorsand the external auditors are available to address shareholders’ queries during the meeting.(E)DEALINGS IN COMPANY’S SECURITIESThe Company has adopted a Code of Conduct to provide guidance to its Directors and offi cers (“Offi cers”) withregard to dealings in the Company’s securities. The Company has complied with its Code of Conduct which statesthat Offi cers of the Company should not deal in the Company’s securities on short-term considerations when theyare in possession of unpublished price-sensitive information on the Group and during the period commencing onemonth prior to the announcement of the Company’s half-year and full year fi nancial results. The Offi cers are alsoexpected to observe insider-trading laws at all times.

26Middle East Development Singapore Ltd.Annual Report 2008Corporate Governance Report(F)INTERESTED PERSON TRANSACTIONSThe Company has established a procedure for recording and reporting interested person transactions. All interestedperson transactions are subject to review by the Audit Committee to ensure that they were done on normalcommercial terms. Details of interested person transactions during the fi nancial year which fall under rule 907 of theListing Manual are as follows:Name of interested personAggregate value ofall interested persontransactions duringthe financial periodunder review (excludingtransactions lessthan $100,000 andtransactions conductedunder shareholders’mandate pursuant toRule 920)Aggregate Value ofall interested persontransactions conductedunder the shareholders’mandate pursuant toRule 920 (excludingtransactions less than$100,000)M.E. Development L.L.C.Type of transactionsProject Construction Management Services Nil 290,541Total Nil 290,541(G)RISK MANAGEMENTThe Company regularly reviews and improves its business and operational activities to identify areas of signifi cantbusiness risks as well as to take appropriate measures to control and mitigate these risks. The Company reviewsall signifi cant control policies and procedures and highlights all signifi cant matters to the Audit Committee and theBoard.(H)MATERIAL CONTRACTSExcept as disclosed in the audited fi nancial statements, there are no material contracts entered into by the Companyor its subsidiaries during the fi nancial year ended 30 June 2008, or still subsisting as at 30 June 2008, whichinvolved the interests of any Director or controlling shareholders of the Company.

Middle East Development Singapore Ltd.Annual Report 2008 27Report of the DirectorsThe directors present their report together with the audited consolidated fi nancial statements of the Group and balancesheet and statement of changes in equity of the Company for the fi nancial year ended 30 June 2008.1 DIRECTORSThe directors of the Company in offi ce at the date of this report are:Dr Oussama Al–Dimashki (Chairman and Chief Executive Offi cer)Ong Soon Teik (Executive Director and Chief Operating Offi cer, Appointed on 2 September 2008)Kim Leng Choon(Executive Director)Ng Tian Huat(Resigned as an Executive Director and re-designated as a Non-ExecutiveDirector on 1 June 2008)Issam Farid Halabi(Non–Executive Director)Hoon Tai Meng(Independent Director)Tan Song Koon(Independent Director)Tee Tua Ba(Independent Director)2 ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE BENEFITSBY MEANS OF THE ACQUISITION OF SHARES AND DEBENTURESNeither at the end of the fi nancial year nor at any time during the fi nancial year did there subsist any arrangementwhose object is to enable the directors of the Company to acquire benefi ts by means of the acquisition of shares ordebentures in the Company or any other body corporate, except as disclosed in paragraph 3 and 5 of the Report ofthe Directors.3 DIRECTORS’ INTERESTS IN SHARES AND DEBENTURESThe directors of the Company holding offi ce at the end of the fi nancial year had no interests in the share capital anddebentures of the Company and related corporations as recorded in the register of directors’ shareholdings kept bythe Company under Section 164 of the Singapore Companies Act except as follows:Name of directors and companiesin which interests are heldShareholdings registeredin name of directorAt beginningof yearOrdinary SharesAt endof yearThe CompanyWong Seong Khuen (@ Kwan Seong Khuen) (Resigned on 29 August 2008) 34,620,000 34,620,000Ng Tian Huat 28,620,000 28,620,000Kim Leng Choon 14,389,500 3,000,500The directors’ interests as at 21 July 2008 were the same as those at the end of the fi nancial year ended 30 June2008.

28Middle East Development Singapore Ltd.Annual Report 2008Report of the Directors4 DIRECTORS’ RECEIPT AND ENTITLEMENT TO CONTRACTUAL BENEFITSSince the beginning of the fi nancial year, no director has received or become entitled to receive a benefi t which isrequired to be disclosed under Section 201(8) of the Singapore Companies Act, by reason of a contract made bythe Company or a related corporation with the director or with a fi rm of which he is a member, or with a companyin which they have a substantial fi nancial interest except for salaries, bonuses and other benefi ts as disclosed in thefi nancial statements. Certain directors received remuneration from related corporations in their capacity as directorsand/or executives of those related corporations.5 SHARE OPTIONSa) Hitchins Employees’ Share Option SchemeThe Hitchins Employees’ Share Option Scheme (the “Scheme”) of the Company was approved and adoptedby its members at an Extraordinary General Meeting held on 13 December 2002.The Scheme provides an opportunity for employees (including Executive Directors of the Group) to have apersonal stake in the shareholdings of the Company.The Scheme is administered by the Remuneration Committee comprising:• Tee Tua Ba (Chairman and Independent Director)• Hoon Tai Meng (Member and Independent Director)• Tan Song Koon (Member and Independent Director)The following persons are eligible to participate in the Scheme:(i) confi rmed full–time employees of the Company and/or subsidiaries who have attained the age of 21years and above and/or before the relevant date of offer of an option;(ii)(iii)Executive Directors; andpersons who qualify under (i) or (ii) and who are controlling shareholders of the Company and theirassociates and whose participation and actual number of shares granted under the Scheme andterms of any option granted to them have been approved by independent shareholders in generalmeeting.Non–executive directors are not eligible to participate in the Scheme.Under the rules of the Scheme, options will be granted at the prevailing market price of the shares basedon the average of the last dealt price per share as indicated in the daily offi cial list or any other publicationpublished by the Singapore Exchange Securities Trading Limited for the 5 consecutive days immediatelypreceding the date of grant (the “Market Price”). Options will not be granted at a discount to the MarketPrice.Options are exercisable, in whole or in part (provided that an option is exercised in part in respect of 1,000shares or any multiple thereof) as follows:(i)(ii)(iii)(iv)up to 40% of the option at any time after 12 months of the date of grant;the next 30% of the option at any time after 18 months of the date of grant;the balance 30% of the option at any time after 24 months of the date of grant; andbefore the end of 120 months of the date of grant of the option, subject to such other conditionsintroduced by the Remuneration Committee from time to time.

Middle East Development Singapore Ltd.Annual Report 2008 29Report of the DirectorsThe aggregate number of shares to be issued under the Scheme shall not exceed 15% of the Company’stotal issued share capital. The number of outstanding share options under the Scheme is as follows:Date of grantBalanceat1 July 2007 ExercisedBalanceat30 June 2008Exerciseprice pershareExpiry date28 April 2004 535,000 (300,000) 235,000 $0.08 28 April 2014Since the commencement of the Scheme, no options have been granted to the directors of the Company,controlling shareholders of the Company or their associates and no participant under the Scheme has beengranted 5% or more of the total options available under the Scheme.The options granted by the Company do not entitle the holders of the options, by virtue of such holdings, toany right to participate in any share issue of any other Company.b) Option to subscribe for ordinary shares at $0.05 eachOn 29 December 2006, the Company granted an option to M.E. Development L.L.C. (“MED”) under asubscription agreement to subscribe for 120,000,000 ordinary shares at $0.05 each. MED subsequentlyexercised part of the option to subscribe for 20,000,000 ordinary shares at $0.05 each in the fi nancial yearended 30 June 2007. As at 30 June 2008, there was a remaining option to subscribe for 100,000,000ordinary shares at $0.05 each.c) Middle East Development Singapore (“MEDS”) Share PlanThe MEDS Share Plan (the “Plan”) of the Company was approved by its members at an ExtraordinaryGeneral Meeting held on 26 October 2007.It is a share incentive plan and is an integral part of the employee incentive compensation in the Company’svariable wage system. The Plan will give the Participants an opportunity to have a personal equity interest inthe Company.The Participants of the Plan are not required to pay for the grant of Awards or for the Shares allotted orallocated. The Plan is for a period of 10 years commencing on the Effective Date.The Plan is administered by the Remuneration Committee comprising:• Tee Tua Ba (Chairman and Independent Director)• Hoon Tai Meng (Member and Independent Director)• Tan Song Koon (Member and Independent Director)The following persons are eligible to participate in the Plan:• Employees of the Group;• Employees of the Company’s Associated Companies; and• Non-executive directors of the Company.The aggregate number of new Shares over which the Committee may grant Awards on any date, whenadded to the number of new Shares issued and issuable in respect of all Shares granted under the Planand any other existing share schemes or share option schemes implemented or to be implemented by theCompany, shall not exceed 15% of the issued share capital of the Company on the day preceding that date.Awards to be issued represent the right conferred by the Company on a Participant. It may be granted atany time during the period the Plan is in force, provided always that in the event that an announcement onany matter involving unpublished price sensitive information is made, awards may only be granted after thesecond Market Day following the aforesaid announcement. Acceptance of the Grant shall be within 30 daysfrom the date of grant.

30Middle East Development Singapore Ltd.Annual Report 2008Report of the DirectorsAn award shall be released:a. After 1 st anniversary of Date of Grant: maximum of 30% of Award granted;b. After 2 nd anniversary of Date of Grant: maximum of 30% of Award granted; andc. After 3 rd anniversary of Date of Grant: maximum of 40% of Award granted.During the year, no shares were granted under the MEDS Share Plan.Other than disclosed above, there were no shares issued by virtue of any exercise of option to take up unissuedshares of the Company or any other corporation in the Group.During the fi nancial year, no option to take up unissued shares of the Company or any corporation in the Group wasgranted.6 AUDIT COMMITTEEThe Audit Committee, comprising all non–executive directors, is chaired by Tan Song Koon, an independent director,and includes Hoon Tai Meng and Tee Tua Ba, both independent directors. The Audit Committee has met three timessince the last Annual General Meeting (“AGM”) and has reviewed the following, where relevant, with the executivedirectors and external auditors of the Company:a) the audit plans and evaluation of the Group’s systems of internal accounting controls;b) the Group’s fi nancial and operating results and accounting policies;c) the fi nancial statements of the Company and the consolidated fi nancial statements of the Group before theirsubmission to the directors of the Company and external auditors’ report on those fi nancial statements;d) the half–yearly and annual announcements as well as the related press releases on the results and fi nancialposition of the Company and the Group;e) the co–operation and assistance given by the management to the Group’s external auditors; andf) the re–appointment of the external auditors of the Group.The Audit Committee has full access to and has the co–operation of the management and has been given theresources required for it to discharge its function properly. It also has full discretion to invite any director andexecutive offi cer to attend its meetings. The external auditors have unrestricted access to the Audit Committee.The Audit Committee has recommended to the directors the nomination of Deloitte & Touche LLP for re–appointmentas external auditors of the Group at the forthcoming AGM of the Company.7 AUDITORSThe auditors, Deloitte & Touche LLP, have expressed their willingness to accept re-appointment.ON BEHALF OF THE DIRECTORSDr Oussama Al–DimashkiKim Leng Choon26 September 2008

Middle East Development Singapore Ltd.Annual Report 2008 31Independent Auditors’ Report to the Members ofMiddle East Development Singapore Ltd.We have audited the accompanying fi nancial statements of Middle East Development Singapore Ltd.. (the “Company”)and its subsidiaries (the “Group”) which comprise the balance sheets of the Group and the Company as at 30 June 2008,the profi t and loss statement, statement of changes in equity and cash fl ow statement of the Group and the statement ofchanges in equity of the Company for the year then ended, and a summary of signifi cant accounting policies and otherexplanatory notes, as set out on pages 32 to 74.The fi nancial statements for the year ended 30 June 2007 were audited by another fi rm of auditors whose report dated7 September 2007 expressed an unqualifi ed opinion on those fi nancial statements.Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these fi nancial statements in accordance withthe provisions of the Singapore Companies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting Standards. Thisresponsibility includes: devising and maintaining a system of internal accounting controls suffi cient to provide a reasonableassurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properlyauthorised and that they are recorded as necessary to permit the preparation of true and fair profi t and loss accounts andbalance sheets and to maintain accountability of assets; selecting and applying appropriate accounting policies; and makingaccounting estimates that are reasonable in the circumstances.Auditors’ ResponsibilityOur responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit inaccordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirementsand plan and perform the audit to obtain reasonable assurance whether the fi nancial statements are free from materialmisstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancialstatements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of materialmisstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditorconsiders internal control relevant to the entity’s preparation and fair presentation of the fi nancial statements in order todesign audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policiesused and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentationof the fi nancial statements. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide abasis for our audit opinion.OpinionIn our opinion,a) the consolidated fi nancial statements of the Group and the balance sheet and statement of changes in equity of theCompany are properly drawn up in accordance with the provisions of the Act and Singapore Financial ReportingStandards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 30 June2008 and of the results, changes in equity and cash fl ows of the Group and the changes in equity of the Companyfor the year ended on that date; andb) the accounting and other records required by the Act to be kept by the Company and by those subsidiariesincorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisionsof the Act.Deloitte & Touche LLPPublic Accountants andCertifi ed Public AccountantsSingapore26 September 2008

32Middle East Development Singapore Ltd.Annual Report 2008Balance Sheets30 June 2008GroupCompanyNote 2008 2007 2008 2007$ $ $ $ASSETSCurrent assetsCash and cash equivalents 7 9,294,250 13,488,727 7,469,982 12,044,923Trade and other receivables 8 6,679,405 8,090,882 3,256,373 2,444,963Held–for–trading investment 9 494,000 – – –Amount due from contract customers 10 373,575 460,276 – –Inventories 11 936,635 931,395 – –Total current assets 17,777,865 22,971,280 10,726,355 14,489,886Non–current assetsProperty, plant and equipment 12 781,031 995,345 96,514 176,786Investments in subsidiaries 13 – – 3,021,819 3,021,821Investment in an associate 14 – – – –Deferred tax asset 25 11,300 11,833 – –Total non–current assets 792,331 1,007,178 3,118,333 3,198,607Total assets 18,570,196 23,978,458 13,844,688 17,688,493LIABILITIES AND EQUITYCurrent liabilitiesBank overdrafts and loans 15 315,862 456,910 – –Trade and other payables 16 4,561,489 4,501,260 1,822,171 1,696,113Amount due to contract customers 10 60,053 66,927 – –Current portion of fi nance leases 17 68,321 83,628 39,216 45,752Income tax payable 211,688 126,000 93,778 25,181Total current liabilities 5,217,413 5,234,725 1,955,165 1,767,046Non–current liabilitiesFinance leases 17 92,314 91,427 32,556 65,236Deferred tax liabilities 25 1,176 106,388 – –Total non–current liabilities 93,490 197,815 32,556 65,236Capital and reservesShare capital 18 18,325,460 18,296,125 18,325,460 18,296,125Statutory reserve 20 346,410 326,231 – –Share option reserves 4,179 9,514 4,179 9,514Foreign currency translation reserves (681,186) (521,160) – –(Accumulated losses) Retained earnings (4,735,570) 435,208 (6,472,672) (2,449,428)Total equity 13,259,293 18,545,918 11,856,967 15,856,211Total liabilities and equity 18,570,196 23,978,458 13,844,688 17,688,493See accompanying notes to fi nancial statements.

Middle East Development Singapore Ltd.Annual Report 2008 33Consolidated Profit and Loss StatementYear Ended 30 June 2008GroupNote 2008 2007$ $Revenue 21 11,189,119 11,808,164Cost of sales (8,165,071) (7,824,514)Gross profit 3,024,048 3,983,650Other operating income 22 283,320 450,111Distribution costs (1,575,456) (1,590,142)Administrative expenses (4,718,528) (2,869,438)Other operating expenses 23 (1,748,688) (45,865)Finance cost 24 (36,786) (69,410)Loss before income tax (4,772,090) (141,094)Income tax expense 25 (378,509) (175,557)Loss for the year 26 (5,150,599) (316,651)Basic loss per share (cents) 27 (1.29) (0.16)Diluted loss per share (cents) 27 (1.29) (0.16)See accompanying notes to fi nancial statements.

34Middle East Development Singapore Ltd.Annual Report 2008Statements of Changes in EquityYear Ended 30 June 2008GroupSharecapitalStatutoryreserveShareoptionreservesForeigncurrencytranslationreservesRetainedearnings/(Accumulatedlosses)Total$ $ $ $ $ $Balance at 1 July 2006 4,311,012 284,879 80,470 (623,136) 793,211 4,846,436Exchange differences on translatingforeign operations, representing netincome recognised directly in equity – – – 101,976 – 101,976Net loss for the year – – – – (316,651) (316,651)Total recognised income and expensefor the year – – – 101,976 (316,651) (214,675)Transfer to statutory reserve – 41,352 – – (41,352) –Issuance of shares 14,254,375 – – – – 14,254,375Share issue expenses (659,418) – – – – (659,418)Exercise of share options 319,200 – – – – 319,200Transfer to share capital upon exerciseof share options 70,956 – (70,956) – – –Balance at 30 June 2007 18,296,125 326,231 9,514 (521,160) 435,208 18,545,918Exchange differences on translatingforeign operations, representing netexpense recognised directly in equity – – – (160,026) – (160,026)Net loss for the year – – – – (5,150,599) (5,150,599)Total recognised expense for the year – – – (160,026) (5,150,599) (5,310,625)Transfer to statutory reserve – 20,179 – – (20,179) –Exercise of share options 24,000 – – – – 24,000Transfer to share capital upon exerciseof share options 5,335 – (5,335) – – –Balance at 30 June 2008 18,325,460 346,410 4,179 (681,186) (4,735,570) 13,259,293See accompanying notes to fi nancial statements.

Middle East Development Singapore Ltd.Annual Report 2008 35Statements of Changes in EquityYear Ended 30 June 2008Sharecapital$Shareoptionreserves$Accumulatedlosses$Total$CompanyBalance at 1 July 2006 4,311,012 80,470 (1,514,631) 2,876,851Net loss for the year – – (934,797) (934,797)Issue of shares 14,254,375 – – 14,254,375Share issue expenses (659,418) – – (659,418)Exercise of share options 319,200 – – 319,200Transfer to share capital upon exerciseof share options 70,956 (70,956) – –Balance at 30 June 2007 18,296,125 9,514 (2,449,428) 15,856,211Net loss for the year – – (4,023,244) (4,023,244)Exercise of share options 24,000 – – 24,000Transfer to share capitalupon exercise of share options 5,335 (5,335) – –Balance at 30 June 2008 18,325,460 4,179 (6,472,672) 11,856,967See accompanying notes to fi nancial statements.

36Middle East Development Singapore Ltd.Annual Report 2008Consolidated Cash Flow StatementYear Ended 30 June 2008GroupNote 2008 2007$ $Operating activitiesLoss before tax (4,772,090) (141,094)Adjustments for:Bad debts written off 950 29Impairment loss on held-for-trading investment 58,397 –Depreciation expense 296,660 345,913Dividend income from held-for-trading investment (5,765) –Fixed assets written off 571 1,435Foreign exchange losses 5,453 6,121Gain on disposal of property, plant and equipment (15,665) (31,759)Impairment of goodwill 52,175 –Interest expense 36,786 69,410Interest income (185,739) (97,525)Inventory written off 1,545 –Loss on disposal of held-for-trading investment 304,241 –Allowances for doubtful debts written back (20,217) (264,220)Provision for impairment loss on project management 927,935 –Provision for warranties 128,254 107,416Allowances for doubtful debts 397,421 38,280Operating (loss) profi t before working capital changes (2,789,088) 34,006Trade and other receivables 1,027,870 (947,711)Amount due from/to contract customers (848,108) (247,318)Inventories (6,785) (181,177)Trade and other payables (68,025) 230,509Cash used in operations (2,684,136) (1,111,691)Interest paid (36,786) (69,410)Income tax paid (397,500) (296,533)Net cash used in operating activities (3,118,422) (1,477,634)Investing activitiesDividend income from held-for-trading investment 5,765 –Interest received 185,739 97,525Proceeds from disposal of held-for-trading investment 6,833,935 –Proceeds from disposal of property, plant and equipment 17,008 63,378Purchase of held-for-trading investment (7,690,573) –Purchase of property, plant and equipment (104,481) (347,415)Acquisition of additional interest in a subsidiary (52,175) –Net cash used in investing activities (804,782) (186,512)

Middle East Development Singapore Ltd.Annual Report 2008 37Consolidated Cash Flow StatementYear Ended 30 June 2008GroupNote 2008 2007$ $Financing activitiesNet proceeds from issue of shares 24,000 13,914,157Net repayments from fi nance leases (14,420) (101,468)Restricted cash (400,305) (23,592)Short term borrowings (164,388) 36,077Net cash (used in) from fi nancing activities (555,113) 13,825,174Net (decrease) increase in cash and cash equivalents (4,478,317) 12,161,028Cash and cash equivalents at beginning of year 12,539,413 295,849Effect of exchange rate changes on the balance ofcash held in foreign currencies (139,805) 82,536Cash and cash equivalents at end of year 7 7,921,291 12,539,413See accompanying notes to fi nancial statements.

38Middle East Development Singapore Ltd.Annual Report 2008Notes to Financial Statements30 June 20081 GENERALThe Company (Registration No. 196600189D) is incorporated in Singapore with its registered offi ce at 80 Raffl esPlace, #22-21 UOB Plaza 2, Singapore 048624 and principal places of business at 80 Raffl es Place, #22–21 UOBPlaza 2, Singapore 048624 and 30 Toh Guan Road, #07-01 ODC Districentre, Singapore 608840. The Company islisted on the Catalist of the Singapore Exchange Securities Trading Limited. The fi nancial statements are expressedin Singapore dollars.The principal activity of the Company is that of investment holding.The principal activities of the subsidiaries are disclosed in Note 13 to the fi nancial statements.The consolidated fi nancial statements of the Group and the balance sheet and statement of changes in equity ofthe Company for the fi nancial year ended 30 June 2008 were authorised for issue by the Board of Directors on 26September 2008.2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESBASIS OF ACCOUNTING – The fi nancial statements have been prepared in accordance with the historical costbasis, except as disclosed in the accounting policies below, and are drawn up in accordance with the provisions ofthe Singapore Companies Act and Singapore Financial Reporting Standards (“FRS”).ADOPTION OF NEW AND REVISED STANDARDS – In the current fi nancial year, the Group has adopted all of thenew and revised FRS and Interpretations of FRS (“INT FRS”) that are relevant to its operations and effective forannual periods beginning on or after 1 July 2007. The adoption of these new/revised FRSs and INT FRSs doesnot result in changes to the Group’s and Company’s accounting policies and has no material effect on the amountsreported for the current or prior years except as disclosed below and in the notes to the fi nancial statements.FRS 107 – Financial Instruments : Disclosures and amendments to FRS 1 – Presentation of Financial Statementsrelating to capital disclosuresThe Group has adopted FRS 107 with effect from annual periods beginning on or after 1 July 2007. The newstandard has resulted in an expansion of the disclosure in these fi nancial statements regarding the Group’s fi nancialinstruments. The Group has also presented information regarding its objectives policies and process for managingcapital (see Note 4) as required by the amendments to FRS 1 which are effective from annual periods beginning onor after 1 July 2007.At the date of authorisation of these fi nancial statements, the following FRS, INT FRS and amendment to FRS thatare relevant to the Group and the Company were issued but not effective.FRS 1 – Presentation of Financial Statements (Revised)FRS 23 – Borrowing costs (Revised)FRS 108 – Operating SegmentsINT FRS 112 – Service Concession ArrangementsINT FRS 113 – Customer Loyalty ProgrammesConsequential amendments were also made to various standards as a result of these new/revised standards.The management anticipates that the adoption of the above FRS, INT FRS and amendments to FRS in futureperiods will not have a material impact on the fi nancial statement of the Group and of the Company in the period oftheir initial adoption.BASIS OF CONSOLIDATION – The consolidated fi nancial statements incorporate the fi nancial statements of theCompany and entities (including special purpose entities) controlled by the Company (its subsidiaries). Control isachieved when the Company has the power to govern the fi nancial and operating policies of an entity so as toobtain benefi ts from its activities.The results of subsidiaries acquired or disposed of during the fi nancial year are included in the consolidated profi tand loss statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Middle East Development Singapore Ltd.Annual Report 2008 39Notes to Financial Statements30 June 20082 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)BASIS OF CONSOLIDATION (Cont’d)Where necessary, adjustments are made to the fi nancial statements of subsidiaries to bring their accounting policiesinto line with those used by other members of the Group.All intra–group transactions, balances, income and expenses are eliminated on consolidation.Minority interests in the net assets of consolidated subsidiaries are identifi ed separately from the Group’s equitytherein. Minority interests consist of the amount of those interests at the date of the original business combination(see below) and the minority’s share of changes in equity since the date of the combination. Losses applicable to theminority in excess of the minority’s interest in the subsidiary’s equity are allocated against the interests of the Groupexcept to the extent that the minority has a binding obligation and is able to make an additional investment to coverits share of those losses.In the Company’s fi nancial statements, investments in subsidiaries and associate are carried at cost less anyimpairment in net recoverable value that has been recognised in the profi t and loss statement.BUSINESS COMBINATIONS - The acquisition of subsidiaries is accounted for using the purchase method. The costof the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilitiesincurred or assumed, and equity instruments issued by the group in exchange for control of the acquiree, plus anycosts directly attributable to the business combination. The acquiree’s identifi able assets, liabilities and contingentliabilities that meet the conditions for recognition under FRS 103 are recognised at their fair values at the acquisitiondate, except for non-current assets (or disposal groups) that are classifi ed as held for sale in accordance with FRS105 Non-Current Assets Held for Sale and Discontinued Operations, which are recognised and measured at fairvalue less costs to sell.Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the costof the business combination over the Group’s interest in the net fair value of the identifi able assets, liabilities andcontingent liabilities recognised. If, after reassessment, the Group’s interest in the net fair value of the acquiree’sidentifi able assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess isrecognised immediately in profi t or loss.The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fairvalue of the assets, liabilities and contingent liabilities recognised.FINANCIAL INSTRUMENTS – Financial assets and fi nancial liabilities are recognised on the Group’s balance sheetwhen the Group becomes a party to the contractual provisions of the instrument.Effective interest methodThe effective interest method is a method of calculating the amortised cost of a fi nancial instrument and ofallocating interest income or expense over the relevant period. The effective interest rate is the rate that exactlydiscounts estimated future cash receipts or payments through the expected life of the fi nancial instrument, orwhere appropriate, a shorter period. Income and expense is recognised on an effective interest rate basis for debtinstruments other than those fi nancial instruments at fair value through profi t and loss.Financial assetsInvestments are recognised and de–recognised on a trade date where the purchase or sale of an investment isunder a contract whose terms require delivery of the investment within the timeframe established by the marketconcerned, and are initially measured at fair value, net of transaction costs.Other fi nancial assets are classifi ed into the following specifi ed categories: fi nancial assets at “fair value through profi tand loss” and “loans receivables”. The classifi cation depends on the nature and purpose of fi nancial assets and isdetermined at the time of initial recognition.

40Middle East Development Singapore Ltd.Annual Report 2008Notes to Financial Statements30 June 20082 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)Cash and cash equivalentsCash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquidinvestments that are readily convertible to a known amount of cash and are subject to an insignifi cant risk ofchanges in value.Financial assets at fair value through profit or loss (FVTPL)Financial assets are classifi ed as at FVTPL where the fi nancial asset is either held for trading or it is designated as atFVTPL.A fi nancial asset is classifi ed as held for trading if:• it has been acquired principally for the purpose of selling in the near future; or• it is a part of an identifi ed portfolio of fi nancial instruments that the Group manages together and has a recentactual pattern of short-term profi t-taking; or• it is a derivative that is not designated and effective as a hedging instrument.Financial assets at fair value through profi t or loss are stated at fair value, with any resultant gain or loss recognisedin profi t or loss. The net gain or loss recognised in profi t or loss incorporates any dividend or interest earned on thefi nancial asset. Fair value is determined in the manner described in Note 4.Loans and receivablesTrade receivables, loans and other receivables that have fi xed or determinable payments that are not quoted in anactive market are classifi ed as “loans and receivables”. Loans and receivables are measured at amortised costusing the effective interest method less impairment. Interest is recognised by applying the effective interest method,except for short–term receivables when the recognition of interest would be immaterial.Impairment of financial assetsFinancial assets are assessed for indicators of impairment at each balance sheet date. Financial assets are impairedwhere there is objective evidence that, as a result of one or more events that occurred after the initial recognition ofthe fi nancial asset, the estimated future cash fl ows of the fi nancial assets have been impacted. For fi nancial assetscarried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount andthe present value of estimated future cash fl ows, discounted at the original effective interest rate.The carrying amount of the fi nancial asset is reduced by the impairment loss directly for all fi nancial assets with theexception of trade and other receivables where the carrying amount is reduced through the use of an allowanceaccount. When a trade and other receivable are uncollectible, it is written off against the allowance account.Subsequent recoveries of amounts previously written off are credited to profi t or loss and against the allowanceaccount. Changes in the carrying amount of the allowance account are recognised in profi t or loss.If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectivelyto an event occurring after the impairment loss was recognised, the previously recognised impairment loss isreversed through profi t or loss to the extent the carrying amount of the investment at the date the impairment isreversed does not exceed what the amortised cost would have been had the impairment not been recognised.

Middle East Development Singapore Ltd.Annual Report 2008 41Notes to Financial Statements30 June 20082 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)Derecognition of financial assetsThe Group derecognises a fi nancial asset only when the contractual rights to the cash fl ows from the asset expire, orit transfers the fi nancial asset and substantially all the risks and rewards of ownership of the asset to another entity.If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to controlthe transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts itmay have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred fi nancialasset, the Group continues to recognise the fi nancial asset and also recognises a collateralised borrowing for theproceeds received.Financial liabilities and equity instrumentsClassification as debt or equityFinancial liabilities and equity instruments issued by the Company and the Group are classifi ed according to thesubstance of the contractual arrangements entered into and the defi nitions of a fi nancial liability and an equityinstrument.Financial liabilitiesTrade and other payables are initially measured at fair value net of transaction costs, and are subsequently measuredat amortised cost, using the effective interest rate method, with interest expense recognised on an effective yieldbasis.Interest–bearing bank loans and overdrafts are initially measured at fair value, and are subsequently measured atamortised cost, using the effective interest method. Any difference between the proceeds (net of transaction costs)and the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance withthe Group’s accounting policy for borrowing costs.Financial guarantee contract liabilities are measured initially at their fair values and subsequently at the higher of theamount of obligation under the contract recognised as a provision in accordance with FRS 37 Provision, ContingentLiabilities and Contingent Assets and the amount initially recognised less cumulative amortisation in accordance withFRS 18 Revenue.Derecognition of financial liabilitiesThe Group derecognises fi nancial liabilities when, and only when, the Group’s obligations are discharged, cancelledor when they expire.CONSTRUCTION CONTRACTS – Where the outcome of a construction contract can be estimated reliably, revenueand costs are recognised by reference to the stage of completion of the contract activity at the balance sheet date,as measured by the proportion that contract costs incurred for work performed to date relative to the estimated totalcontract costs, except where this would not be representative of the stage of completion. Variations in contractwork, claims and incentive payments are included to the extent that they have been agreed with the customer.Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to theextent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expensesin the period in which they are incurred.When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised asan expense immediately.LEASES – Leases are classifi ed as fi nance leases whenever the terms of the lease transfer substantially all the risksand rewards of ownership to the lessee. All other leases are classifi ed as operating leases.

42Middle East Development Singapore Ltd.Annual Report 2008Notes to Financial Statements30 June 20082 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)LEASES (Cont’d)The Group as lesseeAssets held under fi nance leases are recognised as assets of the Group at their fair value at the inception of thelease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessoris included in the balance sheet as a fi nance lease obligation. Lease payments are apportioned between fi nancecharges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balanceof the liability. Finance charges are charged directly to profi t or loss unless they are directly attributable to qualifyingassets, in which case they are capitalised in accordance with the Group’s general policy on borrowing costs (seebelow).Rental payable under operating leases are charged to profi t or loss on a straight–line basis over the term of therelevant lease unless another systematic basis is more representative of the time pattern in which economic benefi tsfrom the leased asset are consumed. Contingent rentals arising under operating leases are recognised as anexpense in the period in which they are incurred.In the event that lease incentives are received to enter into operating leases, such incentives are recognised as aliability. The aggregate benefi t of incentives is recognised as a reduction of rental expense on a straight–line basis,except where another systematic basis is more representative of the time pattern in which economic benefi ts fromthe leased asset are consumed.INVENTORIES – Inventories are stated at the lower of cost or net realisable value. Cost comprises direct materialsand, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventoriesto their present location and condition. Cost is calculated using the weighted average method. Net realisable valuerepresents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing,selling and distribution.PROPERTY, PLANT AND EQUIPMENT – Property, plant and equipment are stated at cost less accumulateddepreciation and any accumulated impairment losses.Depreciation is charged so as to write off the cost of assets over their estimated useful lives, using the straight–linemethod, on the following bases:Leasehold land and building – over the term of lease which is 3.6% to 4.5%Leasehold improvements – 10%Motor vehicles – 10% to 40%Plant and equipment – 10% to 100%The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect ofany changes in estimate accounted for on a prospective basis.Assets held under fi nance lease arrangements are depreciated over their expected useful lives on the same basis asowned assets or, if there is no certainty that the lessee will obtain ownership by the end of the lease term, the assetshall be fully depreciated over the shorter of the lease term and its useful life.The gain or loss arising from the disposal or retirement of an item of property, plant and equipment asset isdetermined as the difference between the sales proceeds and the carrying amounts of the asset and is recognisedin profi t or loss.IMPAIRMENT OF ASSETS – At each balance sheet date, the Group reviews the carrying amounts of its assets todetermine whether there is any indication that those assets have suffered an impairment loss. If any such indicationexists, the recoverable amount of the assets is estimated in order to determine the extent of the impairment loss (ifany). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates therecoverable amount of the cash–generating unit to which the asset belongs.

Middle East Development Singapore Ltd.Annual Report 2008 43Notes to Financial Statements30 June 20082 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)IMPAIRMENT OF ASSETS (Cont’d)Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, theestimated future cash fl ows are discounted to their present value using a pre–tax discount rate that refl ects currentmarket assessments of the time value of money and the risks specifi c to the asset.If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, thecarrying amount of the asset (or cash generating unit) is reduced to its recoverable amount. Impairment losses arerecognised as an expense immediately in profi t and loss.Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash generating unit) isincreased to the revised estimate of its recoverable amount, but only to the extent that the increased carryingamount does not exceed the carrying amount that would have been determined had no impairment loss beenrecognised for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognisedimmediately in profi t and loss.ASSOCIATES - An associate is an entity over which the group has signifi cant infl uence and that is neither asubsidiary nor an interest in a joint venture. Signifi cant infl uence is the power to participate in the fi nancial andoperating policy decisions of the investee but is not control or joint control over those policies.The results and assets and liabilities of associates are incorporated in these fi nancial statements using the equitymethod of accounting, except when the investment is classifi ed as held for sale, in which case it is accountedfor under FRS 105 Non-current Assets Held for Sale and Discontinued Operations. Under the equity method,investments in associates are carried in the consolidated balance sheet at cost as adjusted for post-acquisitionchanges in the Group’s share of the net assets of the associate, less any impairment in the value of individualinvestments. Losses of an associate in excess of the Group’s interest in that associate (which includes any longterminterests that, in substance, form part of the Group’s net investment in the associate) are not recognised,unless the Group has incurred legal or constructive obligations or made payments on behalf of the associate.Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifi able assets, liabilitiesand contingent liabilities of the associate recognised at the date of acquisition is recognised as goodwill. Thegoodwill is included within the carrying amount of the investment and is assessed for impairment as part of theinvestment. Any excess of the Group’s share of the net fair value of the identifi able assets, liabilities and contingentliabilities over the cost of acquisition, after reassessment, is recognised immediately in profi t or loss.Where a group entity transacts with an associate of the Group, profi ts and losses are eliminated to the extent of theGroup’s interest in the relevant associate.PROVISIONS – Provisions are recognised when the Group has a present obligation (legal or constructive) as a resultof a past event it is probable that the Group will be required to settle that obligation, and a reliable estimate can bemade of the amount of the obligation.The amount recognised as a provision is the best estimate of the consideration required to settle the presentobligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation.Where a provision is measured using the cash fl ows estimated to settle the present obligation, its carrying amount isthe present value of those cash fl ows.When some or all of the economic benefi ts required to settle a provision are expected to be recovered from a thirdparty, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and theamount of the receivable can be measured reliably.WARRANTIES – Provisions for warranty costs are recognised at the date of sales of the relevant products, at themanagement’s best estimate of the expenditure required to settle the Company’s obligation.

44Middle East Development Singapore Ltd.Annual Report 2008Notes to Financial Statements30 June 20082 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)SHARE–BASED PAYMENTS – The Group issues equity–settled share–based payments to certain employees.Equity–settled share–based payments are measured at fair value of the equity instruments (excluding the effectof non market–based vesting conditions) at the date of grant. The fair value determined at the grant date of theequity–settled share–based payments is expensed on a straight–line basis over the vesting period, based on theGroup’s estimate of the number of equity instruments that will eventually vest and adjusted for the effect of nonmarket–based vesting conditions. At each balance sheet date, the Group revises the estimate of the number ofequity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised overthe remaining resting period with a corresponding adjustment to the equity–settled employee benefi ts reserve.Fair value is measured using the Black-Scholes pricing model. The expected life used in the model has beenadjusted, based on management’s best estimate, for the effects of non-transferability exercise restrictions andbehavioural considerations.REVENUE RECOGNITION – Revenue is measured at the fair value of the consideration received or receivable.Revenue is reduced for estimated customer returns, rebates and other similar allowances.Sale of goodsRevenue from the sale of goods is recognised when all the following conditions are satisfi ed:• the Group has transferred to the buyer the signifi cant risks and rewards of ownership of the goods;• the Group retains neither continuing managerial involvement to the degree usually associated with ownershipnor effective control over the goods sold;• the amount of revenue can be measured reliably;• it is probable that the economic benefi ts associated with the transaction will fl ow to the entity; and• the costs incurred or to be incurred in respect of the transaction can be measured reliably.Rendering of servicesRevenue from construction contracts is recognised in accordance with the Group’s accounting policy onconstruction contracts (see above).Revenue from rendering of services of a short-term nature is recognised when the service is provided.Management feesManagement fee income from subsidiaries is recognised on an accrual basis.Interest incomeInterest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rateapplicable.

Middle East Development Singapore Ltd.Annual Report 2008 45Notes to Financial Statements30 June 20082 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)REVENUE RECOGNITION (Cont’d)Dividend incomeDividend income is recognised when the shareholder’s right to receive the dividend have been established.BORROWING COSTS – Borrowing costs directly attributable to the acquisition, construction or production ofqualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intendeduse or sale, are added to the cost of those assets, until such time as the assets are substantially ready for theirintended use or sale. Investment income earned on the temporary investment of specifi c borrowings pending theirexpenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.All other borrowing costs are recognised in the profi t and loss statement in the period in which they are incurred.RETIREMENT BENEFIT COSTS – Payments to defi ned contribution retirement benefi t plans are charged as anexpense as they fall due. Payments made to state–managed retirement benefi t schemes, such as the SingaporeCentral Provident Fund, are dealt with as payments to defi ned contribution plans where the Group’s obligationsunder the plans are equivalent to those arising in a defi ned contribution retirement benefi t plan.EMPLOYEE LEAVE ENTITLEMENT – Employee entitlements to annual leave are recognised when they accrueto employees. A provision is made for the estimated liability for annual leave as a result of services rendered byemployees up to the balance sheet date.INCOME TAX – Income tax expense represents the sum of the tax currently payable and deferred tax.The tax currently payable is based on taxable profi t for the year. Taxable profi t differs from profi t as reported in theprofi t and loss statement because it excludes items of income or expense that are taxable or deductible in otheryears and it further excludes items that are not taxable or tax deductible. The Group’s liability for current tax iscalculated using tax rates (and tax laws) that have been enacted or substantively enacted in countries where theCompany and subsidiaries operate by the balance sheet date.Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the fi nancialstatements and the corresponding tax bases used in the computation of taxable profi t, and is accounted forusing the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporarydifferences and deferred tax assets are recognised to the extent that it is probable that taxable profi ts willbe available against which deductible temporary differences can be utilised. Such assets and liabilities are notrecognised if the temporary difference arises from goodwill or from the initial recognition (other than in a businesscombination) of other assets and liabilities in a transaction that affects neither the taxable profi t nor the accountingprofi t.Deferred tax liabilities are recognised on taxable temporary differences arising on investments in subsidiaries andassociate, except where the Group is able to control the reversal of the temporary difference and it is probable thatthe temporary difference will not reverse in the foreseeable future.The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that itis no longer probable that suffi cient taxable profi ts will be available to allow all or part of the asset to be recovered.Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or theasset realised based on the tax rates (and tax laws) that have been enacted or substantively enacted by the balancesheet date. Deferred tax is charged or credited to profi t or loss, except when it relates to items charged or crediteddirectly to equity, in which case the deferred tax is also dealt with in equity.Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assetsagainst current tax liabilities and when they relate to income taxes levied by the same taxation authority and theGroup intends to settle its current tax assets and liabilities on a net basis.

46Middle East Development Singapore Ltd.Annual Report 2008Notes to Financial Statements30 June 20082 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)INCOME TAX (Cont’d)Current and deferred tax are recognised as an expense or income in profi t or loss, except when they relate to itemscredited or debited directly to equity, in which case the tax is also recognised directly in equity, or where they arisefrom the initial accounting for a business combination. In the case of a business combination, the tax effect is takeninto account in calculating goodwill or determining the excess of the acquirer’s interest in the net fair value of theacquiree’s identifi able assets, liabilities and contingent liabilities over cost.FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION – The individual fi nancial statements of each Groupentity are measured and presented in the currency of the primary economic environment in which the entity operates(its functional currency). The consolidated fi nancial statements of the Group and the balance sheet and statementof changes in equity of the Company are presented in Singapore dollars, which is the functional currency of theCompany, and the presentation currency for the consolidated fi nancial statements.In preparing the fi nancial statements of the individual entities, transactions in currencies other than the entity’sfunctional currency are recorded at the rates of exchange prevailing on the date of the transactions. At each balancesheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the balancesheet date. Non–monetary items carried at fair value that are denominated in foreign currencies are retranslatedat the rates prevailing on the date when the fair value was determined. Non–monetary items that are measured interms of historical cost in a foreign currency are not retranslated.Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items areincluded in profi t or loss for the period. Exchange differences arising on the retranslation of non–monetary itemscarried at fair value are included in profi t or loss for the period except for differences arising on the retranslation ofnon–monetary items in respect of which gains and losses are recognised directly in equity. For such non–monetaryitems, any exchange component of that gain or loss is also recognised directly in equity.For the purpose of presenting consolidated fi nancial statements, the assets and liabilities of the Group’s foreignoperations (including comparatives) are expressed in Singapore dollars using exchange rates prevailing on thebalance sheet date. Income and expense items (including comparatives) are translated at the average exchangerates for the period, unless exchange rates fl uctuated signifi cantly during that period, in which case the exchangerates at the dates of the transactions are used. Exchange differences arising, if any, are classifi ed as equity andtransferred to the Group’s translation reserve. Such translation differences are recognised in profi t or loss in theperiod in which the foreign operation is disposed of.On consolidation, exchange differences arising from the translation of the net investment in foreign entities (includingmonetary items that, in substance, form part of the net investment in foreign entities), and of borrowings and othercurrency instruments designated as hedges of such investments, are taken to the foreign currency translationreserves.Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets andliabilities of the foreign operation and translated at the closing rate.3 CRITICAL ACCOUNTING JUDGEMENTS ANDKEY SOURCES OF ESTIMATION UNCERTAINTYIn the application of the Group’s accounting policies, which are described in Note 2, management is required tomake judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are notreadily apparent from other sources. The estimates and associated assumptions are based on historical experienceand other factors that are considered to be relevant. Actual results may differ from these estimates.The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimatesare recognised in the period in which the estimate is revised if the revision affects only that period, or in the period ofthe revision and future periods if the revision affects both current and future periods.

Middle East Development Singapore Ltd.Annual Report 2008 47Notes to Financial Statements30 June 20083 CRITICAL ACCOUNTING JUDGEMENTS ANDKEY SOURCES OF ESTIMATION UNCERTAINTY (Cont’d)Critical judgements in applying the entity’s accounting policiesIn the application of the Group’s accounting policies which are described in Note 2 above, the management is of theopinion that there are no critical judgements involved that have a signifi cant effect on the amounts recognised in thefi nancial statements, except for the key sources of estimation uncertainty as explained below.Key sources of estimation uncertaintyThe key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheetdate, that have a signifi cant risk of causing a material adjustment to the carrying amounts of assets and liabilitieswithin the next fi nancial year, are discussed below.Property, plant and equipmentThe Group has property, plant and equipment stated at carrying value of $781,031 (2007 : $995,345). Anassessment is made at each reporting date whether there is any indication that the asset may be impaired. If anysuch indication exists, an estimate is made of the recoverable amount of the asset. The recoverable amounts ofcash generating units have been determined based on value–in–use calculations. These calculations require the useof estimates. If the revised estimated gross margin is less favourable than used in the calculations there would be aneed to provide for impairment.Useful lives of plant and equipmentThe estimates for the useful lives and related depreciation charges for plant and equipment is based on commercialand production factors which could change signifi cantly as a result of technical innovations and competitor actionsin response to severe market conditions. The depreciation charge is increased where useful lives are less thanpreviously estimated lives, or the carrying amounts written off or written down for technically obsolete or non–strategic assets that have been abandoned or sold. It is reasonably possible, based on existing knowledge, thatoutcomes within the next fi nancial year that are different from assumptions could require a material adjustment tothe carrying amount of the balances affected.Long–term construction contractsOn long–term contracts, revenues are recorded on the percentage–of–completion basis. The percentage ofcompletion is determined by dividing the cumulative costs incurred as at the balance sheet date by the sum ofincurred costs and anticipated costs for completing a contract. The percentage of completion is then appliedto the contract value to determine the cumulative revenue earned. This method of revenue recognition requiresmanagement to prepare cost estimates to complete contract in progress, and in making such estimates, judgementsare required to evaluate contingencies such as potential variances in scheduling, costs of materials, labour costsand productivity, the impact of change orders or liability claims. All known or anticipating losses based on theseestimates are provided for in their entirety without regard to the percentage of completion. Estimated revenues oncontracts include future revenues from claims when such additional revenues can be reliably established. Theseestimates are based on management’s business practices as well as its historical experience, and managementregularly reviews underlying estimates of project profi tability.Estimated allowances for doubtful accountsAn allowance is made for doubtful debts for estimated losses resulting from the subsequent inability of thecustomers to make required payments. If the fi nancial conditions of the customers were to deteriorate, resulting in animpairment of their ability to make payments, additional allowances may be required in future periods. Managementspecifi cally analyses accounts receivables and analyses historical bad debt, customer concentrations, customercreditworthiness, current economic trends and changes in customer payment terms when evaluating the adequacyof the allowance for doubtful accounts.

48Middle East Development Singapore Ltd.Annual Report 2008Notes to Financial Statements30 June 20083 CRITICAL ACCOUNTING JUDGEMENTS ANDKEY SOURCES OF ESTIMATION UNCERTAINTY (Cont’d)Estimated impairment in value of investments in subsidiariesWhen a subsidiary is in capital defi cit and has suffered operating losses, a test is made to assess whether theinvestment in the subsidiary has suffered any impairment, in accordance with the stated accounting policy. Thisdetermination requires signifi cant judgement. An estimate is made of the future profi tability of the subsidiary, and thefi nancial health of and near–term business outlook for the subsidiary, including factors such as industry and sectorperformance, and operational and fi nancing cash fl ow. The amount of the relevant investments net of impairment is$3,021,819 (2007 : $3,021,821) at the balance sheet date.Income taxesThe Group recognises expected liabilities for tax based on an estimation of the likely tax due, which requiressignifi cant judgement as to the ultimate tax determination of certain items. Where actual liabilities arising from theseissues differ from these estimates, such differences will have an impact on income tax and deferred tax provision inthe period when such determination is made. The management in determining the Group’s estimated tax liabilitiesalso assume the availability of current year tax losses for group tax relief.4 FINANCIAL INSTRUMENTS, FINANCIAL ASSETS AND CAPITAL RISKS MANAGEMENT(a)Categories of financial instrumentsThe following table sets out the fi nancial instruments as at the balance sheet date:Financial AssetsGroupCompany2008 2007 2008 2007$ $ $ $Loans and receivables (including cashand cash equivalents) 15,882,235 21,434,156 10,697,823 14,414,579Fair value through profi t or lossheld–for–trading 494,000 – – –Financial LiabilitiesAmortised cost 5,037,986 5,133,225 1,893,943 1,807,101(b)Financial risk management policies and objectivesThe Group’s overall fi nancial risk management programme seeks to minimise potential adverse effects ofthe fi nancial performance of the Group. The Board of Directors provides principles for overall fi nancial riskmanagement and covering specifi c areas, such as market risk (including foreign exchange risk, interestrate risk, equity price risk), credit risk, liquidity risk, cash fl ow interest rate risk, use of derivative fi nancialinstruments and investment of excess cash.The Group does not hold derivative fi nancial instruments for speculative purposes.

Middle East Development Singapore Ltd.Annual Report 2008 49Notes to Financial Statements30 June 20084 FINANCIAL INSTRUMENTS, FINANCIAL ASSETS AND CAPITAL RISKS MANAGEMENT (Cont’d)(b)Financial risk management policies and objectives (cont’d)There has been no change to the Group’s exposure to these fi nancial risks or the manner in which itmanages and measures the risk. Market risk exposures are measured using sensitivity analysis indicatedbelow.i) Credit risk managementCredit risk refers to the risk that a counterparty will default on its contractual obligations resultingin fi nancial loss to the Group. The Group has adopted a policy of only dealing with creditworthycounterparties and obtaining suffi cient collateral where appropriate, as a means of mitigating therisk of fi nancial loss from defaults. The Group’s exposure and the credit ratings of its counterpartiesare continuously monitored and the aggregate value of transactions concluded is spread amongstapproved counterparties. Credit exposure is controlled by the counterparty limits that are reviewedand approved by the management on a regular basis.Trade receivables consist of a large number of customers, spread across diverse industries andgeographical areas. Ongoing credit evaluation is performed on the fi nancial condition of customers.The Group’s exposure to credit risk is infl uenced mainly by the individual characteristics of eachcustomer. The default risk of the country and industry in which customers operate also has aninfl uence on credit risk but to a lesser extent. The Group has no signifi cant concentration of creditrisk.The carrying amount of fi nancial assets recorded in the fi nancial statements, net of any allowances forlosses, represents the Group’s maximum exposure to credit risk without taking account of the valueof any collateral obtained.Further details of credit risks on trade and other receivables are disclosed in Note 8.ii)Interest rate risk managementThe primary source of the Group’s interest rate risk relates to interest bearing bank deposits and itsborrowings from banks and fi nancial institutions. The interest rates on the Group’s borrowings aredisclosed in Note 15 to the fi nancial statements. As certain rates are based on interbank offer rates,the Group is exposed to cash fl ow interest rate risk. This risk is not hedged. Interest bearing bankdeposits are short–term in nature and given the current interest rate level, any variation in the interestrates are not expected to have a material impact on the net income of the Group.Interest rate sensitivityA 50 basis point increase or decrease is used when reporting interest rate risk internally to keymanagement personnel and represents management’s assessment of the possible change in interestrates. If interest rates had been 50 basis points higher or lower and all other variables were heldconstant, there would have been no signifi cant impact on the fi nancial statements of the Group andthe Company for the current and previous fi nancial years.iii)Foreign currency risk managementThe Group transacts business in various foreign currencies, including the Chinese Reminbi, Euro,Malaysian Ringgit, Swiss Franc, United Arab Emirates Dirham and United States dollar and thereforeis exposed to foreign exchange risk.The Group does not enter into derivative foreign exchange contracts for trading purposes.

50Middle East Development Singapore Ltd.Annual Report 2008Notes to Financial Statements30 June 20084 FINANCIAL INSTRUMENTS, FINANCIAL ASSETS AND CAPITAL RISKS MANAGEMENT (Cont’d)(b)Financial risk management policies and objectives (cont’d)iii)Foreign currency risk management (cont’d)At the reporting date, the carrying amounts of monetary assets and monetary liabilities denominatedin currencies other than the respective Group entities’ functional currencies are as follows:GroupCompanyAssets Liabilities Assets Liabilities2008 2007 2008 2007 2008 2007 2008 2007$ $ $ $ $ $ $ $Euro – – 109,952 107,915 – – – –SwissFranc – – 23,427 123,975 – – – –UnitedArabEmiratesDirham – – 35,025 – – – 35,025 –UnitedStatesdollar 38,443 195,983 91,447 – – – – –The Company has a number of investments in foreign subsidiaries, whose net assets are exposed tocurrency translation risk.Foreign currency sensitivity10% is the sensitivity rate used when reporting foreign currency risk internally to key managementpersonnel and represents management’s assessment of the possible change in foreign exchangerates. The sensitivity analysis includes only outstanding foreign currency denominated monetary itemsand adjusts their translation at the period end for a 10% change in foreign currency rates. If therelevant foreign currencies appreciated or depreciated by 10% against the functional currency of eachGroup entity, there would have been no signifi cant impact on the fi nancial statements of the Groupand the Company for the current and previous fi nancial years.

Middle East Development Singapore Ltd.Annual Report 2008 51Notes to Financial Statements30 June 20084 FINANCIAL INSTRUMENTS, FINANCIAL ASSETS AND CAPITAL RISKS MANAGEMENT (Cont’d)(b)Financial risk management policies and objectives (cont’d)iv)Liquidity risk managementThe objective of liquidity management is to ensure that the Group has suffi cient funds to meet itscontractual and fi nancial obligations. To manage this risk, the Group monitors its net operatingcash fl ow and maintains a level of cash and cash equivalents deemed adequate by management forworking capital purposes so as to mitigate the effects of fl uctuations in cash fl ows.Liquidity and interest risk analysesNon–derivative financial liabilitiesWeightedaverageeffectiveinterestrateOndemandorwithin1 yearWithin2 to 5yearsAfter5 years Adjustment Total% $ $ $ $ $Group2008Non–interest bearing – 4,561,489 – – – 4,561,489Finance lease liability(fi xed rate) 3.0 79,714 110,114 – (29,193) 160,635Variable interest rateinstruments 4.9 315,862 – – – 315,8624,957,065 110,114 – (29,193) 5,037,9862007Non–interest bearing – 4,501,260 – – – 4,501,260Finance lease liability(fi xed rate) 3.0 96,187 105,784 – (26,916) 175,055Variable interest rateinstruments 7.1 292,522 – – – 292,522Fixed interest rate instruments 4.8 164,388 – – – 164,3885,054,357 105,784 – (26,916) 5,133,225Company2008Non–interest bearing – 1,822,171 – – – 1,822,171Finance lease liability(fi xed rate) 2.5 46,128 38,442 – (12,798) 71,7721,868,299 38,442 – (12,798) 1,893,9432007Non–interest bearing – 1,696,113 – – – 1,696,113Finance lease liability(fi xed rate) 2.5 46,128 84,570 – (19,710) 110,9881,742,241 84,570 – (19,710) 1,807,101

52Middle East Development Singapore Ltd.Annual Report 2008Notes to Financial Statements30 June 20084 FINANCIAL INSTRUMENTS, FINANCIAL ASSETS AND CAPITAL RISKS MANAGEMENT (Cont’d)(b)Financial risk management policies and objectives (cont’d)iv)Liquidity risk management (cont’d)Non–derivative financial assetsWeightedaverageeffectiveinterestrateOndemandorwithin1 yearWithin2 to 5yearsAfter5 years Total% $ $ $ $Group2008Non–interest bearing – 8,404,326 – – 8,404,326Fixed interest rate instruments 1.7 7,477,909 – – 7,477,90915,882,235 – – 15,882,2352007Non–interest bearing – 9,210,238 – – 9,210,238Fixed interest rate instruments 2.6 12,223,918 – – 12,223,91821,434,156 – – 21,434,156Company2008Non–interest bearing – 3,967,004 – – 3,967,004Fixed interest rate instruments 1.7 6,730,819 – – 6,730,81910,697,823 – – 10,697,8232007Non–interest bearing – 2,542,565 – – 2,542,565Fixed interest rate instruments 2.6 11,872,014 – – 11,872,01414,414,579 – – 14,414,579v) Fair value of financial assets and financial liabilitiesThe carrying amounts of cash and cash equivalents, trade and other current receivables and payablesapproximate their respective fair values due to the relatively short–term maturity of these fi nancialinstruments. The fair values of other classes of fi nancial assets and liabilities are disclosed in therespective notes to fi nancial statements.The fair values of fi nancial assets and fi nancial liabilities are determined as follows:i) the fair value of fi nancial assets and fi nancial liabilities with standard terms and conditions andtraded on active liquid markets are determined with reference to quoted market prices; andii)the fair value of other fi nancial assets and fi nancial liabilities (excluding derivative instruments)are determined in accordance with generally accepted pricing models based on discountedcash fl ow analysis using prices from observable current market transactions and dealer quotesfor similar instruments.

Middle East Development Singapore Ltd.Annual Report 2008 53Notes to Financial Statements30 June 20084 FINANCIAL INSTRUMENTS, FINANCIAL ASSETS AND CAPITAL RISKS MANAGEMENT (Cont’d)(b)Financial risk management policies and objectives (cont’d)vi)Derivative financial instrument riskIt is the Group’s policy not to trade in derivative contracts. From time to time and in the normalcourse of business, the Group enters into forward exchange contracts to hedge its currency exposurearising from fi rm commitments to suppliers for the purchase of goods.As at 30 June 2008 and 2007, the Group did not have any outstanding forward exchange contracts.vii)Equity price risk managementThe Group is exposed to equity risks arising from equity investment classifi ed as held–for–trading.Further details of this investment can be found in Note 9 to the fi nancial statements.Based on the closing quoted market bid price on the date of this report, the Group’s held-for-tradinginvestment has decreased by $266,000. While the share prices have dropped subsequent to theyear-end, management has assessed that there is no indication of a impairment to this investmentand therefore no additional provision is required to be made in the current fi nancial year.(c)Capital risk management policies and objectivesThe Group manages its capital to ensure that entities in the Group will be able to continue as a goingconcern while maximising the return to stakeholders through the optimisation of the debt and equity balance.The capital structure of the Group consists of debts, which included the borrowings disclosedin Note 15, cash and cash equivalents and equity attributable to equity holders of the Group,comprising issued capital and reserves.The review of the Group’s capital risk management policies and objectives is conducted by the AuditCommittee and the Board of Directors.The Group’s overall strategy remains unchanged from 2007.

54Middle East Development Singapore Ltd.Annual Report 2008Notes to Financial Statements30 June 20085 RELATED COMPANY TRANSACTIONSThe Company is a subsidiary of M.E. Development L.L.C. (“MED”), incorporated in the United Arab Emirates, whichis also the Company’s holding company. Related companies in these fi nancial statements refer to members of theholding company’s group of companies.Some of the Company’s transactions and arrangements are between members of the Group and the effect of theseon the basis determined between the parties is refl ected in these fi nancial statements. The intercompany balancesare unsecured, interest–free and repayable on demand unless otherwise stated.Transactions between the Company and its subsidiaries, which are related companies of the Company, have beeneliminated on consolidation and are therefore not disclosed in this note. Details of transactions between the Groupand other related companies are disclosed below.Group2008 2007$ $Payments to the holding company for the expenses incurred on behalfof the Company on project management contracts 154,655 –On 20 April 2007, the Company entered into a Project and Construction Management Agreement (“Agreement”)with the holding company, to provide project management services in connection with the construction anddevelopment of certain projects in the Middle East. On 11 December 2007, the Company announced that MEDinformed the Group that due to a dispute between MED and the owner of the land with respect to 2 projects, itsproject management services would not be required for these 2 projects and the estimated management fee wouldbe reduced from $31.3 million to $17.4 million over a period of 24 months. By way of a letter (“cancellation letter”)dated 21 July 2008, which was received by the Company only on 29 July 2008, MED cancelled the Agreementwith immediate effect, on ground of non-performance. By way of a letter dated 30 July 2008, MED retracted thecancellation letter. On 7 August 2008, the Company submitted a proposed supplementary agreement for MED tosign and execute. The proposed supplementary agreement, which signifi cantly changes the scope and fee structurefor the project supplementary agreement, has not been signed, as at the date of the report. During the currentfi nancial year, the Group incurred cost of $927,935 directly attributable to the project management services. Due tothe uncertainty of the agreement with MED, management and the Board of Directors are of the view that it is notprobable that the cost incurred will be recovered. Accordingly, no revenue is recognised and a full provision wasmade for the cost incurred (Note 10).Subsequent to the Balance Sheet date, MED disposed 90 million shares in the Company, resulting in a drop in itspercentage of equity interest in the Company including the potential voting rights (options) from 50.2% to 32.1%.Accordingly, MED changes its status from the holding company to a related party of the Company (Note 6).

Middle East Development Singapore Ltd.Annual Report 2008 55Notes to Financial Statements30 June 20086 OTHER RELATED PARTY TRANSACTIONSRelated parties are entities with common direct or indirect shareholders and/or directors. Parties are considered tobe related if one party has the ability to control the other party or exercise signifi cant infl uence over the other party inmaking fi nancial and operating decisions.Some of the Group’s transactions and arrangements are with related parties and the effect of these on the basisdetermined between the parties is refl ected in these fi nancial statements. The balances are unsecured, interest–freeand repayable on demand unless otherwise stated.Signifi cant transactions with related parties were as follows:Group2008 2007$ $Consultancy fees paid to a director 39,200 71,781Professional fees paid to a legal fi rm in which a director is a partner 109,175 44,275Contribution to a trust in which directors are the trustee 42,063 38,175Compensation of directors and key management personnelThe remuneration of directors and other members of key management during the year was as follows:Group2008 2007$ $Salaries and other short–term benefi ts 1,608,183 1,154,930Post–employment benefi ts 49,532 60,7671,657,715 1,215,697The remuneration of directors and key management is determined by the Remuneration Committee having regard tothe performance of individuals and market trends.7 CASH AND CASH EQUIVALENTSGroupCompany2008 2007 2008 2007$ $ $ $Fixed deposits 7,477,909 12,223,918 6,730,819 11,872,014Cash at bank and hand 1,816,341 1,264,809 739,163 172,9099,294,250 13,488,727 7,469,982 12,044,923Less: Bank overdrafts (Note 15) (315,862) (292,522) – –Restricted cash (a) (1,057,097) (656,792) (322,232) (317,013)7,921,291 12,539,413 7,147,750 11,727,910The rates of interest for the cash on interest earning account are between 0.5% to 3.2% (2007 : 0.72% to 3.2%)per year for the Group and 0.5% to 1.8% (2007 : 1.6% to 3.2%) per year for the Company. These approximate theweighted effective interest rate.

56Middle East Development Singapore Ltd.Annual Report 2008Notes to Financial Statements30 June 20087 CASH AND CASH EQUIVALENTS (cont’d)(a)Restricted cash pertains to fi xed deposits pledged to bankers as securities for banking facilities granted.The Group’s cash and bank balances that are not denominated in the functional currencies of the respective entitiesare as follows:Group2008 2007$ $United States dollar 38,443 195,983The Company’s cash and bank balances are denominated in Singapore dollars.8 TRADE AND OTHER RECEIVABLESGroupCompany2008 2007 2008 2007$ $ $ $Trade receivablesOutside parties 6,272,626 7,870,504 630,737 682,454Retention monies receivable 1,146,986 918,025 – –Allowances for doubtful debts (1,497,485) (1,945,212) (630,737) (630,737)5,922,127 6,843,317 – 51,717Other receivablesDeposits 202,380 184,384 140,662 146,316VAT/Tax recoverable 233,861 443,959 192,000 267,084Outside parties 229,617 172,944 17,419 7,545Holding company (Note 5) 254,342 300,825 – 300,825Prepayments 91,420 145,453 28,532 75,307Subsidiaries – – 4,969,378 1,736,175Allowances for doubtful debts– subsidiaries – – (2,091,618) (140,006)– holding company (254,342) – – –757,278 1,247,565 3,256,373 2,393,2466,679,405 8,090,882 3,256,373 2,444,963

Middle East Development Singapore Ltd.Annual Report 2008 57Notes to Financial Statements30 June 20088 TRADE AND OTHER RECEIVABLES (Cont’d)Movement in the allowances for doubtful debtsGroupCompany2008 2007 2008 2007$ $ $ $Balance at beginning of year 1,945,212 2,182,519 770,743 835,405Translation adjustment 21,215 (1,161) – –Amounts recovered during the year (20,217) (264,220) – (61,565)Amount written off during the year (591,804) (10,206) – (4,965)Increase in allowances 397,421 38,280 1,951,612 1,868Balance at end of year 1,751,827 1,945,212 2,722,355 770,743The average credit period on sale of goods is 30 days to 120 days (2007 : 30 to 120 days). No interest is chargedon the overdue trade receivables.The table below is an analysis of trade receivables as at 30 June:GroupCompany2008 2007 2008 2007$ $ $ $Not past due and not impaired 1,820,559 2,589,213 – 51,717Past due but not impaired (i) 4,101,568 4,254,104 – –5,922,127 6,843,317 – 51,717Impaired receivables –collectively assessed (ii) 1,739,182 1,897,856 630,737 630,737Less: Provision for impairment (1,739,182) (1,897,856) (630,737) (630,737)– – – –Impaired receivables –individually assessed (ii) (iii)Customer placed under liquidation 12,645 36,682 – –Past due more than 36 months andno response no repayment demand – 10,674 – –Less: Provision for impairment (12,645) (47,356) – –– – – –Total trade receivables, net 5,922,127 6,843,317 – 51,717(i) Aging of receivables that are past due butnot impaired:< 3 months 1,654,352 1,202,649 – 51,7173 months to 6 months 899,971 963,538 – –6 months to 12 months 691,210 958,708 – –> 12 months 856,035 1,129,209 – –4,101,568 4,254,104 – 51,717Included in the Group’s trade receivables are debtors with a carrying amount of $4,101,568 (2007: $4,254,104)which are past due at the reporting date for which the Group has not provided as there has not been a signifi cantchange in credit quality and the amounts are still considered recoverable. The Group does not hold any collateralover these balances.

58Middle East Development Singapore Ltd.Annual Report 2008Notes to Financial Statements30 June 20088 TRADE AND OTHER RECEIVABLES (Cont’d)In determining the recoverability of a trade receivable the Group considers any change in the credit quality of thetrade receivable from the date credit was initially granted up to the reporting date. The concentration of credit riskis limited due to the customer base being large and unrelated. Accordingly, management believes that there is nofurther credit provision required in excess of the allowances of doubtful debts.(ii)(iii)These amounts are stated before any deduction for impairment losses.These receivables are not secured by any collateral or credit enhancements.The Group’s trade receivables that are not denominated in the functional currencies of the respective entities are asfollows:Group2008 2007$ $United States dollar – 158,656In 2007, trade receivables amounting to $217,948 were factored to a fi nancial institution (Note 15).9 HELD-FOR-TRADING INVESTMENTGroup2008 2007$ $Quoted equity shares, at fair value 494,000 –The held-for-trading investment is denominated in Singapore dollars, the functional currency of the entity.The investment represents investment in listed equity securities that offer the Group the opportunity for returnthrough dividend income and fair value gains. They have no fi xed maturity or coupon rate. The fair values of thesesecurities are based on closing quoted market bid price on the last market day of the fi nancial year.10 CONSTRUCTION AND PROJECT MANAGEMENT CONTRACTSGroup2008 2007$ $Construction contractsAmounts due from contract customers 373,575 460,276Amounts due to contract customers (60,053) (66,927)313,522 393,349Contract costs incurred plus recognised profi ts(less recognised losses to date) 2,350,812 2,891,071Less: Progress billings (2,037,290) (2,497,722)313,522 393,349Project management contracts (Note 5)Cost incurred 927,935 –Less: Provision for impairment loss (927,935) –– –

Middle East Development Singapore Ltd.Annual Report 2008 59Notes to Financial Statements30 June 200811 INVENTORIESGroup2008 2007$ $Raw materials 396,728 412,333Work-in-progress 36,975 –Finished goods 502,932 519,062936,635 931,39512 PROPERTY, PLANT AND EQUIPMENTGroupLeaseholdland andbuildingsLeaseholdimprovementsMotorvehiclesPlant andequipmentTotal$ $ $ $ $Cost:At 1 July 2006 722,839 47,444 1,321,347 960,383 3,052,013Foreign currency translationdifferences 14,891 1,198 11,208 6,063 33,360Additions 83,437 – 121,865 142,113 347,415Disposals – – (234,688) (22,500) (257,188)At 30 June 2007 821,167 48,642 1,219,732 1,086,059 3,175,600Foreign currency translationdifferences (23,185) (2,186) (16,234) (9,743) (51,348)Additions – – 76,388 28,093 104,481Disposals – – (76,888) (6,722) (83,610)At 30 June 2008 797,982 46,456 1,202,998 1,097,687 3,145,123Accumulated depreciation:At 1 July 2006 255,191 35,501 943,810 803,613 2,038,115Foreign currency translationdifferences 6,372 1,008 9,442 4,974 21,796Depreciation for the year 64,070 5,884 192,616 83,343 345,913Eliminated on disposals – – (204,529) (21,040) (225,569)At 30 June 2007 325,633 42,393 941,339 870,890 2,180,255Foreign currency translationdifferences (8,687) (2,060) (12,376) (8,002) (31,125)Depreciation for the year 37,796 5,882 161,938 91,044 296,660Eliminated on disposals – – (76,888) (4,810) (81,698)At 30 June 2008 354,742 46,215 1,014,013 949,122 2,364,092Net book value:At 30 June 2008 443,240 241 188,985 148,565 781,031At 30 June 2007 495,534 6,249 278,393 215,169 995,345

60Middle East Development Singapore Ltd.Annual Report 2008Notes to Financial Statements30 June 200812 PROPERTY, PLANT AND EQUIPMENT (Cont’d)CompanyMotorvehiclesPlant andequipmentTotal$ $ $Cost:At 1 July 2006 365,888 522,886 888,774Additions – 115,896 115,896Written off – (20,015) (20,015)At 30 June 2007 365,888 618,767 984,655Additions – 10,548 10,548Disposals – (1,641) (1,641)At 30 June 2008 365,888 627,674 993,562Accumulated depreciation:At 1July 2006 231,446 506,293 737,739Depreciation 68,328 21,730 90,058Eliminated on disposals – (19,928) (19,928)At 30 June 2007 299,774 508,095 807,869Depreciation 49,939 40,311 90,250Eliminated on disposals – (1,071) (1,071)At 30 June 2008 349,713 547,335 897,048Net book value:At 30 June 2008 16,175 80,339 96,514At 30 June 2007 66,114 110,672 176,786The carrying amount of the Group’s and the Company’s motor vehicles includes an amount of $101,938 (2007 :$99,808) and $8,900 (2007 : $53,989) secured in respect of assets held under fi nance lease (Note 17) respectively.13 INVESTMENTS IN SUBSIDIARIESCompany2008 2007$ $Amount due from a subsidiary (a) 1,256,247 1,256,247Unquoted equity shares, at cost 1,795,574 3,362,688Impairment loss (30,002) (1,597,114)3,021,819 3,021,821(a)The amount due from a subsidiary is deemed as part of net investment in the subsidiary.Movement in the provision for impairmentCompany2008 2007$ $Balance at beginning of year 1,597,114 1,597,114Provision during the year 30,002 –Amount written off during the year (1,597,114) –Balance at end of year 30,002 1,597,114

Middle East Development Singapore Ltd.Annual Report 2008 61Notes to Financial Statements30 June 200813 INVESTMENTS IN SUBSIDIARIES (Cont’d)The following is a listing of all the subsidiaries held by the Company:Name of subsidiaries, country ofincorporation and place of operationsHeld by the companyPercentageof equity heldProportion ofvoting power held2008 2007 2008 2007% % % %Principal activitiesHitchins International Pte Ltd (a)SingaporeHitchins Borneo Sendirian Berhad (c)BruneiMEDS Investment Pte Ltd (a)SingaporeMEDS Project Management Pte Ltd (a)Singapore100 100 100 100 Investment holding98 98 98 98 Inactive100 100 100 100 Trading in quotedinvestments andinvestment holding100 100 100 100 Project managementHeld by Hitchins International Pte LtdHitchins (F.E.) Marketing Pte Ltd (a)SingaporeHitchins–Da Sheng Holdings Pte Ltd (a)SingaporeCRG Contractors Pte Ltd (a)SingaporeRenesco Injection (Waterproofi ng)Pte Ltd (a)SingaporeAmpero (M) Sdn Bhd (b)MalaysiaHitchins (Malaysia) Sendirian Berhad (b)MalaysiaDaku Asia Pte Ltd (a) (d)Singapore100 100 100 100 Distribution of specialisedbuilding materials100 100 100 100 Investment holding andsupply of specialisedbuilding materials100 100 100 100 Provision of waterproofi ngworks and contractorsfor construction works inany kind100 100 100 100 Supply of specialisedbuilding materials andwaterproofi ng services100 100 100 100 Supply of specialisedbuilding materials100 100 100 100 Supply of specialisedbuilding materials100 75 100 75 Supply of specialisedbuilding materialsHeld by Hitchins – Da Sheng Holdings Pte LtdShanghai Hitchins Da ShengWaterproofi ng Materials Co., Ltd (b)People’s Republic of China100 100 100 100 Manufacture and supplyof specialised buildingmaterials(a)(b)Audited by Deloitte & Touche LLP, Singapore.Audited by overseas practices of Deloitte Touche Tohmatsu.

62Middle East Development Singapore Ltd.Annual Report 2008Notes to Financial Statements30 June 200813 INVESTMENTS IN SUBSIDIARIES (Cont’d)(c)(d)Not audited as the Company is inactive.During the fi nancial year, the Group acquired the remaining 25% interest in the subsidiary from the minorityshareholder for a consideration of $52,175 which gave rise to a goodwill of $52,175. The Group reviewedthe carrying amount of the goodwill and determined that the goodwill was fully impaired as the subsidiarywas loss making with capital defi ciency as at 30 June 2008. Management is of the view that there wasuncertainty as to whether the subsidiary would return to profi tability in the near future.14 INVESTMENT IN AN ASSOCIATEGroupCompany2008 2007 2008 2007$ $ $ $Cost of investment in associate 239,253 239,253 239,253 239,253Share of post–acquisition losses (239,253) (239,253) – –Less provision for impairment – – (239,253) (239,253)– – – –Name of associate, countryof incorporation andplace of operationsPercentageof equity heldProportion of votingpower held2008 2007 2008 2007% % % %Principal activityAeroroof Industries Sdn BhdMalaysia43 43 43 43 Under liquidation15 BANK OVERDRAFTS AND LOANSGroup2008 2007$ $Advances against trade receivables factored (Note 8) – 164,388Bank overdrafts (secured) 315,862 292,522315,862 456,910The bank overdrafts of the Group are covered by corporate guarantees of the Company to its subsidiaries and fi xeddeposits pledged with the banks.The average effective interest rates paid were as follows:2008 2007Advances against trade receivables factored – 6.0% to 7.0%Bank overdrafts 5% to 6.5% 6.5% to 7.75%

Middle East Development Singapore Ltd.Annual Report 2008 63Notes to Financial Statements30 June 200816 TRADE AND OTHER PAYABLESGroupCompany2008 2007 2008 2007$ $ $ $Trade payablesOutside parties 1,413,522 1,731,016 – 846Minority shareholder of subsidiary – 4,037 – –Bills payable 179,672 278,205 – –Other payablesSubsidiaries (Note 5) – – 524,245 537,093Director (Note 6) 12,482 1,594 – –Related parties (Note 6) 191,400 250,635 191,400 156,778Dividend payable (a) 745,193 745,193 745,193 745,193Provision for warranties 203,018 174,402 – –Other payables 943,464 645,230 70,325 64,153Accrued expenses 872,738 670,948 291,008 192,0504,561,489 4,501,260 1,822,171 1,696,113The Group’s and Company’s trade and other payables that are not denominated in the functional currencies of therespective entities are as follows:Group2008 2007$ $United Arab Emirates Dirham 35,025 –Euro 109,952 107,915Swiss Franc 23,427 123,975United States dollar 91,447 –(a)The amount includes $660,241 payable to two directors of the Company and $84,952 payable to twodirectors of subsidiaries. The dividend was declared and appoved by shareholders prior to the Company’spublic listing on the Singapore Exchange Securities Trading Limited.The average credit period taken to settle trade payables of the Group is about 30 to 90 days (2007 : 30 to 90 days).The other payables are with short–term durations. The carrying amounts approximate the fair values.The provision for warranties refers to provision for production and services sold by the Group. A provision is madebased on past experience and assessment of the probability of an outfl ow for the obligations as a whole.Movement in the provision for warrantiesGroup2008 2007$ $Balance at beginning of year 174,402 131,702Translation adjustment (3,613) 2,452Provision during the year 128,254 107,416Amount written off during the year (96,025) (67,168)Balance at end of year 203,018 174,402

64Middle East Development Singapore Ltd.Annual Report 2008Notes to Financial Statements30 June 200817 FINANCE LEASESAmounts payable under finance leases:GroupMinimumlease paymentsPresent value of minimumlease payments2008 2007 2008 2007$ $ $ $Within one year 79,714 96,187 68,321 83,628In the second to fi fth years inclusive 110,114 105,784 92,314 91,427189,828 201,971 160,635 175,055Less: Future fi nance charges (29,193) (26,916) – –Present value of lease obligations 160,635 175,055 160,635 175,055Less: Amount due for settlement within12 months (shown under currentliabilities) (68,321) (83,628)Amount due for settlement after 12 months 92,314 91,427Amounts payable under finance leases:CompanyMinimumlease paymentsPresent value of minimumlease payments2008 2007 2008 2007$ $ $ $Within one year 46,128 53,816 39,216 45,752In the second to fi fth years inclusive 38,442 76,882 32,556 65,23684,570 130,698 71,772 110,988Less: Future fi nance charges (12,798) (19,710) - -Present value of lease obligations 71,772 110,988 71,772 110,988Less: Amount due for settlementwithin 12 months (shown under currentliabilities) (39,216) (45,752)Amount due for settlement after 12 months 32,556 65,236It is the Group’s policy to lease certain of its plant and equipment and motor vehicles under fi nance leases. Thelease terms range from 3 to 5 years. For the year ended 30 June 2008, the average effective borrowing rate rangefrom 2.4% to 8.2% (2007: 2.4% to 7.2%) per annum. Interest rates are fi xed at the contract date, and thus exposethe Group to fair value interest rate risk. All leases are on a fi xed repayment basis and no arrangements have beenentered into for contingent rental payments.All lease obligations are denominated in the functional currencies of the respective entities. The Group’s obligationsunder fi nance leases are secured by the lessor’s title to the leased assets.The fair value of the Group’s lease obligations approximates their carrying amount.

Middle East Development Singapore Ltd.Annual Report 2008 65Notes to Financial Statements30 June 200818 SHARE CAPITALGroup and Company2008 2007 2008 2007Number of ordinary shares $ $Issued and paid up:At beginning of the year 397,677,500 108,600,000 18,296,125 4,311,012Issuance of ordinary shares for cash – 285,087,500 – 14,254,375Share issue expense – – – (659,418)Issue of shares on exercise of share options 300,000 3,990,000 24,000 319,200Transfer from share option reserves – – 5,335 70,956At end of the year 397,977,500 397,677,500 18,325,460 18,296,125Fully paid ordinary shares, which have no par value, carry one vote per share and carry a right to dividends.19 SHARE–BASED PAYMENTSHitchins Employees’ Share Option SchemeThe Hitchins Employees’ Share Option Scheme (the “Scheme”) of the Company was approved and adopted by itsmembers at an Extraordinary General Meeting held on 13 December 2002.The Scheme is administered by the Remuneration Committee comprising:• Tee Tua Ba (Chairman and Independent Director)• Hoon Tai Meng (Member and Independent Director)• Tan Song Koon (Member and Independent Director)The reserved size of the Scheme is 15% of the issued share capital of the Company on the relevant date of grant ofoptions.The following persons are eligible to participate in the Scheme:(i)(ii)(iii)Confi rmed full–time employees of the Company and/or subsidiaries who have attained the age of 21 yearsand above and/or before the relevant date of offer of an option;Executive Directors of the Company; andPerson who qualify under (i) and (ii) and who are controlling shareholders of the Company and theirassociates and whose participation and actual number of shares granted under the Scheme and terms ofany option granted to them have been approved by independent shareholders in general meeting.Non–Executive Directors are not eligible to participate in the Scheme.Under the rules of the Scheme, options will be granted at the prevailing market price of the shares based on theaverage of the last dealt price per share as indicated in the daily offi cial list or any other publication published by theSGX–ST for the 5 consecutive days immediately preceding the date of grant (the “Market Price”). Options will notbe granted at a discount to the Market Price.

66Middle East Development Singapore Ltd.Annual Report 2008Notes to Financial Statements30 June 200819 SHARE–BASED PAYMENTS (Cont’d)Options are exercisable, in whole or in part (provided that an option is exercised in part in respect of 1,000 shares orany multiple thereof) as follows:(i)(ii)(iii)(iv)up to 40% of the option at any time after 12 months of the date of grant;the next 30% of the option at any time after 18 months of the date of grant;the balance 30% of the option at any time after 24 months of the date of grant; andbefore the end of 120 months of the date of grant of the option, subject to such other conditions introducedby the Remuneration Committee from time to time.Details of the share options outstanding during the year are as follows:Numberof sharesoptionsGroup and Company2008 2007Weightedaverage Numberexercise of sharesprice optionsWeightedaverageexerciseprice$ $Outstanding at the beginning of the year 535,000 0.08 4,525,000 0.08Exercised during the year (300,000) 0.08 (3,990,000) 0.08Outstanding at the end of the year 235,000 0.08 535,000 0.08Exercisable at the end of the year 235,000 0.08 535,000 0.082008 2007Number of Expiry Number ofshares options date shares optionsExpirydateExpiry dates for option 235,000 28 April 2014 535,000 28 April 2014The weighted average share price at the date of exercise for share options exercised during the year was $0.08(2007: $0.08). The options outstanding at the end of the year have a weighted average remaining contractual life of6 years (2007: 7 years).No options were granted in 2008 and 2007.20 STATUTORY RESERVEA subsidiary, Shanghai Hitchins Da Sheng Waterproofi ng Materials Co., Ltd is required by the relevant People’sRepublic of China (“PRC”) regulations and its Articles of Association to allocate where applicable certain percentageof profi t after taxation after deducting accumulated losses as determined in accordance with PRC accountingstandards and regulations to the statutory reserve surplus fund until such reserves reaches 50% of the subsidiary’sregistered capital subject to certain restriction set out in the Company Law of the PRC, and the subsidiary’s Articlesof Associations. Part of the reserves may be converted to increase its registered capital.

Middle East Development Singapore Ltd.Annual Report 2008 67Notes to Financial Statements30 June 200821 REVENUEGroup2008 2007$ $Sales of waterproofi ng materials 4,091,302 4,984,461Revenue from contract services 7,097,817 6,823,70311,189,119 11,808,16422 OTHER OPERATING INCOMEGroup2008 2007$ $Bad debts recovered 8,172 –Dividend income from held–for–trading investment 5,765 –Gain on disposal of property, plant and equipment 15,665 31,759Government grants/subsidies 2,497 4,239Interest income 185,739 97,525Allowances for doubtful debts written back 20,217 264,220Others 45,265 52,368283,320 450,11123 OTHER OPERATING EXPENSESGroup2008 2007$ $Bad debts written off 950 29Fixed assets written off 571 1,435Foreign exchange transaction losses 5,453 6,121Impairment loss on goodwill (Note 13) 52,175 –Impairment loss on held-for-trading investment 58,397 –Inventories written off 1,545 –Loss on disposal of held-for-trading investment 304,241 –Provision for impairment loss on project management (Note 5) 927,935 –Allowances for doubtful debts 397,421 38,2801,748,688 45,865

68Middle East Development Singapore Ltd.Annual Report 2008Notes to Financial Statements30 June 200824 FINANCE COSTGroup2008 2007$ $Interest on obligations under fi nancial leases 12,696 19,530Interest on bank overdrafts and loans 15,031 38,099Interest on trade bills 9,059 11,781Total borrowing costs 36,786 69,41025 INCOME TAX EXPENSEGroup2008 2007$ $Current tax year expense 44,031 183,736Under (Over) provision for prior years 439,636 (67,618)Deferred tax (credit) expense relating to origination and reversal of temporarydifferences (105,158) 59,439Total income tax expense 378,509 175,557Domestic income tax is calculated at 18% (2007 : 18%) of the estimated assessable profi t for the year. Taxation forother jurisdictions is calculated at the rates prevailing in the relevant jurisdictions.The total charge for the year can be reconciled to the accounting loss as follows:Group2008 2007$ $Loss before income tax (4,772,090) (141,094)Income tax expense at 18% (858,976) (25,397)Effect on expenses that are not deductible 448,133 52,737Effect on revenue that is exempt from taxation (1,038) (35,887)Effect of previously unrecognised tax losses nowrecognised as deferred tax assets (3,171) 98,181Under (Over) provision of tax in prior years 439,636 (67,618)Effect of difference in tax rate in different jurisdictions (21,081) 96,846Effect of deferred tax asset not recognised 344,286 –Effect of reduction in tax rate – 10,432Others 30,720 46,263Total income tax expense 378,509 175,557

Middle East Development Singapore Ltd.Annual Report 2008 69Notes to Financial Statements30 June 200825 INCOME TAX EXPENSE (Cont’d)The following are the major deferred tax liabilities and assets recognised by the Group, and the movements thereon,during the current and prior reporting periods:GroupAcceleratedtaxdepreciation Provision Others Total$ $ $ $At 1 July 2006 (9,776) (8,358) (16,982) (35,116)Credit/(Charge) to profi t or loss for the year 5,708 (65,326) 179 (59,439)At 30 June 2007 (4,068) (73,684) (16,803) (94,555)Credit to profi t or loss for the year 506 73,684 30,968 105,158Effect of change in tax rate 143 – (622) (479)At 30 June 2008 (3,419) – 13,543 10,124Certain deferred tax assets and liabilities have been offset in accordance with the Group’s accounting policies.The following is the analysis of the deferred tax balances for balance sheet purposes:Group2008 2007$ $Deferred tax assets 11,300 11,833Deferred tax liabilities (1,176) (106,388)10,124 (94,555)Subject to the agreement by the tax authorities, at the balance sheet date, the Group has unutilised tax losses of$5,572,000 (2007: $3,659,000) available for offset against future profi ts. No deferred tax asset has been recogniseddue to the unpredictability of future profi t streams and uncertainty of the eligibility of such tax losses carryforward.The Group’s unutilised tax losses, may be carried forward indefi nitely subject to the conditions imposed by lawincluding the retention of majority shareholders as defi ned.

70Middle East Development Singapore Ltd.Annual Report 2008Notes to Financial Statements30 June 200826 LOSS FOR THE YEARGroup2008 2007$ $Loss for the year has been arrived after charging (crediting):Costs of inventories recognised as expense 5,952,865 6,408,708Directors’ remuneration:– of the Company 1,136,966 1,084,032– of subsidiaries 243,798 251,267Total directors’ remuneration 1,380,764 1,335,299Employee benefi ts expense (including directors’ remuneration) 3,063,702 3,225,611Defi ned contribution plans 173,716 271,385Total employee benefi ts expense 3,237,418 3,496,996During the fi nancial year, no non-audit services were provided by the auditors of the Company.27 LOSS PER SHAREThe calculation of the basic and diluted loss per share attributable to the ordinary equity holders of the Company isbased on the following data:The calculation of the loss per share is based on the following:Group2008 2007$ $Loss attributable to shareholders for the purposes of basic anddiluted loss per share (5,150,599) (316,651)Number of sharesWeighted average number of ordinary shares for the purposes ofbasic and diluted earnings per shares 397,950,377 203,159,158The outstanding number of options of 100,235,000 (2007 : 100,535,000) have not been included in the calculationof diluted earnings per share because they are anti-dilutive for the current and previous fi nancial years presented.

Middle East Development Singapore Ltd.Annual Report 2008 71Notes to Financial Statements30 June 200828 BUSINESS AND GEOGRAPHICAL SEGMENTSBusiness segmentsFor management purposes, the Group is organised into two major operating divisions – waterproofi ng and projectmanagement. The divisions are the basis on which the Group reports its primary segment information.Principal activities as follows:Waterproofi ng: The manufacturing, installation and sales of waterproofi ng and concrete protection materials.Project Management: The provision of project management services.Segment revenue and expense: Segment revenue and expense are the operating revenue and expensesreported in the Group’s profit and loss statement that are directly attributable to a segment and therelevant portion of such revenue and expenses that can be allocated on a reasonable basis to asegment.Segment assets and liabilities: Segment assets include all operating assets used by a segment and consistprincipally of operating receivables, inventories and property, plant and equipment, net of allowances and provisions.Capital additions include the total cost incurred to acquire property, plant and equipment, and intangible assetsdirectly attributable to the segment. Segment liabilities include all operating liabilities and consist principally ofaccounts payable and accruals.Inter-segment transfers: Segment revenue and expenses include transfers between business segments. Intersegmentsales are charged at prevailing market prices. These transfers are eliminated on consolidation.Segment information about the Group’s operations is presented below:REVENUEGroupWaterproofingProjectManagementConsolidated2008 2007 2008 2007 2008 2007$ $ $ $ $ $External sales 11,189,119 11,808,164 – – 11,189,119 11,808,164Inter-segment sales – – – – – –Total revenue 11,189,119 11,808,164 – – 11,189,119 11,808,164RESULTSSegment results from continuingoperations (429,456) 1,186,661 (1,682,980) 1,987 (2,112,436) 1,188,648Unallocated corporate expense (2,808,607) (1,357,857)Interest expense (36,786) (69,410)Interest income 185,739 97,525Loss before income tax (4,772,090) (141,094)Income tax (378,599) (175,557)Net loss for the year (5,150,599) (316,651)

72Middle East Development Singapore Ltd.Annual Report 2008Notes to Financial Statements30 June 200828 BUSINESS AND GEOGRAPHICAL SEGMENTS (Cont’d)BALANCE SHEETGroupWaterproofingProjectManagementConsolidated2008 2007 2008 2007 2008 2007$ $ $ $ $ $Segment assets 9,938,760 10,949,126 2,282 4,048 9,941,042 10,953,174Unallocated corporate assets 8,629,154 13,025,28418,570,196 23,978,458Segment liabilities 3,444,766 4,128,536 363,067 2,036 3,807,833 4,130,572Unallocated corporate liabilities 1,503,070 1,301,9685,310,903 5,432,540OTHER INFORMATIONCapital expenditure 93,933 231,519 – – 93,933 231,519Unallocated expenditure 10,548 115,896104,481 347,415Depreciation 257,953 255,855 – – 257,953 255,855Unallocated depreciation 38,707 90,058296,660 345,913Geographical segmentsThe Group operates in Singapore, Malaysia, People’s Republic of China and other countries.The following table provides an analysis of the Group revenue by geographical market irrespective of the origin of thegoods/services:GroupRevenue bygeographical market2008 2007$ $Singapore 6,954,366 6,181,253Malaysia 1,812,667 2,143,938People’s Republic of China 846,498 1,556,451Other countries 1,575,588 1,926,52211,189,119 11,808,164

Middle East Development Singapore Ltd.Annual Report 2008 73Notes to Financial Statements30 June 200828 BUSINESS AND GEOGRAPHICAL SEGMENTS (Cont’d)The following is an analysis of the carrying amount of segment assets, and additions to property, plant andequipment, analysed by geographical area in which the assets are located:GroupCarrying amount ofsegment assetsAdditions to property,plant and equipment2008 2007 2008 2007$ $ $ $Singapore 13,955,441 18,470,739 93,494 193,942Malaysia 2,425,361 2,678,940 7,549 50,624People’s Republic of China 2,189,394 2,828,779 3,438 102,84918,570,196 23,978,458 104,481 347,41529 OPERATING LEASE ARRANGEMENTSPayment recognised as an expense during the year:Group2008 2007$ $Minimum lease payments under operating leases 567,702 787,111At the balance sheet date, the Group and the Company have outstanding commitments under non-cancellableoperating leases, which fall due as follows:GroupCompany2008 2007 2008 2007$ $ $ $Within one year 433,037 777,049 239,618 475,742In the second to fi fth years inclusive 46,202 622,705 – 346,399After fi ve years 291,035 188,005 – –770,274 1,587,759 239,618 822,141Operating lease payments represent rentals payable by the Group and Company for certain of its offi ce premisesand warehouse. The leases are negotiated for average term of 3 years.

74Middle East Development Singapore Ltd.Annual Report 2008Notes to Financial Statements30 June 200830 RECLASSIFICATIONS AND COMPARATIVE FIGURESCertain reclassifi cations have been made to the prior year’s fi nancial statements to enhance comparability with thecurrent year’s fi nancial statements.As a result, certain line items have been amended on the face of the balance sheet, profi t and loss statement,statement of changes in equity and cash fl ow statements, and the related notes to the fi nancial statements.Comparative fi gures have been adjusted to conform with the current year’s presentation.PreviouslyreportedGroupReclassificationAfterreclassification2007 2007 2007$ $ $Balance SheetAmount due from contract customers – 460,276 460,276Inventories 1,391,671 (460,276) 931,395Trade and other payables 4,568,187 (66,927) 4,501,260Amount due to contract customers – 66,927 66,927Profit and loss statementOther operating income 56,607 393,504 450,111Financial income 361,745 (361,745) –Financial expense (113,811) 113,811 –Other credits/(charges) 30,295 (30,295) –Other operating expenses – (45,865) (45,865)Finance cost – (69,410) (69,410)

Middle East Development Singapore Ltd.Annual Report 2008 75Statement of DirectorsIn the opinion of the directors, the consolidated fi nancial statements of the Group and balance sheet and statement ofchanges in equity of the Company as set out on pages 32 to 74 are drawn up so as to give a true and fair view of the stateof affairs of the Group and of the Company as at 30 June 2008, and of the results, changes in equity and the cash fl ows ofthe Group, and changes in equity of the Company for the fi nancial year then ended and at the date of this statement, thereare reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.ON BEHALF OF THE DIRECTORSDr Oussama Al-DimashkiKim Leng Choon26 September 2008

76Middle East Development Singapore Ltd.Annual Report 2008Statistics of ShareholdingsAs At 12 September 2008No. of ordinary shares issued : 397,977,500(excluding treasury shares)Class of shares : OrdinaryVoting rights : One vote per shareTreasury shares : NilDISTRIBUTION OF SHAREHOLDINGSSIZE OF SHAREHOLDINGSNO. OFSHAREHOLDERS % NO. OF SHARES %1 - 999 127 5.40 3,177 0.001,000 - 10,000 597 25.38 4,473,055 1.1210,001 - 1,000,000 1,594 67.77 116,983,520 29.401,000,001 AND ABOVE 34 1.45 276,517,748 69.48TOTAL : 2,352 100.00 397,977,500 100.00TWENTY LARGEST SHAREHOLDERSNO. NAME NO. OF SHARES %1. UOB KAY HIAN PTE LTD 61,600,000 15.482. WONG SEONG KHUEN @ KWAN SEONG KHUEN 34,620,000 8.703. NG TIAN HUAT 28,620,000 7.194. KWEK I HUANG 17,900,000 4.505. UNITED OVERSEAS BANK NOMINEES PTE LTD 13,626,660 3.426. MAYBAN NOMINEES (S) PTE LTD 13,074,080 3.297. NG KIM KHUAN 12,929,250 3.258. OCBC SECURITIES PRIVATE LTD 12,585,518 3.169. CHIN WAI WING 12,000,000 3.0210. THONG AI FONG 12,000,000 3.0211. YEO MAY YING SALLY YANG MEIYING SALLY 9,500,000 2.3912. TJIONG BOEN NGIAP @BUSHAR TOMI4,281,000 1.08OR OEY MI LING @MERY WIDJAYA13. GOH BAK HENG 3,691,000 0.9314. LIM & TAN SECURITIES PTE LTD 3,639,000 0.9115. ANG HAK MIANG 3,600,000 0.9016. TAN ENG CHUA 3,073,000 0.7717. PHILLIP SECURITIES PTE LTD 2,808,630 0.7118. KIM ENG SECURITIES PTE. LTD. 2,601,090 0.6519. TOH SOON HUAT 2,200,000 0.5520. DBS NOMINEES PTE LTD 1,995,020 0.50TOTAL : 256,344,248 64.42

Middle East Development Singapore Ltd.Annual Report 2008 77Statistics of ShareholdingsAs At 12 September 2008(As recorded in the Register of Substantial Shareholders)Name of Substantial ShareholdersDIRECT INTERESTDEEMED INTERESTNO. OF SHARES % NO. OF SHARES %M.E. Development L.L.C (2) 60,000,000 15.08Sheikh Tarek Mohammad Bin Laden (1) 60,000,000 15.08Wong Seong Khuen @Kwan Seong Khuen 34,620,000 8.70Ng Tian Huat 28,620,000 7.19Notes:(1) Sheikh Tarek Mohammad Bin Laden is deemed to be interested in the shares held by M.E. Development L.L.C.(2) M.E. Development L.L.C. has an option to subscribe for 100,000,000 shares in the Company at a price of S$0.05 per share.SHAREHOLDING HELD IN THE HANDS OF PUBLICThe percentage of shareholdings in the hands of the public is approximately 71.24% as at 12 September 2008. Accordingly,the Company is in compliance with Rule 723 of the SGX-ST’s Listing Manual.

78Middle East Development Singapore Ltd.Annual Report 2008Notice of Annual General MeetingNOTICE IS HEREBY GIVEN THAT the Annual General Meeting of the Company will be held at 30 Toh Guan Road, #07-01 ODC Districentre, Singapore 608840 on the 23rd day of October 2008 at 9.30 a.m. to transact the following business:ORDINARY BUSINESS1. To receive and adopt the Directors’ Report and Audited Accounts of the Company for the fi nancial year ended 30June 2008 and the Auditors’ Report thereon. Resolution 12. To approve the Directors’ fees of $123,333.00 for the fi nancial year ended 30 June 2008 (2007: $115,153.85).Resolution 23. To re-elect Mr Hoon Tai Meng pursuant to Article 107 of the Company’s Articles of Association.[see explanatory note 1] Resolution 34. To re-elect Mr Ng Tian Huat pursuant to Article 107 of the Company’s Articles of Association.[see explanatory note 2] Resolution 45. To re-elect Mr Ong Soon Teik pursuant to Article 117 of the Company’s Articles of Association. Resolution 56. To re-appoint Messrs Deloitte & Touche LLP as Auditors of the Company and to authorise the Directors to fi x theirremuneration. Resolution 67. To transact any other business of the Company which may properly be transacted at an Annual General Meeting.SPECIAL BUSINESSTo consider and if thought fi t to pass the following as Ordinary Resolutions:-8. “That pursuant to Section 161 of the Companies Act, Cap. 50, and Rule 806 of the Listing Manual of the SingaporeExchange Securities Trading Limited, the Directors of the Company be authorised and empowered 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 requireshares to be issued, including but not limited to the creation and issue of (as well as adjustments to)options, warrants, debentures or other instruments convertible into shares,at any time and upon such terms and conditions and for such purposes and to such persons as theDirectors may, in their absolute discretion, deem fi t; and(b)(notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue shares inpursuance of any Instrument made or granted by the Directors of the Company while this Resolution was inforce,provided that:-(1) the aggregate number of shares (including shares to be issued in pursuance of the Instruments, made orgranted pursuant to this Resolution) and Instruments to be issued pursuant to this Resolution shall notexceed fi fty per centum (50%) of the 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 andInstruments to be issued other than on a pro-rata basis to existing shareholders of the Company shallnot exceed twenty per centum (20%) of the issued shares (excluding treasury shares) in the capital of theCompany (as calculated in accordance with sub-paragraph (2) below);

Middle East Development Singapore Ltd.Annual Report 2008 79Notice of Annual General Meeting(2) (subject to such calculation as may be prescribed by the Singapore Exchange Securities Trading Limited)for the purpose of determining the aggregate number of shares and Instruments that may be issued undersub-paragraph (1) above, the percentage of issued shares and Instruments shall be based on the numberof issued shares (excluding treasury shares) in the capital of the Company at the time of the passing of thisResolution, after adjusting for:-(i)(ii)(iii)new shares arising from the conversion or exercise of the Instruments or any convertible securities;new shares arising from exercising share options or vesting of share awards outstanding andsubsisting at the time of passing this Resolution;any subsequent bonus issue, consolidation or subdivision of shares;(3) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions ofthe Listing Manual of the Singapore Exchange Securities Trading Limited for the time being in force (unlesssuch compliance has been waived by the Singapore Exchange Securities Trading Limited) and the Articles ofAssociation of the Company; and(4) unless revoked or varied by the Company in general meeting, such authority shall continue in force (i) untilthe conclusion of the next Annual General Meeting of the Company or the date by which the next AnnualGeneral Meeting of the Company is required by law to be held, whichever is the earlier or (ii) in the case ofshares to be issued in pursuance of the Instruments, made or granted pursuant to this Resolution, until theissuance of such shares in accordance with the terms of the Instruments.”[see explanatory note 3] Resolution 79. “That approval be and is hereby given to the Directors of the Company to offer and grant options in accordance withthe provisions of the Hitchins Employees’ Share Option Scheme (the “Scheme”), and pursuant to Section 161 ofthe Companies Act, Cap. 50, to allot and issue from time to time such number of ordinary shares in the Companyas may be required to be allotted and issued pursuant to the exercise of the options under the Scheme, providedalways that the aggregate number of ordinary shares to be allotted and issued pursuant to the Scheme and othershare-based incentive schemes shall not exceed fi fteen per centum (15%) of the issued shares (excluding treasuryshares) in the capital of the Company at any time and from time to time.”[see explanatory note 4] Resolution 810. “That approval be and is hereby given to the Directors of the Company to grant awards in accordance with theprovisions of the Middle East Development Singapore Share Plan (the “Plan”), and to allot and issue from time totime such number of fully paid-up shares as may be required to be allotted and issued pursuant to the vesting ofawards under the Plan, provided always that the aggregate number of ordinary shares to be allotted and issuedpursuant to the Plan and other share-based incentive schemes shall not exceed fi fteen per centum (15%) of theissued shares (excluding treasury shares) in the capital of the Company at any time and from time to time.”[see explanatory note 5] Resolution 911. “That for the purposes of Chapter 9 of the Listing Manual of the Singapore Exchange Securities Trading Limited:-(a)(b)approval be given for the Company, its subsidiaries and associated companies or any of them to enter intoany of the transactions falling within the types of Interested Person Transactions as set out in the Appendix tothe Notice of Annual General Meeting to Shareholders dated 8 October 2008 (the “Appendix”) with any partywho is of the class of Interested Persons described in the Appendix, provided that such transactions arecarried out in the normal course of business, at arm’s length and on commercial terms and in accordancewith the guidelines of the Company for Interested Person Transactions as set out in the Appendix (the“Shareholders’ Mandate”);unless revoked or varied by the Company in a general meeting, the Shareholders’ Mandate shall continue inforce until the conclusion of the next Annual General Meeting of the Company or the date by which the nextAnnual General Meeting of the Company is required by law to be held, whichever is earlier; and

80Middle East Development Singapore Ltd.Annual Report 2008Notice of Annual General Meeting(c)authority be given to the Directors to complete and do all such acts and things (including executing all suchdocuments as may be required) as they may consider necessary, desirable or expedient to give effect to theShareholders’ Mandate as they may think fi t.”[see explanatory note 6] Resolution 10By Order of the BoardChew Kok LiangCompany SecretaryDate: 8 October 2008Explanatory Notes:1. Mr Hoon Tai Meng, upon re-election as a Director of the Company, will remain as Chairman of the Nominating Committee and a member of boththe Audit and the Remuneration Committees. He is considered an independent director for the purposes of Rule 704(8) of the Listing Manual of theSingapore Exchange Securities Trading Limited.2. Mr Ng Tian Huat, upon re-election as a Director of the Company, will remain as a Non-Executive Director and is considered non-independent.3. The proposed ordinary resolution 7, if passed, will empower the Directors from the date of the Annual General Meeting until the date of the next AnnualGeneral Meeting to issue further shares in the capital of the Company, up to an amount not exceeding in aggregate 50% of the total number of issuedshares excluding treasury shares in the capital of the Company with a sub-limit of 20% for issues other than on a pro-rata basis to shareholders. Forthe purpose of determining the aggregate number of ordinary shares that may be issued, the percentage of issued share capital shall be based on thetotal number of issued shares excluding treasury shares in the share capital of the Company at the time that Resolution 7 is passed, after adjustingfor (a) new shares arising from the conversion or exercise of any convertible securities or share options and share awards in issue at the time thatResolution 7 is passed, and (b) any subsequent bonus issue, consolidation or subdivision of shares.4. The proposed ordinary resolution 8, if passed, will empower the Directors to allot and issue shares in the capital of the Company pursuant to theHitchins Employees’ Share Option Scheme (the “Scheme”) and such other share-based incentive scheme of the Company, provided that the aggregatenumber of shares to be allotted and issued pursuant to the Scheme and other share-based incentive schemes shall not exceed 15% of the issuedshares (excluding treasury shares) in the capital of the Company from time to time.5. The proposed ordinary resolution 9, if passed, will empower the Directors to allot and issue shares in the capital of the Company pursuant to thevesting of awards under the Middle East Development Singapore Share Plan (the “Plan”) and such other share-based incentive scheme of the Companyprovided that the aggregate number of shares to be allotted and issued pursuant to the Plan and other share-based incentive schemes shall not exceed15% of the issued shares (excluding treasury shares) in the capital of the Company from time to time.6. The proposed ordinary resolution 10, if passed, is to renew the Shareholders’ Mandate granted by the Shareholders during the Extraordinary GeneralMeeting of the Company held on 26 October 2007 to authorise the Company, its subsidiaries and associated companies or any of them to enter intoany of the mandated transactions with parties who are considered “Interested Persons” (as defi ned in Chapter 9). The nature of the interested persontransactions and the classes of interested persons in respect of which the Shareholders’ Mandate is sought to be renewed remains unchanged. Moredetails on the Shareholders’ Mandate to be renewed is set out in the Appendix to the Notice of Annual General Meeting to Shareholders dated 8October 2008 enclosed with this Notice.Notes:1. A member entitled to attend and vote at this meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy need not be a member ofthe Company.2. If a proxy is to be appointed, the form must be deposited at the registered offi ce of the Company, at 80 Raffl es Place #22-21 UOB Plaza 2 Singapore048624 not less than 48 hours before the Meeting.3. The form of proxy must be signed by the appointor or his attorney duly authorised in writing.4. In case of joint shareholders, all holders must sign the proxy form.

MIDDLE EAST DEVELOPMENTSINGAPORE LTD.(Company Registration Number 196600189D)(Incorporated in the Republic of Singapore)i. For Investors who have used their CPF monies to buy MiddleEast Development Singapore Ltd.’s shares, this Report isforwarded to them at the request of the CPF ApprovedNominees and is sent solely FOR INFORMATION ONLY.PROXY FORM –ANNUAL GENERAL MEETING(Please see notes overleaf before completing this form)ii.iii.This Proxy Form is not valid for use by CPF investors andshall be ineffective for all intents and purposes if used orpurported to be used by them.CPF investors who wish to vote should contact their CPFApproved Nominees.I/We,(Name)of(Address)being a member/members of MIDDLE EAST DEVELOPMENT SINGAPORE LTD. (the “Company”), hereby appoint:NameAddressNRIC/PassportNumberShareholdingsNumber (Note 2) (%)and/or (delete as appropriate)or failing the person, or either or both of the persons, referred to above, the Chairman of the meeting 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 Annual General Meetingof the Company to be held at 30 Toh Guan Road, #07-01 ODC Districentre, Singapore 608840 on 23 October 2008 at9.30 a.m. and at any adjournment thereof.I/We direct my/our proxy/proxies to vote in the manner indicated below. If no specifi c direction as to the manner of votingis given, my/our proxy/proxies may vote or abstain at his discretion.No. Resolution (Note 3) For Against1 Adoption of Directors’ Report and Accounts for the year ended 30 June 20082 Approval of Directors’ fees3 Re-election of Mr Hoon Tai Meng as a Director4 Re-election of Mr Ng Tian Huat as a Director5 Re-election of Mr Ong Soon Teik as a Director6Re-appointment of Messrs Deloitte & Touche LLP as Auditors and to authorise theDirectors to fi x their remuneration7 Authority to issue additional shares pursuant to Section 1618 Authority to issue shares pursuant to Hitchins Employees’ Share Option Scheme9Authority to issue shares pursuant to Middle East Development Singapore SharePlan10 Renewal of Mandate for Interested Person TransactionsDated this day of 2008Number of Shares Held(a) CDP Register(b) Register of Members(Note 5)IMPORTANT:(Note 6)Signature of Shareholder(s) or, Common Seal

Notes :1. A Shareholder entitled to attend and vote at the Annual General Meeting is entitled to appoint not more than two proxies to attend and vote in hisstead. Such proxy need not be a Shareholder.2. Where a Shareholder appoint two proxies, the second appointment shall be deemed as alternative unless he/she specifi es the proportion of his/hershareholding (expressed as a percentage of the whole) to be represented by each proxy.3. IMPORTANT: If you wish to vote “FOR” the Resolution, please indicate an “X” in the box marked “FOR” the Resolution. If you wish to vote “AGAINST”the Resolution, please indicate an “X” in the box marked “AGAINST” the Resolution.4. Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register (as defi ned in Section130A of the Companies Act, Cap. 50), you should insert that number of Shares. If you have Shares registered in your name in the Register ofMembers, you should insert that number of Shares. If you have Shares entered against your name in the Depository Register and Shares registered inyour name in the Register of Members, you should insert the aggregate number of Shares entered against your name in the Depository Register andregistered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate toall the Shares held by you.5. The instrument appointing a proxy or proxies must be executed under the hand of the appointor or of his attorney duly authorised in writing. Where theinstrument appointing a proxy or proxies is executed by a corporation, it must be executed either under the common seal of the corporation or underthe hand of any offi cer or attorney duly authorised.6. The instrument appointing a proxy or proxies must be deposited at the registered offi ce of the Company, at 80 Raffl es Place #22-21 UOB Plaza 2Singapore 048624 not later than 48 hours before the time appointed for the Annual General Meeting.7. Where an instrument appointing a proxy is signed on behalf of the appointor or by an attorney, the power of attorney (or other authority) or a dulycertifi ed copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy, failing which the instrument may betreated as invalid.8. A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks it to act as itsrepresentative at the Meeting, in accordance with Section 179 of the Companies Act, Cap. 50.General: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 trueintentions of the appointor are not ascertainable from the instructions of the appointor specifi ed in the instrument appointing a proxy or proxies. In addition, inthe case of Shares entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being theappointor, is not shown to have Shares entered against his name in the Depository Register 48 hours before the time appointed for holding the Meeting, ascertifi ed by The Central Depository (Pte) Limited to the Company.

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80 Raffles Place #22-21UOB Plaza 2Singapore 048624