Zag Roar 2006

Annual Report 2006
ZAGRO annual report 2006
iii
Zagros offices/consultants presence
Russia
Germany
Spain
China
Pakistan
Egypt
Bangladesh
India
Sri Lanka
Vietnam
Myanmar
Thailand
Philippines
Malaysia
Singapore
Indonesia
South Africa
Australia
Our business is to help improve the quantity and quality of

Brazil
food that comes to your family table. To achieve this goal,

we manufacture and distribute a wide range of nutrition
and protection products for animals and crops. We are also
increasingly sought after for our highly efficient and reliable
laboratory services in life sciences.
Our Business
iv
Contents
Financial
Highlights
06
Review of
Operations
09
Chairmans
Statement
08
International
Brands
11
Milestones
12
Corporate
Information
16
Financial
Statements
Board of Directors
& Key Management
14
Corporate
Governance
17
22
CROP CARE
Higher Yield, Superior Quality
Zagros comprehensive range of crop care products is used extensively by farm owners and agri-producers
in many parts of the world. We manufacture and distribute nutrition and protection products for growers
of cotton, oil palm, rice, wheat, tea, rubber, coffee, cocoa, fruits and vegetables. These products include
fertilizers, soil conditioners, fungicides, insecticides, herbicides and cover crop seeds.
Zagros crop care products play an integral role in the food supply chain, enhancing quality, improving
productivity and generating better yield of farm crops. The nutrition products provide essential nutrients
while the protection products protect and treat crops against pests, diseases, weeds and fungi throughout the
life cycle of farm produce, from seeding to harvesting.
ANIMAL HEALTH
Providing Quality, Promoting Safety
Zagros animal health products play a vital role in improving the quality of animal produce across the globe.
Our nutritional products like vitamins, growth promotants, hormones and probiotics provide essential nutrition
to livestock, poultry and aquatic animals like fowl layers, breeders, broilers, ducks, pigs, cattle, sheep,
shrimp, fish and even zoo animals and birds bred in diverse farm environments. Our protection products like
anticoccidials and antibiotics provide the necessary treatment and protection of these animals against disease
outbreaks which often result in extensive losses for farmers.
PACIFIC LAB SERVICES

Leading Laboratory Services Provider
Pacific Lab Services has been providing highly accurate and specialized tests and analyses by its team of
highly-trained laboratory specialists for a long 35 years. Besides playing a crucial part in providing quality
assurance for Zagros products, the services of Pacific Lab Services is highly sought after for ingredient
analyses of veterinary, pharmaceutical, Chinese traditional medicine, food and industrial chemicals. Its quick
turnaround time, consistent results and professionalism have gained the trust of not just local customers but
also multi-national companies.
ECTOPARASITICIDE PRODUCTS
Effective Disease Control for the Worlds Livestock
Neocidol and Steladone , two of Zagros renowned and well-established brands, are popular for their effective
control of ectoparasites like mange mites, blowflies, keds, lice and ticks. Besides improving the quality of dairy
produce, beef and mutton, they also significantly improve the well-being of a large part of the worlds cattle
and sheep population which is estimated at 1.3 billion and 1 billion respectively.
Both Neocidol and Steladone have a vast range of uses on swine, goats, horses, donkeys, mules, camels and
rabbits. They can be applied by ear-tagging, dipping, bathing and spraying. Common formulations of Neocidol
include Neocidol 250 EC, Neocidol 600 EC, Neocidol 600 EW, Neocidol B40 Ear-tags, Diacap 300 EC and
Neocidol 40 WP. Steladone is available as Steladone 300 EC.
Photo: Courtesy of eFeedLink Pte Ltd
Financial Highlights
Summarised Profit and Loss Account (S$000)

for the financial year ended 31 December

Turnover
Earnings before interest,
taxation, depreciation
and amortisation
Profit before taxation
Profit attributable to
members of the Company
2002
2003
2004
2005
2006
75,109
104,483
100,814
85,188
97,309
3,357
1,960
4,963
3,232
7,417
5,149
6,070
3,960
7,863
5,859
814
2,216
3,800
3,142
4,263
2002
2003
2004
2005
2006
61,054
20,153
40,901
12,076
72,887
30,679
42,208
8,885
70,744
27,316
43,428
3,946
67,526
22,445
45,081
4,153
70,394
22,298
48,096
10,240
2002
2003
2004
2005
2006
Summarised Balance Sheet (S$000)

as at 31 December

Total assets
Total liabilities
Shareholders funds
Cash and cash equivalents
Shareholders Value
as at 31 December
Net tangible assets

backing per share (cents) 16.28 16.27 14.05 14.94 16.05
Earnings per share - Basic
and Fully Diluted (cents) 0.32 0.88 1.51 1.25 1.68
Dividend and Bonus Share Trend:

2007 (proposed)
2006
2005
2004
2003
2002
2001
2000
1999
1998
1998
1997
Dividend
Dividend
Dividend
Dividend
Dividend
Dividend
Dividend
Dividend
Dividend
Bonus
Dividend
Dividend
20% less tax

20% less tax
20% less tax
20% less tax
20% less tax
20% less tax
20% less tax
20% less tax
10% less tax
1 for 1 bonus issue
20% less tax
20% less tax
Turnover (S$000)
02
75,109
03
104,483
04
100,814
05
85,188
06
97,309
Earnings before interest, taxation, depreciation and amortisation (S$000)

02
3,357
03
4,963
04
7,417
05
6,070
06
7,863
Profit attributable to members of the company (S$000)

02
814
03
2,216
04
3,800
05
3,142
06
4,263
Earnings per share (cents)

02
0.32
03
0.88
04
1.51
05
1.25
06
1.68
Chairmans Statement
Dear Shareholders,
2006 marks an exciting watershed year for the Zagro Group as
the company builds on the momentum of its global expansion
phase. Since the brand acquisition of Neocidol and Steladone

from Novartis Animal Health Inc in 2004, we have been investing
time, effort and resources to put in place the necessary product
registrations in the respective target markets. The process has
been arduous and challenging but the results thus far have been
noteworthy.
The Group now owns more than 600 product registrations and
230 trademarks worldwide. We are able to sell and distribute
our products in more than 50 countries either directly through
our sales force or through appointed distributors in countries
ranging from Malaysia, Thailand, Philippines and Indonesia,
to Netherlands, Spain, Africas, CIS countries and the Americas.
Our regular customer base has expanded to exceed 3600 and
the impact on the bottom line has been significant.
Net earnings for the Group surged by a creditable 37% from
$3.4 million to $4.6 million as revenue grew by 14% to
$97.3 million, from $85.2 million last year. Strong demand
for crop care products and steady growth in the animal
care segment were key factors contributing to this better
performance. Overall gross margin also improved to 22% due
to better product mix and stronger-margin ectoparasiticides
and aquaculture products.
Supported by these sound fundamentals, the Group is

now poised to embark on its next phase of growth. Going
forward, we seek to be among the global players in animal
health and crop care through the strengthening of our
product portfolio, widening of our distribution channels
and the expansion of our customer and revenue base.
The outlook for the Group is encouraging. We expect
demand for agri-related products to rise in line with the
growth of the world population. To tap into this buoyant
demand, we seek to expedite our planned expansion
through acquisitions of complementary and synergistic
businesses. These acquisitions are likely to be funded
largely by internal cash reserves.
We will continue to be guided by our objective of generating
strong long-term shareholder value by developing Zagro
as a world-class organization with all-round capabilities
and depth in manufacturing, product development and
intellectual property.
The Board of Directors is pleased to announce dividends of

1 cent per share, less tax; continuing its dividend payment track
record for the last 10 years.
Finally, let me take this opportunity to express my

appreciation to our Board of Directors for their guidance
and unwavering support. Special mention and our
heartfelt thanks go to Mr Davinder Singh, who has elected
to retire in the forthcoming AGM due to his heavy work
commitment, for his insights and counsel rendered to Zagro
during the period of his tenure. I would also like to thank
our staff, customers, suppliers and business partners for
their contributions.
The Groups cash position has also gained in strength. Net bank
surplus stood at $3.7 million. Our operations continued to churn
strong cash flow of $11.0 million, up from $6.8 million last year,
thereby boosting cash and cash equivalents at year-end to
$10.2 million.
I am confident that we would be on track to achieving our

corporate vision and strategic business objectives if we
continue to deliver on our excellent execution, develop an
even stronger product mix and further unlock the potential
of our intellectual property.
Earnings per share climbed by 34% from 1.25 cents to 1.68 cents
while Return on Equity rose from 7.4% to 9.5%. Net asset value
per share has also increased from 17.55 cents to 18.36 cents.
The Groups balance sheet too continued to remain strong.
Liquidity remains at a comfortable level of 2.5 times while
interest cover is at an all-time high of 65.4 times. In line with
higher business volume, total expenses increased by 13% to
$16 million although this increase could have been lower at 6%
if not for foreign exchange differences.
Poh Beng Swee

Chairman and CEO
Zagro Asia Limited
Review of Operations
Among Zagros key business segments, Crop Care, the mainstay of the Groups
operations, remained the top revenue earner while preserving its margins
in this tightly-contested global business. We seek to develop this segment
further by identifying new business opportunities with a view to injecting
new revenue streams. On the animal health front, the diversification into
ectoparasiticides and aquaculture is showing good progress. The introduction
of these two stronger-margin product categories has given the animal health
segment a shot in the arm, boosting significantly the returns of this previously
lower-margin segment.
WIDENING OUR GLOBAL FOOTPRINT

Zagro extended its global footprint in 2006 through a landmark registration
for Neocidol in Spain and the Netherlands, paving the way for the Group to
penetrate into the lucrative yet tough European market.
The launch of Neocidol in Europe is an important milestone for the Group

as it opens up doors and business opportunities for Zagro to introduce and
cross-sell other products into this territory. The stringent registration
requirements in Europe combined with its leadership in research and
development have made the region the de facto benchmark for the animal
health industry. Acceptance in Europe facilitates the introduction of a
product into other emerging markets.
As such, we are trying to tap the full potential of Neocidol , despite initial
regulatory problems. Being a premium brand product, in contrast to a generic
one, also meant that the product yields stronger margins and commands
substantial customer loyalty. Zagro is now proactively seeking new markets
and intensifying our marketing efforts to our customers and distributors
to realise the drugs potential. We expect the product to continue to be a
perfomer with healthy contributions to our bottom line.
NEW PRODUCTS AND PARTNERSHIPS

Seabait
An important coup for the Group last year was the acquisition of the exclusive
global distribution rights for Seabait polychaete worms for the feeding of
broodstock shrimp and fish. The Group secured the rights to market these
Rolls-Royce of worms from Seabait Limited, a University of Newcastle

upon Tyne spin-off that specialises in the culture of marine worms.
Seabait is an established and much-lauded product with health certifications

from CEFAS UK Fisheries Department, University of Stirling and UK Veterinary
services. This deal was an extension of Zagros existing relationship with
Seabait . Prior to this latest agreement, Zagro had been Seabait s polychaete
worms distributor in South-east Asia for about a year after which the contract
was extended to the rest of the world.
The contract with Seabait is significant in that it allows Zagro to pursue its
long-term goal of creating a new growth engine for the hatchery business.
It presents the Group with a valuable opportunity to build a whole product
portfolio for the high-end shrimp hatchery business which is part of the
fast-growing aquaculture business.
Review of Operations
Strategic Collaboration
In December 2006, Zagro inked an agreement with Eden Research plc,
a leading UK agrochemical development company to collaborate in research
and development work for the investigation and development of new
insecticidal, anti-bacterial and anti-fungal formulations. Under the agreement,
Eden will grant Zagro an exclusive licence for products that are tried and taken
to market in ten Asian countries, namely Malaysia, Philippines, Singapore,
Indonesia, Vietnam, Sri Lanka, Bangladesh, Myanmar, Thailand and Laos.
Both Zagro and Eden will work towards developing formulations for use in the
treatment of animal and plant pathogens of particular relevance to the Asian
and tropical markets.
VALUE CREATION
The Group is a firm believer in the value of a strong research and development
heritage. Product development staff now accounts for 15% of total staff
strength. We are also steadily building our arsenal of intellectual property.
To date, Zagro owns 400 crop care and 200 animal health product registrations
as well as 230 trademarks and rights to three global trademarks. The Group
lays claim to 80 toxicological studies and 200 free trial reports, and has
manufacturing know-how of 35 crop care and 90 animal health products.
We will increasingly engage in licensing activities to develop these into
substantial revenue streams for the company. Following the out-licensing
agreement with Schering Plough Pty Ltd, Australia, Zagro went on to
successfully secure an in-licensing contract with crop care global leader
Syngenta AG, for a key premium crop care product, Basudin . We expect to
create more value through this route.
GLOBAL BRANDING CAMPAIGN

Zagros branding campaign continued to gather pace with Zagros
participation in international trade shows and exhibitions such as VIV Europe
2006 in Holland, Aquamar International in Mexico, Indo Livestock 2006 in
Indonesia and Vietstock 2006 in Vietnam. The Groups extensive marketing
blitz includes regular advertisements in key industry publications, product
launches, sponsorships (UK/Singapore Workshop on Sustainable Aquaculture)
as well as promotional activities like seminars and sales campaigns.
These initiatives collectively serve to position the Zagro brand and its key
products more prominently and more consistently in the global market place
and form part of our infrastructure into building a world-class corporation.
10
International Brands
11
Milestones
Acquisition of premix manufacturing

plant from Gold Coin Group, renamed
as Zagro Asia (Tianjin) Co Ltd.
Acquisition of agro distribution and
formulation plant in Pakistan, renamed
as Zagro NPC (Private) Ltd.
Started out as Zuellig Agri

Healthcare, a department
operating under Swissbased pharmaceutical
and agricultural giant
Zuellig Group.
Acquisition of 20% interest in

Zuellig Chemicals Sdn Bhd.
Awarding of ISO9002 certification

to Zagro while its laboratory was
accredited with IEC SINGLAS certificate.
Zagro factory gutted

by fire on 23 August.
Resumed business at
alternative location
on 25 August.
1953
1995
1997
1999
1994
1996
1998
Acquisition of Agsin Pte

Ltd and Zuellig Agrochem
Corporation (Philippines).
Listing of Zagro on
SESDAQ under the Stock
Exchange of Singapore.
Setting up of ioint-venture in
India under Zagro Industries
(India) Pte Ltd.
Major corporate restructure.

Various Zuellig agri businesses
in Asia were grouped together
as The Zagro Group.
Awarding of ISO9002
certification to Zagro Asia
(Tianjin) Co Ltd by Det Norske
Veritas of the Netherlands.
Approval of Zagro Employees
Share Option Scheme.
12
Officially transferred to the

Main Board of the Stock Exchange
of Singapore on 10 July.
Launched 3 global B2B exchangeplus
portals, www.agroconnect.com,
www.vetsquare.com and
www.wtopharma.com.
Investment by Green Dot Capital,
a wholly-owned subsidiary of
Singapore Technologies Pte Ltd,
in AgroExchangePlus Pte Ltd.
Acquisition of Fezagro Co. Ltd

in Thailand.
Licensed trademark and patented product

Eureka Gold to Schering Plough Pty Ltd, Australia.
2000
2003
2005
Incorporation of Zagro Africa Pty Ltd.
2001
2004
2006
Exercise of option and further

investment by Green Dot Capital in
AgroExchangePlus Pte Ltd.
Incorporation of P.T. Zagro Indonesia,

Zagro Animal Health Pte Ltd and
Zagro Europe GmbH.
Disposal of Zagro Asia (Tianjin) Co Ltd.
Awarding of ISO9001:2000 and GMP

certifications to Zagros production and
laboratory facilities.
Appointed as exclusive global
distributor of Seabait SPF

marine polychaete worms for
the maturation of fish and
shrimp broodstock.
Acquisition of additional 60% interest

in Zuellig Chemicals Sdn Bhd. Became
subsidiary of the Group and renamed
Zagro Chemicals Sdn Bhd.
Acquisition of global ectoparasiticide
brands, Neocidol and Steladone ,

from Novartis Animal Health Inc., Basel.
Option Agreement with Green Dot
Investments Pte Ltd (GDI) in July,
under which Zagro shares are to be
issued to GDI as purchase consideration
to acquire all of the AgroExchangePlus
Pte Ltds shares that GDI holds, over a
five-year period.
Launch of new micro-encapsulation

and waterbase formulations
(Diacap and Neocidol 600EW)

for global markets.
AgroexchangePlus becomes a
fully-owned subsidiary.
13
Board of Directors
Mr Poh Beng Swee is Chairman of the Board and Chief Executive Officer of the Company
and has held these positions since 1994. He was last re-elected on 28 April 2005.
He graduated with a Bachelor of Business Administration (Hons) degree from the then
University of Singapore in 1971 and had attended the Harvard Advanced Management
Programme at Harvard Business School in 1989. Mr Poh is 58 years old and is also a
director of most of the subsidiaries of the Zagro Group.
Mr Davinder Singh is the Chief Executive Officer of Drew & Napier LLC.
He graduated with a degree in Bachelor of Law from the National University of Singapore
in 1982, and was appointed Senior Counsel in 1997, in the first batch of Senior Counsel
appointed in Singapore. He was appointed to the Board as a Non-Executive Director on
20 May 1996 and was last re-elected on 28 April 2005. Mr Singh also holds directorships
in Singapore Airlines Limited and Petra Foods Limited. Mr Singh is 49 years old.
Mr Soo Kam Beng @ Soo Man Kheng is the General Manager of the Groups Malaysia
subsidiary (Zagro Chemicals Sdn Bhd). He holds a Bachelor of Science (Agriculture)
degree from Punjab Agricultural University in India. He was appointed as an Executive
Director in 1996 and was last re-elected on 28 April 2006. Mr Soo is 60 years old and
holds directorships in several subsidiaries of the Zagro Group.
Ms Ng Ai Kwan was appointed as a Non-Executive Director on 20 May 1996 and was last
re-elected on 28 April 2006. She graduated with a Bachelor of Business Administration
degree from the National University of Singapore. Ms Ng holds directorships in
Chu Cheong Co. Pte Ltd, Granz Holdings Pte Ltd, Mazda Motor (S) Pte Ltd and Sanyo
Singapore Pte Ltd. She is 58 years old.
14
Dr Thomas Stunzi Zuellig was appointed to the Board as a Non-Executive Director on

3 June 2003 and was last re-elected on 30 April 2004. He has years of experience in
the agricultural and feeds industries, having held key positions in various Gold Coin
and Zuellig Group companies. Dr Zuellig holds a doctorate in law from the University of
Zurich, Switzerland. He is a director in various Zuellig and Gold Coin Group companies.
He is 50 years old.
Mr Noris Ong Chin Guan was a partner in PricewaterhouseCoopers and has

been in professional practice for more than 30 years. He was appointed as a
Non-Executive Director on 19 January 2007. Mr Ong is a fellow of the Institute of
Chartered Accountants in England and Wales, the CPA Australia and Institute of Certified
Public Accountants, Singapore. He is presently chairman and director of the Board of the
Tax Academy of Singapore, director of the Singapore Institute of Taxation, director of
the Association of Taxation Technicians, Singapore and also chairman of CPA Australia
Appeals Committee (Ethics). Mr Ong is also a Justice of Peace, served as Nominated
Member of Parliament, was awarded gold medal in 2003 by ICPAS for his service to
the accounting profession and the community and conferred the Public Service Star BBM in 2006. He is 58 years old.
Key Management
Ms Chow Siew Hwa is the Chief Financial Officer of the Group. She is responsible for the Groups finance, internal
controls and corporate secretarial functions. Prior to joining the group in 2004, Ms Chow had more than 3 years of audit
experience with an international public accounting firm, 6 years of financial management experience in public-listed
companies and more than 10 years of senior management experience in a well-established European MNC encompassing
regional financial as well as commercial responsibilities. She is a CPA with a Bachelor of Commerce (Accountancy)
Gold Medal from the Nanyang University, Singapore and holds an MBA in general management from the University
of Hull, UK.
Dr Somchai Theveethivarak is the General Manager of the Groups Thailand subsidiary. His responsibility is to provide leadership
and direction to the business and operations to maximize profit and optimize efficiency. Prior to joining the Group in 1996,
he had held various management positions in companies engaged in agricultural and veterinary businesses. Dr Somchai
graduated in Veterinary Medicine from Kasetsart University, Thailand. He was recently elected as the Vice President of Thai
Crop Protection Association.
Mr Chin Vui Nam is the President of the Groups Philippines subsidiary. He oversees the operations and is responsible for the
performances of several sales branches and representative offices located in various parts of the country. He has close to
30 years of experience in the agricultural and veterinary industries. He was with the Zuellig Group for more than 16 years before
he joined the Group in 1993. He has in-depth knowledge of the industry and the business of the Group by having worked as
Branch Manager in several overseas subsidiaries of the Group in Asia.
15
Corporate Information
BOARD OF DIRECTORS
Mr Poh Beng Swee (Chairman & CEO)
Mr Soo Kam Beng @ Soo Man Kheng
Mr Davinder Singh
Ms Ng Ai Kwan
Dr Thomas Stunzi Zuellig
Mr Ong Chin Guan, Noris
AUDIT COMMITTEE
Ms Ng Ai Kwan (Chairperson)
Mr Davinder Singh
Dr Thomas Stunzi Zuellig
Mr Ong Chin Guan, Noris
REGISTERED OFFICE
SOLICITORS
PRINCIPAL BANKERS
Zagro Global Hub

5 Woodlands Terrace #06-00
Singapore 738430
Drew & Napier LLC

Oliver Quek & Associates
The Hongkong & Shanghai Banking

Corporation Limited
Standard Chartered
Maybank Berhad
The Siam Commercial Bank
AUDITORS
Ernst & Young
Certified Public Accountants
Mr Vincent Toong
(Audit Partner-in-charge since 2005)
SHARE REGISTRAR
Lim Associates (Pte) Ltd
3 Church Street #08-01
Samsung Hub
Singapore 049483
COMPANY SECRETARY
Ms Madelyn Kwang Yeit Lam
16
OTHER INFORMATION
Major leasehold property used as office
cum factory at Zagro Global Hub.
Zagro Global Hub is built on a leasehold
land under a 60-year operating lease for
the period from 23 November 1994 to
30 November 2054.
Corporate Governance
The Company is committed to the enhancement of long-term shareholders value and protection of shareholders interests
through corporate performance and accountability.
When establishing its corporate governance framework, the Company evaluates the principles and guidelines of the Code of
Corporate Governance (the Code) set by the Council on Corporate Disclosure and Governance. Taking into consideration the
costs and benefits of the recommended practices and their applicability to our business circumstances, the Company adopts
practices that are most suitable and effective in order to achieve high standard of corporate governance desired.
The key mechanism of the Companys corporate governance system is a strong and objective Board of Directors. The composition
of the Board and the formation of appropriate sub-committees enable it to carry out its functions effectively. This report
describes the Companys corporate governance structure, processes and activities with specific references to the Code.
BOARD OF DIRECTORS
(Principles 1, 2, 6 & 10)
The Board comprises 6 Directors, 2 of whom hold executive positions and 3 of whom are considered as independent (as defined
by the Code):
Executive Directors
Poh Beng Swee

Soo Kam Beng @ Soo Man Kheng
Non-Executive Directors
Davinder Singh
Ng Ai Kwan
Thomas Stunzi Zuellig
Ong Chin Guan, Noris
- Chairman and Chief Executive Officer of the Company

- General Manager of Zagro Chemicals Sdn Bhd, a subsidiary of the Company
-
Independent Director
Independent Director (Chairman of Audit Committee)
Non-independent Director
Independent Director
The Board consists of respectable individuals of diverse backgrounds from the private sector, whose management and business
skills and experiences are extensive and complementary. It is made up of a balanced mix of executive and non-executive,
independent and non-independent Directors. The Board as a whole exhibits core competencies required for performing its
stewardship and governance roles. Details of the Directors academic and professional qualifications and other appointments
are set out on page 14 and page 15 of the Annual Report.
The Board approves the Groups key business initiatives and major investment and funding decisions. It reviews and evaluates
the Groups financial performances. From time to time, matters that require the Boards attention are circulated. The Board
meets at least twice a year and oversees the affairs of the Group. The number of Board meetings held in 2006, as well as the
attendance of each Board member at those meetings are as follows:
Directors
Number of meetings held in 2006
Number of meetings attended
Poh Beng Swee
Davinder Singh
Ng Ai Kwan
In aiding the Board to fulfill its responsibilities, the Management of the Company provides the Board with timely and complete
information in the form of financial reports and explanatory notes of the business and performances prior to Board meetings.
As and when requested by the Board, the Management also supplies the Board with additional information covering wide range
of issues, such as a specific accounting treatment, or the latest business circumstances and developments. New Directors
appointed during the financial year are provided with background and financial information, in order to orientate them to the
Groups structure and business.
All Directors have separate and independent access to Management and to the Company Secretary. The Company Secretary
administers and attends Board meetings, prepares minutes of such meetings, assists the Chairman in ensuring the board
procedures are followed and applicable rules and regulations, including the requirements of the Companies Act and the
Singapore Exchange Securities Trading Limited, are complied with.
17
CHAIRMAN AND CHIEF EXECUTIVE OFFICER

(Principle 3)
Mr Poh Beng Swee holds the positions of Chairman of the Board and Chief Executive Officer of the Company. He is also the
controlling shareholder of the Company. The scale of the business does not warrant a meaningful split of these positions.
Mr Poh discharges his duty as Chairman of the Board objectively with the help of his other Board members. The Board consists
of 4 non-executive Directors, one of whom has in-depth knowledge of the industry. This composition serves as a check that the
Board as a whole is independent in substance, and that the power and authority of the Board does not vest on only one person.
The Board meetings are also attended by key Management other than the CEO, to represent the Management in accounting of
Managements actions and the Companys performance to the Board.
Among his other duties, the Chairmans role is to schedule and chair the Board meetings, to prepare meeting agenda and to
exercise control over quality, quantity and timeliness of flow of information to the Board.
AUDIT COMMITTEE (AC), INTERNAL CONTROLS AND INTERNAL AUDIT

(Principles 11, 12 & 13)
The AC comprises Ms Ng Ai Kwan as the Chairman, Mr Davinder Singh, Dr Thomas Stunzi Zuellig and Mr Noris Ong (appointed
19th January 2007) as members. All four are non-executive Directors, and other than Dr Zuellig, they are independent Directors.
The AC meets at least twice a year. The number of AC meetings held in 2006, as well as the attendance of each member at
those meetings are as follow:
AC Members
Number of meetings held in 2006
Number of meetings attended
Ng Ai Kwan (Chairman)
Davinder Singh
The AC, which has written terms of reference, performs the following functions:
1.
Review with the external auditors their audit plans;
2.
Review with the external auditors their evaluation of internal financial controls together with
Managements responses;
3.
Review the level of assistance given by the Companys officers to the auditors;
4.
Review the half year and full year financial results of the Company and the Group before their submission to
the Board and their announcement;
5.
Investigate any matters within the ACs terms of reference;
6.
Approve the nomination of external auditors for re-appointment; and
7.
Review interested person transactions in accordance with Chapter 9 of the Listing Manual of the Singapore
Exchange Securities Trading Limited.
The Company maintains a sound system of internal controls, with control features that can be found pervasively in all operations
and processes. The external auditors of the Company carry out reviews on the internal financial control systems and report
their findings to the AC. The current scale of operations does not warrant a formal internal audit function. This will be reviewed
from time to time as the need arises.
The AC has full access to and cooperation by the Companys Management. It has also been given the resources required to
discharge its functions properly and has full discretion to invite any Director or executive officer to attend its meetings.
The external auditors have unrestricted access to the AC.
The AC has nominated Ernst & Young for re-appointment as external auditors of the Company at the forthcoming Annual
General Meeting. The AC has reviewed the non-audit services provided by Ernst & Young to satisfy itself that the nature
and extent of such services will not prejudice the independence and objectivity of the external auditors before confirming
their re-nomination.
18
ZAGRO EMPLOYEES SHARE OPTION SCHEME COMMITTEE

This Committee, which administers the Zagro Employees Share Option Scheme, comprises 4 Directors. They are:
Executive Director
Poh Beng Swee
Non-Executive Directors
Davinder Singh
Ng Ai Kwan
The scheme was approved in 1998, and its object is to give recognition to full time employees who have contributed significantly
to the growth and development of the Group. This scheme rewards these employees with the opportunity to participate in the
equity of the Company.
The role of the Committee is to select eligible employees to participate in this scheme, and to determine the number of shares
and the subscription price of each offer.
NOMINATING COMMITTEE (NC)

(Principles 4 & 5)
The Company recognises that a formal and transparent process for appointment of Directors and for assessment of Board
effectiveness are two important aspects of good corporate governance. The Code recommends the setting up of a Nominating
Committee to undertake the responsibility of administering such a process. The Company did not establish a NC during the financial
year under review, as the Board itself can fulfill the role of NC. The size of the Board does not warrant having a sub-committee for the
stated purposes.
Being a small-sized board, the contribution and performance of each Director (measured in terms of attendance, preparedness,
participation, leadership and decision making) are apparent to the other Directors and the shareholders. All the Directors
also submit themselves for re-nomination and re-election at regular intervals and at least once in every 3 years. At such
time that the Board finds that it requires new members to improve its working and quality, the Board would make the
recommendation. The independence of the Board is also being monitored and ensured, not only by the Board itself, but also
by the Company and the Company Secretary. Thus the Company is satisfied that its current Board serves the Company and the
shareholders effectively.
The Board will review the need for a NC annually, and will establish one should the need arise.
REMUNERATION COMMITTEE (RC)

(Principles 7 & 8)
The Company recognises that a formal and transparent process for fixing the remuneration of individual Directors is
an aspect of good corporate governance. The Code recommends the setting up of a Remuneration Committee to undertake
the responsibility of administering such a process. The Company did not establish a RC during the financial year under review,
as the Board itself can fulfill the role of a RC. The size of the Board does not warrant having a sub- committee for the
stated purposes.
The Board will review the need for a RC annually, and will establish one should the need arise.
The remuneration policy of the Company is to pay competitively and adequately. This translates to be remuneration
that is attractive but yet non-excessive, that enables the Company to recruit capable Directors, Management and staff.
While the initial remuneration set for an individual is based on qualification and relevant work experience, subsequent salary
adjustments, bonus and other incentives are awarded based on the individuals effort and performance, and the Companys
overall profitability. The remuneration policy seeks to align the interests of Directors and staff to those of shareholders.
19
DISCLOSURE ON REMUNERATION
(Principles 8 & 9)
The remunerations of Directors and top 5 executives for the year are as follows:
Number of Directors and
executives earning
Below $250,000
Number of Directors and executives

earning remuneration in the range of:
$250,000 - $499,999
Executive Directors
Non-executive Directors
Top 5 executives
The executive Director whose remuneration was above $250,000 is Mr Poh Beng Swee. His remuneration comprised fixed salary
(78.1%), bonus (12.8%), Directors fee (4.6%), and others (4.5%). Mr Soo Kam Beng @ Soo Man Khengs remuneration comprised
fixed salary (63.9%), bonus (7%), Directors fee (21.5%), and others (7.6%). The non-executive Directors remuneration comprised
only Directors fees. All Directors fees were approved at last years AGM.
The Company has an employee share option scheme that grants employees, including executive Directors and top executives,
options to subscribe for shares of the Company. Details of the scheme can be found in the above paragraph on the Zagro
Employees Share Option Scheme Committee and on pages 24 and 50-51 of the Annual Report.
There are no employees in the Group who are immediate family members of any director or the CEO and whose renumeration
exceed S$150,000 during the year.
COMMUNICATION WITH SHAREHOLDERS

(Principles 10, 14 & 15)
The Company and the Board believe that a high standard of disclosure is an important aspect of good corporate governance.
The Company releases timely, accurate and complete information in accordance with the Corporate Disclosure Policy of the
Singapore Exchange Securities Trading Limited via SGXNET, news releases and the Groups website (www.zagro.com).
The Board, the Management and the external auditors of the Company are always present at annual and other general meetings,
to explain the business and the performance of the Group to the shareholders, and to address the shareholders concerns and
queries. The Company welcomes and values the views of all shareholders.
RISK MANAGEMENT
(Listing Manual Rule 1207(4)(d))

Other than the financial risk management objectives and policies described on page 54 of the Annual Report, the main business
risks that the Group faces when operating in the global market arise from unpredictable climate conditions and diseases
outbreak, changes in environmental laws, and intense competition.
Climate conditions and diseases

The sales of the Groups veterinary and agro-chemical products are indirectly affected by outbreak of diseases and adverse
climatic conditions, due to their impact on the businesses of our customers, who are the feed mills, livestock breeders,
husbandry, aquaculture farmers, and cash-crops farmers.
The Group mitigates these risks with three strategies. Firstly, the Group has a wide customer base, with customers who engage
in the breeding of different kinds of livestock and the cultivation of different crop products. The probability of a disease
outbreak that attacks more than one kind of or all of livestock is low. Secondly, the Groups customers are located in different
countries, but mainly in Asia. Again, geographical diversification confines the threats of these risks to only portions of the
Groups business. Thirdly, the governments and regulatory agencies of the countries of the Groups customers are generally
prompt in taking actions to contain diseases outbreaks and to help their farmers weather tough climatic conditions.
Environmental laws
The Group is vulnerable to changes in environmental laws in the countries in which we operate. Reacting to new findings on
products or their raw materials, the regulatory authorities may introduce laws or guidelines to prohibit or discourage the use
of certain products. The Group follows closely the changes in environmental laws globally and has intimate knowledge of our
products. The Group is therefore able to anticipate potential changes in legislation and will be in the position to replace banned
products in a short period of time. We are also able to bring in new products quickly when opportunity arises.
20
Competition
The Group faces competition from multi-national companies and smaller local manufacturers and distributors. The Group aims
to achieve its competitive edge over its competitors through the following strengths:
The Company has also implemented a Crisis Management plan. The plan is managed by the Crisis Management Team headed
by the CEO. The plan includes recovery strategies for production, sales, finance, IT and all other critical operations, as well
as a maintenance programme for all these processes. In addition, the plan specifies a command cum back up center at an
alternative site.
SECURITIES TRANSACTIONS
(Listing Manual Rule 1207(18))
The Group has adopted an internal compliance code with respect to dealings in securities by Directors and officers in line with
the guidelines on dealings in securities prescribed by the SGX-ST. In line with the guidelines, Directors, Management and officers
of the Group who have access to price sensitive and confidential information are not permitted to deal in the Companys shares
during the periods commencing one month before the announcement of the Groups annual or half yearly results and ending
on the date of the announcement of such results, or when they are in possession of unpublished price sensitive information on
the Group.
INTERESTED PERSON TRANSACTIONS

(Listing Manual Rule 920(1)(a))
The Company has adopted an internal policy in respect of any transactions with interested persons and has set out procedures
for review and approval of the Companys interested person transactions.
The general mandate for interested person transactions (IPT Mandate) with the Gold Coin Group was last renewed at the
Companys Eleventh Annual General Meeting (AGM) on 28 April 2006. The IPT Mandate will be put forth for renewal at the
forthcoming AGM.
Interested person transactions pursuant to the Shareholders Mandate obtained by the Group are as follow:
Name of interested person
Aggregate value of all interested person

transactions during the financial year
under review (excluding transactions
less than S$100,000 and transactions
conducted under shareholders mandate
pursuant to Rule 920)
Aggregate value of all interested

person transactions during the financial
year under review, conducted under
shareholders mandate pursuant to
Rule 920 (excluding transactions less
than S$100,000)
Nil
Nil
21
Financial Report
Report of
the Directors
23
Independent
Auditors Report
27
Statement by
Directors
26
Profit and Loss

Accounts
28
Balance Sheets
29
Consolidated Cash
Flow Statement
32
Statistics of
Shareholdings
59
Statements of
Changes in Equity
30
Notes to the
Financial Statements
33
Notice of Twelve
Annual General Meeting
60
22
Proxy Form
63
Report of the Directors

The directors are pleased to present their report to the members together with the audited consolidated financial statements of
Zagro Asia Limited (the Company) and its subsidiaries (collectively, the Group) and the profit and loss account, balance sheet and
statement of changes in equity of the Company for the financial year ended 31 December 2006.
Directors
The directors of the Company in office at the date of this report are :Poh Beng Swee
Davinder Singh
Ng Ai Kwan
Ong Chin Guan, Noris
(Chairman and Chief Executive Officer)
Arrangements to enable directors to acquire shares and debentures

Except under The Zagro Employees Share Option Scheme as described below, neither at the end of nor at any time during the financial
year was the Company a party to any arrangement whose objects are, or one of whose object is, to enable the directors of the Company
to acquire benefits by means of the acquisition of shares or debentures of the Company or any other body corporate.
Directors interests in shares and debentures

The following directors, who held office at the end of the financial year, had, according to the register of directors shareholdings
required to be kept under Section 164 of the Singapore Companies Act, Cap. 50, an interest in shares and share options of the Company
and related corporations (other than wholly-owned subsidiaries) as stated below :

Direct interest
Deemed interest

At beginning of
At end of
At
At beginning of
At end of
At
Name of director
the year
the year
21 January 2007
the year
the year
21 January 2007

The Company
Zagro Asia Limited
Ordinary shares
Poh Beng Swee
77,456,000
1,100,000
77,456,000
1,100,000
77,456,000
1,100,000
Options to subscribe for ordinary shares

200,000
200,000
200,000
24,360,000

26,860,000

29,360,000
Mr Poh Beng Swee (Mr Poh) with shareholding as above, is deemed to have an interest in the shares of all the Companys subsidiaries
in proportion to its interests in these subsidiaries by virtue of his interest in more than 20% of the issued capital of the Company.
Except as disclosed in this report, no other director who held office at the end of the financial year had interests in shares or share
options of the Company, or of related corporations, either at the beginning of the financial year, or at the end of the financial year.
Directors contractual benefits

On 5 February 2004, Mr Poh being a director of the Company, entered into a call option agreement with a substantial corporate shareholder
of the Company, under which Mr Poh is granted the right to purchase from the substantial corporate shareholder the ordinary shares
of the Company, amounting to not more than 6% of the paid-up capital of the Company. The exercise price of the option is $0.20 per
ordinary share and the validity period of the option is 3 years from the date of the agreement.
During the year, Mr Poh acquired 2.5 million shares from the substantial corporate shareholder. These shares were acquired on 8 May
2006. These shares were acquired via a company in which Mr Poh controls not less than 20% of the voting shares.
Except as disclosed above and in the financial statements, since the end of the previous financial year, no director of the Company has
received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director,
or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest.
23
Share options
(i)
On 29 June 1998, the Company approved The Zagro Employees Share Option Scheme (Scheme) which would enable
selected full-time employees, including executive directors of the Company and the subsidiaries to subscribe for shares of
$0.05 each in the capital of the Company. The Scheme was amended with approval by the shareholders in an Extraordinary
General Meeting held on 31 May 2001 to extend the option period from 5 years to 10 years and extend the exercise period for
options offered at a discount from 1 year to 2 years.
The members of the committee administering the Scheme who are also directors of the Company are as follows :-
Poh Beng Swee

Davinder Singh
Ng Ai Kwan
Details of outstanding options at the end of the financial year are :-

Date of grant
Balance at Balance at Exercise

1.1.2006 Cancelled Forfeited 31.12.2006
price Exercisable period
8.5.2001
16.2.2004
1,077,000
1,065,000
(85,000)
992,000
(60,000) 1,005,000
2,142,000
(145,000) 1,997,000
$0.212 9.5.2003 to 7.5.2010

$0.200 17.2.2006 to 15.2.2014
Details of options granted to and exercised by a director of the Company are :

Options

granted during
Name
financial year
Aggregate options
granted since
commencement
of plan to end of
financial year
Aggregate options
expired since
commencement
of plan to end of
financial year
Aggregate options
exercised since
commencement
of plan to end of
financial year
Aggregate
options
outstanding
as at end of
financial year
Soo Kam Beng @

Soo Man Kheng

400,000
(100,000)
(100,000)
200,000

No participant has received 5% or more of the total number of options available under the Scheme. No option has been granted
to controlling shareholders of the Company and their associates.
(ii)
In 2004, the Company entered into a call and put option agreement (Shareholders Agreement) with a minority shareholder
of a subsidiary of the Group to acquire the minority shareholders interest in the subsidiary company, AgroExchangePlus Pte Ltd
(AEP), comprising 23,311 ordinary shares of S$1.00 each, in exchange for shares in the Company for a total consideration of
S$2,250,049 which was the original investment paid by the minority shareholder. During the year, the Company exercised the
remaining options, issued 6,290,244 new ordinary shares and acquired the 22,850 ordinary shares in AEP held by the minority
shareholder.
(iii)
In 2000, a subsidiary of the Company, Vetsquare.com Pte Ltd (Vetsquare), entered into a subscription agreement with a
minority shareholder of a subsidiary of the Group to grant to the minority shareholder a non-transferable option to purchase
new shares in Vetsquare. The option was valid for a term of 3 months commencing from the date of completion of investment
by a third party into Vetsquare and allowed the option holder the option to subscribe for up to 5 per cent of the share capital
in Vetsquare, at a price determined by the third party investor. During the year, the subscription agreement was terminated
pursuant to the termination of the Shareholders Agreement following the acquisition of the shares in the subsidiary that were
held by the minority shareholder (see (ii) above).
(iv)
The options granted by the Company and its subsidiaries do not entitle the holders of the options, by virtue of such holdings,
to any right to participate in any share of any other corporation.
No unissued shares of the Company or its subsidiaries, other than those referred to above, are under option as at the date of this
report.
24
Audit committee
The audit committee performed the functions specified in the Singapore Companies Act, Cap. 50. The functions performed are detailed
in the Report on Corporate Governance.
Auditors
Ernst & Young have expressed their willingness to accept reappointment as auditors.
On behalf of the board of directors :
Poh Beng Swee

Chairman

Director
Singapore
16 March 2007
25
Statement by Directors
We, Poh Beng Swee and Soo Kam Beng @ Soo Man Kheng, being two of the directors of Zagro Asia Limited (the Company), do hereby
state that, in the opinion of the directors,
(i)
the accompanying balance sheets, profit and loss accounts, statements of changes in equity, and consolidated cash flow statement
together with the notes thereto are drawn up so as to give a true and fair view of the state of affairs of the Company and its
subsidiaries (collectively, the Group) as at 31 December 2006, and the results and changes in equity of the Company and of
the Group and cash flows of the Group for the year ended on that date, and
(ii)
at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and
when they fall due.
On behalf of the board of directors :
Poh Beng Swee

Chairman

Director
Singapore
16 March 2007
26
Independent Auditors Report

to the Members of Zagro Asia Limited
We have audited the accompanying financial statements of Zagro Asia Limited (the Company) and its subsidiaries (collectively,
the Group) set out on pages 28 to 58, which comprise the balance sheets of the Group and the Company as at 31 December 2006, the
statements of changes in equity of the Group and the Company, the profit and loss account of the Group and the Company, and cash
flow statement of the Group for the year then ended, and a summary of significant accounting policies and other explanatory notes.
Directors responsibility for the financial statements

The Companys directors are responsible for the preparation and fair presentation of these financial statements in accordance with
the provisions of the Singapore Companies Act, Cap. 50 (the Act) and Singapore Financial Reporting Standards. This responsibility
includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting
policies; and making accounting estimates that are reasonable in the circumstances.
Auditors responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance
with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant
to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by
directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion,
(i)
the consolidated financial statements of the Group, and the balance sheet, profit and loss account and statement of changes
in equity of the Company are properly drawn up in accordance with the provisions of the Singapore Companies Act, Cap. 50
(the Act) and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group
and of the Company as at 31 December 2006 and the results, changes in equity and cash flows of the Group and the results,
changes in equity of the Company for the year ended on that date; and
(ii)
the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in
Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.
ERNST & YOUNG

Certified Public Accountants
Singapore
16 March 2007
27
Profit and Loss Accounts

for the year ended 31 December 2006
Group Company
Notes
2006
2005
2006

$000
$000
$000
2005
$000
Turnover
3
Cost of sales
97,309
(76,231)
85,188
(67,450)
Gross profit

Other revenue
Selling and marketing expenses
Administrative expenses
Other operating expenses, net
21,078
771
(8,213)
(4,182)
(3,504)
17,738
528
(8,073)
(4,227)
(1,756)

2,643

(378)
(782)
Operating profit
4
Interest income
5
Interest expense
6

Taxation
7
5,950
229
(320)
4,210
131
(381)
1,483
56

1,030
17
5,859
(1,284)
3,960
(610)
1,539
(182)
1,047
15
Profit for the year

Attributable to :

Equity holders of the Company
Minority interest
4,575
3,350
1,357
1,062

4,263
312

3,142
208
1,357

1,062

Earnings per share :

4,575
3,350
1,357
1,062
1.68 cents
1.25 cents
Basic and diluted

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
28
882
(387)
535
Balance Sheets
as at 31 December 2006
Group Company
Notes
2006
2005
2006

$000
$000
$000
Non-current assets
Property, plant and equipment
10
11,040
11,033

Intangible assets
11
5,947
6,568
Investment in subsidiaries
12

13,427
Investment in an associate
13
13

Deferred tax assets

20
325
257

Current assets

Other investment
14
2,050
2,058
Inventories
15
19,098
21,040
Related party/company balances

16

66
21,345
Trade and other receivables
17
21,622
22,331
13
Fixed deposits
22
4,358
995
2,030
Cash and bank balances
22
5,941
3,178
59
2005
$000
10,915
24,389
22

53,069
49,668
23,447

Current liabilities
Trade and other payables
18
13,857
12,863
259
Interest-bearing loans and borrowings
19
6,589
7,987

Provision for taxation
924
1,125
88
Bank overdrafts
22
59
20

24,411

Net current assets
Non-current liabilities

Deferred tax liabilities
20
294
61
21,429
21,995
347
31,640

(869)
27,673

(450)
23,100

24,056
Net assets
48,096
45,081
36,527

Equity attributable to equity
holders of the Company
Share capital
21
29,691
12,549
29,691
Share premium

14,936

Reserves
17,540
16,569
6,836
34,971

Minority interests
47,231
44,054
865
1,027
Total equity

48,096
45,081
36,527
355
12,549
14,936
7,486
34,971

36,527
34,971
29
Statements of Changes in Equity

Attributable to equity holders of the Company
Employee Foreign
Fair value
share
currency
Share Share adjustment Capital
option translation Revenue Total Minority Total
(1)
(2)
reserve interests equity
Group
capital premium reserve reserve reserve reserve(3) reserve

$000
(Note 21)
$000
12,549
14,936
$000
$000
$000
$000
$000
$000
$000
$000
2006
At 1 January 2006
Transfer of share premium
reserve to share capital
Foreign currency
translation adjustment
Net loss on fair value change
during the year
14,936 (14,936)
Net income recognised

directly in equity
Profit for the year
Total recognised income
and expenses for the year
Issuance of shares
during the year
Acquisition of additional
shares in a subsidiary
from a minority shareholder
Dividends paid/payable to
ordinary shareholders
(Note 8)
minority shareholders
At 31 December 2006

58
1,993
37
(1,134)
15,615 16,569
(8)
(8)

707

699
4,263 4,263
(7)
312
692
4,575
(8)
707
4,263
305
5,267
(1,983)
(8)
4,962
(2,008) (2,008)
29,691
(1,983)
(427)
17,870 17,540
(7)
707
45,081
2,206
707
1,027

(223)
700
(8)
2,206
(2,206)
(2,008)
(244)
865
(244)
50
10
37
48,096
12,549 14,936

1,993

33
(1,533) 14,514 14,974

(33)

969 43,428

12,549
1,993
33
(1,533)
969
43,428
408
2005
At 31 December 2004
as previously reported
Effects of adopting FRS 102
At 31 December 2004,
restated
Foreign currency translation
adjustment
Net gain on fair value change
during the year
Net income recognised
directly in equity
Profit for the year
Total recognised income

and expenses for the year
Share based payments for the year
Dividends paid/payable to ordinary
shareholders (Note 8)
minority shareholders
At 31 December 2005

14,936
14,481 14,974
58
58

399

457
3,142 3,142
9
208
466
3,350
58

399

3,142 3,599

4
217

3,816
4
12,549 14,936
58
1,993
37
399
399
58
(2,008) (2,008)

(1,134)
15,615 16,569
30
58
(2,008)
(159)
1,027
(159)
45,081
Statements of Changes in Equity


Attributable to equity holders of the Company
Share Share Employee share Revenue Total
reserve
equity
Company
capital
premium
option reserve (2)

$000
$000
$000
$000
$000

(Note 21)
2006
At 1 January 2006
Transfer of share premium
reserve to share capital
Profit for the year
Total recognised income and
expenses for the year
Issuance of shares during the year
Dividends paid/payable to ordinary
shareholders (Note 8)
At 31 December 2006

12,549
14,936
37
7,449
34,971
14,936

(14,936)

1,358
1,358

2,206
1,358

1,358
2,206
29,691
(2,008)
(2,008)
37
6,799
36,527
2005
At 31 December 2004
as previously reported
Effect of adopting FRS 102
12,549

14,936

33
8,428
(33)
35,913
At 31 December 2004, restated

Profit for the year

Total recognised income and
expenses for the year
Share based payments for the year
Dividends on ordinary shares
(Note 8)
12,549

14,936

33

8,395
1,062
35,913
1,062
At 31 December 2005

12,549

14,936

37
1,062

1,062
4
(2,008)
(2,008)
7,449
34,971
(1) Fair value adjustment reserve records the cumulative fair value changes of available-for-sale financial assets until they are derecognised or
impaired.
(2) Employee share option reserve represents the equity-settled share options granted to employees (Note 21). The reserve is made up of the cumulative
value of services received from employees recorded on grant of equity-settled share options.
(3) Foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign
operations whose functional currencies are different from that of the Groups presentation currency.
31
Consolidated Cash Flow Statement

Group

2006

$000
Cash flows from operating activities :

Operating profit before taxation and minority interest
Adjustments for :
Depreciation of property, plant and equipment
Gain on disposal of property, plant and equipment
Amortisation of intangible assets
Interest income
Interest expense
Share based payment
Currency realignment
2005
$000
5,859
3,960
1,002
(7)
910
(229)
320

706
1,128
(4)
732
(131)
381
4
393
8,561
715
1,942
913
66
6,463
1,251
763
(679)
Cash generated from operations

Interest income received
Interest expenses paid
Income taxes paid
12,197
223
(324)
(1,134)
7,798
131
(381)
(737)
Net cash flows from operating activities

Cash flows from investing activities :
Purchase of property, plant and equipment
Addition in intangible assets
Proceeds from sale of property, plant and equipment
Investment in associate
10,962
6,811
(1,016)
(291)
10
(13)
(282)
(92)
13
Net cash flows used in investing activities

Cash flows from financing activities :
Net repayment of loans and borrowings
Dividend paid on ordinary shares
Dividend paid to minority shareholders
(1,310)
(361)
(1,398)
(2,008)
(159)
(3,994)
(2,008)
(241)
Net cash flows used in financing activities
(3,565)
(6,243)
6,087
4,153
207
3,946
10,240
4,153
Operating profit before working capital changes

Decrease in trade and other receivables
Decrease in inventories
Increase/(decrease) in payables and accruals
Decrease in related party balances
Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of year (Note 22)
Cash and cash equivalents at end of year (Note 22)

32
Notes to the Financial Statements

- 31 December 2006
1. Corporate information

Zagro Asia Limited (the Company) is a limited liability company, which is domiciled and incorporated in Singapore.
The registered office and principal place of business of the Company is Zagro Global Hub, 5 Woodlands Terrace, #06-00,
Singapore 738430.
The principal activity of the Company is investment holding. The subsidiaries are primarily engaged in the manufacturing and
trading in crop care, animal health and ectoparasiticide products. Two of the subsidiaries are engaged in e-commerce related
activities. They own, operate and transact on B2B exchangeplus portal for crop care and animal health products. There have
been no significant changes in the nature of these activities during the year.
Related companies in these financial statements refer to subsidiaries of the Group. Related parties in these financial statements
refer to enterprises in which the directors and substantial corporate shareholders of the Group have beneficial interests.
2. Significant accounting policies

2.1

Basis of preparation
The consolidated financial statements of the Group and the profit and loss account, balance sheet and statement of changes
in equity of the Company have been prepared in accordance with Singapore Financial Reporting Standards (FRS).
The financial statements have been prepared on a historical cost basis except for derivative financial instruments and availablefor-sale financial assets that have been measured at its fair value.
The financial statements are presented in Singapore Dollars (SGD or $) and all values are rounded to the nearest thousand
($000) except when otherwise indicated.
2.2

Changes in accounting policies

The accounting policies have been consistently applied by the Group and the Company and are consistent with those used in
the previous financial year, except for the changes in accounting policies discussed below.
(a)

Adoption of new FRS

On 1 January 2006, the Group and the Company adopted the following standard mandatory for annual financial periods
beginning on or after 1 January 2006.
The adoption of this new FRS did not give rise to any prior year adjustment or adjustment to the reserves as at 1
January 2006.
(b)

Adoption of revised FRS

The Group and the Company adopted the following revised standards mandatory for annual periods beginning on or
after 1 January 2006.
FRS 19 (revised)
FRS 39 (revised)
FRS 39 (revised)
The adoption of these standards did not result in any significant change in accounting policies.
INT FRS 104 Determining Whether an Arrangement Contains a Lease
Employee Benefits
Fair value option
Financial Guarantee Contracts
33

- 31 December 2006
2. Significant accounting policies (contd)

2.2
Changes in accounting policies (contd)

(c)
FRS and INT FRS not yet effective
The Group and the Company have not early adopted any of the FRS and Interpretations of Financial Reporting Standards
(INT FRS) that have been issued but not yet effective :
Effective date

(Annual periods

beginning on or after)
FRS 1
Amendment to FRS 1 (revised),

Presentation of financial statements (Capital Disclosures)
1 January 2007
FRS 40
Investment Property
1 January 2007
FRS 107
Financial Instruments: Disclosures
1 January 2007
INT FRS 107
Applying the Restatement Approach under FRS 29,

Financial Reporting in Hyperinflationary Economies
1 March 2006
INT FRS 108
Scope of FRS 102, Share-based Payment
1 May 2006
INT FRS 109
Reassessment of Embedded Derivatives
1 June 2006
INT FRS 110
Interim Financial Reporting and Impairment
1 November 2006
The adoption of these FRS and INT FRS, where applicable are not expected to have significant impact on the financial
statements of the Group and the Company.
2.3

Significant accounting estimates and judgements

Estimates, assumptions concerning the future and judgements are made in the preparation of the financial statements.
They affect the application of the Groups accounting policies, reported amounts of assets, liabilities, income and expenses,
and disclosures made. They are assessed on an on-going basis and are based on experience and relevant factors, including
expectations of future events that are believed to be reasonable under the circumstances.
(a)
Key sources of estimation uncertainty

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

Impairment of goodwill
The Group determines whether goodwill is impaired at least on an annual basis in accordance with the policy
stated at Note 2.8(a). No impairment was recognised for the year. The recoverable amount for goodwill was
determined based on a value in use calculation using cash flow projection based on financial budgets approved
by management covering a one-year period. The pre-tax discount rate applied to the cash flow projection was
6% (2005 : 6%) per annum, being the cost of financing for the Groups bank lending rate. The carrying amount
of the Groups goodwill at 31 December 2006 was $180,000 (2005 : $180,000).
(ii)

Amortisation of brand
The cost of brand is amortised in accordance with the policy stated at Note 2.8(d). The carrying amount of
the Groups brand at 31 December 2006 was $5,463,000 (2005 : $6,260,000). Changes in the expected sales
generated by the brand could impact the economic useful life and the residual value of the brand, therefore
future amortisation charges could be revised.
(iii)

Depreciation of plant and machinery

The plant and machinery for the manufacturing activities are depreciated in accordance with the policy stated
at Note 2.7. These are common life expectancies applied in the industry. The carrying amount of the Groups
plant and machinery at 31 December 2006 was $1,103,000 (2005 : $1,187,000). Changes in the expected level
of usage and technological developments could impact the economic useful life and the residual value of these
assets, therefore future depreciation charges could be revised.
(iv)

Income taxes
The Group has exposure to income taxes in numerous jurisdictions. Significant judgement is involved in
determining the group-wide provision for income taxes. There are certain transactions and computations for
which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises
liabilities for expected tax issues in accordance with the policy stated at Note 2.23. Where the final tax outcome
of these matters is different from the amounts that were initially recognised, such differences will impact
the income tax and deferred tax provisions in the period in which such determination is made. The carrying
amount of the Groups tax payables and deferred tax liabilities at 31 December 2006 was $924,000 (2005 :
$1,125,000) and $869,000 (2005 : $450,000) respectively.
34

- 31 December 2006

2.4
Functional and foreign currency

(a)
Functional currency
The management has determined the currency of the primary economic environment in which the Company operates
(i.e. functional currency) to be SGD. Sales prices and major costs of providing goods and services including major
operating expenses are primarily influenced by fluctuations in SGD.
(b)
Foreign currency transactions

Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries
and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at
the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the closing
rate of exchange ruling at the balance sheet date. Non-monetary items that are measured in terms of historical cost
in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary
items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair
value was determined.
Exchange differences arising on the settlement of monetary items or on translating monetary items at the balance
sheet date are recognised in the profit and loss account except for exchange differences arising on monetary items that
form part of the Groups net investment in foreign subsidiaries, which are recognised initially in a separate component
of equity as foreign currency translation reserve in the consolidated balance sheet and recognised in the consolidated
profit and loss account on disposal of the subsidiary. In the Companys separate financial statements, such exchange
differences are recognised in the profit and loss account.
(c)
Foreign currency translation

The assets and liabilities of foreign operations for each balance sheet presented are translated into SGD at the closing
rate ruling at that balance sheet date and their income and expenses for each income statement are translated at
average exchange rates for the year, which approximates the exchange rates at the dates of the transactions. All resulting
exchange differences are recognised in a separate component of equity as foreign currency translation reserve.
Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after 1 January 2005 are
treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign
operations and translated at the closing rate at the balance sheet date.

Goodwill and fair value adjustments which arose on acquisitions of foreign subsidiaries before 1 January 2005 are
deemed to be assets and liabilities of the parent company and are recorded in SGD at the rates prevailing at the date
of acquisition.
On disposal of a foreign operation, the cumulative amount of exchange differences deferred in equity relating to that
foreign operation is recognised in the profit and loss account as a component of the gain or loss on disposal.
2.5
Subsidiaries and principles of consolidation

(a)
Subsidiaries
A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to
obtain benefits from its activities. The Group generally has such power when it directly or indirectly, holds more than
50% of the issued share capital, or controls more than half of the voting power, or controls the composition of the
board of directors.
In the Companys separate financial statements, investments in subsidiaries are accounted for at cost less any
impairment losses.
(b)
Principles of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the
balance sheet date. The financial statements of the subsidiaries are prepared for the same reporting date as the parent
company. Consistent accounting policies are applied for like transactions and events in similar circumstances.
All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group transactions
that are recognised in assets, are eliminated in full.
35

- 31 December 2006

2.5
Subsidiaries and principles of consolidation (contd)

(b)
Principles of consolidation (contd)
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control,
and continue to be consolidated until the date that such control ceases.

Acquisitions of subsidiaries are accounted for using the purchase method. The cost of an acquisition is measured as the
fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange,
plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of
the extent of any minority interest.

Minority interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group. They are
presented in the consolidated balance sheet within equity, separately from the parent shareholders equity, and are
separately disclosed in the consolidated profit and loss account.
2.6

Associates
An associate is an entity, not being a subsidiary or a joint venture, in which the Group has significant influence. This generally
coincides with the Group having 20% or more of the voting power, or has representation on the board of directors.
The Groups investments in associates are accounted for using the equity method. Under the equity method, the investment
in associate is carried in the balance sheet at cost plus post-acquisition changes in the Groups share of net assets of the
associate. The Groups share of the profit or loss of the associate is recognised in the consolidated profit and loss account. Where
there has been a change recognised directly in the equity of the associate, the Group recognises its share of such changes.
After application of the equity method, the Group determines whether it is necessary to recognise any impairment loss with
respect to the Groups net investment in the associate. The associate is equity accounted for from the date the Group obtains
significant influence until the date the Group ceases to have significant influence over the associate.
Goodwill relating to an associate is included in the carrying amount of the investment.
Any excess of the Groups share of the net fair value of the associates identifiable assets, liabilities and contingent liabilities
over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in
the determination of the Groups share of the associates profit or loss in the period in which the investment is acquired.
When the Groups share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured
receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the
associate.
The most recent available audited financial statements of the associates are used by the Group in applying the equity method.
Where the dates of the audited financial statements used are not co-terminous with those of the Group, the share of results is
arrived at from the last audited financial statements available and un-audited management financial statements to the end of
the accounting period. Consistent accounting policies are applied for like transactions and events in similar circumstances.
In the Companys separate financial statements, investments in associates are accounted for at cost less impairment losses.
2.7

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any impairment in value. All items of
property, plant and equipment are initially recorded at cost.
The initial cost of a property, plant and equipment comprises its purchase price and any directly attributable costs of bringing
the asset to its working condition and location for its intended use. Any trade discounts and rebates are deducted in arriving
at the purchase price. Expenditure incurred after the property, plant and equipment have been put into operation, such as
repairs and maintenance and overhaul costs, is normally charged to the profit and loss account in the period in which the costs
are incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future
economic benefits expected to be obtained from the use of an item of property, plant and equipment beyond its originally
assessed standard of performance, the expenditure is capitalised as an additional cost of property, plant and equipment.
Depreciation of an asset begins when it is available for use and is computed on a straight-line basis over the estimated useful
life of the asset as follows:
Leasehold land and buildings

Plant and machineries
Office furniture, fixtures and equipment
Motor vehicles
36
-
-
-
-
50 to 93 years
5 to 15 years
3 to 10 years
5 to 10 years

- 31 December 2006

2.7

Property, plant and equipment (contd)

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances
indicate that the carrying value may not be recoverable.
The residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that the amount,
method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the
future economic benefits embodied in the items of property, plant and equipment.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected
from its use or disposal. Any gain or loss arising on derecognition of the asset is included in the profit and loss account in the
year the asset is derecognised.
2.8
Intangible assets
(a)
Goodwill
Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business
combination over the Groups interest in the net fair value of the identifiable assets, liabilities and contingent liabilities.
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed
for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value
may be impaired.

Since 1 January 2005, goodwill is no longer amortised on a straight-line basis over a period of 3 years but it is tested
annually for impairment or whenever there is indication of impairment. The accounting policy for impairment of assets
is included in Note 2.14.

If an entity is subsequently sold, the carrying amount of capitalised goodwill relating to the entity sold is taken to the
consolidated income statements as part of the gain or loss on sale.

Goodwill and fair value adjustments which arose on acquisitions of foreign subsidiaries before 1 January 2005 are
deemed to be assets and liabilities of the parent company and are recorded in SGD at the rates prevailing at the date
of acquisition.
(b)
Negative goodwill
If the cost of the business combination is less than the Groups interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities of the business acquired, the difference is recognised directly in the consolidated
profit and loss account.
(c)
Product registration
Costs relating to product registration, which are acquired, are capitalised and amortised on a straight-line basis over
the useful lives of between 3 -5 years. Product registration is tested annually for impairment or more frequently, if the
events or circumstances warrant it. Amortisation period and method are reviewed at each financial year-end.
(d)
Brand
Costs relating to brand of product lines which are acquired, are capitalised and amortised at a rate which bears
relation to the total projected sales generated from the brand as management believes there is foreseeable limit to
the period over which the brand is expected to generate net cash flows for the Group. It is currently estimated that
the assets would be amortised based on 15% external sales generated by the brand annually. Brand is tested annually
for impairment or more frequently if the events or circumstances warrant it. Amortisation period and method are
reviewed at each financial year-end.

Gain or loss arising from derecognition of an intangible asset is measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are recognised in the profit and loss account when the asset is
derecognised.
2.9

Financial instruments
Financial assets classified as held for trading and available-for-sale are measured at fair value while loans, receivables and
held-to-maturity investments are measured at amortised cost using the effective interest method. Financial liabilities (other
than derivative financial instruments) are measured at amortised costs using the effective interest method. Derivative financial
instruments are classified as financial assets or financial liabilities as appropriate and measured at fair value.
The difference between the carrying values and fair values is recognised in the fair value adjustment reserve. The difference
between the carrying values and amortised costs is recognised in the revenue reserve.
37

- 31 December 2006

2.9
Financial instruments (contd)

(a)
Financial assets at fair value through profit or loss
Financial assets classified as held for trading are included in the category financial assets at fair value through profit or
loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term.
Derivative financial instruments are also classified as held for trading unless they are designated as effective hedging
instruments. Gains or losses on investments held for trading are recognised in the profit and loss account.
(b)
Held-to-maturity investment
Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity
when the group has the positive intention and ability to hold the assets to maturity. Investments intended to be held
for an undefined period are not included in this classification. Other long-term investments that are intended to be
held-to-maturity, such as bonds, are subsequently measured at amortised cost using the effective interest method.
This cost is computed as the amount initially recognised minus principal repayments, plus or minus the cumulative
amortisation using the effective interest method of any difference between the initially recognised amount and
the maturity amount and minus any reduction for impairment or uncollectibility. This calculation includes all fees
and points paid or received between parties to the contract that are an integral part of the effective interest rate,
transaction costs and all other premiums and discounts. For investments carried at amortised cost, gains and losses
are recognised in the profit and loss account when the investments are derecognised or impaired, as well as through
the amortisation process.
(c)
Loans and receivables

Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market are
classified as loans and receivables. Such assets are carried at amortised cost using the effective interest method. Gains
and losses are recognised in profit and loss account when the loans and receivables are derecognised or impaired, as
well as through the amortisation process.
(d)
Available-for-sale financial assets

Available-for-sale financial assets are those non-derivative financial assets that are designated as available-for-sale
or are not classified in any of the three preceding categories. After initial recognition, available-for-sale financial
assets are measured at fair value with gains or losses being recognised in the fair value adjustment reserve until the
investment is derecognised or until the investment is determined to be impaired at which time the cumulative gain
or loss previously reported in equity is included in the profit and loss account.
The fair value of investments that are actively traded in organised financial markets is determined by reference to
the relevant Exchanges quoted market bid prices at the close of business on the balance sheet date. For investments
where there is no active market, fair value is determined using valuation techniques such as recent arms length market
transactions; market value of other similar instrument discounted cash flow analysis; and option pricing models.
Investments in equity instruments that do not have a quoted market price in an active market and whose fair value
cannot be reliably measured are measured at cost less impairment losses.
2.10
Derecognition of financial assets and liabilities

(a)
Financial assets
A financial asset is derecognised where the contractual rights to receive cash flows from the asset have expired.
On derecognition of a financial asset, the difference between the carrying amount and the sum of (a) the consideration
received and (b) any cumulative gain or loss that has been recognised directly in equity is recognised in the profit and
loss account.
(b)
Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expired.
2.11

Other investment
Other investment is classified as available-for-sale financial assets and is accounted for in accordance with the policy stated
in Note 2.9.
2.12

Cash and cash equivalents

Cash and cash equivalents comprise fixed deposits, cash on hand and at bank less bank overdrafts. Cash and fixed deposits
carried in the balance sheets are classified and accounted for as loans and receivables as stated in Note 2.9.
For the purpose of the cash flow statement, cash and cash equivalents are shown net of outstanding bank overdrafts which
are repayable on demand and which form an integral part of the Groups cash management.
38

- 31 December 2006

2.13

Trade and other receivables

Trade and other receivables including amounts due from related parties, are classified and accounted for as loans and receivables
as stated in Note 2.9.
An impairment is made for uncollectible amounts when there is objective evidence that the Group will not be able to collect
the debt. Bad debts are written off when identified. Further details on the accounting policy for impairment of financial assets
are stated in Note 2.14.
2.14

Impairment of financial and non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication
exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the assets recoverable
amount.
An impairment loss is recognised in the profit and loss account whenever the assets carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an assets or cash-generating units fair value less costs to sell and its value in
use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable
cash flows (cash-generating units).
A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the
assets recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset
is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been
determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Reversal of an impairment
loss is recognised in the profit and loss account.
The Group does not reverse in a subsequent period, any impairment loss recognised for goodwill.
2.15

Inventories
Inventories are stated at the lower of cost and net realisable value.
Costs incurred in bringing the inventories to their present location and condition are accounted for as follows:
Raw materials purchase costs on weighted average basis;
Finished goods and work-in-progress costs of direct materials and labour and a proportion of manufacturing overheads
based on normal operating capacity but excluding borrowing costs. These costs are assigned on weighted average
basis.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and
the estimated costs necessary to make the sale.
2.16
Trade and other payables
Liabilities for trade and other amounts payable are initially recognised at fair value and subsequently measured at amortised
cost using the effective interest method.
Gains and losses are recognised in the profit and loss account when the liabilities are derecognised as well as through
the amortisation process. The liabilities are derecognised when the obligation under the liability is discharged, cancelled
or expired.
2.17

Interest-bearing loans and borrowings

All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable
transaction costs.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective
interest method.
Gains and losses are recognised in the profit and loss account when the liabilities are derecognised as well as through the
amortisation process.
39

- 31 December 2006

2.18

Borrowing costs
Borrowing costs are generally expensed as incurred. Borrowing costs are capitalised if they are directly attributable to the
acquisition, construction or production of a qualifying asset. Capitalisation of borrowing costs commences when the activities
to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are being incurred.
Borrowing costs are capitalised until the assets are ready for their intended use. If the resulting carrying amount of the asset
exceeds its recoverable amount, an impairment loss is recorded.
2.19

Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) where, as a result of a past event, it
is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed,
the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating
to any provision is presented in the profit and loss account net of any reimbursement.
Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer
probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is
reversed.
2.20
Employee benefits
(a)
Defined contribution plans
The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations.
In particular, the Singapore companies in the Group make contributions to the Central Provident Fund scheme in
Singapore, a defined contribution pension scheme. Contributions to national pension schemes are recognised as an
expense in the period in which the related service is performed.
(b)
Employee leave entitlement

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

Employee share option are measured by reference to the fair value at the date on which the share options are granted.
In valuing the share options, no account is taken of any performance conditions, other than conditions linked to the
price of the shares of the Company (market conditions).

The employee share option expense is recognised in the profit and loss account on a straight-line basis over the vesting
period, together with a corresponding increase in the employee share option reserve. No expense is recognised for
awards that do not ultimately vest.
2.21

Operating leases
Leases where the lessor effectively retains substantially all the risks and rewards of ownership of the leased item are classified
as operating leases. Operating lease payments are recognised as an expense in the profit and loss account on a straight-line
basis over the lease term.
The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term
on a straight-line basis.
2.22

Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can
be reliably measured. The following specific recognition criteria must also be met before revenue is recognised :(a)
Sale of goods
Revenue is recognised upon the transfer of significant risk and rewards of ownership of the goods to the customer,
which generally coincides with delivery and acceptance of the goods sold.
(b)
Interest income
Interest income is recognised as interest accrues (using the effective interest method) unless collectibility is in doubt.
(c)
Rental income
Rental income arising on commercial property sub-leases is recognised on a time proportion basis. The aggregate cost
of incentives provided to lessees is recognised as a reduction of rental income over the lease term on a straight-line
method.
(d)

40
Dividends
Dividend income is recognised when the Groups right to receive payment is established.

- 31 December 2006

2.23
Income taxes
(a)
Current tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered
from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are
enacted or substantively enacted by the balance sheet date.
(b)
Deferred tax
Deferred income tax is provided, using the liability method, on all temporary differences at the balance sheet date
between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred
tax assets and liabilities are measured using the tax rates expected to apply to taxable income in the years in which
these temporary differences are expected to be recovered or settled based on the tax rates enacted or substantively
enacted at the balance sheet date.

Deferred tax liabilities are recognised for all taxable temporary differences associated with investments in subsidiaries,
associates and interests in joint ventures, except where the timing of the reversal of the temporary difference can be
controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carrying-forward of unused tax losses and
unabsorbed capital allowances, to the extent that it is probable that taxable profit will be available against which the
deductible temporary differences, carry-forward of unused tax losses and unused tax credits can be utilised.
At each balance sheet date, the Group re-assesses unrecognised deferred tax assets and the carrying amount of deferred
tax assets. The Group recognises a previously unrecognised deferred tax asset to the extent that it has become probable
that future taxable profit will allow the deferred tax asset to be recovered. The Group conversely reduces the carrying
amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profit will be available
to allow the benefit of part or all of the deferred tax asset to be utilised.

Deferred tax are charged or credited directly to equity if the tax relates to items that are credited or charged, in the
same or a different period, directly to equity.
(c)
Sales tax
Sales tax comprises goods and services tax and value-added tax.
Revenues, expenses and assets are recognised net of the amount of sales tax.
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables
or payables in the balance sheet.
2.24

Derivative financial instruments

The Group uses derivative financial instruments such as forward currency contracts to hedge its risks associated with foreign
currency fluctuations. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative
contract is entered into and are subsequently remeasured at fair value. Derivative financial instruments are carried as assets
when the fair value is positive and as liabilities when the fair value is negative.
Any gains or losses arising from changes in fair value on derivative financial instruments that do not qualify for hedge accounting
are taken to the profit and loss account for the year.
The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts with
similar maturity profiles.
2.25

Segments
For management purposes, the Group is organised on a world-wide basis into three major operating businesses. The divisions
are the basis on which the Group reports its primary segment information. Segment revenue, expenses and results include
transfers between business segments and between geographical segments. Such transfers are accounted for on an arms
length basis. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can
be allocated on a reasonable basis. Segment capital expenditure is the total cost incurred during the year to acquire segment
assets that are expected to be used for more than one year.
41

- 31 December 2006
3. Turnover

Turnover represents invoiced trading sales after allowance for goods returned and trade discounts. It excludes dividends,
interest income and, in respect of the Group, intra-group transactions.
Group

2006

$000
2005
$000
Turnover is analysed as follows :-

External parties
Related parties
94,537
2,772
82,807
2,381
97,309
85,188
4. Operating profit

Operating profit is stated after charging/(crediting) :-
Group Company

2006
2005
2006

$000
$000
$000
2005
$000
Cost of inventories sold

73,871
64,562

Salaries and employees benefits

7,178
7,006
315
201
Cost of share based payment

4

4
Depreciation of property, plant and equipment
(Note 10)
1,002
1,128

Amortisation of intangible assets (Note 11)

910
732

Impairment/(write back) of obsolete inventories

10
(84)

Inventories written off

154
137

Impairment of doubtful trade debts (Note 17)

90
98

Bad debts written off

- non-trade (Note 16)
66

66
- trade (Note 17)

5
14

Other fees paid to auditors of the Company

25
37
7
19
Gain on disposal of property, plant and equipment
(7)
(4)

Foreign currency loss/(gain)

153
(614)
492
(163)
Fair value loss on forward currency contracts
29

Included in the salaries and employees benefits of the Group is an amount of $370,000 (2005 : $412,000) being contributions
to the Central Provident Fund.
5. Interest income
Group Company

2006
2005
2006

$000
$000
$000
2005
$000
Interest income received from banks

Interest income from bonds
146
83
48
83
56

17
229
131
56
17
6. Interest expense
Group Company

2006
2005
2006

$000
$000
$000
42
2005
$000
Interest expense on :
Bank overdrafts
3
Bankers acceptances
238
Term loans
79
6
212
163
381
320

- 31 December 2006
7. TaxATION

Major components of income tax expense / (credit) for the year ended 31 December are :-
Group Company

2006
2005
2006

$000
$000
$000
In respect of current year profits :-

Provision for current tax
Provision/(write back) of deferred tax, net
(Note 20)
1,387
389

247
(262)
(257)
1,284

(109)
247

1,541
981
389

In respect of prior years :-
Overprovision of current tax
(454)
(371)
(207)
Underprovision of deferred tax (Note 20)
197

Income tax expense/(credit)

recognised in the profit and loss account

154
1,090
2005
$000
(371)
(207)
(262)
610
182
(15)
A reconciliation of the statutory tax rate to the Groups effective tax rate for the years ended 31 December is as follows : Group Company

2006
2005
2006

%
%
%
Statutory tax rate

Non-taxable income
Non-deductible expenses
Tax effect on benefits arising from deductible
temporary differences not recognized
Tax savings as a result of double tax deduction
Exempt profits
Overprovision of taxation in prior years
Benefit from temporary differences
recognised in respect of prior years
Difference in tax rates applicable
to overseas subsidiaries
Others
Effective tax rate

2005
%
20.0
(4.6)
5.2
20.0
(1.8)
7.3
20.0
(10.7)
12.6
20.0
(3.1)
3.1
(2.8)
(0.8)
(0.7)
(4.4)

(0.3)
(0.9)
(9.4)

(3.1)
(0.7)
(13.5)
(1.1)
(1.0)
(25.0)
(5.3)
10.1
(0.1)
8.7
(2.9)
7.0
0.2
6.7
(1.0)
21.9
15.4
11.8
(1.4)
A loss-transfer system of group relief (group relief system) for companies was introduced in Singapore with effect from year
of assessment 2003. Under the group relief system, a company belonging to a group may transfer its current year unabsorbed
capital allowances, current year unabsorbed trade losses and current year unabsorbed donations (loss items) to another
company belonging to the same group, to be deducted against the assessable income of the latter company.
Two of the subsidiaries within the Group intends to transfer trade losses of $22,959 (2005 : $141,688) relating to the current
financial year to a subsidiary under the group relief system, subject to compliance with the relevant rules and procedures and
agreement of the Inland Revenue Authorities of Singapore.
As at 31 December 2006, the Group has unutilised tax losses of $154,700 (2005 : $154,700) and unabsorbed capital allowances
of $7,000 (2005 : $6,500), that are available for offset against future taxable profits of the subsidiaries, which resulted in
deferred tax assets of approximately $32,000 (2005 : $32,000) not recognised in the financial statements due to uncertainty
of recoverability. The use of these tax losses and capital allowances is subject to the agreement of the tax authorities and
compliance with certain provisions of the tax legislation of the respective countries in which the companies operate.
43

- 31 December 2006
8.
Dividends
Group and Company

2006
2005

$000
$000
Dividends paid
First and final :
$0.01 (2005 : $0.01) per ordinary share less tax of 20% (2005 : 20%)
2,008
2,008
9. Earnings per share

Basic earnings per share is calculated based on the consolidated net profit for the year attributable to ordinary equity holders
of the Company of $4,263,000 and $3,142,000 for the financial years ended 31 December 2006 and 2005, respectively, divided
by the weighted average number of ordinary shares outstanding during the financial years of 31 December 2006 and 2005 of
253,657,001 shares and 250,989,994 shares, respectively.
Diluted earnings per share is calculated based on the consolidated net profit as stated above, divided by weighted average
number of ordinary shares outstanding during the year, after adjusting for the effects of dilutive options, which amounted to
253,657,001 shares and 250,989,994 shares for financial years of 31 December 2006 and 2005, respectively.
1,997,000 (2005 : 2,142,000) of share options granted to employees under the existing employee share option plans have not
been included in the calculation of diluted earnings per share because they are anti-dilutive for the current and previous
financial years presented.
10. Property, plant and equipment
Leasehold land
and buildings
$000
Plant and
machineries
$000
44
Total
$000

9,859
47
3

3,555
15
129
(4)
3,015
33
96
(16)
1,420
33
54
(25)
17,849
128
282
(45)
9,909
1
481

3,695
38
221

3,128
10
186
(30)
1,482
18
128
(49)
18,214
67
1,016
(79)
3,294
1,579
19,218
At 31 December 2006
10,391
3,954

Accumulated depreciation
At 1 January 2005
809
2,174
6
12
Charge for the year
236
322
Disposals

At 31 December 2005
and 1 January 2006
1,051
2,508
16
32
Charge for the year
226
311
Disposals

Motor
vehicles
$000
Group
Cost
At 1 January 2005
Additions
Disposals

At 31 December 2005
and 1 January 2006
Additions
Disposals
Office furniture,
fixtures and equipment
$000
At 31 December 2006

Net carrying value
1,293

At 31 December 2005
8,858
At 31 December 2006
9,098
2,851
2,285
27
357
(15)
756
20
213
(21)
6,024
65
1,128
(36)
2,654
8
275
(29)
968
15
190
(47)
7,181
71
1,002
(76)
2,908
1,126
8,178
1,187
474
514
11,033
1,103
386
453
11,040

- 31 December 2006
11. Intangible assets

Brand Product registration Goodwill Total

$000
$000
$000
$000
Group
Cost :
At 1 January 2005
Elimination of accumulated amortisation
Additions
Disposals
7,217

284
6

92
(6)
404

(224)

7,905
6
(224)
92
(6)
7,217

376
(4)
291
180

7,773
(4)
291
At 31 December 2006
7,217

Accumulated amortisation :
At 1 January 2005
316

Elimination of accumulated amortisation

Amortisation for the year
641
Disposals

663
180
8,060
159
5

91
(7)
224

(224)

699
5
(224)
732
(7)
248
(2)
113
1,205
(2)
910
359
2,113
At 31 December 2005 and 1 January 2006

Additions
At 31 December 2005 and 1 January 2006

Amortisation for the year
At 31 December 2006
957

797
1,754
Net carrying value :

At 31 December 2005
6,260
128
180
6,568
At 31 December 2006
5,463
304
180
5,947
12. Investment in subsidiaries

Company

2006

$000
2005
$000
Unquoted shares, at cost

Less: Impairment
17,040
(3,613)
14,528
(3,613)
Carrying amount of investments
13,427
10,915
Details of subsidiaries are as follows :-

Country of Percentage
Principal
incorporation and
of equity held Cost of
Name
activities
operations
by the Group
investment

2006
2005
2006
2005

%
%
$
$
Zagro Singapore
Pte Ltd (1)

Manufacture and distribution

of animal health products and
distribution of crop care,
human healthcare and specialty
chemical products
Singapore
100
100
2,500,000
2,500,000
Zagro Animal Health

Pte Ltd (a) (1)
Trading and distribution of

Singapore
100
100

animal health products
Zagro Europe GmbH (a) (6)

Trading and distribution of

animal health products
Germany
100
100
PT Zagro Indonesia (b) (6)

Trading and distribution of crop

care and animal health products
Indonesia
100
100
45

- 31 December 2006
12. Investment in subsidiaries (contd)

Country of Percentage
Principal
incorporation and
of equity held Cost of
Name
activities
operations
by the Group
investment

2006
2005
2006
2005

%
%
$
$
AgroExchangePlus Pte Ltd (1) Investment holding and trading

of crop care products
Singapore
100
92
Agsin Pte Ltd (c) (1)

Distribution and export of

crop care products
Singapore
100
92
AgroConnect.com
Pte Ltd (c) (1)

Owns, operates and transacts

on B2B exchangeplus portal
for crop care products
Singapore
100
92
Zagro Industries Pte Ltd

Investment holding and trading
(formerly known as
of agri-health products
Agbio Investment Pte Ltd) (1)
Singapore
100
100
Vetsquare.com
Pte Ltd (d) (1)

Owns, operates and transacts

on B2B exchange-plus portal
for animal health products
Singapore
100
100
Zagro Newco Pte Ltd (1)
Investment holding
Singapore
100
100
Agri Nutrition Asia

Pte Ltd (1)
Dormant
Singapore
100
100
Zagro Chemicals Sdn Bhd

(formerly known as
Zuellig Chemicals
Sdn Bhd) (2)

of crop care products and
distribution of animal
health products
Malaysia
80
80
2,528,226
2,528,226
Zagro Corporation (3)

Distribution of agri-health
products
Philippines
100
100
4,919,518
4,612,518
Zagro (Thailand) Limited

(formerly known as
of agri-health products
Fezagro Company Limited) (4)
Thailand

100
100
4,592,000
4,592,000
Zagro NPC (Private)

Limited (e) (5)
Dormant
Pakistan
100
100
Zagro Industries (India)

Private Limited (e) (6)
Dormant
India
65
65
Zagro Africa (Pty) Ltd (f) (6)
Dormant
Africa
100
100
2,500,051
294,499
17,039,801 14,527,249

(a) Subsidiaries of Zagro Singapore Pte Ltd. Costs of investment are not stated as subsidiaries are not directly held by the Company.
(b) 50% owned by Zagro Singapore Pte Ltd and 50% owned by Zagro Industries Pte Ltd. Cost of investment is not stated as subsidiary
is not directly held by the Company.
(c) Subsidiaries of AgroExchangePlus Pte Ltd. Costs of investment are not stated as subsidiaries are not directly held by the
Company.
(d) Subsidiary of Zagro Industries Pte Ltd. Cost of investment is not stated as subsidiary is not directly held by the Company.
(e) Subsidiaries of Zagro Newco Pte Ltd. Costs of investment are not stated as subsidiaries are not directly held by the Company.
(f) Subsidiary of Zagro Animal Health Pte Ltd. Cost of investment is not stated as subsidiary is not directly held by the Company.
(1) Audited by Ernst & Young, Singapore.
(2) Audited by Ernst & Young, Malaysia.
(3) Audited by Sycip Gorres Velayo & Co., an affiliate of Ernst & Young, Singapore.
(4) Audited by Ernst & Young, Thailand.
(5) Audited by Ford, Rhodes, Robson, Morrow, an affiliate of Ernst & Young, Singapore.
(6) Not required to be audited by law in its country of incorporation.
46

- 31 December 2006
12. Investment in subsidiaries (contd)

During the financial year, the Company subscribed additional 100,000 shares of 100 Pesos each in Zagro Corporation (ZAC).
The subscription was satisfied via capitalisation of amount due from ZAC amounting to $307,000. Accordingly, the Companys
cost of investment in ZAC increased from S$4,612,518 to S$4,919,518.
In addition, the Company acquired the remaining 22,850 shares, representing 8.36% equity interest in AgroExchangePlus Pte
Ltd (AEP) from a minority shareholder. The acquisition was satisfied by the issuance of new ordinary shares in the Company.
Accordingly, the Companys cost of investment in AEP increased from S$294,499 to S$2,500,051.
13. Investment in an associate

Group

2006

$000
2005
$000
Unquoted shares, at cost

Share of post-acquisition reserves
13

Carrying amount of investment

Details of an associate are as follows :-
13
Country of Percentage of

incorporation
equity held
Name Principal activities
and operations
by the Group

2006
2005

%
%
Agsin Sdn Bhd (1)

Sales and distribution of crop care

and animal health products
Malaysia
30
(1) Audited by Chuah Kim Seng & Co., Malaysia.
The summarised financial information of the associate is as follow :-
Group

2006

$000
2005
$000
Assets and liabilities

Current assets

40
Current liabilities
(1)
(1)
Results
Revenue
Loss for the year
14. Other investment

Group

2006

$000
Available-for-sale financial assets

4.15% bond, quoted
Balance at beginning of year
Fair value adjustment
2005
$000

2,058
(8)
2,000
58
Balance at end of year

2,050
2,058

The fixed rate bond has an effective interest rate of 4.15% (2005 : 4.15%) per annum received semi-annually in arrears and
matures on 19 December 2011.
47

- 31 December 2006
15. Inventories
Group

2006

$000
Raw materials :-
At cost
1,728
At net realisable value
3,373

Finished products :-
At cost
9,198
At net realisable value
4,799
Total inventories at lower of cost and net realisable value
19,098
2005
$000
3,281
2,901
8,221
6,637
21,040
16. Related party/company balances

Group Company

2006
2005
2006

$000
$000
$000
2005
$000
Amounts receivable on current account :-

Subsidiaries

21,345
Related party

66

24,323
66

66
21,345
24,389

Bad debts written off directly to
the profit and loss account (Note 4)
(66)

(66)

Amounts receivable on current account are non-trade in nature, unsecured, interest-free, repayable on demand and are to
be settled in cash.
Included in amounts receivable on current account of the Company is an amount of $6,305.000 (2005: $6,274,000) denominated
in US dollars.
Amounts receivable from subsidiaries included dividend receivable of $975,000 (2005 : $635,000) from subsidiaries.
17. Trade and other receivables

Group Company

2006
2005
2006

$000
$000
$000
Trade
External parties
Related parties
Sundry debtors
Amount due from an associate
Deposits
Prepayments
Interest receivable
21,903
429
522
1
170
114
6
23,361
305
508

221
93

2005
$000

5

3
5

23,145
24,488
13
Impairment of trade receivables :-
External parties
(1,523)
(2,157)

21,622
22,331
13

Trade receivables are non-interest bearing. They are recognised at their original invoice amounts which represent their
values on initial recognition.
fair
Included in trade receivables of the Group is an amount of $3,737,000 (2005 : $3,228,000) denominated in US dollars.
Related parties receivables

Amounts due from related parties are non-interest bearing and are repayable on demand. These amounts are unsecured and
are to be settled in cash.
48

- 31 December 2006
17. Trade and other receivables (contd)

Allowance for doubtful trade debts

For the year ended 31 December 2006, an impairment loss of $90,000 (2005 : $98,000) (Note 4) was recognised in the profit
and loss account subsequent to a debt recovery assessment performed on trade receivables as at 31 December 2006. For the
Group, bad trade debts written off directly to the profit and loss account amounted to $5,000 (2005 : $14,000) (Note 4).
18. Trade and other payables

Group Company

2006
2005
2006

$000
$000
$000
Trade
External parties
Accruals
Sundry creditors
Accrued staff benefit expenses
Accrued product liability expenses
Fair value of forward currency contracts
9,018
2,887
1,307
266
350
29
8,462
1,943
1,939
169
350

13,857
12,863
2005
$000

248
11

282
12
259
294

Trade and other payables are non-interest bearing.
Included in trade payables of the Group is an amount of $4,858,000 (2005 : $2,752,000) denominated in US dollars.
19. Interest-bearing loans and borrowings

Group

Effective interest rate Maturities
2006

%

$000
Current :-
Ringgit fixed rate bankers acceptances
3.714.32
- unsecured

Baht floating rate bank loans

- secured

Peso fixed rate bank loans

8.509.12
- secured
January 2007 to
March 2007

February 2007 to
March 2007

The Baht and Peso bank loans are secured by corporate guarantee from the Company.
5,898
2005
$000
6,431
611
691
945
6,589
7,987
20. Deferred taxation

Group

2006

$000
Deferred tax assets :-

Credit to profit and loss account (Note 7)
2005
$000
257
68
248
9

Deferred tax liabilities :-
(Charge)/credit to profit and loss account (Note 7)
325
257
(450)
(419)
(550)
100
Balance at end of year
(869)
(450)
Net deferred tax liabilities

(544)
(193)
49

- 31 December 2006
20.
Deferred taxation (contd)

Deferred taxation as at 31 December related to the following :-
Group

2006

$000
Deferred tax assets :-

Impairment of trade receivables
Impairment of obsolete inventories
Other temporal differences

Gross deferred tax assets
Less : Deferred tax assets not recognised

2005
$000
115
330
127
81
354
82
572

517
(32)
572
485
Deferred tax liabilities :-

Differences in depreciation and amortisation
Other temporal differences
(1,016)
(100)
(538)
(140)
(1,116)
(678)
(544)
(193)
Gross deferred tax liabilities
Net deferred tax liabilities
21. Share capital

Group and Company

2006
2005

$000
$000
Issued and fully paid :-

Balance at beginning -
250,989,994 (2005 : 250,989,994) ordinary shares
Transfer of share premium reserve to share capital

Issued during the financial year -
6,290,244 (2005 : Nil) ordinary shares
(264,447 and 6,025,797 issued at $0.365 and $0.35 respectively)

Balance at end 257,280,238 (2005 : 250,989,994) ordinary shares

The holders of ordinary shares are entitled to receive dividends as and when declared by the
carry one vote per share without restriction.
12,549
14,936
12,549
2,206
29,691
12,549
Company. All ordinary shares
In accordance with the Companies (Amendment) Act 2005, on 30 January 2006, the shares of the Company ceased to have a
par value and the amount standing in the share premium reserve became part of the Companys share capital.
Share options
The Company approved on 29 June 1998 The Zagro Employees Share Option Scheme (Scheme) which would enable selected
full-time employees, including executive directors of the Company and the subsidiaries to subscribe for shares in the capital
of the Company. The Scheme was amended with approval by the shareholders in an Extraordinary General Meeting held on
31 May 2001 to extend the option period 5 years to 10 years and extend the exercise period for options offered at a discount
from 1 year to 2 years. Options offered at market price shall be exercisable during the period commencing 1 year from the
date the options are granted.
50

- 31 December 2006
21. Share capital (contd)

Share option (contd)

The following table details the number and weighted average exercise prices (WAEP) of, and movements in, share options
during the year :-

2006
2005

Number
Number

of shares WAEP
of shares WAEP
Outstanding at beginning of year (1)

Forfeited during the year
Expired during the year
2,142,000
(145,000)

0.206
0.206

3,238,000
(73,000)
(1,023,000)
$0.228
$0.215
$0.275
Outstanding at end of year

1,997,000
0.206
2,142,000
$0.206
Exercisable at year end

1,997,000
0.206
2,142,000
$0.206
Outstanding Outstanding Exercisable Exercisable

options as at
Average
average
options as at
average
option price
31.12.2006
option price
Option price
31.12.2006
life (2)
$0.212
$0.200
992,000
1,005,000
3.3
7.1
$0.212
$0.200
992,000
1,005,000
$0.212
$0.200
1,997,000
5.2
$0.206
1,997,000
$0.206
(1) Included within these balances are equity-settled options that have not been recognised in accordance with FRS 102 as these
equity-settled options were granted on or before 22 November 2002. These options have not been subsequently modified and
therefore do not need to be accounted for in accordance with FRS 102.
(2) Weighted-average contractual life remaining in years.
The fair value of share options as at the date of grant, is estimated using a binomial model, taking into account the terms and
conditions upon which the options were granted. The inputs to the model used for the years ended 31 December 2006 and 31
December 2005 are shown below.
2006
2005
Dividend yield (%)

4.88
4.88
Expected volatility (%)
27.55
27.55
Historical volatility (%)
22.55
22.55
Risk-free interest rate (%)
2.06
2.06
Expected life of option (years)
5.5
5.5
Weighted average share price ($)
0.20
0.20

The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may
occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may
also not necessarily be the actual outcome. No other features of the option grant were incorporated into the measurement
of fair value.
22. Cash and cash equivalents

Group Company

2006
2005
2006

$000
$000
$000
Fixed deposits
Cash and bank balances
Bank overdrafts

4,358
5,941
(59)
10,240
2005
$000
995
3,178
(20)
2,030
59

22
4,153
2,089
22
Included in cash and cash equivalents denominated in foreign currencies at 31 December are as follows :US dollar
Euro

2,416
809
2,222
263
18

51

- 31 December 2006
22. Cash and cash equivalents (contd)

Cash at banks earns interest at floating rates based on daily bank deposit rates ranging from 0.2% to 5% (2005 : 1% to 4%)
per annum. Fixed deposits are made for varying periods between one week to one month depending on the immediate cash
requirements of the Group, and earn interests at the respective short-term deposit rates. The weighted average effective
interest rate of fixed deposits is 2.98% (2005 : 3.68%) per annum.
Bank overdrafts are included in the determination of cash and cash equivalents because they form an integral part of the
Groups cash management strategy.
Bank overdrafts are unsecured, repayable on demand and interest-bearing at floating rates based on banks prime lending
rate. The weighted average effective interest rate of bank overdrafts is 7% (2005 : 6.50%) per annum.
23. Commitments and contingencies

(i)
Capital commitments
Capital expenditure contracted for as at the balance sheet date but not recognised in the financial statements is as
follows :-
Group

2006

$000
2005
$000
Capital commitments in respect of property, plant and equipment
436
(ii)
Operating leases
The Group entered into commercial property sub-leases on its surplus office and manufacturing buildings. These noncancellable leases have remaining non-cancellable lease terms of between 1 to 3 years with renewal option for another
2 years included in the contracts. There are no restrictions placed upon the Group or the Company by entering into
these leases. Operating lease income recognised in the profit and loss account during the year amount to $230,170
(2005 : $144,880).
Future minimum sub-lease payments receivable under non-cancellable operating leases as at 31 December are as
follows :-
Group

2006

$000
Not later than one year

Later than one year but not later than five years

506
506

The Group entered into commercial property leases mainly for office and manufacturing buildings. These non-cancellable
leases have remaining non-cancellable lease terms of up to 50 years. All leases include a clause to enable upward
revision of the rental charge on an annual basis based on prevailing market conditions. Operating lease payments
recognised in the profit and loss account during the year amount to $493,280 (2005 : $614,137).
247
259
2005
$000
230
276
Future minimum lease payments under non-cancellable leases as at 31 December are as follows : Group

2006

$000
52
Not later than one year

Later than one year but not later than five years
Later than five years
2005
$000
469
390
3,599
519
642
3,831
4,458
4,992

- 31 December 2006
23. Commitments and contingencies (contd)

(iii)

Contingent liabilities
Legal claim
During the year, one of the Groups foreign subsidiaries was involved in a dispute with a customer over product
specifications which resulted in the customer initiating a claim against the subsidiary to recover damages of an
unsubstantiated amount, and for which the subsidiary in turn instituted a counterclaim against the customer for nonpayment. From the initial review of the evidence submitted to-date by the claimant, the directors are of the opinion
that the claim is without merit and unlikely to succeed. No provision for losses and damages have been made in relation
to this claim in the financial statements for the year ended 31 December 2006.
24. Related party transactions

An entity or individual is considered a related party of the Group for the purposes of the financial statements if: i) it possesses
the ability (directly or indirectly) to control or exercise significant influence over the operating and financial decisions of the
Group or vice versa; or ii) it is subject to common control or common significant influence.
(a)
Sale and purchase of goods and services

In addition to those related party information disclosed elsewhere in the financial statements, the following significant
transactions between the Group and related parties who are not members of the Group took place during the year at
terms agreed between the parties:
Group

2006

$000
Related parties :-

Sale of goods to related parties

(b)
Fees paid to a firm in which a director is a partner
2,772
2,381
19
13
Compensation of key management personnel
Group

2006

$000
2005
$000
Salaries, allowances, bonuses and other costs

Central Provident Fund contributions
Total compensation paid to key management personnel

Comprise amounts paid to :-
Directors of the Company
Other key management personnel

2005
$000
907
37
871
40
944
911
630
314
611
300
944
911
53

- 31 December 2006
25. Financial risk management objectives and policies

The main risks arising from the Groups financial instruments are interest rate risk, foreign currency risk, credit risk and liquidity
risk. The board reviews and agrees policies for managing each of these risks and they are summarised below.
(a)
Interest rate risk

The Groups exposure to market risk for changes in interest rates relates primarily to the Groups bank borrowings.
The Groups policy is to obtain the most favourable interest rates available.
Surplus funds are placed with reputable banks.
Information relating to the Group interest rate exposure is also disclosed in the notes to the financial statements.
(b)
Foreign currency risk

The Group has exposure to foreign currency movement United States dollar (USD) and Euro on its trade receivables,
trade payables and cash and bank balances. Management monitors this exposure to foreign currency movement
closely.
The Group uses forward foreign exchange contracts in managing its foreign currency risk arising from firm commitments
and specific transactions denominated in certain foreign currencies, primarily the USD.
(c)
Credit risk
The carrying amount of trade and other receivables, other investments and cash represent the Groups maximum
exposure to credit risk. No other financial assets carry a significant exposure to credit risk.
The Group has no significant concentration of credit risk with any single customer, and monitors its exposure to credit
risks arising from sales to customers on an on-going basis when credit evaluations are done on customers that require
credit. The Group only deals with pre-approved customers with good credit ratings. These debts are continually
monitored and therefore, the Group does not expect to incur material credit losses.

Cash is placed with reputable banks.
(d)
Liquidity risk
The Groups financing activities are managed centrally by maintaining an adequate level of cash and cash equivalents
to finance the Groups operations. The Group also ensures availability of bank credit lines to address any short-term
funding requirement.

The Groups surplus funds are also managed centrally by placing them with reputable financial institutions on varying
maturities.
26. Financial instruments

(a)
(b)

Credit risk
There are no significant concentrations of credit risk within the Group or the Company.
Fair values
Financial instruments carried at fair value
The Group has carried other investment that are classified as available-for-sale financial assets, and all derivative
financial instruments, at their fair value as required by FRS 39.
Financial instruments whose carrying amount approximate fair value
Management has determined that the carrying amounts of cash and short term deposits, current trade and other
receivables, related company balances, current trade and other payables, and current bank loans, based on their
notional amounts, reasonably approximate their fair values because these are mostly short term in nature or are
repriced frequently.
During the year, no amount (2005: Nil) has been recognised in the profit and loss account in relation to the change in
fair value of financial assets or financial liabilities estimated using a valuation technique.
54

- 31 December 2006
26. Financial instruments (contd)

(c)
Interest rate risk

The following tables sets out the carrying amount, by maturity, of the Groups and the Companys financial instruments
that are exposed to interest rate risk:

Within
1 year
$000
1-2
years
$000
2-3
years
$000
3-4
years
$000
4-5 More
years
than 5 Total
$000
$000
$000
2006
Group
Fixed rate
4.15% bond, quoted
Fixed deposits
Bank loans
Bankers acceptances

Floating rate
Cash assets
Bank overdrafts

4,358
(691)
(5,898)
2,050

2,050
4,358
(691)
(5,898)
5,941
(59)
5,941
(59)
2,030
2,030
59
59
Company
Fixed rate
Fixed deposits

Floating rate
Cash assets

2005
Group

Fixed rate
4.15% bond, quoted
Fixed deposits
Bank loans
Bankers acceptances

Floating rate
Cash assets
Bank overdrafts
Bank loans

995
(945)
(6,431)
3,178
(20)
(611)
2,058

2,058
995
(945)
(6,431)
3,178
(20)
(611)
Company
Floating rate
Cash assets
22
22
Interest on financial instruments subject to floating interest rates is contractually repriced at intervals of less than
6 months. Interest on financial instruments at fixed rates are fixed until the maturity of the instrument. The other
financial instruments of the Group and the Company that are not included in the above tables are not subject to
interest rate risks.
55

- 31 December 2006
26. Financial instruments (contd)

(d)
Derivative financial instrument

Derivative financial instruments included in the balance sheets at 31 December are as follows :-
Group
Contract/notional
2006
2005

amount
Assets Liabilities
Assets Liabilities

$000
$000
$000
$000
$000
Forward currency
contracts

2,356
(29)
At 31 December 2006, the settlement dates on open forward contracts ranged between 1 to 9 months, details of which
are set out below :-

2006
2005
US$000 US$000
Contracts to deliver US dollars and received :

Baht
1,474
1,506
27. Segment information

Reporting format
The primary segment reporting format is determined to be business segments as the Groups risks and rates of return are
affected predominantly by differences in the products and services produced. Secondary information is reported geographically.
The operating business are organised and managed separately according to the nature of the products and services provided,
with each segment representing a strategic business unit that offers different products and serves different markets.
Business segments
The Group is organised on a worldwide basis into three main operating segments, namely :-
56
Crop Care
manufactures and distributes seeds, fertilizers, fungicides, insecticides, herbicides and

nutrition products for crops.
Animal Health
manufactures and distributes ectoparasiticides, antibiotics, anticoccidials, nutritional

products in the growth of livestock, poultry and aquatic animals.
Corporate and Others
distributes generic pharmaceutical raw materials and specialty chemicals, analyses of

nutrients and active ingredients, general management and administration.
Geographical segments
Segment revenue by geographical segments are based on the location of customers regardless of where the goods are produced.
The assets and capital expenditure are based on the location of those assets.

- 31 December 2006
27. Segment information (contd)

Allocation basis and transfer pricing

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated
on a reasonable basis. Unallocated items mainly comprise corporate assets and expenses.
Segment accounting policies are the same as the policies of the Group as described in Note 2. The Group generally accounts
for inter-segment sales and transfers as if the sales or transfers were to third parties at current market prices.
(a)
Business segments
The following table present revenue and results information regarding the Groups business segments for the years
ended 31 December 2006, and 2005 and certain assets and liabilities information regarding business segments at 31
December 2006 and 2005.

Animal Corporate
Crop Care Health
and Others Eliminations Consolidated
2006
2005
2006
2005
2006
2005
2006
2005
2006
2005
$000
$000
$000
$000
$000
$000
$000
$000
$000
$000
Segment revenue :
Sales to external
customers
Inter-segment sales
59,964 52,075 33,590 29,395

3,755

3,718

97,309 85,188
Total revenue
59,964 52,075 33,590 29,395 3,755 3,718

97,309 85,188

Results :
Segment results
6,410 4,917 1,602
66 (2,062)
(773) 5,950 4,210

Unallocated income
Interest income
229
131
Interest expense
(320)
(381)
Taxation
5,859
(1,284)
3,960
(610)
Profit for the year 4,575 3,350

Assets and liabilities :
Segment assets
28,695 29,713 18,250 19,775 10,762 11,550

57,707 61,038
Unallocated assets 12,687 6,488
Total assets 70,394 67,526

Segment liabilities
6,541 6,193 4,525 3,490 2,791 3,180

13,857 12,863

Unallocated liabilities :
Bank loans and
borrowings 6,589 7,987
Bank overdrafts
59
20
Provision for taxation
924 1,125
Deferred taxation
869
450
Total liabilities 22,298 22,445

Other segment information :
Capital expenditure
202
110
210
77
895
187 1,307
374
Impairment/(write back)
for doubtful debts
75
131
18
(37)
(3)
4
90
98
Bad debts written off

12
71
2
71
14
Impairment/(write back)
of obsolete
inventories
18
34
10
(135)
(18)
17
10
(84)
Inventories written off
1
42
153
89

6
154
137
Depreciation of property,
plant and equipment 150
72
218
225
634
831 1,002 1,128
Amortisation of
intangible assets
87
79
823
653

910
732

57

- 31 December 2006
27. Segment information (contd)

(b)
Geographical segments
The following table present revenue, capital expenditure and certain asset information regarding the Groups
geographical segments for the year ended 31 December 2006 and 2005.
2006
$000
Asia Others Elimination Consolidated

2005
2006
2005
2006
2005
2006
2005
$000
$000
$000
$000
$000
$000
$000

Segment revenue 87,977 78,582

Other geographical information :-
Segment assets 54,593 57,684
Capital expenditure 1,292
374
9,332
6,606
97,309 85,188
3,114
15
3,354

57,707 61,038
1,307
374
28. Subsequent event

The directors proposed a first and final dividend in respect of financial year 2006 of $0.01 (2005 : $0.01) per ordinary share,
less tax of 18% (2005 : 20%) amounting to $2,109,698 (2005 : $2,007,920).
29.
Authorisation of financial statements
The financial statements for the year ended 31 December 2006 were authorised for issue in accordance with a resolution of
the directors on 16 March 2007.
58
Statistics of Shareholdings
as at 12 March 2007
DISTRIBUTION OF SHAREHOLDINGS

No. of
Size of Shareholdings Shareholders
% No. of Shares
%

1 - 999
1,000 - 10,000
10,001 - 1,000,000
1,000,001 AND ABOVE
2
2,604
1,010
14
0.05
71.74
27.82
0.39
1,000
13,015,000
54,183,000
190,081,238
0.00
5.06
21.06
73.88
TOTAL:
3,630
100.00
257,280,238
100.00
TWENTY LARGEST SHAREHOLDERS

No. Name No. of Shares
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
POH BENG SWEE

HSBC (SINGAPORE) NOMINEES PTE LTD
POHCONNECT HOLDINGS PTE LTD
SOH DOLLY

GREEN DOT INVESTMENTS PTE LTD
UNITED OVERSEAS BANK NOMINEES PTE LTD
NOMURA SINGAPORE LIMITED

LEE SOO YING

DBS NOMINEES PTE LTD

KIM ENG SECURITIES PTE. LTD.
TEO JOO KIM

MCCALLUM JOHN CHARLES

SOO KAM BENG @ SOO MAN KHENG
TEH PENG HOOI

SIN TIEN SENG PTE LTD

JEFFREY COLIN ROBERTS

LEE WOON KIAT

UOB KAY HIAN PTE LTD

LIM & TAN SECURITIES PTE LTD
TAN CHUN LIM

TOTAL:
77,456,000
64,672,000
15,000,000
14,360,000
4,318,238
2,344,000
2,251,000
2,000,000
1,763,000
1,433,000
1,189,000
1,148,000
1,100,000
1,047,000
1,000,000
885,000
868,000
863,000
740,000
722,000
30.11
25.14
5.83
5.58
1.68
0.91
0.87
0.78
0.69
0.56
0.46
0.45
0.43
0.41
0.39
0.34
0.34
0.34
0.29
0.28
195,159,238
75.88
SUBSTANTIAL SHAREHOLDERS
(as shown in the Companys Register of Substantial Shareholders)
Name
Direct Interest Indirect Interest Total Interest
Poh Beng Swee

InterRip Holdings Limited
Soh Dolly
PohConnect Holdings Pte Ltd
77,456,000
64,572,000
14,360,000
15,000,000
29,360,000

15,000,000

106,816,000
64,572,000
29,360,600
15,000,000
41.52
25.10
11.41
5.83
Note:
(1)
Mr Poh Beng Swee is deemed to be interested in the 14,360,000 shares held by his spouse, Ms Soh Dolly, and in the 15,000,000
shares held by PohConnect Holdings Pte Ltd, a company in which he controls not less than 20% of the voting shares.
(2)
Ms Soh Dolly is deemed to be interested in the 15,000,000 shares held by PohConnect Holdings Pte Ltd, a company in which
she controls not less than 20% of the voting shares.
PERCENTAGE OF SHAREHOLDINGS IN PUBLIC HANDS

Rule 723 of the Listing Manual of the Singapore Exchange Securities Trading Limited (SGX-ST) requires that at least 10% of the equity
securities (excluding preference shares and convertible equity securities) of a listed company in a class that is listed is at all times
held by the public.
The Company has complied with Rule 723. As at 12 March 2007, approximately 33.28 % of the Companys ordinary shares listed on the
SGX-ST were held in the hands of the public (on the basis of information available to the Company).

59
Notice of Twelfth Annual General Meeting
ZAGRO ASIA LIMITED

Registration No. : 199406784D
(Incorporated in the Republic of Singapore)
(the Company)
NOTICE IS HEREBY GIVEN that the Twelfth Annual General Meeting of the Company will be held at Zagro Global Hub, 5 Woodlands
Terrace #06-00, Singapore 738430, on Monday, the 30th day of April 2007 at 11.00 a.m. for the following purposes:
As Ordinary Business
1.
To receive and adopt the Directors Report and the Audited Accounts for the financial year ended 31 December 2006, together
with the Auditors Report thereon.
(Resolution 1)
2.
To declare a first and final dividend of one cent per share (less income tax of 18%).
(Resolution 2)
3.
To approve payment of Directors fees amounting to S$120,000/- for the year ended 31 December 2006.
(Resolution 3)
4.
To re-elect Dr Thomas Stunzi Zuellig as Director under Article 91.
(Resolution 4)
5.
To re-elect Mr Ong Chin Guan Noris as Director under Article 97.
(Resolution 5)
6.

7.
To note the retirement of Mr Davinder Singh as Director. (See explanatory note below)
To re-appoint Messrs Ernst & Young as auditors and to authorise the Directors to fix their remuneration.
8.
To transact any other business that may be transacted at an Annual General Meeting.
(Resolution 6)
As Special Business
To consider and, if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without modifications :9.

Ordinary Resolution One

That pursuant to Section 161 of the Companies Act, Chapter 50 and the Listing Manual of the Singapore Exchange Securities
Trading Limited (SGX-ST), authority be and is hereby given to the Directors to issue shares in the capital of the Company
(whether by way of rights, bonus or otherwise) at any time and upon such terms and conditions and for such purposes and to
such persons as the Directors may in their absolute discretion deem fit provided that :-
(a)
the aggregate number of shares to be issued pursuant to this Resolution does not exceed twenty-five (25%) per cent of
the issued shares in the capital of the Company (as calculated in accordance with sub-paragraph (b) below), of which
the aggregate number of shares to be issued other than on a pro rata basis to shareholders of the Company does not
exceed twenty (20%) per cent of the issued shares in the capital of the Company (as calculated in accordance with
sub-paragraph (b) below);
(b)
for the purpose of determining the aggregate number of shares that may be issued under sub-paragraph (a) above, the
percentage of issued shares shall be calculated based on the number of issued shares in the capital of the Company
at the time this Resolution is passed, after adjusting for:-
(i)
new shares arising from the conversion or exercise of any convertible securities;
(ii)
new shares arising from exercising share options or vesting of share awards outstanding or subsisting at the
time of the passing of this Resolution; and
(iii)
any subsequent consolidation or subdivision of shares; and
60
(c)
unless revoked or varied by the Company in general meeting, the authority conferred by this Resolution shall continue
in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual
General Meeting of the Company is required by law to be held, whichever is the earlier.
(Resolution 7)
10.
Ordinary Resolution Two
That approval be and is hereby given to the Directors to offer and grant options from time to time in accordance with the
provisions of The Zagro Employees Share Option Scheme (the Scheme), and pursuant to Section 161 of the Companies
Act, Cap. 50, to allot and issue from time to time such amount of shares in the capital of the Company as may be required
to be issued pursuant to the exercise of options under the Scheme, provided always that the aggregate number of shares to
be issued pursuant to the Scheme shall not exceed ten (10) per cent of the total number of issued shares in the capital of
the Company from time to time and that, subject to such adjustments as may be made in accordance with the Scheme, the
aggregate number of shares to be issued to an Employee pursuant to the exercise of options under the Scheme during the entire
operation of the Scheme shall not exceed twenty-five (25) per cent of the total number of Scheme Shares which may be issued
by the Company (including any Shares which may be issued pursuant to adjustments, if any, made under the Scheme) and the
aggregate number of Scheme Shares to be issued to the executive Directors, chief executive officers and the Employees of
the rank of General Manager (or equivalent or analogous corporate rank) and above pursuant to the exercise of options under
the Scheme shall not exceed fifty (50) per cent of the total number of Scheme Shares which may be issued by the Company
(including any Shares which may be issued pursuant to adjustments, if any, made under the Scheme).
(Resolution 8)
11.
Ordinary Resolution Three
(A)
That approval be and is hereby given for the purposes of Chapter 9 of the Listing Manual of the Singapore Exchange
Securities Trading Limited, for the Company, its subsidiaries, or its related or associated corporations (the Zagro Group)
to enter into any of those categories of Interested Person Transactions as set out in the Addendum to Shareholders
of the Company dated 10 April 2007 (the Addendum), provided that such transactions are entered into on an arms
length basis and on normal commercial terms and are carried out in accordance with the guidelines and procedures
of the Company for Interested Person Transactions as set out in the Addendum.
(B)
That the approval given in Resolution (A) above (the Shareholders Mandate) shall, unless revoked or varied by the
Company in general meeting, continue in force until the conclusion of the next Annual General Meeting of the Company;
and
(C)
That the Directors of the Company be and are hereby authorised to do any and all such acts and things as they may
consider necessary, expedient, incidental or in the interests of the Company to give effect to the approvals given in
Resolution (A) above.
(Resolution 9)
NOTICE OF BOOKS CLOSURE

NOTICE IS ALSO HEREBY GIVEN that the Transfer Books and Register of Members of the Company will be closed on 17 May 2007 for
the purpose of determining shareholders entitlements to the proposed first and final dividend of one cent per share (less income tax
of 18%) in respect of the financial year ended 31 December 2006.
Duly completed transfers received by the Companys Registrars, Lim Associates (Pte) Ltd at 3 Church Street #08-01, Samsung Hub,
Singapore 049483 up to 5.00 p.m. on 16 May 2007 will be registered before entitlements to the dividend are determined. The dividend,
if approved by shareholders at the Twelfth Annual General Meeting, will be paid on 25 May 2007.
Members whose Securities Accounts with The Central Depository (Pte) Limited are credited with shares at 5.00 p.m. on 16 May 2007
will be entitled to the proposed first and final dividend.
BY ORDER OF THE BOARD
POH BENG SWEE

Chairman
Singapore, 10 April 2007
61
Notes:
1.
A Member of the Company entitled to attend and vote may appoint not more than two proxies to attend and vote instead of
him. A proxy need not be a member.
2.
If a proxy is to be appointed, the form must be deposited at the registered office of the Company at Zagro Global Hub,
5 Woodlands Terrace #06-00, Singapore 738430 not less than 48 hours before the time fixed for holding the Meeting.
Explanatory Notes
Mr Davinder Singh s/o Amar Singh, a Director retiring by rotation, has given notice that he is not seeking re-election. Upon conclusion
of this meeting, Mr Singh will retire as Director.
Ordinary Resolution 5
Mr Ong Chin Guan Noris, if re-elected, will remain as an independent non-executive director and member of the Audit Committee.
Resolution No. 7 is to empower the Directors to issue shares in the capital of the Company up to an amount not exceeding in total
twenty-five (25%) per cent of the issued shares in the capital of the Company, with a sub-limit of twenty (20%) per cent of shares
issued other than on a pro rata basis to shareholders.
For the purpose of determining the aggregate number of shares that may be issued, the percentage of issued shares shall be calculated
based on the number of issued shares in the capital of the Company at the time that Resolution No. 7 is passed, after adjusting for (a)
new shares arising from the conversion or exercise of any convertible securities; (b) new shares arising from exercising share options
or vesting of share awards outstanding or subsisting at the time of the passing of this Resolution; and (c) any subsequent consolidation
or subdivision of shares.
The share options referred to are to those granted by the Company pursuant to employee share options governed by Part VIII of
Chapter 8 of the Listing Manual of the Singapore Exchange Securities Trading Limited.
Ordinary Resolution 8, if passed, will empower the Directors of the Company to offer and grant options under the Zagro Asia Employees
Share Option Scheme (the Scheme) which was approved at the Extraordinary General Meeting of the Company held on 29 June 1998
(as from time to time amended, modified or supplemented), and to allot and issue shares pursuant to the exercise of options under
the Scheme, subject to the terms of the resolution.
Ordinary Resolution 9, if passed, renews the mandate to allow the Company, its subsidiaries, or its related or associated corporations
(the Zagro Group) or any of them to enter into certain interested person transactions with persons who are considered interested
persons (as defined in Chapter 9 of the Listing Manual of The Singapore Exchange Securities Trading Limited). Please refer to the
Addendum to the Shareholders of the Company dated 10 April 2007 for details.
62
Proxy Form
ZAGRO ASIA LIMITED
Important
Registration No. : 199406784D

(Incorporated in the Republic of Singapore)
(the Company)
1. For investors who have used their CPF monies to buy shares in the capital of Zagro Asia
Limited, this report is forwarded to them at the request of their CPF Approved Nominees
and is sent solely FOR INFORMATION ONLY.
2. This Proxy Form is not valid for use by CPF Investors and shall be ineffective for all
intents and purposes if used or purported to be used by them.
I/We,
of
being *member/members of ZAGRO ASIA LIMITED (the Company), hereby appoint
Name
Address
*NRIC/
Passport Number
Percentage of
Shareholdings (%)
Address
NRIC/ Passport
No.
Proportion of
Shareholding (%)
*and/or (delete as appropriate)

Name
as *my/our *proxy/proxies to vote for *me/us on *my/our behalf and, if necessary, to demand a poll, at the Twelfth Annual General
Meeting of the Company, to be held at Zagro Global Hub, 5 Woodlands Terrace #06-00, Singapore 738430 on Monday, the 30th day of
April 2007 at 11.00 am and at any adjournment thereof.
(Please indicate with an X in the spaces provided whether you wish your vote(s) to be cast for or against the resolutions as set out
in the Notice of Twelfth Annual General Meeting. In the absence of specific directions, the *proxy/proxies will vote or abstain as
*he/they think fit, as *he/they will on any other matter arising at the Twelfth Annual General Meeting.)
No. Resolutions For
1.

To receive and adopt the Directors Report and the Audited Accounts for the
financial year ended 31 December 2006, together with the Auditors Report thereon.
2.
To declare a first and final dividend of one cent per share (less income tax of 18%).
3.
To approve Directors fees.
4.
To re-elect Dr Thomas Stunzi Zuellig as Director under Article 91.
5.
To re-elect Mr Ong Chin Guan Noris as Director under Article 97.
6.

To re-appoint Messrs Ernst & Young as auditors and to authorise the Directors
to fix their remuneration.
7.

To approve ordinary resolution to authorise Directors to issue shares pursuant to

Section 161 of the Companies Act, Cap. 50.
8.

To authorise Directors to offer and grant options and to issue shares pursuant to the
grant of the options under The Zagro Employees Share Option Scheme.
9.

To approve the ordinary resolution to renew the mandate on interested person

transactions.
Dated this
day of
Signature(s) of member(s)/Common Seal
* Delete accordingly
2007.
Against
Total Number of Ordinary Shares Held
IMPORTANT: PLEASE READ NOTES OVERLEAF
63
Proxy Form
Notes:1.
A member of the Company entitled to attend and vote at the above meeting is entitled to appoint one or two proxies to
attend and vote in his/her stead. A proxy need not be a member of the Company and where there is more than one proxy, the
proportion of Shares to be represented by each proxy must be stated.
2.
Where a member appoint two proxies, the appointments shall be invalid unless he specified the proportion (expressed as a
percentage of the whole) of his shareholding to be represented by each proxy. If no such proportion or number is specified
the first named proxy may be treated as representing 100 per cent of the shareholding and any second named proxy as an
alternate to the first named.
3.
This instrument of proxy must be signed by the appointor or his/her duly authorised attorney or, if the appointor is a body
corporate, signed by a duly authorised officer or its attorney or affixed with its common seal thereto.
4.
A body corporate which is a member may also appoint by resolution of its directors or other governing body an authorised
representative in accordance with its Articles of Association and Section 179 of the Companies Act, Chapter 50 of Singapore
to act on behalf of such body corporate.
5.
This instrument appointing a proxy or proxies, (together with the power of attorney (if any) under which it is signed or a
certified copy thereof), must be deposited at the registered office of the Company at Zagro Global Hub, 5 Woodlands Terrace
#06-00, Singapore 738430 not less than 48 hours before the time fixed for holding the Annual General Meeting.
6.
Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter of power of attorney
or a duly certified copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy;
failing which the instrument may be treated as invalid.
7.
Please insert the total number of shares held by you. If you have shares entered against your name on the Depository Register
(as defined in Section 130A or the Companies Act, Chapter 50 of Singapore), you should insert that number of shares. If you
have shares entered against your name in the Depository Register and registered in your name in the Register of Members, you
should insert the aggregate number of shares. If no number is inserted, this instrument of proxy will be deemed to relate to
all the shares held by you.
8.
The Company shall be entitled to reject this instrument of proxy if it is incomplete, improperly completed or illegible or where
the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in this instrument
of proxy. In addition, in the case of members whose shares are deposited with The Central Depository (Pte) Limited (CDP),
the Company may reject any instrument of proxy lodged if such member is not shown to have shares entered against his name
in the Depository Register as at 48 hours before the time appointed for the holding of the Annual General Meeting as certified
by CDP to the Company.
64
Group Addresses
Zagro Asia Limited
Vetsquare.com Pte Ltd
Zagro NPC (Pvt) Ltd
Zagro Global Hub

5 Woodlands Terrace
Singapore 738430
Tel: +65 6759 1811
Fax: +65 6759 1855
zagroasia@zagro.com
www.zagro.com
Bukit Timah P.O. Box 0102

Singapore 915804
Tel: +65 6753 9188
Fax: +65 6759 1866
admin@vetsquare.com
www.vetsquare.com
Plot 59, Sector 24
Agsin Pte Ltd

Singapore 915804
Tel: +65 6753 9188
Fax: +65 6759 1866
aep@zagro.com
Zagro Global Hub

5 Woodlands Terrace
Singapore 738430
Tel: +65 6759 1811
Fax: +65 6758 7118
agsin@zagro.com
Zagro Animal Health Pte Ltd

Zagro Global Hub
5 Woodlands Terrace
Singapore 738430
Tel: +65 6759 1811
Fax: +65 6759 1855
contact@neocidol.com
www.neocidol.com
Agri Nutrition Asia Pte Ltd

Zagro Global Hub
5 Woodlands Terrace
Singapore 738430
Tel: +65 6759 1811
Fax: +65 6759 1855
zana@zagro.com
Pacific Lab Services

(Division of Zagro Singapore Pte Ltd)
Zagro Global Hub
5 Woodlands Terrace
Singapore 738430
Tel: +65 6759 1811
Fax: +65 6759 2066
paclab@zagro.com
www.pacificlab.com.sg
AgroConnect.com Pte Ltd

Singapore 915804
Tel: +65 6753 9188
Fax: +65 6759 1866
contact@agroconnect.com
www.agroconnect.com
AgroExchangePlus Pte Ltd
Zagro Industries Pte Ltd

Korangi Industrial Area,

Karachi,
Pakistan
Tel: + 65 6759 1811
Fax: + 65 6759 1855
zpakistan@zagro.com
Zagro Singapore Pte Ltd

(Sri Lanka Liaison Office)
7 Mendis Place, Dehiwela
Sri Lanka
Tel: +94 1 7420 2856
Fax: +94 1 731 794 / 733 649
zsrilanka@zagro.com
Singapore 915804
Zagro (Thailand) Ltd
Tel: +65 6753 9188
12th Floor, Ploenchit Center

2 Sukhumvit Road, Kwaeng Klongtoey,
Khet Klongtoey, Bangkok 10110
Thailand
Tel: +662 656 8710 / 656 8754
Fax: +662 656 8758 / 656 8759
zthailand@zagro.com
Fax: +65 6759 1866

zind@zagro.com
Zagro Singapore Pte Ltd

Zagro Global Hub
5 Woodlands Terrace
Singapore 738430
Tel: +65 6759 1811
Fax: +65 6759 1855
zsingapore@zagro.com
www.zagro.com
Zagro Chemicals Sdn Bhd

27 Jalan PJS 3/34
Taman Sri Manja
46000 Petaling Jaya,
Selangor, Malaysia
Tel: +60 3 7783 0766 / 7783 3400
Fax: +60 3 7783 0772 / 7783 3015
zmalaysia@zagro.com
Zagro Corporation
7th Floor, Raha Sulayman Building
108 Benavidez Street,
Legaspi Village
Makati City, Philippines
Tel: +63 2 8101 340 / 8101 417 /8104 545
Fax: +63 2 8102 526
zphilippines@zagro.com
P.T. Zagro Indonesia

Jl. Pangeran Jayakarta
Complex 24 No. 18
Center Jakarta
Indonesia
Tel: +65 6759 1811
Fax: +65 6759 1855
zindo@zagro.com
Zagro Europe GmbH

Rheinstrasse 1
D79618 Rheinfelden
Germany
Tel: +49 7623 794 555
Fax: +49 7623 794 557
contact@neoocidol.com
zeurope@zagro.com
Zagro Africa (Pty) Ltd

88 Forrest Road
Elm Street
Inanda 2196
Tel: +27 11 883 7417
Fax: +27 11 883 2077
zafrica@zagro.com
23
ZAGRO ASIA LIMITED

Zagro Global Hub
5 Woodlands Terrace
Singapore 738430
Tel : +65 6759 1811
Fax: +65 6759 1855
zagroasia@zagro.com
www.zagro.com
Co.Reg.No.: 199406784D
ii

Zag Roar 2006

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Annual Report 2006

ZAGRO annual report 2006

Zagros offices/consultants presence

Our business is to help improve the quantity and quality of

food that comes to your family table. To achieve this goal,

ZAGRO annual report 2006

ZAGRO annual report 2006

ZAGRO annual report 2006

ZAGRO annual report 2006

PACIFIC LAB SERVICES

ZAGRO annual report 2006

Neocidol 40 WP. Steladone is available as Steladone 300 EC.

ZAGRO annual report 2006

Photo: Courtesy of eFeedLink Pte Ltd

Summarised Profit and Loss Account (S$000)

Summarised Balance Sheet (S$000)

Net tangible assets

ZAGRO annual report 2006

20% less tax

Earnings before interest, taxation, depreciation and amortisation (S$000)

Profit attributable to members of the company (S$000)

Earnings per share (cents)

ZAGRO annual report 2006

phase. Since the brand acquisition of Neocidol and Steladone

Supported by these sound fundamentals, the Group is

The Board of Directors is pleased to announce dividends of

Finally, let me take this opportunity to express my

I am confident that we would be on track to achieving our

ZAGRO annual report 2006

Poh Beng Swee

WIDENING OUR GLOBAL FOOTPRINT

The launch of Neocidol in Europe is an important milestone for the Group

NEW PRODUCTS AND PARTNERSHIPS

Rolls-Royce of worms from Seabait Limited, a University of Newcastle

Seabait is an established and much-lauded product with health certifications

ZAGRO annual report 2006

GLOBAL BRANDING CAMPAIGN

ZAGRO annual report 2006

ZAGRO annual report 2006

Acquisition of premix manufacturing

Started out as Zuellig Agri

Acquisition of 20% interest in

Awarding of ISO9002 certification

Zagro factory gutted

Acquisition of Agsin Pte

Major corporate restructure.

ZAGRO annual report 2006

Officially transferred to the

Acquisition of Fezagro Co. Ltd

Licensed trademark and patented product

Incorporation of Zagro Africa Pty Ltd.

Exercise of option and further

Incorporation of P.T. Zagro Indonesia,

Disposal of Zagro Asia (Tianjin) Co Ltd.

Awarding of ISO9001:2000 and GMP

Appointed as exclusive global

distributor of Seabait SPF

Acquisition of additional 60% interest

Acquisition of global ectoparasiticide

brands, Neocidol and Steladone ,

Launch of new micro-encapsulation

(Diacap and Neocidol 600EW)

ZAGRO annual report 2006

ZAGRO annual report 2006