RepoRt of the DiRectoRs GP Industries Limited Annual ...

18

The directors of GP Industries Limited present their report together with the audited consolidated financial statements of the Group

and the statement of financial position and statement of changes in equity of the Company for the financial year ended 31 March

2011.

1. Directors

The directors of the Company in office at the date of this report are:

Executive:

Victor Lo Chung Wing, Chairman

Leung Pak Chuen, Executive Vice Chairman

Brian Li Yiu Cheung, Managing Director

Andrew Chuang Siu Leung

Wong Man Kit

Eric Ng Siu Kai (appointed on 1 April 2010)

Non-executive:

Lim Ah Doo

Phua Bah Lee

Lim Hock Beng

2. Arrangements to enable directors to acquire benefits

by means of acquisition of shares or debentures

Neither at the end of the financial year nor at any time during the financial year did there subsist any arrangement, to which

the Company is a party, the objective of which is to enable the directors of the Company to acquire benefits by means of the

acquisition of shares in, or debentures of, the Company or any other body corporate except for the Share Option Scheme

1999 set out in paragraphs 3 and 5 of this report.

RepoRt of the DiRectoRs GP Industries Limited Annual Report 2010-11

19

RepoRt of the DiRectoRs GP Industries Limited Annual Report 2010-11

3. Directors’ interest in shares and debentures

According to the register of directors’ shareholdings kept by the Company under Section 164 of the Singapore Companies

Act, the undermentioned persons who were directors of the Company at 31 March 2011 had interest in shares of the

Company and the Company’s ultimate holding company, Gold Peak Industries (Holdings) Limited (“Gold Peak”) as detailed

below:

Shareholdings registeredin the name of director

Shareholdings in which director is deemed to have an interest

Name of directorAt beginning of

financial year At end of

financial yearAt 21 April

2011At beginning of

financial year At end of

financial yearAt 21 April

2011

Interest in the Company’s ordinary shares Victor Lo Chung Wing - - - 414,098,443 414,398,443 414,398,443Leung Pak Chuen 1,608,000 1,608,000 1,608,000 - - -Brian Li Yiu Cheung 1,465,000 1,465,000 1,465,000 - - -Andrew Chuang Siu Leung 155,000 155,000 155,000 - - -Wong Man Kit 72,000 72,000 72,000 - - -Lim Ah Doo 300,000 300,000 300,000 - - -Phua Bah Lee 214,000 214,000 214,000 - - -Lim Hock Beng 214,000 214,000 214,000 - - -

Options to subscribe for the Company’s ordinary sharesVictor Lo Chung Wing 2,068,000 1,768,000 1,168,000 - - - Leung Pak Chuen 730,000 730,000 730,000 - - - Brian Li Yiu Cheung 650,000 650,000 650,000 - - - Andrew Chuang Siu Leung 610,000 610,000 410,000 - - - Wong Man Kit 175,000 175,000 111,000 - - - Eric Ng Siu Kai 450,000 450,000 270,000 - - -

Interest in Gold Peak’s ordinaryshares of HK$0.50 each Victor Lo Chung Wing 6,141,945 6,141,945 6,141,945 226,747,823 226,747,823 226,747,823Leung Pak Chuen 4,575,114 4,575,114 4,575,114 - - - Brian Li Yiu Cheung 928,571 300,000 300,000 - - - Andrew Chuang Siu Leung 410,713 - - 267,142 677,855 677,855Wong Man Kit 12 12 12 150,000 150,000 150,000

Options to subscribe for Gold Peak’s ordinary shares of HK$0.50 each Victor Lo Chung Wing - 750,000 750,000 - - -Leung Pak Chuen - 700,000 700,000 - - -Brian Li Yiu Cheung - 700,000 700,000 - - -Andrew Chuang Siu Leung - 700,000 700,000 - - -Wong Man Kit - 700,000 700,000 - - -Eric Ng Siu Kai - 700,000 700,000 - - -

By virtue of Section 7 of the Singapore Companies Act, Mr Victor Lo Chung Wing is deemed to have interests in the shares

of all of the Company’s related corporations as he is interested in more than 20% in the issued shares of Gold Peak.

20

4. Directors’ receipt and entitlement to contractual benefits

Since the beginning of the financial year, no director has received or become entitled to receive a benefit which is required

to be disclosed under Section 201(8) of the Singapore Companies Act, by reason of a contract made by the Company or a

related corporation with the director or with a firm of which he is a member, or with a company in which he has a substantial

financial interest except as disclosed in paragraph 5 of this report and in the financial statements.

Certain directors have received remuneration from related corporations in their capacities as directors and/or executives of

those related corporations.

5. Share option schemes

a) Option schemes of the Company

i) The Company’s Executives’ Share Option Scheme adopted at an extraordinary general meeting held on 19

September 1996 (the “1996 Scheme”) was discontinued and replaced by Share Option Scheme 1999 (the “1999

Scheme”), which was adopted at an extraordinary general meeting held on 19 November 1999. All unexercised

options under the 1996 Scheme had expired by 1 August 2004. The duration of the 1999 Scheme had also

reached its maximum period of ten years on 31 March 2010 and ceased to operate accordingly. As a result, no

options could be granted subsequent to 31 March 2010. However, options previously granted under the 1999

Scheme continue to be exercisable in accordance with the regulations of the 1999 Scheme.

ii) The 1999 Scheme is administered by the Remuneration Committee, comprised Messrs Phua Bah Lee, Lim Ah Doo

and Lim Hock Beng during the financial year.

iii) Movements of the options granted under the 1999 Scheme to subscribe for the Company’s ordinary shares are

as follows:

Offer date Expiry dateExercise price

Number outstanding

at 1 April2010

Number exercised

Number cancelled/

lapsed

Number outstanding

at 31 March2011

No. 1 14 April 2000 13 April 2010 S$0.456 532,000 (328,000) (204,000) -

No. 2 4 April 2001 3 April 2011 S$0.620 1,622,000 - - 1,622,000

No. 3 14 August 2002 13 August 2012 S$0.550 919,000 - (13,000) 906,000

No. 4 15 September 2003 14 September 2013 S$0.880 2,937,000 - (20,000) 2,917,000

No. 5 5 July 2004 4 July 2014 S$1.030 3,677,000 - (155,000) 3,522,000

9,687,000 (328,000) (392,000) 8,967,000

iv) During the financial year, no option to take up unissued shares of the Company was granted.

RepoRt of the DiRectoRs (cont’d) GP Industries Limited Annual Report 2010-11

21

5. Share option schemes (cont’d)

v) 1) Details of the options granted under the 1996 Scheme to persons who were directors during the financial

year are as follows:

Name of director

Aggregate options

granted since commencement

of scheme to19 November 1999

Aggregate options

exercised since commencement

of scheme to31 March 2011

Aggregate options

lapsed since commencement


Aggregate options

outstanding at31 March 2011

Leung Pak Chuen 540,000 (420,000) (120,000) -

Brian Li Yiu Cheung 420,000 (320,000) (100,000) -

Andrew Chuang Siu Leung 290,000 (210,000) (80,000) -

Wong Man Kit 120,000 (65,000) (55,000) -

Eric Ng Siu Kai 240,000 (180,000) (60,000) -

2) Details of the options granted under the 1999 Scheme to persons who were directors during the financial

year are as follows:

Name of director

Aggregateoptions

granted sincecommencement


Aggregateoptions

exercised sincecommencement


Aggregateoptions

lapsed since commencement


Aggregateoptions

outstanding at31 March 2011

Victor Lo Chung Wing 2,068,000 (300,000) - 1,768,000

Leung Pak Chuen 1,790,000 (1,060,000) - 730,000

Brian Li Yiu Cheung 1,485,000 (835,000) - 650,000

Andrew Chuang Siu Leung 720,000 (110,000) - 610,000

Wong Man Kit 207,000 (32,000) - 175,000

Eric Ng Siu Kai 715,000 (265,000) - 450,000

Lim Ah Doo 490,000 (300,000) (190,000) -

Phua Bah Lee 374,000 (214,000) (160,000) -

Lim Hock Beng 374,000 (214,000) (160,000) -

vi) No options were granted to controlling shareholders of the Company and their associates. The options granted

to Mr Victor Lo Chung Wing, a controlling shareholder of the Company by virtue of his interest in Gold Peak, was

before 24 January 2008, when his interest in the issued shares of Gold Peak exceeded 20%.

vii) No director or employee has received five percent or more of the total number of options available under the

1999 Scheme.


22

5. Share option schemes (cont’d)

viii) No options under the 1999 Scheme were granted to the Gold Peak Group Executive Directors, Non-executive

Directors and Executives (the “parent group employees”, which excludes the directors and executives of the

Company and its subsidiaries as defined in the 1999 Scheme) since the commencement of the 1999 Scheme to

31 March 2011.

ix) The options granted by the Company do not entitle the holders of such options, by virtue of such holding, to any

rights to participate in any share issue of any other company.

b) No option to take up unissued shares of subsidiaries has been granted during the financial year.

c) Save as aforesaid, during the financial year, there were no shares of the Company or any corporation in the Group

issued by virtue of the exercise of an option to take up unissued shares.

d) At the end of the financial year, there were no unissued shares of subsidiaries under option.

6. Audit committee

The Audit Committee carried out its functions in accordance with Section 201B(5) of the Singapore Companies Act, including

a review of the financial statements of the Company and of the Group for the financial year and the auditors’ report thereon

before their submission to the directors of the Company.

At the date of this report, the Audit Committee comprises the following members, all of whom are independent non-

executive directors:

Lim Ah Doo

Phua Bah Lee

Lim Hock Beng

The Audit Committee met five times since the last Annual General Meeting. The Audit Committee has reviewed the following:

a) the annual audit plan of the external auditors;

b) the results of the internal auditors’ examination of the Group’s systems of internal accounting controls;

c) the internal audit plans and results of internal audits as well as management’s responses to the recommendations of

the internal auditors;

d) the Group’s financial results and accounting policies;

e) the Group’s quarterly, half-yearly and full year results, the statement of financial position of the Company and

the consolidated financial statements of the Group before their submission to the Board for approval for public

announcements in respect of such results and related results announcement;


23


6. Audit committee (cont’d)

f) the Group’s interested person transactions;

g) non-audit services performed by the external auditors to ensure that the nature and extent of such services will not

prejudice the independence and objectivity of the external auditors before recommending to the Board, subject to

shareholders’ approval, the re-appointment of the Company’s external auditors; and

h) the co-operation and assistance given by the management to the internal and external auditors.

The Audit Committee has full access to and co-operation by management and full discretion to invite any director or executive

officer to attend its meetings, and reasonable resources to enable it to discharge its functions properly. The external and

internal auditors have unrestricted access to the Audit Committee.

The Audit Committee meetings are held with the internal and external auditors and by invitation, representatives from

management.

The Audit Committee has recommended to the Board of Directors that Deloitte & Touche LLP be nominated for re-appointment

as external auditors of the Group at the forthcoming Annual General Meeting of the Company.

7. Auditors

The auditors, Deloitte & Touche LLP, have expressed their willingness to accept re-appointment.

On behalf of the Board of Directors

Victor Lo Chung Wing

Chairman

Leung Pak Chuen

Executive Vice Chairman

27 June 2011

24

In the opinion of the directors, the consolidated financial statements of the Group and the statement of financial position and

statement of changes in equity of the Company as set out on pages 27 to 105 are drawn up so as to give a true and fair view of

the state of affairs of the Group and of the Company as at 31 March 2011, and of the results, changes in equity and cash flows

of the Group and changes in equity of the Company for the financial year then ended and at the date of this statement, there are

reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.

On behalf of the Board of Directors

Victor Lo Chung Wing

Chairman

Leung Pak Chuen

Executive Vice Chairman

27 June 2011

statement of DiRectoRs

25

To the members of GP Industries Limited

Report on the Financial Statements

We have audited the accompanying financial statements of GP Industries Limited (the “Company”) and its subsidiaries (the

“Group”) which comprise the statements of financial position of the Group and the Company as at 31 March 2011, and the

income statement, the statement of comprehensive income, statement of changes in equity and statement of cash flows of the

Group and the statement of changes in equity of the Company for the year then ended, and a summary of significant accounting

policies and other explanatory notes, as set out on pages 27 to 105.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions

of the Singapore Companies Act (the “Act”) and Singapore Financial Reporting Standards and for devising and maintaining a

system of internal accounting controls sufficient to provide reasonable assurance that assets are safeguarded against loss from

unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the

preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets.

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 about 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 auditor’s 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 entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that

are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal

control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting

estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the

audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

inDepenDent auDitoRs’ RepoRt GP Industries Limited Annual Report 2010-11

26

Opinion

In our opinion, the consolidated financial statements of the Group and the statement of financial position and statement of changes

in equity of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting

Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 March 2011 and of

the results, changes in equity and cash flows of the Group and changes in equity of the Company for the year ended on that date.

Report on Other Legal and Regulatory Requirements

In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiaries

incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

Deloitte & Touche LLP

Public Accountants and

Certified Public Accountants

Loi Chee Keong

Partner

Appointed on 30 July 2010

Singapore

27 June 2011

inDepenDent auDitoRs’ RepoRt (cont’d)

27

Note The Group

2011 2010

S$’000 S$’000

Revenue 3 335,766 267,879

Cost of sales (245,927) (192,588)

Gross profit 89,839 75,291

Other operating income 4 4,959 9,001

Distribution costs (32,254) (30,315)

Administrative expenses (39,477) (38,437)

Exchange (loss) gain (1,005) 685

Other operating expenses (2,156) (3,906)Profit before finance costs, exceptional items

and share of results of associates 5 19,906 12,319

Finance costs 6 (4,573) (4,731)

Exceptional items 7 (15,416) (4,190)

Share of results of associates 13 34,051 41,126

Profit before taxation 33,968 44,524

Income tax expense 8 (10,044) (10,355)

Profit for the financial year 23,924 34,169

Attributable to:

Equity holders of the Company 23,806 33,854

Non-controlling interests 118 315

23,924 34,169

Earnings per share (Singapore cents)

Basic 9 4.60 6.05

Diluted 9 4.60 6.05

consoliDateD income statement GP Industries Limited Annual Report 2010-11

Financial year ended 31 March 2011

See accompanying notes to the financial statements.

28

The Group

2011 2010

S$’000 S$’000


Other comprehensive income (loss):

Exchange translation (deficit) surplus (7,386) 13,638Exchange translation surplus recognised in income

statement upon liquidation / de-registration of subsidiaries (44) (3,734)

Net exchange translation deficit and capital reservesurplus recognised in income statement upondisposal / liquidation of associates 2,195 372

Available-for-sale financial assets surplus recognised inincome statement upon disposal of other investments - (496)

Share of other comprehensive loss of associates (25,568) (25,833)

Other comprehensive loss for the financial year (30,803) (16,053)

Total comprehensive (loss) income for the financial year (6,879) 18,116

Attributable to:

Equity holders of the Company (6,885) 17,923

Non-controlling interests 6 193

(6,879) 18,116



consoliDateD statement of compRehensive income

29

Note The Group The Company2011 2010 2011 2010

S$’000 S$’000 S$’000 S$’000

Non-current AssetsInvestment properties 10 12,202 - - -Property, plant and equipment 11 37,481 42,152 244 305Interest in subsidiaries 12 - - 339,198 401,409Interest in associates 13 283,124 304,852 168,373 176,379Investment in unquoted equity shares 14 12,247 22,454 - -Non-current receivables 15 21,164 11,206 - -Other investments 16 2,896 5,108 - -Deferred tax assets 26 192 - - -Intangible assets 17 4,926 5,027 - -

374,232 390,799 507,815 578,093

Current AssetsInventories 18 51,947 51,981 - -Receivables and prepayments 19 69,383 124,636 1,400 183Dividend receivable 32 486 537 14,669 15,704Taxation recoverable 77 10 - -Bank balances, deposits and cash 20 68,402 62,361 18,324 11,995

190,295 239,525 34,393 27,882

Current LiabilitiesTrade and other payables 21 61,373 62,944 5,030 154,112Provisions 22 752 756 - -Obligations under finance leases 23 81 170 28 27Income tax payable 7,271 9,927 1,079 1,775Amount due to ultimate holding company 24 1,332 1,067 276 172Bank loans 25 66,175 147,968 31,513 104,121

136,984 222,832 37,926 260,207

Net Current Assets (Liabilities) 53,311 16,693 (3,533) (232,325)

Non-current LiabilitiesBank loans 25 60,694 10,413 52,260 2,500Obligations under finance leases 23 52 143 52 81Deferred tax liabilities 26 3,620 2,697 79 202Amount due to a subsidiary 12 - - 139,619 -

64,366 13,253 192,010 2,783Net Assets 363,177 394,239 312,272 342,985

Represented by:Issued capital 27 286,307 286,157 286,307 286,157Treasury shares 27 (6,159) - (6,159) -Reserves 82,046 106,456 32,124 56,828Equity attributable to equity holders of

the Company 362,194 392,613 312,272 342,985Non-controlling interests 983 1,626 - -

Total Equity 363,177 394,239 312,272 342,985

statements of financial position GP Industries Limited Annual Report 2010-11

As at 31 March 2011


30

statements of changes in equity GP Industries Limited Annual Report 2010-11


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statements of changes in equity GP Industries Limited Annual Report 2010-11

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on

disp

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othe

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--

--

-(4

96)

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(496

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(496

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e (lo

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s-

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Tota

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r -

- (1

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- (1

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- 3

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8,11

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(18,

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(1

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(1

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llatio

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Tran

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5574

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Div

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(Not

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--

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(10,

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Bala

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(71,

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169,

795

392,

613

1,62

639

4,23

9

32

Issued capital

Treasury shares

Capital reserve

Share-based payment

reserveRetained

profitsTotal

equity

S$’000 S$’000 S$’000 S$’000 S$’000 S$’000

The Company

Balance at 1 April 2010 286,157 - - 506 56,322 342,985Loss and total comprehensive

loss for the financial year - - - - (7,147) (7,147)Issue of shares under share

option scheme (Note 27) 150 - - - - 150Purchase of treasury shares

(Note 27) - (6,159) - - - (6,159)Grant of share options by

ultimate holding company (Note 27) - - 614 - - 614

Transfer from reserve upon cancellation of share options - - - (21) 21 -

Dividends paid (Note 27) - - - - (18,171) (18,171)

Balance at 31 March 2011 286,307 (6,159) 614 485 31,025 312,272

Balance at 1 April 2009 304,371 - - 591 71,375 376,337Loss and total comprehensive

loss for the financial year - - - - (4,163) (4,163)Cancellation of 55,681,443

issued shares pursuant to a selective capital reduction (Note 27) (18,264) - - - - (18,264)

Issue of shares under share option scheme (Note 27) 50 - - - - 50

Transfer from reserve upon cancellation of share options - - - (85) 85 -

Dividends paid (Note 27) - - - - (10,975) (10,975)

Balance at 31 March 2010 286,157 - - 506 56,322 342,985

Legal reserve represents that part of the profit after taxation of certain subsidiaries in the People’s Republic of China (“PRC”)

transferred in accordance with local requirements. The legal reserve cannot be distributed or reduced except where approval is

obtained from the relevant PRC authority to apply the amount either in setting off accumulated losses or increasing capital.

statements of changes in equity (cont’d)Financial year ended 31 March 2011


33

2011 2010

S$’000 S$’000

Operating activities


Adjustments for:

Share of results of associates (34,051) (41,126)

Amortisation of intangible assets - 507

Depreciation of property, plant and equipment 5,646 5,529

Finance costs 4,573 4,731

Interest income (1,618) (4,960)

(Gain on disposal) Loss on disposal and write-off of property, plant and equipment, net (500) 59

Dividend income from other investments - (915)

Share-based payment expenses on share options granted by ultimate holding company 614 -

Allowance for impairment loss on intangible assets 18 24

Loss on dilution of interest in associates 103 2,079

Loss (Gain) on disposal / de-registration / liquidation of associates, net 619 (83)

Gain on de-registration / liquidation / disposal of subsidiaries (Note 39) (46) (41)

Allowance for impairment loss on investment in unquoted equity shares 10,218 8,815

Allowance for impairment loss on other investments 3,379 4,486

Allowance for doubtful non-current receivables 626 -

Loss in fair value of investment properties 620 -Excess of share of fair value of identifiable net tangible assets of a joint venture

acquired over consideration paid - (10,074)Excess of share of fair value of identifiable net tangible assets of additional interest

in an associate acquired over consideration paid - (890)Cumulative exchange translation surplus realised as income upon de-registration

of a subsidiary - (3,735)

Gain on disposal of other investments - (1,092)

Expenses incurred for selective capital reduction - 1,132

Additional provision for warranty cost in respect of CIH Limited’s divestment in 2003 - 2,519

Restructuring costs - 1,074

Operating profit before movements in working capital 24,169 12,563

Inventories 34 8,521

Receivables and prepayments (7,334) 25,848

Trade and other payables 1,569 10,555

Provisions (4) (1)

Amount due to ultimate holding company 396 814

Translation of foreign subsidiaries (3,898) (5,458)

Cash generated from operations 14,932 52,842

Income tax paid (5,969) (2,153)

Interest paid (4,575) (4,746)

Interest received 948 695

Net cash generated from operating activities 5,336 46,638

consoliDateD statement of cash flows GP Industries Limited Annual Report 2010-11



34

2011 2010

S$’000 S$’000

Investing activities

Purchase of property, plant and equipment (note a) (4,557) (4,418)

Proceeds from amount retained for CIH Limited’s divestment in 2003, net 9,117 1,050

Dividends received from associates 14,289 7,953

Dividend received from other investments 520 475

Proceeds from disposal of property, plant and equipment 716 614Proceeds from CIH Limited’s divestment of interest in unquoted equity shares

in 2003 and 2005 26,219 12,200

Proceeds from disposal of associates 8,707 8,971Share of a joint venture’s uplift (placement) of fixed deposit with original maturity period

over three months 476 (492)

Proceeds from de-registration / return of surplus capital of associates 688 -

Payment in relation to acquisition of investment properties (715) -

Cash outflow from disposal of a subsidiary, net of proceeds received (Note 39) - (368)

Acquisition of interest in a joint venture, net of share of cash acquired (Note 38) - (3,019)

Additional investment in associates - (1,470)

Proceeds from disposal of other investments - 12,762

Net cash generated from investing activities 55,460 34,258

Financing activities

Drawdown of long-term bank loans 84,428 9,190

Repayment of long-term bank loans (102,675) (39,794)

Repayment of short-term bank loans, net (6,838) (16,758)

Obligations under finance leases (167) (157)

Dividends paid (18,171) (10,975)

Proceeds from issue of new shares 150 50

Dividend paid to non-controlling interests (86) -

Purchase of treasury shares (6,159) -

Payment for additional interest in a subsidiary (519) -

Net cash used in financing activities (50,037) (58,444)

Net increase in cash and cash equivalents 10,759 22,452

Cash and cash equivalents at beginning of the financial year 61,869 42,033

Effects of exchange rate changes on the balance of cash held in foreign currencies (4,226) (2,616)

Cash and cash equivalents at end of the financial year 68,402 61,869

Cash and cash equivalents at end of the financial year comprised:

Bank balances, deposits and cash (Note 20) 68,402 62,361

Less: Share of a joint venture’s fixed deposit with original maturity period over three months - (492)

68,402 61,869

Note (a) :

During the financial year ended 31 March 2010, the Group acquired property, plant and equipment with an aggregate cost of

S$4,532,000 of which S$114,000 were acquired under finance leases.



consoliDateD statement of cash flows (cont’d)

35

1. General

The Company (Registration No. 199502128C) is incorporated in the Republic of Singapore and is listed on the Mainboard

of the Singapore Exchange Securities Trading Limited (“SGX-ST”). The Company’s registered office and principal place of

business is at 97 Pioneer Road, Singapore 639579. The financial statements are expressed in Singapore dollars (“S$”).

The principal activities of the Company comprise those of an investment holding company and regional headquarters of the

Group.

The principal activities of the Group’s significant subsidiaries, significant associates and joint venture are disclosed in Notes

36, 37 and 38 to the financial statements, respectively.

The consolidated financial statements of the Group and statement of financial position and statement of changes in equity of

the Company for the financial year ended 31 March 2011 were authorised for issue by the Board of Directors on 27 June 2011.

2. Summary of significant accounting policies

Basis of Accounting

The financial statements are prepared in accordance with the historical cost convention, except as disclosed in the accounting

policies below, and are drawn up in accordance with the provisions of the Singapore Companies Act and Singapore Financial

Reporting Standards (“FRS”).

Adoption of New and Revised Standards

During the financial year, the Group has adopted all the new and revised FRSs and Interpretations of FRS (“INT FRS”) that are

relevant to its operations and effective for annual periods beginning on or after 1 April 2010. The adoption of these new/

revised FRSs and INT FRSs does not result in any substantial change to the Group’s and Company’s accounting policies and

has no material effect on the amounts reported for the current and prior financial years.

The changes to certain relevant FRSs are described below:

The Group has adopted FRS 27 Consolidated and Separate Financial Statements (Revised 2009) in accounting for transaction

with non-controlling interests (see below - basis of consolidation for subsidiaries). Changes in the Group’s interest in

subsidiaries that do not result in a loss of control are accounted for as equity transactions. When the Group loses control

of a subsidiary, any interest retained in the former subsidiary will be recorded at fair value with the remeasurement gain or

loss recognised in the profit or loss. The change in the accounting policy has been applied prospectively and has no material

impact on the financial statements and earnings per share.

notes to the financial statements GP Industries Limited Annual Report 2010-11

31 March 2011

36

31 March 2011

notes to the financial statements (cont’d) GP Industries Limited Annual Report 2010-11

2. Summary of significant accounting policies (cont’d)

The Group has adopted FRS 103 Business Combinations (Revised 2009) in accounting for business combinations. Business

combinations are now accounted for using the acquisition method as at the acquisition date (see below - business

combinations). Previously, business combinations were accounted for under the purchase method. Pursuant to the purchase

method, the cost of an acquisition was measured at 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. The excess of the Group’s

interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition was

credited to profit or loss in the period of acquisition. For business acquisitions that were achieved in stages, any existing equity

interests in the acquiree were not remeasured to their fair value. Contingent consideration was recognised as an adjustment

to the cost of acquisition only when it was probable and can be measured reliably. The change in accounting policy has been

applied prospectively and has no impact on the financial statements.

Basis of Consolidation

Subsidiaries

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made up to

31 March each year. Subsidiaries are entities controlled by the Company. Control is achieved when the Company has the

power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the financial year are included in the consolidated income statement

from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies used in

line with those used by other members of the Group.

All inter-company transactions, balances, income and expenses are eliminated on consolidation.

Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. The interest of non-

controlling shareholders may be initially measured (at date of original business combination) either at fair value or at the non-

controlling interests’ proportionate share of the fair value of the acquiree’s identifiable net assets. The choice of measurement

basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling

interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes

in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling

interests having a deficit balance.

Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their

relative interests in the subsidiary. Any difference between the amount by which the non-controlling interests are adjusted

and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the

Company.

37



When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the

aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous

carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. Amounts

previously recognised in other comprehensive income in relation to the subsidiary are accounted for (i.e. reclassified to

profit or loss or transferred directly to retained earnings) in the same manner as would be required if the relevant assets or

liabilities were disposed of. The fair value of any investment retained in the former subsidiary at the date when control is lost

is regarded as the fair value on initial recognition for subsequent accounting under FRS 39 Financial Instruments: Recognition

and Measurement or, when applicable, the cost on initial recognition of an investment in an associate or jointly controlled

entity.

In the Company’s financial statements, investments in subsidiaries are carried at cost less any impairment in net recoverable

value that has been recognised in profit or loss.

Interest in Joint Venture

A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity that is

subject to joint control, that is when the strategic financial and operating policy decisions relating to the activities require the

unanimous consent of the parties sharing control.

The Group’s joint venture arrangements involve the establishment of a separate entity in which each venturer has an interest.

The Group reports its interest in joint venture using proportionate consolidation. The Group’s share of the assets, liabilities,

income and expenses of joint venture are combined with the equivalent items in the consolidated financial statements on a

line-by-line basis.

Any goodwill arising on the acquisition of the Group’s interest in a joint venture is accounted for in accordance with the

Group’s accounting policy for goodwill arising on the acquisition of a subsidiary.

Where the Group transacts with its joint venture, unrealised profits and losses are eliminated to the extent of the Group’s

interest in the joint venture.

Where necessary, adjustments are made to the financial statements of joint venture to bring its accounting policies used in

line with those used by other members of the Group.

Interest in Associates

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a

joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee

but is not control or joint control over those policies.

38

31 March 2011



The results and assets and liabilities of associates are incorporated in these financial statements using the equity method

of accounting. Under the equity method, investments in associates are carried in the consolidated statement of financial

position at cost as adjusted for post-acquisition changes in the Group’s share of the net assets of the associate, less any

impairment in the value of individual investments. Losses of an associate in excess of the Group’s interest in that associate

(which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate) are not

recognised, unless the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and

contingent liabilities of the associate recognised at the date of acquisition is recognised as goodwill. The goodwill is included

within the carrying amount of the investment and is assessed for impairment as part of the investment. Any excess of the

Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition,

after reassessment, is recognised immediately in profit or loss.

Where a Group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group’s

interest in the associate.

Where necessary, adjustments are made to the financial statements of associates to bring the accounting policies used in line

with those used by other members of the Group.

In the Company’s financial statements, investments in associates are carried at cost less any impairment in net recoverable

value that has been recognised in profit or loss.

Business Combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each

acquisition is measured, on the acquisition date, at the aggregate fair values of assets given, liabilities incurred by the Group

to the former owners of the acquiree, and equity interests issued by the Group in exchange for control of the acquiree.

Acquisition-related costs are recognised in profit or loss as incurred.

Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration

arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost

of acquisition where they qualify as measurement period adjustments (see below). The subsequent accounting for changes in

the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the

contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent

reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an

asset or a liability is remeasured at subsequent reporting dates in accordance with FRS 39 Financial Instruments: Recognition

and Measurement, or FRS 37 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding

gain or loss being recognised in profit or loss.

39



Where a business combination is achieved in stages, the Group’s previously held interests in the acquired entity are remeasured

to fair value at the acquisition date (i.e. the date the Group attains control) and the resulting gain or loss, if any, is recognised

in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been

recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if

that interest were disposed of.

The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under the FRS

are recognised at their fair value at the acquisition date, except that:

• deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and

measured in accordance with FRS 12 Income Taxes and FRS 19 Employee Benefits respectively;

• liabilities or equity instruments related to the replacement by the Group of an acquiree’s share-based payment awards

are measured in accordance with FRS 102 Share-based Payment; and

• assets (or disposal groups) that are classified as held for sale in accordance with FRS 105 Non-current Assets Held for

Sale and Discontinued Operations are measured in accordance with FRS 105.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination

occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional

amounts are adjusted during the measurement period (see below), or additional assets or liabilities are recognised, to reflect

new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have

affected the amounts recognised as of that date.

The measurement period is the period from the date of acquisition to the date the Group obtains complete information about

facts and circumstances that existed as of the acquisition date and is subject to a maximum of one year from acquisition date.

The accounting policy for initial measurement of non-controlling interests is described above.

Foreign Currency Transactions

The individual financial statements of each Group entity are presented in the currency of the primary economic environment

in which the entity operates (its functional currency). The consolidated financial statements of the Group and the statement

of financial position and statement of changes in equity of the Company are presented in Singapore dollars, which is the

functional currency of the Company, and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional

currency are recorded at the rate of exchange prevailing on the date of the transaction. At the end of each reporting period,

monetary items denominated in foreign currencies are retranslated at the rates prevailing at the end of the reporting period.

Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on

the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign

currency are not retranslated.

40

31 March 2011



Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in

profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are

included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect

of which gains and losses are recognised in other comprehensive income. For such non-monetary items, any exchange

component of that gain or loss is also recognised in other comprehensive income.

Foreign Currency Translation

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations

(including comparatives) are expressed in Singapore dollars using exchange rates prevailing at the end of the reporting

period. Income and expense items (including comparatives) are translated at the average exchange rates for the period,

unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the

transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated

in the Group’s exchange translation reserve.

On the disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a foreign operation, or a disposal

involving loss of control over a subsidiary that includes a foreign operation, loss of joint control over a jointly controlled entity

that includes a foreign operation, or loss of significant influence over an associate that includes a foreign operation), all of

the accumulated exchange differences in respect of that operation attributable to the Group are reclassified to profit or loss.

Any exchange differences that have previously been attributed to non-controlling interests are derecognised, but they are

not reclassified to profit or loss.

In the case of a partial disposal (i.e. no loss of control) of a subsidiary that includes a foreign operation, the proportionate

share of accumulated exchange differences are re-attributed to non-controlling interests and are not recognised in profit or

loss. For all other partial disposals (i.e. of associates or jointly controlled entities not involving a change of accounting basis),

the proportionate share of the accumulated exchange differences is reclassified to profit or loss.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities (including

monetary items that, in substance, form part of the net investment in foreign entities), and of borrowings and other currency

instruments designated as hedges of such investments, are recognised in other comprehensive income and accumulated in

exchange translation reserve.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the

foreign operation and translated at the closing rate.

41



Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods

and services provided in the normal course of business, net of discounts and sales related taxes.

Revenue from the sale of goods is recognised when all the following conditions are satisfied:

• the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;

• the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor

effective control over the goods sold;

• the amount of revenue can be measured reliably;

• it is probable that the economic benefits associated with the transaction will flow to the entity; and

• the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Management fee income is recognised when services are rendered.

Engineering development fee income is recognised when development services are rendered.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate

applicable.

Dividend income from investments is recognised when the shareholders’ rights to receive payment have been established.

Rental income from investment properties is recognised on a straight-line basis over the term of the relevant lease.

Research Expenditure

Research expenditure is charged to profit or loss in the year in which it is incurred.

Retirement Benefit Costs

Payments to defined contribution retirement benefit plans are charged as an expense as they fall due. Payments to state-

managed retirement benefit schemes, such as the Singapore Central Provident Fund, are dealt with as payments to defined

contribution plans where the Group’s obligations under the plans are equivalent to those arising in a defined contribution

retirement benefit plan.

Employee Leave Entitlement

Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated

liability for annual leave as a result of services rendered by employees up to the end of the reporting period.

42

31 March 2011



Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets

that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those

assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the

temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing

costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

Income Tax

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the income

statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes

items that are not taxable or tax deductible. The Group’s liability for current tax is calculated using tax rates (and tax laws)

enacted or substantively enacted in countries where the Group’s entities operate by the end of the reporting period, and any

adjustment to tax payable in respect of previous years.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements

and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet

liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets

are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary

differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or

from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects

neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates,

and interest in joint venture, except where the Group is able to control the reversal of the temporary difference and it is

probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible

temporary differences associated with such investments and interests are only recognised to the extent that it is probable that

there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected

to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it

is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

43



Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset

realised based on the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting

period. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited outside

profit or loss (either in other comprehensive income or directly in equity), in which case the deferred tax is also recognised

outside profit or loss (either in other comprehensive income or directly in equity, respectively), or where they arise from the

initial accounting for a business combination. In the case of a business combination, the tax effect is taken into account in

calculating goodwill or determining the excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable

assets, liabilities and contingent liabilities over cost.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set-off current tax assets against

current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to

settle its current tax assets and liabilities on a net basis.

Financial Instruments

Financial assets and financial liabilities are recognised on the Group’s statement of financial position when the Group becomes

a party to the contractual provisions of the instrument.

Effective Interest Method

The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest

income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash

receipts or payments through the expected life of the financial instrument, or where appropriate, a shorter period.

Financial Assets

Investment in unquoted equity shares and other investments

The classification of investments is dependant on the purpose of holding the investments. The Group’s investment in

unquoted equity shares and other investments have been designated as available-for-sale financial assets with effect from 1

April 2005 (Notes 14 and 16).

Investments are recognised and derecognised on a trade date where the purchase or sale of an investment is under a contract

whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially

measured at fair value, net of transaction costs.

Available-for-sale financial assets are measured at subsequent reporting dates at fair value. Gains and losses arising from

changes in fair value are recognised directly in other comprehensive income, until such investments are disposed of or are

determined to be impaired, at which time the cumulative gain or loss previously recognised in other comprehensive income

is included in the profit or loss for the period. Impairment losses recognised in profit or loss for equity investments classified

as available-for-sale are not subsequently reversed through profit or loss. The fair values of the available-for-sale financial

assets that are quoted in an active market are determined based on the published price quotations at the end of the reporting

period. The fair values of the available-for-sale financial assets that are not quoted in an active market and whose fair values

cannot be reliably measured are carried at cost less impairment.

44

31 March 2011



Non-current receivables, trade and other receivables

Non-current receivables, trade and other receivables that have fixed or determinable payments that are not quoted in an

active market are accounted for as “loans and receivables”. Loans and receivables are measured at amortised cost using the

effective interest method less impairment. Interest income is recognised by applying the effective interest method, except for

short-term receivables when the recognition of interest would be immaterial.

Cash and cash equivalents in the consolidated statement of cash flows

Cash and cash equivalents in the consolidated statement of cash flows comprise cash on hand and at bank and short-term,

highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk

of changes in value, such as fixed deposit with an original maturity period of three months or less, and exclude cash at bank,

fixed deposit or highly liquid investments which are pledged as security. For the purpose of the consolidated statement of

cash flows, cash and cash equivalents are presented net of bank overdrafts which are repayable on demand.

Impairment of financial assets

Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are impaired

where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the

financial asset, the estimated future cash flows of the investment have been impacted.

For available-for-sale equity instruments, a significant or prolonged decline in the fair value of the investment below its cost

is considered to be objective evidence of impairment.

For all other financial assets, objective evidence of impairment could include:

• significant financial difficulty of the issuer or counterparty; or

• default or delinquency in interest or principal payments; or

• it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually

are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables

could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the

portfolio past the average credit period, as well as observable changes in national or local economic conditions that correlate

with default on receivables.

For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying

amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment loss charged directly to profit or loss for all financial

assets with the exception of trade receivables and other receivables where the carrying amount is reduced through the use

of an allowance account. When trade receivables and other receivables are uncollectible, they are written-off against the

allowance account. Subsequent recoveries of amounts previously written-off are credited to the profit or loss. Changes in the

carrying amount of the allowance account are recognised in profit or loss.

45



When an available-for-sale financial asset is considered to be impaired, cumulative gains or losses previously recognised in

other comprehensive income are reclassified to profit or loss.

With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss

decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the

previously recognised impairment loss is reversed through profit or loss to the extent the carrying amount of the investment

at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not

been recognised.

In respect of available-for-sale equity instruments, impairment losses previously recognised in profit or loss are not reversed

through profit or loss. In respect of available-for-sale equity instruments carried at fair value, any subsequent increase in fair

value after an impairment loss is recognised in other comprehensive income.

Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it

transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group

neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred

asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the

Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to

recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

Financial Liabilities and Equity Instruments

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered

into and the definitions of a financial liability and an equity instrument.

Trade and other payables

Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at

amortised cost, using the effective interest method. Interest expense is recognised on an effective yield basis, except for short-

term payables when the recognition of interest would be immaterial.

Bank borrowings

Interest-bearing bank loans and bank overdrafts are initially measured at fair value, and are subsequently measured at

amortised cost, using the effective interest method. Any difference between the proceeds (net of transaction costs) and

the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the Group’s

accounting policy for borrowing costs.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its

liabilities. Equity instruments issued are recorded at the proceeds received, net of direct issue costs.

46

31 March 2011



Treasury shares

When the Company purchases its own equity share capital, the consideration paid, including any directly attributable costs,

is taken against “Treasury Shares” within equity. When the shares are subsequently disposed of, the realised gains or losses

on disposal of the treasury shares are recognised in equity.

Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they

expire.

Derivative Financial Instruments

The Group’s activities expose it primarily to the financial risks of changes in foreign exchange rates and interest rates. The

Group uses derivative financial instruments to mitigate the financial impact associated with foreign currency and interest rate

fluctuations relating to certain forecasted transactions.

Derivative financial instruments are initially measured at fair value on the contract date, and are remeasured to fair value at

subsequent reporting dates.

Changes in the fair value of derivative financial instruments that are not designated and not effective as hedges of future cash

flows are recognised immediately in profit or loss.

Investment Properties

Investment property, which is property held to earn rentals and/or for capital appreciation, is measured initially at its cost,

including transaction costs. Subsequent to initial recognition, investment property is measured at fair value. Gains or losses

arising from changes in the fair value of investment property are included in profit or loss for the period in which they arise.

Property, Plant and Equipment

Property, plant and equipment are carried at cost less accumulated depreciation and any accumulated impairment loss where

the recoverable amount of the asset is estimated to be lower than its carrying amount.

Depreciation

Depreciation is charged to write-off the cost of property, plant and equipment over their estimated useful lives using the

straight-line method as follows:

Category of property, plant and equipment Depreciation rates per annumLeasehold improvements - 10% to 331/3%Furniture, fixtures and equipment - 5% to 25%Machinery and equipment - 10% to 331/3%Motor vehicles - 10% to 331/3%Moulds and tools - 10% to 50%

47



Freehold land is not depreciated.

Leasehold land is depreciated over the period of the leases using the straight-line method.

Freehold buildings are depreciated over their estimated useful lives at 2% per annum using the straight-line method.

Leasehold buildings are depreciated over their estimated useful lives at 2% to 5% per annum using the straight-line method.

Fully depreciated assets still in use are retained in the financial statements.

The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any

changes in estimate accounted for on a prospective basis.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets.

The gain or loss on disposal or retirement of an item of property, plant and equipment is determined as the difference

between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

Intangible Assets

Goodwill

Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the acquisition date).

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interest in

the acquiree and the fair value of the acquirer’s previously held equity interest (if any) in the entity over net of the acquisition-

date amounts of the identifiable assets acquired and the liabilities assumed.

If, after reassessment, the Group’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of the

consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer’s

previously held equity interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain

purchase gain.

Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill

is allocated to each of the Group’s cash-generating units expected to benefit from the synergies of the combination. Cash-

generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is

an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying

amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit

and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment

loss recognised for goodwill is not reversed in a subsequent period.

On disposal of a subsidiary or joint venture, the attributable amount of goodwill is included in the determination of the profit

or loss on disposal.

48

31 March 2011



The Group’s policy for goodwill arising on the acquisition of an associate is described under “Interest in Associates” above.

Deferred Expenditure

Deferred expenditure represents the cost of acquiring the right of technical know-how for the production of new products

and expenditure incurred on the development of new products the commercial value of which is reasonably certain. The cost

is amortised, using the straight-line method, over a period of five years from the date of acquisition.

Trademark

The cost of acquiring rights to a trademark licence for the marketing and manufacturing of new products is amortised, using

the straight-line method, over the shorter of the period of the licence and twenty years.

Patent Rights

Patent rights are measured initially at purchase cost and are amortised, using the straight-line method, over their estimated

useful lives.

Corporate Club Membership

Investment in corporate club membership is held for long-term and is stated at cost less any impairment in net recoverable

value.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and where applicable,

direct labour costs and overheads that have been incurred in bringing the inventories to their present location and condition

calculated using the first-in, first-out method. Net realisable value is calculated as the actual or estimated selling price less all

further costs of production and the related costs of marketing, selling and distribution.

Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of

ownership to the lessee. All other leases are classified as operating leases.

The Group as Lessor

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct

costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and

recognised in profit or loss on a straight-line basis over the lease term.

The Group as Lessee

Assets held under finance leases are recognised as assets of the Group at their fair values at the inception of the lease. The

corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease

payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate

of interest on the remaining balance of the liability. The finance charges are recognised directly in profit or loss. Contingent

rentals are recognised as expenses in the periods in which they are incurred.

49



Rentals payable under operating leases are recognised in profit or loss on a straight-line basis over the term of the relevant

leases. Contingent rentals arising under operating leases are recognised as expenses in the periods in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The

aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another

systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

Impairment of Tangible and Intangible Assets Excluding Goodwill

At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to

determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists,

the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where it is

not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the

cash-generating unit to which the asset belongs.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually,

and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future

cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the

time value of money and the risks specific to the asset.

The extent of impairment was based on the net realisable value for those assets which are not expected to be further

deployed in operational use, while the estimates of value in use calculation for those assets which remain in operational use

have been adjusted to reflect the current level of business activities.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying

amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an

expense immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased

to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying

amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in

prior years. A reversal of an impairment loss is recognised as income immediately.

50

31 March 2011



Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is

probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the

obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the

end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is

measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those

cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party,

the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the

receivable can be measured reliably.

Share-based Payments

Equity-settled Share-based Payments

The fair value of the employee services received in exchange for the grant of options or shares is recognised as an expense

in the profit or loss with a corresponding increase in share-based payment reserve, or capital reserve in respect of options

granted by the Company’s ultimate holding company, over the vesting period.

Options granted by a Group entity pursuant to schemes approved by its respective shareholders were measured at fair value

(excluding the effect of non market-based vesting conditions) at the date of offer using the Black-Scholes pricing model. The

fair value determined at the offer date of the options is expensed on a straight-line basis over the vesting period, based on

the estimated number of shares that will eventually vest and adjusted for the effect of non market-based vesting conditions.

The expected life used in the model has been adjusted for the estimated effects of non-transferability, exercise restrictions

and behavioural considerations.

Certain directors and employees of the Group are also entitled to options to subscribe for the ordinary shares in the ultimate

holding company of the Company. The fair value of such options is determined by the ultimate holding company. The Group’s

attributable share of the fair value of such options is expensed on a straight-line basis over the vesting period.

The policy described above is applied to all equity-settled share-based payments that were granted after 22 November 2002

and vested after 1 January 2005. No amount has been recognised in the financial statements in respect of other equity-

settled share-based payments.

3. Revenue

The Group

2011 2010

S$’000 S$’000

Product sales 335,766 267,879

51


4. Other operating income

The Group

2011 2010

S$’000 S$’000

Commission income - 155

Dividend income from other investments - 915

Engineering development and design fee income 696 731

Interest income:

An associate - 4

Banks 570 136

Third parties 1,048 4,820

Gain on disposal of property, plant and equipment, net 530 30

Management fee income from associates 260 479

Operating lease income 160 80

Tooling income 516 255

Others 1,179 1,396

4,959 9,001

5. Profit before finance costs, exceptional items and share of results of associates

Profit before finance costs, exceptional items and share of results of associates is arrived at after charging (crediting) the following:

The Group

2011 2010

S$’000 S$’000

Amortisation of intangible assets - 507

Depreciation of property, plant and equipment 5,646 5,529

Directors’ remuneration:

Fees 170 155

Other emoluments 3,126 2,521

Employee benefits expense (excluding directors’ remuneration) 63,334 54,487Cost of defined contribution plans included in employee

benefits expense and directors’ remuneration 3,791 3,344

Allowance and write-off for inventories, net of write-back 2,966 3,258

Cost of inventories recognised as expense 237,880 182,060

Property, plant and equipment written-off 30 89

Research expenditure 8,855 9,308

52

31 March 2011


6. Finance costs

The Group

2011 2010

S$’000 S$’000

Interests on:

Bank loans, overdrafts and bills payable 4,567 4,726

Finance leases 6 5

4,573 4,731

7. Exceptional items

The Group

2011 2010

S$’000 S$’000

(Loss) Gain on disposal / de-registration / liquidation of associates, net (619) 83

Gain on de-registration / liquidation / disposal of subsidiaries 46 41

Allowance for impairment loss on investment in unquoted equity shares (10,218) (8,815)

Allowance for impairment loss on other investments (3,379) (4,486)

Allowance for doubtful non-current receivables (626) -

Loss in fair value of investment properties (620) -

Loss on dilution of interest in an associate - (2,079)Excess of share of fair value of identifiable net tangible assets

of a joint venture acquired over consideration paid - 10,074Excess of share of fair value of identifiable net tangible assets

of additional interest in an associate acquired over consideration paid - 890Cumulative exchange translation surplus realised as income

upon de-registration of a subsidiary - 3,735

Gain on disposal of other investments - 1,092

Expenses incurred for selective capital reduction - (1,132)Additional provision for warranty cost in respect of CIH Limited’s (“CIH”)

divestment in 2003 - (2,519)

Restructuring costs (note a) - (1,074)

(15,416) (4,190)

There is no income tax effect on exceptional items.

Note:

a) Restructuring costs relating to other investments comprised:

The Group

2011 2010

S$’000 S$’000

Allowance for doubtful receivables - (522)

Allowance for inventory - (596)

Write-back of costs and expenses on liquidation of subsidiaries - 44

- (1,074)

53


8. Income tax expense

The Group

2011 2010

S$’000 S$’000

Current taxation:

Provision for Singapore taxation in respect of profit for the financial year 169 43

Foreign tax charged on profits arising outside Singapore 4,092 2,309

Over-provision in respect of prior years (1,805) (29)

Withholding tax on overseas income 863 562

Deferred taxation expense 938 499

Share of taxation of associates (Note 13) 5,787 6,971

10,044 10,355

The income tax expense varied from the amount of income tax expense determined by applying the Singapore income tax

rate of 17% (2010 : 17%) to profit before taxation as a result of the following differences:

The Group

2011 2010

S$’000 S$’000


Income tax expense at statutory tax rate 5,775 7,569

Effect of different tax rate of overseas operations 779 1,115

Effect of changes in tax rates (182) (3)

Income not subject to tax (2,877) (6,340)

Expenses not deductible for tax purposes 5,758 5,526

Deferred tax assets not recognised 2,016 4,171

Recognition of previously unrecognised deferred tax assets (1,414) (2,724)

Over-provision in prior years, including those of associates (1,577) (433)

Withholding tax, including those of associates 1,571 911

Others 195 563

Total income tax expense at effective rates 10,044 10,355

54

31 March 2011


9. Earnings per share

The following data are used in computing basic and fully diluted earnings per share disclosed in the income statement:

a) Earnings

The Group

2011 2010

S$’000 S$’000

Profit attributable to equity holders of the Company 23,806 33,854

b) Number of shares

Group and Company

2011 2010

Weighted average number of ordinary shares used in calculating basic earnings per share 517,605,256 559,669,267

Adjustment for dilutive potential ordinary shares - -Weighted average number of ordinary shares used in

calculating diluted earnings per share, adjusted for the effects of all dilutive potential ordinary shares 517,605,256 559,669,267

There are no dilutive effects for 2011 and 2010 as the share options are out-of-money.

10. Investment properties

The Group

2011 2010

S$’000 S$’000

Balance at beginning of the financial year - -

Additions 12,434 -

Fair value loss (620) -

Currency realignment 388 -

Balance at end of the financial year 12,202 -

During the financial year, the Group acquired the investment properties, all situated in Australia, as part of the settlement

of the outstanding amounts due under the Tarway Loan (Note 19 c). The fair value of respective investment property at

31 March 2011 has been arrived at on the basis of valuation at 31 March 2011 or 15 April 2011 carried out by Lindsay

Wapper & Associates Valuation Services (“Lindsay”) or Jones Lang LaSalle Limited (“JLL”), independent property valuers.

Lindsay and JLL have appropriate qualifications and recent experience in the valuation of similar properties in the relevant

locations. The valuation of the respective property was arrived at by reference to market evidence of transaction prices for

similar properties in the same locations and conditions.

All of the Group’s investment properties are leased out under operating leases. During the financial year, rental income

amounted to S$89,000. Direct operating expenses arising from the investment properties amounted to S$84,000.

55


11. Property, plant and equipment

The Group

Freehold land and building

Leasehold land andbuildings

Leasehold improve-

ments

Furniture,fixtures and equipment

Machinery and

equipmentMotor

vehiclesMoulds

and tools Total

S$’000 S$’000 S$’000 S$’000 S$’000 S$’000 S$’000 S$’000

Cost:

Balance at 1 April 2010 3,141 28,151 6,470 15,133 33,555 1,999 11,980 100,429

Currency realignment (133) (2,589) (638) (1,018) (3,174) (175) (740) (8,467)

Additions - - 94 1,029 1,197 533 1,704 4,557

Disposals and write-offs - - (68) (897) (63) (224) (33) (1,285)

Reclassifications - - 396 (163) 664 30 (927) -

Balance at 31 March 2011 3,008 25,562 6,254 14,084 32,179 2,163 11,984 95,234

Accumulated depreciation:

Balance at 1 April 2010 669 7,405 3,709 12,615 22,366 1,342 9,528 57,634

Currency realignment (29) (943) (372) (819) (2,185) (118) (569) (5,035)

Charge for the financial year 41 854 758 898 2,037 231 827 5,646Eliminated on disposals and

write-offs - - (42) (744) (56) (194) (33) (1,069)

Reclassifications - - (308) (54) 584 7 (229) -

Balance at 31 March 2011 681 7,316 3,745 11,896 22,746 1,268 9,524 57,176

Accumulated impairment loss:

Balance at 1 April 2010 - - 73 215 289 - 66 643

Currency realignment - - (8) (22) (29) - (7) (66)

Balance at 31 March 2011 - - 65 193 260 - 59 577

Net book value:

Balance at 31 March 2011 2,327 18,246 2,444 1,995 9,173 895 2,401 37,481

56

31 March 2011


11. Property, plant and equipment (cont’d)

The Group

Freehold land and building

Leasehold land and buildings

Leasehold improve-

ments

Furniture,fixtures and equipment

Machinery and

equipmentMotor

vehiclesMoulds

and tools Total

S$’000 S$’000 S$’000 S$’000 S$’000 S$’000 S$’000 S$’000

Cost:

Balance at 1 April 2009 3,216 23,550 6,980 15,629 29,195 2,434 11,487 92,491

Currency realignment (75) (1,904) (535) (893) (2,314) (150) (575) (6,446)

Acquisition of a joint venture - 7,001 - 221 6,636 184 1,755 15,797

Additions - - 1,169 661 1,634 233 835 4,532

Disposals and write-offs - (496) (739) (272) (849) (525) (306) (3,187)

Disposal of a subsidiary - - (405) (213) (747) (177) (1,216) (2,758)

Balance at 31 March 2010 3,141 28,151 6,470 15,133 33,555 1,999 11,980 100,429


Balance at 1 April 2009 643 4,899 4,084 12,734 18,657 1,773 8,912 51,702

Currency realignment (18) (409) (310) (693) (1,476) (104) (398) (3,408)

Acquisition of a joint venture - 2,324 - 143 4,122 98 1,081 7,768

Charge for the financial year 44 742 944 851 2,002 180 766 5,529Eliminated on disposals and

write-offs - (151) (636) (242) (647) (473) (188) (2,337)Eliminated on disposal of a

subsidiary - - (373) (178) (292) (132) (645) (1,620)

Balance at 31 March 2010 669 7,405 3,709 12,615 22,366 1,342 9,528 57,634


Balance at 1 April 2009 - 78 251 272 810 49 667 2,127

Currency realignment - (5) (19) (22) (66) (4) (53) (169)Eliminated on disposals and

write-offs - (73) (104) - - - - (177)Eliminated on disposal of a

subsidiary - - (55) (35) (455) (45) (548) (1,138)

Balance at 31 March 2010 - - 73 215 289 - 66 643

Net book value:

Balance at 31 March 2010 2,472 20,746 2,688 2,303 10,900 657 2,386 42,152

57



The Company

Leasehold improvements

Furniture, fixtures and equipment

Motor vehicles Total

S$’000 S$’000 S$’000 S$’000

Cost:

Balance at 1 April 2010 67 1,410 340 1,817

Additions - 1 - 1

Disposals and write-offs - (2) - (2)

Balance at 31 March 2011 67 1,409 340 1,816


Balance at 1 April 2010 10 1,377 125 1,512

Charge for the financial year 13 14 34 61

Eliminated on disposals and write-offs - (1) - (1)

Balance at 31 March 2011 23 1,390 159 1,572

Net book value:

Balance at 31 March 2011 44 19 181 244

Cost:

Balance at 1 April 2009 159 1,496 379 2,034

Additions 67 21 197 285

Disposals and write-offs (159) (107) (236) (502)

Balance at 31 March 2010 67 1,410 340 1,817


Balance at 1 April 2009 159 1,427 307 1,893

Charge for the financial year 10 46 9 65

Eliminated on disposals and write-offs (159) (96) (191) (446)

Balance at 31 March 2010 10 1,377 125 1,512

Net book value:

Balance at 31 March 2010 57 33 215 305

The Group The Company

2011 2010 2011 2010

S$’000 S$’000 S$’000 S$’000

Net book value of leasehold improvements held under finance leases 4 99 - -

Net book value of motor vehicles held under finance leases 154 188 154 188

58

31 March 2011



Details of the properties owned by the Company’s subsidiaries and joint venture included in land and buildings are as follows:

Location Description Tenure

Hong Kong

Unit 2, 18/F,Wah Sing Industrial Building,12-14 Wah Sing Street,Kwai Chung, New Territories, Hong Kong

A 344-square metre warehouse 50 years from 1997

China

No. 76, Hui Feng Si Road,Zhongkai Hi-Tech IndustrialDevelopment Zone, HuizhouCity, Guangdong, China

Factory building for manufacturing plant, warehouse and office with built-in area of 41,770 square metres built on a 147,266-square metre industrial land

50 years from 2003

Block A and B, 28 DalingRoad, Shang Pai, HuizhouCity, Guangdong, China

Two residential buildings with total built-in area of 7,305 square metres

70 years from 2006

Flat 1207 and 1208, Tien Di Building,3046 Bao An South Road, Shenzhen, China

Two residential flats of approximately 190 square metres

50 years from 1991

No. 68, 168 Shanlian Road, Dachang Town, Baoshan District, Shanghai, China

Factory buildings for manufacturing plant, warehouse and office with built-in area of 25,361 square metres built on an approximately 34,000-square metreindustrial land

50 years from 2000

United KingdomEcclestone Road, Tovil,Maidstone,Kent ME15 6QP, England

Factory building for manufacturing plant, warehouse and office with built-in area of 3,090 square metres

Freehold

59


12. Interest in subsidiaries

The Company

2011 2010

S$’000 S$’000

Unquoted equity shares, at cost 392,590 392,807

Allowance for impairment loss (70,863) (10,900)

321,727 381,907

Loans to subsidiaries 18,287 20,272

Allowance for impairment loss (816) (770)

17,471 19,502

339,198 401,409

Details of the significant subsidiaries are set out in Note 36 to the financial statements.

During the financial year, the Company carried out a review of the recoverable amount of its investment in subsidiaries. The

Company estimated that the recoverable amount of certain subsidiaries were below its carrying value and accordingly the

Company recognised an allowance for impairment loss of S$60,409,000 (2010 : S$10,000,000) in these subsidiaries. The

estimated recoverable amount of these subsidiaries were based on fair value less cost to sell, which were determined with

reference to their respective net asset value.

Loans to subsidiaries form part of the Company’s net investment in the subsidiaries. Interest-free loans amount to S$2,352,000

(2010 : S$2,619,000). The remaining loans of S$15,935,000 (2010 : S$17,653,000) are interest bearing at interest rates

ranging from 3.40% to 4.53% (2010 : 3.38% to 6.66%) per annum. These amounts are unsecured and settlement is neither

planned nor likely to occur in the foreseeable future.

Amount due to a subsidiary

During the financial year, the Company entered into agreements pursuant to which an unsecured and non-interest bearing

amount of S$150,000,000 due to CIH is subordinated to the Company’s payment obligations under certain term loan

agreements (the “Subordinated Loan”). As a result, the earliest date for the Company to settle the Subordinated Loan is 20

July 2013. As at 31 March 2011, the carrying value of the Subordinated Loan of S$139,619,000, which also approximates

its fair value, represents the present value of the Subordinated Loan discounted at a rate of 3.30% per annum from 20 July

2013.

60

31 March 2011


13. Interest in associates


2011 2010 2011 2010

S$’000 S$’000 S$’000 S$’000

Quoted equity shares, at cost 167,130 167,377 140,085 140,085

Unquoted equity shares, at cost 23,783 34,545 28,438 36,859

190,913 201,922 168,523 176,944

Share of post-acquisition reserves 92,805 104,056 - -

Allowance for impairment loss (594) (1,126) (150) (565)

283,124 304,852 168,373 176,379

Market value of quoted equity shares at 31 March 109,297 129,686 75,916 97,217

Details of the significant associates are set out in Note 37 to the financial statements.

The issued shares of two of the Group’s associates are quoted. The shares of GP Batteries International Limited (“GP

Batteries”) are quoted on the SGX-ST and the shares of Meiloon Industrial Co., Ltd. (“Meiloon”) are quoted on the Taiwan

Stock Exchange Corporation.

The market value of the Group’s and the Company’s investment in GP Batteries was lower than its corresponding carrying

value in the Group’s and the Company’s financial statements as at 31 March 2011 and 2010. Management considered that

such market values did not reflect GP Batteries’ fair value to the Group and the Company, but instead the Group’s share

of GP Batteries’ net asset value represented a fairer reflection of the recoverable amount. Accordingly, no impairment loss

allowance was required as at 31 March 2011 and 2010.

The market value of the Group’s investment in Meiloon was lower than the corresponding carrying value in the Group’s

financial statements as at 31 March 2011 and 2010. As at 31 March 2011, management performed a recoverability analysis

on the carrying amount of the Group’s investment in Meiloon. After considering the transacted prices of the Meiloon shares

during the financial year ended 31 March 2011, the improvement in Meiloon’s results of operations and the potential

revaluation surplus on Meiloon’s land and building, management concluded no impairment loss allowance was required as

at 31 March 2011. As at 31 March 2010, the recoverable amount was determined based on the value in use calculations

using the cashflow projections based on financial budget approved by management, past performance and future market

development. A discount rate of 11.8%, based on an independent professional valuer’s assessment, was applied. Based on

the estimated recoverable amount, no impairment loss allowance was required as at 31 March 2010.

61


13. Interest in associates (cont’d)

The Group

2011 2010

S$’000 S$’000

a) The Group’s share of attributable profit of associates for the financial year is as follows:

Share of results 34,051 41,126

Share of taxation (Note 8) (5,787) (6,971)

Share of attributable profit 28,264 34,155

b) Summarised financial information in respect of the Group’s associates is set out below:

Total assets 1,607,043 1,651,011

Total liabilities (750,412) (768,227)

Net assets 856,631 882,784

Revenue 2,008,103 1,700,061


During the financial year, the Group recognised all losses of its associates. During the financial year ended 31 March 2010,

the Group did not recognise losses of an associate, in which the Group’s share of losses exceeded its interest therein, of

S$6,000. As at 31 March 2011, there were no accumulated unrecognised losses of associates (2010 : S$62,000).

62

31 March 2011


14. Investment in unquoted equity shares

The Group

2011 2010

S$’000 S$’000


Shareholder’s loans 22,097 25,662

63,190 62,230


12,247 22,454

The investment represents CIH’s 19% interest in Gerard Corporation Pty Ltd (“Gerard Corporation”). Gerard Corporation is

incorporated in Australia. Currently, the principal activities of the Gerard Corporation group of companies include trading

in cookware and kitchen equipment, packaging, freight forwarding, commercial property ownership and rural interests in

forestry and agriculture.

The shareholder’s loans form part of the Group’s net investment in Gerard Corporation. These loans are unsecured and are

not repayable within the next twelve months.

Movements in the allowance for impairment loss during the financial year are as follows:

The Group

2011 2010

S$’000 S$’000

Balance at beginning of the financial year 39,776 24,879

Charge for the financial year 10,218 8,815

Currency realignment 949 6,082

Balance at end of the financial year 50,943 39,776

As at 31 March 2011 and 2010, the estimated recoverable amount of the investment in Gerard Corporation was determined

with reference to the financial position of Gerard Corporation, and adjusted for certain discount factors. Allowance for

impairment loss for investment in unquoted equity shares for the financial year of S$10,218,000 (2010 : S$8,815,000) is

included in exceptional items (Note 7).

63


15. Non-current receivables

The Group

2011 2010

S$’000 S$’000

Unsecured non-current receivables:

Amount due from an associate of Gerard Corporation (note a) - 12,306

Amounts due from GSM (Holdings) Limited (note b) 18,013 -

Amounts due from Gerard Corporation and its subsidiary (note c) 4,528 -

Others 822 809

Allowance for doubtful non-current receivables (3,115) (1,909)

20,248 11,206

Secured non-current receivables (note d) 916 -

21,164 11,206

Movements in the allowance for doubtful non-current receivables are as follows:

The Group

2011 2010

S$’000 S$’000

Balance at beginning of the financial year 1,909 -

Charge for the financial year 1,380 781

Reclassification from current receivables - 1,081

Currency realignment (174) 47


Note:

a) Being CIH’s amount due from an associate of Gerard Corporation. During the financial year, as a result of restructuring,

GSM (Holdings) Limited (“GSMH”) assumed the liabilities from the associate (note b). Certain amount bears interest at

interest rates ranging from 5.25% to 6.66% per annum during the financial year ended 31 March 2010.

b) As at 31 March 2011, amount outstanding comprised (i) a non-trade receivable with principal sum of S$10,988,000

assumed from an associate of Gerard Corporation (note a) and accrued interest of S$606,000. The amount was

interest bearing at interest rates ranging from 5.25% to 6.66% per annum; and (ii) trade and other receivables of

S$6,419,000 (2010 : S$8,205,000) reclassified from receivables and prepayments. Certain amount bears interest at

5.25% (2010 : 5.25%) per annum.

Subsequent to 31 March 2011, the Group subscribed for a convertible note issued by GSMH, satisfied with the

principal sum of the non-trade receivable (Note 40).

64

31 March 2011


15. Non-current receivables (cont’d)

c) CIH advanced certain sums to Gerard Corporation and a subsidiary of Gerard Corporation (the “Non-Tarway Loan”).

As at 31 March 2011, total principal sum and interest receivable of the Non-Tarway Loan amounted to S$15,123,000

(2010 : S$14,216,000) (Note 19 d i).

During the financial year, the Group negotiated with Gerard Corporation on a repayment plan. A formal loan settlement

agreement was reached subsequent to 31 March 2011 pursuant to which an amount of A$7,750,000 (equivalent to

S$10,098,000) will be repaid before 31 March 2012 by instalments (the “Current portion of Non-Tarway Loan”,

(Note 19 d i)) and A$3,857,000 (equivalent to S$5,025,000) will be repaid during the financial year ending 31 March

2013 by instalments (the “Non-current portion of Non-Tarway Loan”).

Pursuant to the loan settlement agreement reached subsequent to 31 March 2011, the Non-Tarway Loan will be

interest free. Accordingly, the Non-current portion of Non-Tarway Loan was stated at its fair value of S$4,528,000 as

at 31 March 2011. During the financial year, the principal sum of the Non-Tarway Loan was interest bearing at interest

rates ranging from 6.75% to 6.83% (2010 : 6.75% to 6.83%) per annum.

d) In 2008, CIH granted a loan to a business partner to enable him to subscribe for new shares in a company. The loan

was due in January 2011 and part of the amount due was settled. The Group agreed with the debtor to repay the

remaining balance by instalments with the final instalment due on 31 March 2014. As at 31 March 2011, the amount

due before 31 March 2012 was included under receivables and prepayments (Note 19 d ii). During the financial year,

the loan was interest bearing at interest rates ranging from 4.50% to 5.53% (2010 : 5.18% to 6.02%) per annum.

The loan is secured by shares in the afore-mentioned company.

16. Other investments

The Group

2011 2010

S$’000 S$’000



2,896 5,108

Movements in the allowance for impairment loss during the financial year are as follows:

The Group

2011 2010

S$’000 S$’000


Charge for the financial year 3,379 4,486

Amount written-off during the financial year - (894)

Currency realignment (1,780) 209


65


16. Other investments (cont’d)

The estimated recoverable amount of other investments was determined with reference to the respective financial position

of the investments and adjusted for certain discount factors. During the financial year, the Group recognised an allowance

for impairment loss of S$3,379,000 (2010 : S$4,486,000). Such allowance for impairment loss is included in exceptional

items (Note 7).

17. Intangible assets

The Group

2011 2010

S$’000 S$’000

Goodwill 4,823 4,906

Other intangible assets 103 121

4,926 5,027

Movements of these intangible assets are as follows:

Goodwill

The Group

2011 2010

S$’000 S$’000

Cost:


Amount written-off during the financial year (214) -

Currency realignment (654) (578)




Amount written-off during the financial year (214) -

Currency realignment (571) (507)


Net book value:


66

31 March 2011


17. Intangible assets (cont’d)

The recoverable amount of goodwill is determined based on value in use calculations. The key assumptions for value in use

calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs.

Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of

money and risks specific to the business unit. Growth rate and changes in selling prices and direct costs are based on past

performance of the business unit and expected market development.

The recoverable amount of goodwill allocated to other investments of S$4,092,000 (2010 : S$4,092,000) is determined

based on the value in use calculation using cash flow projections derived from most recent financial budget approved

by management for the next five years using a discount rate of 15.00% (2010 : 15.00%). Growth rates of up to 5.00%

(2010 : 5.00%) are used during the five-year period to extrapolate cash flows. Cash flows beyond the five-year period are

extrapolated using a 1.00% (2010 : 1.00%) growth rate.

The recoverable amount of goodwill allocated to the electronics and acoustics business of S$475,000 (2010 : S$529,000)

is determined based on the value in use calculation using cash flow projections derived from most recent financial budget

approved by management for the next three years using a discount rate of 7.89% (2010 : 7.89%). Growth rates of up to

5.00% (2010 : 15.00%) are used during the three-year period to extrapolate cash flows. Cash flows beyond the three-year

period are extrapolated using a 3.00% (2010 : 3.00%) growth rate.

The amount of goodwill allocated to the automotive wire harness business of S$256,000 (2010 : S$285,000) is insignificant.

67


17. Intangible assets (cont’d)

Other Intangible Assets

The GroupDeferred

expenditure Trademark Patent rights Corporate club

membership Total

S$’000 S$’000 S$’000 S$’000 S$’000

Cost:

Balance at 1 April 2010 7,490 426 6,830 194 14,940

Currency realignment (764) (44) (697) - (1,505)

Balance at 31 March 2011 6,726 382 6,133 194 13,435

Accumulated amortisation:

Balance at 1 April 2010 6,724 341 2,596 - 9,661

Currency realignment (686) (35) (265) - (986)

Balance at 31 March 2011 6,038 306 2,331 - 8,675


Balance at 1 April 2010 766 85 4,234 73 5,158

Charge for the financial year - - - 18 18


Balance at 31 March 2011 688 76 3,802 91 4,657

Net book value:

Balance at 31 March 2011 - - - 103 103

Cost:

Balance at 1 April 2009 8,149 464 7,432 194 16,239

Currency realignment (659) (38) (602) - (1,299)

Balance at 31 March 2010 7,490 426 6,830 194 14,940

Accumulated amortisation:

Balance at 1 April 2009 7,316 371 2,283 - 9,970

Amortisation for the financial year - - 507 - 507


Balance at 31 March 2010 6,724 341 2,596 - 9,661


Balance at 1 April 2009 833 93 4,607 49 5,582

Charge for the financial year - - - 24 24


Balance at 31 March 2010 766 85 4,234 73 5,158

Net book value:

Balance at 31 March 2010 - - - 121 121

The amortisation expense has been included in administrative expenses.

68

31 March 2011


18. Inventories

The Group

2011 2010

S$’000 S$’000

Raw materials 19,604 20,825

Work-in-progress 3,500 3,624

Finished goods 28,843 27,532

51,947 51,981

19. Receivables and prepayments


2011 2010 2011 2010

S$’000 S$’000 S$’000 S$’000

Trade receivables from third parties 40,985 40,554 - -

Less: Allowance for doubtful trade receivables (1,279) (2,048) - -

39,706 38,506 - -

Deposits and prepayments 5,382 5,163 1,384 133

Due from related parties – trade (note a, Note 32) 850 326 - -

Due from associates – trade (note a) 476 413 - -

Due from associates – non-trade (note a) 35 1 - -

Amount retained for CIH’s divestment in 2003 (note b) - 7,332 - -Amount receivable relating to divestment of

interest in Gerard Corporation (note c) 9,576 47,589 - -

16,319 60,824 1,384 133

Other receivables (note d) 18,720 30,028 16 50

Less: Allowance for doubtful other receivables (5,362) (4,722) - -

13,358 25,306 16 50

69,383 124,636 1,400 183

69


19. Receivables and prepayments (cont’d)

The Group

2011 2010

S$’000 S$’000

Movements in the allowance for doubtful receivables are as follows:


Charge for the financial year, net 433 3,464

Amount utilised (186) (17,228)

Acquisition of a joint venture - 96

Reclassification to non-current receivables - (1,081)

Currency realignment (376) (1,403)


Allowance for doubtful receivables at end of the financial year comprises:

Doubtful trade receivables 1,279 2,048

Doubtful other receivables 5,362 4,722

6,641 6,770

Included in allowance for doubtful receivables were specific allowance against trade receivables and other receivables of

S$916,000 and S$5,339,000 respectively (2010 : S$1,005,000 and S$4,165,000 respectively). The allowance for doubtful

debts recognised represented the difference between the carrying amount of the related receivables and the present value

of the collectible amount. Such receivables were individually impaired either because a debt was significantly past due and

the debtor did not respond to repayment demands, or there were circumstances that indicate a debtor may not be able to

honour its obligations when the debt is due. The Group does not hold any collateral over these receivables.

Note:

a) The amounts due from associates and related parties are unsecured, non-interest bearing and repayable on demand.

b) In 2003, CIH and certain members of the Gerard family (the “Gerard Vendors”) disposed of their respective share of the

electrical wiring devices and installation systems (“EWDIS”) business in Australia to Schneider Electric SA (“Schneider”).

Part of the proceeds from disposal and the related interest receivable are retained to cover warranty claims for a period

of four years from 22 December 2003 (the “Retention Money”). As at 31 March 2011, the warranty claim issue

remained unresolved.

During the financial year ended 31 March 2010, CIH’s and the Gerard Vendors’ respective Retention Money were

pooled together (the “Pooled Retention Money”). On 11 June 2010, the Gerard Vendors executed an irrevocable

direction to Schneider (the “Irrevocable Direction”) to pay the entire Pooled Retention Money to the Group upon

resolution of the warranty claim issue. Hence, Gerard Vendors’ entitlement of approximately A$5.8 million as at 31

March 2011 will be used to settle part of the Tarway Loan outstanding (note c).

70

31 March 2011



During the financial year, A$7.0 million was released from the Pooled Retention Money to the Group, following the

provision by the Group of a A$7.0 million (equivalent to S$9,120,000) letter of credit in favour of Schneider (Note 30).

As at 31 March 2010, the Group’s entitlement to the Pooled Retention Money of approximately A$7.5 million was

stated net of provision against warranty claims. The amount is non-interest bearing.

The key sources of estimation uncertainty relating to the settlement of the warranty claims are discussed in Note 34 to

the financial statements.

c) The amount receivable (the “Tarway Loan”) arose from CIH’s divestment of a 33.39% interest in Gerard Corporation to

certain Gerard family members (the “Gerard Family”) in 2003 and 2005. As at 31 March 2011, the outstanding Tarway

Loan amounted to S$9,576,000 (equivalent to approximately A$7,350,000). Pursuant to a Deed of Settlement dated

2 November 2010, A$850,000 will be settled in cash in July 2011 and A$6,500,000 will be settled with the Gerard

Vendor’s entitlement to the Pooled Retention Money upon its release (note b) and cash.

As at 31 March 2010, total outstanding Tarway Loan amounted to S$47,589,000 (equivalent to approximately

A$37,089,000). During the financial year, the Gerard Family settled approximately A$30.2 million, of which

approximately A$20.9 million was in cash and A$9.3 million was with properties at market value (Note 10).

The Tarway Loan is secured by way of a charge over 34.33% of the issued shares in Gerard Corporation.

Principal sum of the Tarway Loan was interest bearing at 5.85% to 8.38% (2010 : 4.60% to 8.88%) per annum.

Subsequent to 30 June 2010, all amounts outstanding under the Tarway Loan had become interest free. The key

sources of estimation uncertainty relating to the settlement of the outstanding Tarway Loan are discussed in Note 34

to the financial statements.

d) Other receivables of the Group, net of allowance for doubtful debts, comprised mainly:

i) The Current portion of Non-Tarway Loan of S$10,098,000 (2010 : S$14,216,000) (Note 15 c);

ii) Portion of CIH’s loan to a business partner which is due for repayment before 31 March 2012 of S$101,000

(2010 : S$1,198,000) (Note 15 d); and

iii) CIH’s amounts due from its trade associates totalling S$79,000 (2010 : S$6,150,000). These advances are

unsecured and repayable on demand. Certain amount bears interest at 5.40% (2010 : 5.25% to 6.25%) per

annum.

Trade receivables are generally non-interest bearing with credit terms of up to 90 days (2010 : 90 days). The Group closely

monitors the credit quality of its trade receivables. For receivables that are not past due, they are considered collectible and

accordingly not impaired. Interest may be charged on past due trade receivables.

71



The age analysis of trade receivables that are past due but not impaired is as follows:

The Group

2011 2010

S$’000 S$’000

Past due 1 to 60 days 1,980 2,162

Past due 61 to 90 days 173 177

Past due 91 to 120 days 107 109

Past due more than 120 days 67 169

2,327 2,617

The Group has not provided for any impairment loss allowance in respect of the above-mentioned receivables as there has

not been a significant change in credit quality and the amounts are still considered recoverable. The Group does not hold any

collateral over these balances.

The age analysis of non-trade related receivables that are past due but not impaired is as follows:

The Group

2011 2010

S$’000 S$’000

Past due 1 to 60 days (note e) - 6,583

Past due 61 to 90 days - 57

Past due 91 to 120 days - -

Past due more than 120 days (note f) 1 11,176

1 17,816

Note:

e) Amount as at 31 March 2010 included a S$6,416,000 (equivalent to A$5,000,000) Tarway Loan instalment due on 31

March 2010 according to a repayment plan, which was settled subsequent to 31 March 2010. As at 31 March 2011,

there was no overdue amount under the Tarway Loan.

f) Amount as at 31 March 2010 comprised mainly part of the Non-Tarway Loan due from Gerard Corporation which

was due during the financial year ended 31 March 2010 and was not repaid. Subsequent to 31 March 2011, a loan

settlement agreement was reached pursuant to which such amount will be repaid by instalments during the financial

year ending 31 March 2012 and 2013 (Note 15 c).

The Group has not provided for any impairment loss allowance in respect of the above-mentioned receivables as the amounts

are still considered recoverable. Save for the amounts due under the Tarway Loan (note c), the Group does not hold any

collateral over these receivables.

72

31 March 2011


20. Bank balances, deposits and cash


2011 2010 2011 2010

S$’000 S$’000 S$’000 S$’000

Cash and bank balances 42,699 57,927 8,609 10,061

Fixed deposits 25,703 4,434 9,715 1,934

68,402 62,361 18,324 11,995

The carrying amounts of these assets approximate their fair values. Fixed deposits generally comprise deposits with an original

maturity period of three months or less. As at 31 March 2010, fixed deposits included share of a joint venture’s deposit

amounted to S$492,000 with an original maturity period over three months and was pledged to a bank for a short-term loan

granted to the joint venture (Note 25).

Fixed deposits bear interest rates ranging from 0.06% to 4.69% (2010 : 0.01% to 3.50%) per annum.

21. Trade and other payables


2011 2010 2011 2010

S$’000 S$’000 S$’000 S$’000

Trade payables:

Third parties 37,965 38,817 - -

Associates 605 563 - -

Other payables:

Third parties 5,932 6,261 109 714

Associates 985 2,199 950 1,159

Due to subsidiaries – non-trade, net (note a) - - 2,658 151,194

Accrued charges 15,886 15,104 1,313 1,045

61,373 62,944 5,030 154,112

Note:

a) The amount due to and from subsidiaries are presented on a net basis as the Company has the right to set-off the

amount due to and from subsidiaries within the Group. During the financial year, an amount of S$150,000,000 due by

the Company to CIH was reclassified to non-current liabilities (Note 12).

Trade payables have credit terms of up to 90 days (2010 : 120 days).

73


22. Provisions

The Group

2011 2010

S$’000 S$’000

Balance at beginning of the financial year 756 900

Amount utilised - (1)

Amount written-back (4) (134)

Currency realignment - (9)

Balance at end of the financial year 752 756

Provision was mainly for cost expected to be incurred by CIH in completing the disposal of the EWDIS business in 2003.

23. Obligations under finance leases

Minimum lease paymentsPresent value of

minimum lease payments

2011 2010 2011 2010

S$’000 S$’000 S$’000 S$’000

The Group

Amounts payable under finance leases:

Within one year 84 174 81 170

Within two to five years 54 148 52 143

138 322 133 313

Less: Future finance lease charges (5) (9) - -

Present value of finance lease obligations 133 313 133 313

Less: Amount due within twelve months as shown under current liabilities (81) (170)

Amount due for settlement after twelve months 52 143

74

31 March 2011


23. Obligations under finance leases (cont’d)

Minimum lease paymentsPresent value of

minimum lease payments

2011 2010 2011 2010

S$’000 S$’000 S$’000 S$’000

The Company

Amounts payable under finance leases:

Within one year 31 31 28 27

Within two to five years 54 86 52 81

85 117 80 108

Less: Future finance lease charges (5) (9) - -

Present value of finance lease obligations 80 108 80 108

Less: Amount due within twelve months as shown under current liabilities (28) (27)

Amount due for settlement after twelve months 52 81

Certain finance leases of the Group bear interest on a floating interest rate basis. The initial lease terms are between three

to four years (2010 : three to five years).

Interest rates on finance leases range from 1.21% to 4.20% (2010 : 1.20% to 10.79%) per annum.

The fair value of the Group’s lease obligations approximates their carrying amount.

24. Amount due to ultimate holding company

The Company’s immediate and ultimate holding company is Gold Peak Industries (Holdings) Limited (“Gold Peak”), a

company incorporated in Hong Kong and listed on The Stock Exchange of Hong Kong Limited. The amounts due to Gold

Peak are non-trade in nature, unsecured, non-interest bearing and repayable on demand.

75


25. Bank loans


2011 2010 2011 2010

S$’000 S$’000 S$’000 S$’000

Current liabilities

Current portion of long-term bank loans 24,091 96,081 20,260 89,186

Short-term bank loans 38,954 49,509 11,253 14,935

Import loans 3,130 2,378 - -

66,175 147,968 31,513 104,121

Non-current liabilities

Long-term bank loans due after one year 60,694 10,413 52,260 2,500

Total borrowings 126,869 158,381 83,773 106,621

Of which:

Secured - 514 - -

Unsecured 126,869 157,867 83,773 106,621

126,869 158,381 83,773 106,621

As at 31 March 2010, included in short-term bank loans was the share of a joint venture’s bank loan amounted to S$514,000

which was secured by the joint venture’s fixed deposit (Note 20).

As at 31 March 2011, bank loans of the Company amounting to S$70,020,000 are guaranteed by certain subsidiaries of the

Company.

Interest rates on secured short-term bank loan range from 1.15% to 1.79% (2010 : 1.15%) per annum. Interest rates on

other short-term bank loans and import loans range from 1.25% to 7.00% (2010 : 1.25% to 12.20%) per annum. Interest

rates on long-term bank loans range from 1.05% to 5.40% (2010 : 1.05% to 11.73%) per annum.

76

31 March 2011


26. Deferred tax assets and liabilities

Movements in the deferred tax assets and liabilities recognised by the Group are as follows:

Revaluation of investment

properties

Acceleratedtax

depreciationTax

losses

Other temporary

differences, net Total

S$’000 S$’000 S$’000 S$’000 S$’000

The Group

Deferred tax assets

Balance at 1 April 2010 - - - - -

Credit for the financial year 186 - - - 186

Currency realignment 6 - - - 6

Balance at 31 March 2011 192 - - - 192

Deferred tax liabilities

Balance at 1 April 2009 - 208 (54) 1,219 1,373

Acquisition of a joint venture - - - 1,497 1,497

(Credit) Charge for the financial year - (61) 50 510 499

Transfer to current tax payable - - - (626) (626)

Currency realignment - (14) 4 (36) (46)

Balance at 31 March 2010 - 133 - 2,564 2,697

Charge for the financial year - 58 - 1,066 1,124

Currency realignment - (16) - (185) (201)

Balance at 31 March 2011 - 175 - 3,445 3,620

Movements in the deferred tax liabilities recognised by the Company are as follows:

Accelerated tax

depreciation

Other temporary

differences, net Total

S$’000 S$’000 S$’000

The Company

Deferred tax liabilities

Balance at 1 April 2009 12 67 79

(Credit) Charge for the financial year (1) 124 123

Balance at 31 March 2010 11 191 202

Credit for the financial year (3) (120) (123)

Balance at 31 March 2011 8 71 79

As at 31 March 2011, subsidiaries of the Group have potential tax benefits of approximately S$4,971,000 (2010 :

S$9,884,000) arising from unutilised tax losses, unabsorbed wear and tear allowances and other temporary differences,

which are available for set-off against future taxable profits. These potential tax benefits have not been recognised in the

financial statements due to the uncertainty of its recoverability. The use of these potential tax benefits 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 subsidiaries operate.

77


26. Deferred tax assets and liabilities (cont’d)

As at 31 March 2011, the aggregate amount of temporary differences associated with undistributed earnings of subsidiaries

for which deferred tax liabilities have not been recognised is S$7,021,000 (2010 : S$3,886,000). No liability has been

recognised in respect of these differences because the Group is in a position to control the timing of the reversal of the

temporary differences and it is probable that such differences will not reverse in the foreseeable future.

27. Issued capital, treasury shares, share-based payments and dividends

a) Issued capital

Group and Company

Number of ordinary shares Issued capital

2011 2010 2011 2010

S$’000 S$’000

Issued and fully paid up:

At beginning of the financial year 521,030,482 576,601,925 286,157 304,371Cancellation of issued shares pursuant to a

selective capital reduction - (55,681,443) - (18,264)Issue of shares under the Company’s Share

Option Scheme 1999 (the “1999 Scheme”) 328,000 110,000 150 50

At end of the financial year 521,358,482 521,030,482 286,307 286,157

Fully paid ordinary shares, other than those held by the Company as treasury shares, carry one vote per share and carry

a right to dividends as and when declared by the Company.

During the financial year ended 31 March 2010, the Company and its indirect wholly owned subsidiary, Tarway Two

Pty Ltd (“Tarway”), entered into a conditional agreement (the “Share Cancellation Agreement”) with Belvedire Pty Ltd

(“Belvedire”) and various parties representing the Gerard Vendors on 9 July 2009 to:

i) cancel 55,681,443 ordinary shares (the “Relevant Shares”) in the capital of the Company, representing

approximately 9.66% of the ordinary shares in the then issued capital of the Company, held by Belvedire by way

of a selective capital reduction (the “SCR”); and

ii) to make a cash distribution of S$0.328 for each Relevant Share, or approximately S$18,264,000 in aggregate

(the “Cancellation Monies”) to Belvedire, to be satisfied by the Company setting off the Cancellation Monies due

to Belvedire against the principal amounts outstanding under the Tarway Loan.

The Company obtained approval of the SCR and the Share Cancellation Agreement by its shareholders at a shareholders’

meeting held on 19 November 2009, and the sanction of the SCR by the High Court of Singapore on 3 December

2009. The SCR had become effective on 11 December 2009 under Section 78G of the Companies Act, Chapter 50 of

Singapore. Accordingly, the number of issued ordinary shares was reduced by 55,681,443 and the amount of issued

capital was reduced by approximately S$18,264,000.

78

31 March 2011


27. Issued capital, treasury shares, share-based payments and dividends (cont’d)

b) Treasury shares

Group and Company

2011 2010 2011 2010

Number of ordinary shares S$’000 S$’000

At beginning of the financial year - - - -

On-market purchases 10,892,000 - 6,159 -

At end of the financial year 10,892,000 - 6,159 -

Treasury shares relate to ordinary shares of the Company that are held by the Company.

During the financial year, the Company purchased 10,892,000 of its ordinary shares by way of on-market purchases at

share prices ranging from S$0.435 to S$0.595.

c) Share-based payments

i) Equity-settled share option scheme of the Company

The Company offered options to eligible grantees to subscribe for the ordinary shares in the Company under the

1999 Scheme. The duration of the 1999 Scheme reached its maximum period of ten years on 31 March 2010

and ceased to operate accordingly. However, options previously granted under the 1999 Scheme continue to be

exercisable in accordance with the regulations of the 1999 Scheme.

The 1999 Scheme is administered by the Remuneration Committee. Exercise price of options equals to the

average of the last dealt prices for the shares of the Company on the SGX-ST for the last three market days for

which there was trading in the Company’s shares, immediately preceding the date of offer. The Remuneration

Committee had discretion to fix the exercise price at a discount not exceeding 20% to the above price. The

vesting period was one year from the date of offer for options granted without discount, or two years for options

granted at a discount. The expiry date for options offered to eligible grantees that hold executive positions,

including the executive directors, is ten years from the date of offer, or five years for other eligible grantees.

Unexercised options are cancelled upon occurrence of certain events, including when the option holder ceases

to be employed by the Group.

79



Details of the Company’s options outstanding during the financial year are as follows:

2011 2010

Number of options

Weightedaverage

exercise priceNumber of

options

Weightedaverage

exercise price

‘000 S$ ‘000 S$

Outstanding at beginning of the financial year 9,687 0.839 10,332 0.838

Cancelled (392) 0.707 (535) 0.896

Exercised (328) 0.456 (110) 0.456

Outstanding at end of the financial year 8,967 0.859 9,687 0.839

Exercisable at end of the financial year 8,967 0.859 9,687 0.839

The weighted average share price at the date of exercise for options exercised during the financial year was

S$0.51 (2010 : S$0.50). The options outstanding at the end of the financial year have a weighted average

remaining contractual life of 2.2 years (2010 : 3.1 years). The 1999 Scheme ceased to operate on 31 March 2010.

No options were offered during the financial year ended 31 March 2010.

ii) During the financial year, Gold Peak granted options to its directors and executives, including directors and

executives of the Company and its subsidiaries, to subscribe for ordinary shares of Gold Peak. As a result, the

Group and the Company recognised S$614,000 and S$40,000 as expenses relating to equity-settled share-

based payment transactions respectively (2010 : S$Nil and S$Nil respectively) and are included in administrative

expenses.

d) Dividends

Group and Company

2011 2010

S$’000 S$’000

i) Dividends paid during the financial year are as follows:

Final tax-exempt (1-tier) dividend of 2.00 Singapore cents (“S cents”) per ordinary share for the financial year ended 31 March 2010 10,427 -

Final tax-exempt (1-tier) dividend of 1.00 S cent per ordinary share for the financial year ended 31 March 2009 - 5,766

Interim tax-exempt (1-tier) dividend of 1.50 S cents per ordinary share for the financial year ended 31 March 2011 7,744 -

Interim tax-exempt (1-tier) dividend of 1.00 S cent per ordinary share for the financial year ended 31 March 2010 - 5,209

18,171 10,975

80

31 March 2011



Group and Company

2011 2010

S$’000 S$’000

ii) Dividends proposed before these financial statements were authorised and not included as liabilities in these financial statements are as follows:

Final tax-exempt (1-tier) dividend of 1.50 S cents (2010 : 2.00 S cents) per ordinary share 7,657 10,427

Special tax-exempt (1-tier) dividend of 1.50 S cents (2010 : Nil S cent) per ordinary share 7,657 -

15,314 10,427

The proposed dividend amount in respect of the financial year ended 31 March 2011 of S$15,314,000 is based

on 510,466,482 issued shares as at 30 May 2011. The proposed dividends are subject to shareholders’ approval

at the forthcoming annual general meeting of the Company.

The proposed dividend amount in respect of the financial year ended 31 March 2010 of S$10,427,000 was based

on 521,358,482 issued shares as at 29 May 2010. The said dividend was approved by the shareholders at the

annual general meeting of the Company held on 30 July 2010 and was paid in September 2010.

28. Lease commitments

The Group as lessee


2011 2010 2011 2010

S$’000 S$’000 S$’000 S$’000

Minimum lease payments paid under operating leases recognised as an expense 4,873 5,199 50 203

The Group and the Company have outstanding commitments under non-cancellable operating leases, which fall due as

follows:


2011 2010 2011 2010

S$’000 S$’000 S$’000 S$’000

Within one year 3,019 3,398 13 50

Within two to five years 2,874 4,005 - 13

After five years 33 254 - -

5,926 7,657 13 63

Operating lease payments represent rentals payable by the Group for rental of office and factory premises, motor vehicles

and plant and machinery. Leases are negotiated for lease terms of between three months to ten years except for factory

premises, the lease terms of which are twenty years.

81


28. Lease commitments (cont’d)

The Group as lessor

The Group rents outs its investment properties under operating leases. As at 31 March 2011, the leases have unexpired terms

of approximately three months to thirty-three months. The leases have renewal options and escalation clauses included in

the contracts.

The Group has contracted with tenants for the following future minimum lease payments:

The Group

2011 2010

S$’000 S$’000

Within one year 248 -

Within two to five years 275 -

523 -

29. Capital commitments


2011 2010 2011 2010

S$’000 S$’000 S$’000 S$’000

Capital expenditure:Commitments for the acquisition of

property, plant and equipment 174 321 15 -

30. Contingent liabilities (unsecured)


2011 2010 2011 2010

S$’000 S$’000 S$’000 S$’000

Export bills discounted with recourse 765 624 - -

Outstanding letter of credit (Note 19 b) 9,120 - - -

Guarantees given to certain banks in respect of banking facilities utilised by:

Subsidiaries - - 40,273 40,928

Associates 756 14,355 756 13,592

The maximum amount the Group and the Company could become liable is as shown above.

The financial effects relating to financial guarantee contracts issued by the Company are insignificant to the financial

statements of the Company and therefore are not recognised.

82

31 March 2011


31. Segment information

The Group’s businesses are organised into four segments based on the types of products that they provide, as follows:

Electronics and acoustics

The Group designs, manufactures and sells professional audio products and “KEF” brand loudspeakers. Associates of this

business segment are mainly engaged in the manufacturing of high precision parts and components used in electronics

products.

Automotive wire harness

The Group supplies automotive wire harness to automotive manufacturers.

Batteries

The Group’s associate, GP Batteries, manufactures, develops and markets batteries and battery-related products.

Other investments

Comprises the Group’s non-core investments and assets, including CIH’s investment in unquoted equity shares and other

investments and the Group’s associates, Linkz Industries Limited and Meiloon. During the financial year ended 31 March

2010, this business segment also included CIH’s light fittings business. The Group exited from the light fittings business by

31 March 2010.

The executive directors of the Company and management monitor the results of these business segments for the purpose of

making decisions about resource allocation and performance assessment. Segment performance is evaluated based on the

Group’s share of profit before taxation contributed by each business segment. Investment related finance cost and income

taxes, which are managed on a group basis, are not allocated to the business segments.

Information regarding the Group’s operating segments is presented below.

83


31. Segment information (cont’d)

a) Operating segments


Automotive wire harness Batteries

Other investments Elimination Consolidated

S$’000 S$’000 S$’000 S$’000 S$’000 S$’000

2011

Revenue

External revenue 242,303 93,463 - - - 335,766

Inter-segment revenue - - - - - -

Total revenue 242,303 93,463 - - - 335,766

ResultsContribution before

exceptional items and taxation 23,350 14,438 12,795 1,706 - 52,289

Exceptional items (Note 7) (533) - - (14,883) - (15,416)

Contribution after exceptional items and before taxation 22,817 14,438 12,795 (13,177) - 36,873

Assets and liabilities

Assets 180,911 71,581 141,865 181,157 (11,256) 564,258

Liabilities 69,313 36,114 - 12,435 (11,256) 106,606

Other information

Interest income 117 145 - 997 - 1,259

Finance costs 292 687 - 162 - 1,141

Share of results of associates 9,418 6,135 12,899 5,599 - 34,051

Depreciation and amortisation 4,232 1,205 - 209 - 5,646

Impairment on:

investment in unquoted equity shares - - - 10,218 - 10,218

other investments - - - 3,379 - 3,379

intangible assets - - - 18 - 18

Fair value loss on investment properties - - - 620 - 620

Interest in associates 22,945 9,628 141,865 108,686 - 283,124

Additions of property, plant and equipment 3,980 576 - 1 - 4,557

Additions of investment properties - - - 12,434 - 12,434

84

31 March 2011




Automotivewire harness Batteries

Other investments Elimination Consolidated

S$’000 S$’000 S$’000 S$’000 S$’000 S$’000

2010

Revenue

External revenue 218,664 46,692 - 2,523 - 267,879

Inter-segment revenue - - - - - -

Total revenue 218,664 46,692 - 2,523 - 267,879

ResultsContribution before

exceptional items and taxation 15,984 8,375 23,729 2,850 - 50,938

Exceptional items (Note 7) 146 10,011 890 (15,237) - (4,190)Contribution after

exceptional items and before taxation 16,130 18,386 24,619 (12,387) - 46,748

Assets and liabilities

Assets 182,421 68,496 152,931 238,143 (11,677) 630,314

Liabilities 72,659 44,861 - 10,889 (11,677) 116,732

Other information

Interest income 235 140 - 4,665 (80) 4,960

Finance costs 1,455 526 - 243 (80) 2,144

Share of results of associates 8,861 4,131 23,729 4,405 - 41,126

Depreciation and amortisation 5,077 778 - 181 - 6,036

Impairment on:

investment in unquoted equity shares - - - 8,815 - 8,815

other investments - - - 4,486 - 4,486

intangible assets - - - 24 - 24

Interest in associates 30,050 7,469 152,931 114,402 - 304,852Additions of property, plant

and equipment 3,648 881 - 3 - 4,532

85



Reconciliation of the operating segment results, segment assets, segment liabilities, interest income and finance costs

are provided as follows:

2011 2010

S$’000 S$’000

ResultsContribution after exceptional items and before taxation

per reportable segments 36,873 46,748

Unallocated finance costs, net (3,073) (2,587)

Taxation (10,044) (10,355)

Taxation attributable to non-controlling interests’ share of results 50 48

Profit attributable to equity holders of the Company 23,806 33,854

Assets

Per reportable segments 564,258 630,314

Other unallocated assets 269 10

Consolidated 564,527 630,324

Liabilities


Unallocated bank loans and finance lease obligations 83,853 106,729

Other unallocated liabilities 10,891 12,624


Interest income


Unallocated interest income 359 -


Finance costs


Unallocated finance costs 3,432 2,587


86

31 March 2011



b) Geographical information

Revenue analysed by the location of the customers or the shipment destination, where appropriate, is as follows:

2011 2010

S$’000 S$’000

Singapore 1,381 1,941

PRC, Hong Kong and Taiwan 126,415 77,755

Other Asian countries 17,785 15,809

Asia 145,581 95,505

United Kingdom and Germany 39,386 42,400

Other European countries 43,017 39,595

Europe 82,403 81,995

United States of America 89,275 73,999

Other American countries 14,204 11,552

America 103,479 85,551

Others 4,303 4,828

Total 335,766 267,879

Non-current assets analysed by the geographical location in which the assets are located is as follows:

2011 2010

S$’000 S$’000

Singapore 142,150 153,238

PRC, Hong Kong and Taiwan 175,516 190,459

Australia 12,202 -

Others 7,865 8,334

Total 337,733 352,031

Non-current assets comprise investment properties, property, plant and equipment, interest in associates and intangible

assets.

87



c) The amount of revenue derived from each single external customer which exceeded 10% of the Group’s revenue is as

follows:

2011 2010

S$’000 S$’000

Customer A Electronics and acoustics segment 48,751 43,532

Customer B Automotive wire harness segment 42,840 -

32. Related party transactions and balances

Related parties are entities with common direct or indirect shareholders and/or directors. Parties are considered to be related

if one party has the ability to control the other party or exercise significant influence over the other party in making financial

and operating decisions. Related companies in these financial statements refer to members of the ultimate holding company’s

group of companies. For this Note 32 purposes, associates also include those that are associates of the ultimate holding and/

or related companies.

Transactions between the Company and its subsidiaries, and among its subsidiaries, have been eliminated on consolidation

and are not disclosed in this note.

Transactions between the Group and its joint venture have been eliminated on consolidation to the extent of the Group’s

interest and where applicable, the amount not eliminated is disclosed in this note.

In addition to the related party information disclosed elsewhere in the financial statements, the Group has significant

transactions with related parties on terms agreed between the parties as follows:

The Group

Associates Related companies

2011 2010 2011 2010

S$’000 S$’000 S$’000 S$’000

Sales 6,186 2,184 - -

Licence fee - - (1,025) (1,011)

Purchases (3,564) (2,901) - -

Rental expenses (51) (38) (516) (525)

Purchases of property, plant and equipment - - - (162)

Engineering development and design fee income 234 125 - -

88

31 March 2011


32. Related party transactions and balances (cont’d)

In addition to the related party information disclosed elsewhere in the financial statements, the Group and the Company has

dividend receivable from related parties as at the end of the financial year as follows:


2011 2010 2011 2010

S$’000 S$’000 S$’000 S$’000

Associates 486 - - -

Subsidiaries - - 14,669 15,704

The remuneration of key management personnel is as follows:

The Group

2011 2010

S$’000 S$’000

Short-term benefits (including directors’ fees) 4,987 4,539

Post employment benefits 174 147

Cost of options granted by ultimate holding company 172 -

5,333 4,686

33. FRS yet to be adopted

At the date of authorisation of these financial statements, the following FRS and amendments to FRS that are relevant to the

Group were issued but not effective:

FRS 24 - Related Party Disclosures (Revised)

Amendments arising from improvements to FRS (issued in October 2010)

The Group’s assessment is set out below:

FRS 24 (Revised) is effective for annual periods beginning on or after 1 January 2011. The revised standard clarifies the

definition of a related party and consequently additional parties may be identified as related to the reporting entity. In the

period of initial adoption, the changes to related party disclosures, if any, will be applied retrospectively with restatement of

the comparative information. As FRS 24 (Revised) is a disclosure standard, it will have no impact on the financial position on

the Group and the Company upon implementation.

Management anticipates that the adoption of the above FRS and amendments to FRS that were issued but not effective until

future periods will not have a material impact on the financial statements of the Group and of the Company in the period

of their initial adoption.

89


34. Critical accounting judgements and key sources of estimation uncertainty

In the application of the Group’s accounting policies, which are described in Note 2, management is required to make

judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent

from other sources. The estimates and associated assumptions are based on historical experience and other factors that are

considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised

in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future

periods if the revision affects both current and future periods.

Critical Judgements in Applying the Group’s Accounting Policies

Apart from those involving estimations (see below), management is of the view that there are no critical judgements that

have a significant effect on the amounts recognised in the financial statements.

Key Sources of Estimation Uncertainty

In addition to the estimates and underlying assumptions mentioned elsewhere in the financial statements, the key assumptions

concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, 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.

Impairment of Goodwill

The Group estimates the value in use of the cash-generating units to which the goodwill is allocated in determining whether

goodwill requires any impairment. This requires the Group to estimate the future cash flows expected from the cash-

generating units and an appropriate discount rate in order to calculate the present value of the future cash flows. Details of

the carrying value of goodwill are stated in Note 17.

Impairment of Property, Plant and Equipment

Property, plant and equipment are reviewed for impairment whenever there is any indication that the assets are impaired. If

any such indication exists, the recoverable amount (i.e. higher of the fair value less cost to sell and value in use) of the asset is

estimated to determine the impairment loss. Details of the carrying amount of the property, plant and equipment are stated

in Note 11.

Impairment of the Company’s Investment in Subsidiaries and Associates

The Company’s investment in subsidiaries and associates is reviewed for impairment whenever there is any indication that

the investment may be impaired. The impairment allowance provided during the financial year, the basis of estimating the

recoverable amount and the carrying value of the investment in subsidiaries and associates are stated in Notes 12 and 13

respectively.

90

31 March 2011


34. Critical accounting judgements and key sources of estimation uncertainty (cont’d)

Fair Value and Impairment of Unquoted Available-for-sale Financial Assets

Management has determined that the fair value of the Group’s unquoted available-for-sale financial assets, comprising

investment in unquoted equity shares and other investments, cannot be reliably measured and accordingly, these unquoted

available-for-sale financial assets are stated at cost, less impairment. The impairment allowance provided during the financial

year, the basis of estimating the recoverable amount and the carrying value of the unquoted available-for-sale financial assets

are stated in Notes 14 and 16.

Allowance for Inventory Obsolescence

The carrying amount of inventories, stated in Note 18, is progressively reduced based on the age and type of inventories.

These estimates of realisable values are made by management after taking into account historical and forecast selling prices.

Allowance for Bad and Doubtful Debts

The policy for allowances for bad and doubtful debts of the Group is based on the evaluation of collectibility and aging

analysis of accounts and on management’s judgement. A considerable amount of judgement is required in assessing the

ultimate recoverability of these receivables, including the current creditworthiness and the past collection history of each

customer. If the financial conditions of customers of the Group were to deteriorate, resulting in the impairment of their ability

to make payments, additional allowances may be required. Details of the carrying amount of the receivables are stated in

Notes 15 and 19.

Recoverability of Amount due from the Gerard Family

The Gerard Family has substantially repaid the Tarway Loan in accordance with the agreed schedule. Of the unsettled amount

of A$7,350,000, A$850,000 will be settled in cash in July 2011 while the remaining A$6,500,000 will be settled with the

Gerard Vendor’s share of the Pooled Retention Money upon its release and cash. Management is confident of the recovery

of the Tarway Loan after considering the possible favourable outcome of the litigation and the Gerard Family’s good past

repayment record (Note 19).

Recoverability of Non-Tarway Loan

Gerard Corporation plans to realise one of its properties to fund the repayment of the Non-Tarway Loan. Therefore, full

settlement of the Non-Tarway Loan may depend on the timing of disposal of the property, the actual amount of proceed

from disposal and its ability to settle the debts in priority to other liabilities in Gerard Corporation. On 1 June 2011, Gerard

Corporation settled an A$1.0 million instalment, well ahead of its due date of 31 August 2011. Given Gerard Family’s good

payment record, Gerard Corporation’s commitment to raise fund to repay the Non-Tarway Loan, the value of the property

and instalment payment received well ahead of due date, no impairment loss allowance on the Non-Tarway Loan was made

as at 31 March 2011 (Notes 15 and 19).

Recoverability of the Amounts due from GSMH

Management has discussed with the management of GSMH on the business prospect of GSMH and reviewed the financial

projections prepared by the management of GSMH. GSMH’s ability to generate sufficient cash flow to repay the amounts

due to the Group depends on whether GSMH can achieve the projected financial results. Management has assessed the

recoverability of the amounts due from GSMH and made necessary amount of impairment loss allowance (Note 15).

91


34. Critical accounting judgements and key sources of estimation uncertainty (cont’d)

Warranty Claims Associated with CIH’s Disposal of the EWDIS Business

CIH’s disposal of the EWDIS business to Schneider included a warranty clause for contingencies. Prior to the expiry of the

warranty period, an intellectual property claim was instituted against the disposed EWDIS business in Australia. As at 31

March 2011, the litigation has not yet been resolved. On 29 April 2011, the Australian Court dismissed the case but an

appeal was filed by the plaintiff. The result of this claim and the timing of the resolution affect the final discharge of the

Group’s warranty liabilities and the release of the Pooled Retention Money retained by Schneider.

Management believes that the intellectual property claim is without merits and is expected to be decided in the Group’s

favour, without any material claim against the retention monies outstanding. The Group has set aside provision to cover

liabilities related to the identified claims (Note 19) and other uncertainties such as legal and professional fees (Note 22).

35. Financial instruments, financial risk and capital risk management

a) Categories of financial instruments

The following table sets out the financial instruments as at the end of the reporting period:


2011 2010 2011 2010

S$’000 S$’000 S$’000 S$’000

Financial assetsLoans and receivables

(including cash and bank balances) 155,660 196,070 33,009 27,749

Available-for-sale financial assets 15,143 27,562 - -

Financial liabilities

Amortised cost 189,707 222,705 228,778 261,013

b) Financial risk management policies and objectives

The Group’s major financial instruments include non-current receivables, trade and other receivables, trade and other

payables, bank balances and bank loans. Details of these financial instruments are disclosed in the respective notes. The

Group does not hold or issue derivative financial instruments for speculative purposes. The Group’s holding of available-

for-sale financial assets, presented under investment in unquoted equity shares (Note 14) and other investments (Note

16), are not quoted in active markets and are held for long-term strategic purposes.

The risks associated with the Group’s major financial instruments include credit risk, interest rate risk, foreign currency

risk and liquidity risk. The policies on how to manage these risks are set out in this Note 35.

Management manages and monitors these exposures to ensure appropriate measures are implemented on a timely

and effective manner. The Group’s overall strategy remains unchanged from prior year.

92

31 March 2011


35. Financial instruments, financial risk and capital risk management (cont’d)

c) Credit risk management

The Group manages credit risk by evaluating the counterparties’ credit worthiness before any transaction take place,

ongoing credit evaluation of the counterparties’ financial position, limiting the aggregate financial exposure to any

individual counterparty and requiring counterparties to provide letters of credit or other forms of security, if considered

necessary.

The Group places its cash and fixed deposits with reputable financial institutions.

As disclosed under Note 31, the revenue derived from certain customers exceeded 10% of the Group’s revenue. Save

for the credit exposure to such customers, the Group has no major concentration of credit risk in respect of its trade

receivables. The Group has concentration of credit risk over non-current receivables and other receivables, due to the

Non-Tarway Loan and amounts due from GSMH (Notes 15 and 19). Key sources of estimation uncertainty relating to

the recoverability of the Non-Tarway Loan and amounts due from GSMH are discussed in Note 34.

The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, and the

contingent liabilities arising from guarantees given to banks (Note 30), represents the Group’s maximum exposure to

credit risk without taking account of the value of any collateral or other security obtained.

d) Interest rate risk management

The interest rate risk exposure of the Group mainly arises from its interest bearing debts and interest bearing assets,

which are substantially bearing interest at floating rates. The Group considers, where appropriate, to use derivative

financial instruments to mitigate the financial impact associated with interest rates fluctuations relating to certain

forecasted transactions.

If interest rate had been 50 basis points higher or lower and all other variables were held constant:

i) consolidated interest income for the financial year would increase or decrease by S$236,000 (2010 : S$423,000).

ii) consolidated finance costs for the financial year would increase or decrease by S$728,000 (2010 : S$885,000).

e) Foreign currency risk management

The Group’s monetary assets and liabilities are mainly denominated in United States dollar, Euro, Hong Kong dollar,

Renminbi, Australian dollar and Singapore dollar. Exposures to foreign currency risks are managed as far as possible

by matching monetary assets and liabilities in the same currency denomination and supplemented with appropriate

financial instruments where necessary. The Group considers, where appropriate, to use derivative financial instruments

to mitigate the financial impact associated with foreign currency fluctuations relating to certain forecasted transactions.

93



The Group’s significant net foreign currency denominated monetary assets (liabilities) exposures relative to the

respective functional currency of the Company, its subsidiaries and joint venture at the end of the reporting period are

summarised below:

The Group

2011 2010

S$’000 S$’000

Australian dollar 17,981 10,051

Euro (3,233) (486)

Hong Kong dollar 16,482 19,842

Renminbi 4,783 (1,348)

Singapore dollar 1,610 1,610

United States dollar 24,209 9,984

The Company’s significant net foreign currency denominated monetary assets (liabilities) exposures relative to its

functional currency at the end of the reporting period are summarised below:

The Company

2011 2010

S$’000 S$’000

Australian dollar 19,557 3,334

Hong Kong dollar 32,550 37,317

United States dollar (8,127) (8,616)

If the respective functional currency of the Company, its subsidiaries and joint venture strengthens or weakens by 5%

(2010 : 5%) against the following major relevant foreign currencies with all other variables held constant, the Group

would record additional exchange gain (loss) as follows:

The Group

2011 2010

Strengthen Weaken Strengthen Weaken

S$’000 S$’000 S$’000 S$’000

Australian dollar (899) 899 (503) 503

Euro 165 (165) 58 (58)

Hong Kong dollar (783) 867 (945) 1,045

Renminbi (253) 253 52 (52)

Singapore dollar (85) 85 (82) 82

United States dollar (1,299) 1,299 (544) 544

94

31 March 2011



If the functional currency of the Company strengthens or weakens by 5% (2010 : 5%) against the following major

relevant foreign currencies with all other variables held constant, the Company would record additional exchange gain

(loss) as follows:

The Company2011 2010

Strengthen Weaken Strengthen WeakenS$’000 S$’000 S$’000 S$’000

Australian dollar (978) 978 (167) 167Hong Kong dollar (1,550) 1,713 (1,777) 1,964United States dollar 406 (406) 431 (431)

Exchange differences attributable to certain intercompany monetary items which in substance are part of the Group’s

net investment in overseas operations are directly dealt with in the Group’s equity. If the respective functional currency

of the Company, its subsidiaries and joint venture strengthens or weakens by 5% (2010 : 5%) against the following

relevant foreign currencies with all other variables held constant, the Group’s equity would increase (decrease) by:

The Group2011 2010

Strengthen Weaken Strengthen WeakenS$’000 S$’000 S$’000 S$’000

Australian dollar 3,443 (3,443) 1,736 (1,736)Hong Kong dollar (831) 919 (926) 1,023

In management’s opinion, the sensitivity analyses are unrepresentative of the inherent foreign exchange risk as the year

end exposure does not reflect the exposure during the year due to seasonal effects of its business activities.

The Group’s foreign currency translation risk arises mainly from the Company’s foreign incorporated subsidiaries,

associates and joint venture, whose net assets are denominated in currencies other than Singapore dollar, the Company’s

reporting currency.

f) Liquidity risk management

The Group finances its operations by a combination of borrowings and equity. Adequate lines of credit are maintained

to ensure the necessary liquidity is available when required. The Company is in a net current liabilities position but funds

will be available from its subsidiaries when required.

95



The remaining contractual maturity for non-derivative financial liabilities at the end of the reporting period is as follows:

The GroupWeighted average effective

interest rate

On demand or within

1 yearWithin 2

to 5 years Adjustments Total

% S$’000 S$’000 S$’000 S$’000

2011

Non-interest bearing 62,705 - - 62,705Finance lease obligations

(fixed rate) 4.2 31 54 (5) 80Finance lease obligations

(floating rate) 1.3 53 - - 53

Fixed interest rate instruments 4.7 2,915 - (29) 2,886

Variable interest rate instruments 3.6 65,968 63,713 (5,698) 123,983

Financial guarantee contracts 756 - (756) -

132,428 63,767 (6,488) 189,707

2010


(fixed rate) 4.2 31 86 (9) 108Finance lease obligations

(floating rate) 1.2 144 63 (2) 205

Fixed interest rate instruments 4.3 3,661 - (71) 3,590


Financial guarantee contracts 14,355 - (14,355) -

227,682 10,861 (15,838) 222,705

96

31 March 2011



The CompanyWeighted average effective

interest rate

On demand or within

1 yearWithin 2

to 5 years Adjustments Total

% S$’000 S$’000 S$’000 S$’000

2011


(fixed rate) 4.2 31 54 (5) 80


Subordinated Loan 3.3 - 150,000 (10,381) 139,619


79,971 205,069 (56,262) 228,778

2010


(fixed rate) 4.2 31 86 (9) 108

Variable interest rate instruments 1.8 104,607 2,510 (496) 106,621


313,442 2,596 (55,025) 261,013

Liabilities pertaining to financial guarantee contracts are the Group’s and the Company’s contingent liabilities arising

from guarantees given to banks (Note 30).

g) Capital risk management

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while

maximising the return to its stakeholders through the optimisation of the debt and equity balance.

The capital structure of the Group consists of debt, which includes the borrowings disclosed in Note 25, and equity

attributable to the equity holders of the Company.

Management reviews the Group’s capital structure from time to time and recommends to the Board of Directors

appropriate actions such as payment of dividend, new share issues, share buy-back and utilisation of available banking

facilities.

The Group’s overall strategy remains unchanged from the financial year ended 31 March 2010. The Group and the

Company are in compliance with externally imposed capital requirements which include PRC legal requirement to set

aside a legal reserve and financial covenants to maintain certain financial ratios required by the financial institutions for

the facilities granted as at 31 March 2011 and 2010.

97



h) Fair values of financial assets and financial liabilities

The fair values of financial assets and financial liabilities approximate their respective carrying amounts recorded in

the financial statements, determined in accordance with the accounting policies disclosed in Note 2 to the financial

statements except for available-for-sale financial assets carried at cost less impairment.

The Group classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputs used

in making the measurements. The fair value hierarchy has the following levels:

i) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);

ii) inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly

(i.e. as prices) or indirectly (i.e. derived from prices) (Level 2); and

iii) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).

The financial instruments carried at fair value, analysed by valuation method is as follows:

The Group

Level 1 Level 2 Level 3 Total

S$’000 S$’000 S$’000 S$’000

2011

Available-for-sale financial assets - - - -

2010

Available-for-sale financial assets - - - -

As at 31 March 2011, the Group’s available-for-sale financial assets comprising investment in unquoted equity shares

and other investments with a total net carrying value of S$15,143,000 (2010 : S$27,562,000) are measured at cost less

impairment as the fair values cannot be determined reliably as the variability in the range of reasonable fair value estimates

derived from valuation techniques can vary significantly.

Impairment losses on available-for-sale financial assets are recognised when there is a significant or prolonged decline in the

fair value of such investments below their cost.

98

31 March 2011


36. Subsidiaries

Significant subsidiaries of the Group are as follows:

Name of company

Place of incorporationand business Principal activities

Effective percentage of

equity and voting power held

2011 2010% %

Bowden Industries (China) Limited (1) (d) Hong Kong Investment holding 100 100

Bowden Industries Limited (1) (b) Hong Kong Investment holding, manufacturing and trading of electrical wiring accessories, electronic control devices and related products

100 100

Celestion International Limited (1) (c) England and Wales Design and trading of loudspeakers 100 100

CIH Limited (a) Singapore Investment holding 100 100

Coudrey Investments Limited (1) (3) Seychelles Investment holding 100 100

Dragon Star Enterprises Limited (1) (3) British Virgin Islands Investment holding 100 100

Enventure Limited (1) (d) British Virgin Islands Investment holding 100 100

Ever Grace Capital Investment Limited (5) (b)

Hong Kong Investment holding 100 -

Faith Capital Investment Limited (5) (b) Hong Kong Investment holding 100 -

Famingo Pte Ltd (a) Singapore Investment holding 100 100

Fancy Luck Investment Limited (1) (b) Hong Kong Investment holding 100 100

Giant Fair Investment Limited (1) (b) Hong Kong Investment holding 100 100

GP Acoustics France SAS (1) (c) France Marketing and trading of audio and electronics products

100 100

GP Acoustics GmbH (1) (c) Germany Distribution of audio products 100 100

GP Acoustics International Limited (1) (6) Hong Kong Trading of audio products 100 -

GP Acoustics Limited (3) British Virgin Islands Investment holding 100 100

99


36. Subsidiaries (cont’d)

Name of company




2011 2010

% %

GP Acoustics (HK) Limited (1) (b) Hong Kong Marketing and trading of audio and electronics products

100 100

GP Acoustics (Singapore) Pte Limited (a) Singapore Marketing and trading of audio and electronics products

100 100

GP Acoustics (UK) Limited (1) (b) England and Wales Investment holding and trading of loudspeakers

100 100

GP Acoustics (US), Inc. (1) (c) United Statesof America

Marketing and distribution of loudspeakers

100 100

GP Auto Parts Limited (b) Hong Kong Investment holding 100 100

GP Electronics (China) Limited (b) Hong Kong Investment holding 100 100

GP Electronics (HK) Limited (b) Hong Kong Marketing and trading of audio products

100 100

GP Electronics (Huizhou) Co., Ltd. (2) (g) The People’sRepublic of China

Manufacturing of electronics and acoustics products

95 92.50

金柏電子有限公司 (1) (2) (4) (i) The People’sRepublic of China

Marketing and trading of electronics and acoustics products

100 100

GP Electronics (SZ) Limited (2) (i) The People’sRepublic of China

Development of electronics products 100 100

GP Industries Marketing Limited (b) Hong Kong Marketing and trading of quality parts and components and hygienicand health care products

100 100

GP Precision Parts (Huizhou) Co., Ltd. (1) (2) (g)

The People’sRepublic of China

Manufacturing of metal parts and personal health care products

100 100

GPE International Limited (b) Hong Kong Investment holding 100 100

Huizhou GP Wiring Technology Ltd. (2) (h) The People’sRepublic of China

Manufacturing of automotive wire harness, transformers and switching mode power supply

100 100

100

31 March 2011



Name of company




2011 2010

% %

KEF Audio (UK) Limited (1) (c) England and Wales Design and trading of loudspeakers 100 100

Key Win Industrial Limited (b) Hong Kong Investment holding 100 100

King Bright Capital Investment Limited (5) (b)

Hong Kong Investment holding 100 -

Maxson Industries Limited (1) (f) Hong Kong Investment holding and trading 100 100

Maxson Industries (Huizhou) Limited (1) (e) The People’s Republic of China

Plastic mould fabrication, manufacturing of injection moulded plastic components and medical plastic products

100 100

Nike Enterprises Limited (b) Hong Kong Investment holding 100 100

Pinberry Investments Limited (1) (3) British Virgin Islands Investment holding 100 100

Regal Trinity Limited (1) (d) British Virgin Islands Investment holding 100 100

Star Bright Technology Limited (1) (d) Hong Kong Investment holding 100 100

Tarway Two Pty Ltd (1) (3) Australia Investment holding 100 100

Whitehill Industries Limited (1) (b) Hong Kong Investment holding 100 100

101



Note:(1) Equity interest is held by subsidiaries of the Company.(2) These subsidiaries, in compliance with their local statutory requirement, adopt 31 December as their financial year

end. Such financial year end is not co-terminous with that of the Company. Adjustments are made for the effect of any significant transactions that occur between 1 January and 31 March. A member firm of Deloitte Touche Tohmatsu Limited has audited the financial statements of these subsidiaries, with the exception of GP Acoustics (China) Limited and GP Electronics (SZ) Limited, for the purposes of the Group’s consolidated financial statements for the financial year ended and as at 31 March 2011 (“2011 Consolidated Financial Statements”).

(3) The financial statements of these subsidiaries are not audited as there are no statutory audit requirements in its country of incorporation. The financial statements have been audited by Deloitte & Touche LLP, Singapore or a member firm of Deloitte Touche Tohmatsu Limited for the purposes of the 2011 Consolidated Financial Statements of the Group.

(4) For identification purpose, the translated name for this subsidiary is “GP Acoustics (China) Limited”.(5) Incorporated during the financial year.(6) Incorporated during the financial year and commenced operations subsequent to 31 March 2011.

(a) Audited by Deloitte & Touche LLP, Singapore, which are the auditors of all Singapore incorporated subsidiaries.(b) Audited by member firms of Deloitte Touche Tohmatsu Limited.(c) Subsidiary of GP Acoustics (UK) Limited. The consolidated financial statements of GP Acoustics (UK) Limited are

audited by a member firm of Deloitte Touche Tohmatsu Limited.(d) Subsidiary of Bowden Industries Limited. The consolidated financial statements of Bowden Industries Limited have

been audited by a member firm of Deloitte Touche Tohmatsu Limited for the purpose of the 2011 Consolidated Financial Statements of the Group.

(e) Subsidiary of Maxson Industries Limited. The local statutory consolidated financial statements of Maxson Industries Limited are audited by Au Choi Yuen & Co.

(f) Local statutory audit performed by Au Choi Yuen & Co.(g) Local statutory audit performed by Shu Lun Pan Yangcheng Certified Public Accountants Co., Limited Huizhou Branch.(h) Local statutory audit performed by Huizhou East Certified Public Accountants.(i) Local statutory audit performed by Shenzhen Zheng Feng Li Fu Certified Public Accountants.

102

31 March 2011


37. Associates

Significant associates of the Group are as follows:

Name of company




2011 2010

% %

Dai-ichi Electronics (Shanghai) Co Ltd. (10)


Manufacturing of loudspeakers and electronics products

- 20.00

Dongguan Jifu MetallicProducts Ltd. (2) (3)


Manufacturing of metallic products 30.00 30.00

GP Batteries International Limited (1) Singapore Manufacture, development and marketing of batteries and battery-related products

49.71 49.79

Kunshan TIME InterconnectLimited (2) (4)


Manufacturing of cable assemblies 37.72 47.23

Linkz Industries Limited (b) Hong Kong Investment holding 37.72 47.23

Linkz Industries (Shanghai) Ltd. (2) (4) The People’sRepublic of China

Manufacturing of cables 35.83 44.87

Linkz Industries (Suzhou) Limited (2) (4) The People’sRepublic of China

Manufacturing of local area network cables

37.72 47.23

Linkz International Limited (2) (4) Hong Kong Trading of electronic cables and wires and cable assemblies

37.72 47.23

Meiloon Industrial Co., Ltd. (2) (7) Taiwan Development, manufacturing and marketing of acoustics and audio-visual equipment

20.02 20.02

Shinwa Industries (China) Ltd. (2) (5) The People’sRepublic of China

Manufacturing of electronic components

10.50 10.50

Shinwa Industries (Hangzhou) Limited (2) (5)


Manufacturing of electronic components

10.50 10.50

Shinwa Industries (H.K.) Limited (8) (b) Hong Kong Trading of electronic components 15.00 15.00

SPG Industry (China) Limited (2) (6) (10) The People’sRepublic of China

Manufacturing of high precision parts and components

- 32.49

103


37. Associates (cont’d)

Name of company




2011 2010

% %

SPG Industry (H.K.) Limited (10) Hong Kong Trading of high precision parts and components

- 46.41

SPG Tech (China) Ltd. (2) (6) (10) The People’sRepublic of China

Manufacturing of tooling and moulds - 46.41

Suzhou Bordnetze Electrical Systems Ltd (9) (a)


Manufacturing of automotive wire harness

20.00 20.00

Time Interconnect, Inc. (2) (4) United Statesof America

Trading of electronic cables and wires and cable assemblies

37.72 47.23

Wisefull Technology Limited (2) (b) Hong Kong Investment holding and trading of metallic products

30.00 30.00

Note:(1) GP Batteries is listed on the Mainboard of SGX-ST. The consolidated financial statements of GP Batteries are audited

by Deloitte & Touche LLP, Singapore. Significant subsidiaries and associates of GP Batteries are listed in the financial statements of GP Batteries.

(2) Equity interest is held by subsidiaries or associates of the Company.(3) Subsidiary of Wisefull Technology Limited.(4) Subsidiary of Linkz Industries Limited.(5) Subsidiary of Shinwa Industries (H.K.) Limited.(6) Subsidiary of SPG Industry (H.K.) Limited.(7) Meiloon is listed on the Taiwan Stock Exchange Corporation. The consolidated financial statements of Meiloon are

audited by PKF Taiwan. Meiloon has been equity accounted for in the consolidated financial statements based on results ended, or as at, 31 December, the financial year end of Meiloon.

(8) The Group has significant influence in Shinwa Industries (H.K.) Limited (“Shinwa”) through the Company’s representation on Shinwa’s board of directors.

(9) Associate of Shanghai Jinting Automobile Harness Limited.(10) Disposed of during the financial year ended 31 March 2011.

(a) Local statutory audit performed by KPMG Huazhen Shanghai Branch.(b) These associates adopt a different financial year end from that of the Group. For the purposes of applying the

equity method of accounting, the financial statements of these associates for the twelve months period ended 31 March have been used, which have been reviewed by a member firm of Deloitte Touche Tohmatsu Limited. The local statutory consolidated financial statements of Linkz Industries Limited, Shinwa Industries (H.K.) Limited and Wisefull Technology Limited are audited by a member firm of Deloitte Touche Tohmatsu Limited, PricewaterhouseCoopers Ltd. and Au Choi Yuen & Co., respectively.

104

31 March 2011


38. Joint venture

During the financial year ended 31 March 2010, the Company’s wholly owned subsidiary, GP Auto Parts Limited, acquired a

50% equity interest in Shanghai Jinting Automobile Harness Limited (“Jinting”) for a cash consideration of S$17,874,000.

Jinting is incorporated in The People’s Republic of China and its principal business is the manufacture and supply of automotive

wire harness. The consolidated financial statements of GP Auto Parts Limited have been audited by a member firm of Deloitte

Touche Tohmatsu Limited for the purpose of the 2011 Consolidated Financial Statements of the Group. The local statutory

financial statements of Jinting are audited by Shanghai Zhonghui Certified Public Accountants Co., Ltd.

The following amounts are included in the Group’s financial statements as a result of the proportionate consolidation of

Jinting:

2011 2010S$’000 S$’000

Non-current assets 17,063 15,495Current assets 33,336 35,492Current liabilities (18,031) (22,168)Non-current liabilities (3,367) -Net assets 29,001 28,819

Revenue 80,121 38,428


The fair values of identifiable assets and liabilities as at the effective date of acquisition, during the financial year ended 31

March 2010, were as follows:

2010 S$’000

Property, plant and equipment 8,029Interest in associates 5,052Inventories 11,097Receivables and prepayments 10,905Bank balances, deposits and cash 14,855Trade and other payables (13,824)Income tax payable (165)Bank loans - current (5,130)Bank loans - non-current (1,539)Deferred tax liabilities (1,497)Net identifiable assets acquired 27,783Excess of share of fair value of identifiable net tangible assets acquired over consideration paid (10,074)Adjustment to exchange translation reserve 165Total cash paid on acquisition 17,874Less: Bank balances, deposits and cash acquired (14,855)Cash outflow from acquisition of a joint venture, net of cash acquired 3,019

Had the acquisition been completed on 1 April 2009, the Group’s revenue and Group’s profit attributable to the equity

holders of the Company for the financial year ended 31 March 2010 would have been S$310,918,000 and S$42,263,000

respectively.

105


39. De-registration, liquidation and disposal of subsidiaries

During the financial year ended 31 March 2011, the Group de-registered / liquidated its interest in certain inactive subsidiaries

and recognised a net gain on de-registration / liquidation of subsidiaries of S$46,000, comprising a cumulative exchange

translation surplus of S$44,000, as an exceptional item (Note 7).

During the financial year ended 31 March 2010, the Group deregistered an inactive wholly owned subsidiary and recognised

a cumulative exchange translation surplus of S$3,735,000 as an exceptional item (Note 7).

During the financial year ended 31 March 2010, the Group disposed of its entire 100% equity interest in GP Lighting

Technology (Huizhou) Limited (“GP Lighting”). GP Lighting incurred net losses of S$2,000,000 for the financial year ended

31 March 2009 and S$1,863,000 for the period from 1 April 2009 to the date of disposal.

The assets and liabilities as at the date of disposal were as follows:

2010 S$’000

Bank balances, deposits and cash 729Trade and other payables (536)Net identifiable assets disposed 193Provision for warranty 216Adjustment to exchange translation reserve 1Gain on disposal of subsidiary 41Total consideration 451Less: Bank balances, deposits and cash disposed (729)

Proceeds receivable on 31 December 2010 (90)Cash outflow from disposal of a subsidiary, net of proceeds received (368)

40. Subsequent event

Subsequent to the financial year end, the Group entered into an agreement (the “Subscription Agreement”) to subscribe for

a convertible note in the principal amount of approximately HK$68,019,000 (equivalent to S$10,988,000) issued by GSMH

(the “Convertible Note”). The Group satisfied the consideration for the Convertible Note by discharging and releasing GSMH

from an amount due to the Group (Note 15). The Convertible Note has a final maturity date of 21 April 2016 and is interest

bearing at 2.00% per annum. Unless previously converted into new shares of GSMH or repaid in accordance with the terms

of the Convertible Note, GSMH shall redeem the Convertible Note on 21 April 2016 the outstanding principal together with

interest accrued thereon. The Group can convert the Convertible Note in whole or in part into new shares to be issued by

GSMH during the period from 21 April 2012 to 21 April 2016, according to the basis of conversion set out in the Subscription

Agreement.

106

Introduction

This Statement describes how GP Industries Limited (the “Company”) applied the principles of the Code of Corporate Governance

introduced in 2001 and amended in 2005 (the “Code”) to its corporate governance processes and activities with specific reference

to the Code and any deviations from the Code are explained.

Board Matters

Principle 1: The Board’s Conduct of Affairs

The principal functions of the Board are:

(i) supervising the overall management of the business and affairs of the Group;

(ii) approving the Group’s strategic plans, significant investment and divestment proposals and funding decisions;

(iii) reviewing the Group’s financial performance and key operational initiatives;

(iv) implementing risk management policies and practices;

(v) approving nominations to the Board of Directors;

(vi) reviewing and endorsing the recommended framework of remuneration for the Board and key executives by the Remuneration

Committee; and

(vii) assuming responsibility for corporate governance.

The Board conducts regular meetings on a quarterly basis and ad hoc meetings as and when required. Article 100(2) of the

Company’s Articles of Association allows Board meetings to be conducted by way of telephone or video conferencing or by

other audio or audio-visual communications equipment. The attendance of the Directors at meetings of the Board and Board

Committees, as well as the frequency of such meetings, are disclosed in this Statement. The Company, however, believes that the

contributions of the Directors can be reflected in means other than by the attendance at such meetings. A Director is appointed on

the strength of his calibre, experience and his potential to contribute to the proper guidance of the Company and its businesses in

forms such as management’s access to him for guidance or exchange of views outside the formal environment of Board meetings

and also his ability to bring relations which are strategic to the interests of the Group.

Matters that are specifically reserved for the Board’s decision include material acquisitions and disposal of assets, corporate or

financial restructuring, share issuance and dividend payment to shareholders, and other transactions of a material nature requiring

announcement under the listing rules of the Singapore Exchange Securities Trading Limited (“SGX-ST”).

The Company provides facilities for new Directors to meet their relevant training needs and also orientation programmes to

familiarise them with the business of the Company and its subsidiaries (the “Group”) and governance practices. All Directors are

routinely updated on developments in the operating environment, particularly on relevant new laws and regulations.

Principle 2: Board Composition and Guidance

Presently, the Board consists of nine Directors, of whom three are Independent (as defined in the Code) Non-Executive Directors.

During the financial year, Mr Eric Ng Siu Kai was appointed an Executive Director of the Company on 1 April 2010. Key information

regarding the Directors is provided under the “Board of Directors and Senior Management” section of the annual report.

coRpoRate goveRnance statement GP Industries Limited Annual Report 2010-11

107

coRpoRate goveRnance statement GP Industries Limited Annual Report 2010-11

Principle 2: Board Composition and Guidance (cont’d)

The Nominating Committee is of the view that the current Board comprises persons who, as a group, provides core competencies

necessary to meet the Company’s objectives.

The Board has reviewed its composition of Directors and is satisfied that such composition is appropriate for the nature and scope

of the Group’s operations and facilitates effective decision-making. The Board will constantly examine its size with a view to

determining its impact upon its effectiveness.

Principle 3: Chairman, Executive Vice Chairman and Managing Director

The Chairman of the Company bears responsibility for the overall functioning of the Board. The Executive Vice Chairman and the

Managing Director are responsible for the daily running of the Group’s business. The Chairman, the Executive Vice Chairman and

the Managing Director are not related.

Principle 6: Access to Information

Management provides the Board and its various sub-committees with relevant information and reports prior to their respective

meetings. In addition, Management also provides the Board with further information or ad hoc reports as and when required.

Board members are also consulted or updated with latest developments of the Group with regular management meetings,

circulation of discussion papers and informal meetings such as discussions via tele-communications. Directors have separate and

independent access to the Company’s senior management and the Company Secretaries for additional information. In addition,

should Directors, whether as a group or individually, need independent professional advice, Management will, upon direction by

the Board, appoint a professional advisor selected by the group or the individual, to render the advice. The cost of such professional

advice will be borne by the Company.

At least one of the Company Secretaries attends Board meetings, particularly the meetings for reviewing the draft announcements

of the Group’s quarterly and full year results, and is responsible for ensuring that Board procedures are followed. It is the Company

Secretary’s responsibility to ensure that the Company complies with the requirements of the Singapore Companies Act. Together

with the management staff of the Company, the Company Secretary is also responsible for compliance with all SGX-ST rules and

regulations, which are applicable to the Company.

Please refer to the “Corporate Information” section of the annual report for the composition of the Company’s Board of Directors

and Board Committees.

Board Committees

Nominating Committee

Principle 4: Board Membership

The Nominating Committee (“NC”) currently consists of five Directors, three of whom, including the Chairman of the NC, are

Independent Non-Executive Directors.

The NC is guided by its Terms of Reference that set out its responsibilities, which includes consideration of salient factors for the

purposes of Directors’ re-nomination and determination of independence.

108

Principle 4: Board Membership (cont’d)

The duties and responsibilities of the NC are to:

(i) make recommendations to the Board on the appointment of new Executive and Non-Executive Directors, including making

recommendations to the composition of the Board generally and the balance between Executive and Non-Executive Directors

appointed to the Board;

(ii) regularly review the Board structure, size and composition and make recommendations to the Board with regards to any

adjustments that are deemed necessary;

(iii) determine the suitability and eligibility of nominated candidates for the approval of the Board, determining annually whether

or not a Director is independent, to fill Board vacancies as and when they arise as well as put in place plans for succession.

If the NC determines that a Director, who has one or more of the relationships that could interfere with his exercise of

independent business relationship judgement, is in fact independent, it would disclose the full nature of the Director’s

relationship and bear responsibility for explaining why he should be considered independent. Conversely, the NC has the

discretion to determine that a Director is non-independent even if the circumstances set forth in the Code are not applicable;

(iv) make recommendations to the Board for the continuation (or not) in services of any Director who has reached the age of 70;

(v) recommend Directors who are retiring by rotation to be put forward for re-election. All Directors are required to submit

themselves for re-nomination and re-election at regular intervals and at least once every three years;

(vi) assess the effectiveness of the Board as a whole and assess the contribution by each individual Director to the effectiveness

of the Board. Although the Directors are not evaluated individually, the factors taken into consideration for the re-nomination

of the Directors for the year are based on the contribution of each individual Director to the effectiveness of the Board and

whether each Director continues to demonstrate his commitment to the role (including commitment of time for Board and

Committee meetings, and any other duties) particularly when a Director has multiple board representations; and

(vii) have due regard to the principles of the Code and Code of Best Practices on Securities Transactions.

Principle 5: Board Performance

The Board, through the delegation of its authority to the NC, has used its best efforts to ensure that Directors appointed to the

Board possess the background, experience and knowledge in technology, business, finance and management skills critical to the

Group’s business and that each Director, through his unique contributions, brings to the Board an independent and objective

perspective to enable balanced and well-considered decisions to be made. In the event that the appointment of a new Board

member is required, the criteria for the appointment will be driven by the need to position and shape the Board in line with the

medium-term needs of the Company and its business.

The NC has decided, in consultation with the Board, on how the Board should be evaluated and has selected a set of performance

criteria that is linked to long-term shareholders’ value, for evaluation of the Board’s performance. The NC has set up a formal

assessment process to evaluate the effectiveness of the Board as a whole. Although the Directors are not evaluated individually, the

factors taken into consideration for the re-nomination or re-appointment of the Directors are, inter alia, contributions made by the

Directors at the meetings and attendance at meetings.

The Board is of the view that the financial parameters recommended by the Code as performance criteria for the evaluation of

Directors’ performance may not fully measure the long-term success of the Company and is less appropriate for the Non-Executive

Directors and the Board’s performance as a whole.

coRpoRate goveRnance statement (cont’d) GP Industries Limited Annual Report 2010-11

109


Accountability and Audit

Principle 10: Accountability

The Board is accountable to the shareholders. It is the aim of the Board to provide shareholders with a balanced and understandable

assessment of the Company’s performance, position and prospects when presenting the annual financial statements, announcement

of the Group’s financial results and price sensitive public reports.

Management is accountable to the Board. Management prepares balanced and understandable monthly management accounts.

Principle 11: Audit Committee

Currently the Audit Committee (“AC”) comprises three members who are Independent Non-Executive Directors. Members of the

AC are experienced professionals and businessmen. They are knowledgeable in accounting, banking and financial management

matters and possess extensive general business knowledge. The AC is of the view that its members have sufficient financial

management expertise and experience to discharge the AC’s functions.

The AC is guided by its Terms of Reference, which set out its duties and responsibilities. The principal duties of the AC include:

(i) reviewing external auditors’ audit plan;

(ii) reviewing the results of internal auditors’ examination of the systems of internal accounting controls;

(iii) reviewing the significant financial reporting issues and judgements so as to ensure the integrity of the financial statements of

the Group and any formal announcements relating to the Group’s financial performance;

(iv) reviewing the adequacy of the Group’s financial controls, operational and compliance controls, and risk management policies

and systems;

(v) ensuring the internal audit function is independent of the activities it audits, has sufficient resources to perform its duties,

and has appropriate standing within the Company;

(vi) reviewing the scope and results of the audit and its cost effectiveness and the independence and objectivity of the external

auditors annually;

(vii) recommending to the Board on the appointment/re-appointment of the external auditors, the audit fee and matters related

to the resignation and dismissal of the auditors;

(viii) reviewing the Group’s quarterly and full year results before their submission to the Board for approval for public announcements;

(ix) approving the internal audit plans and reviewing results of internal audits as well as management’s responses to the

recommendations of the auditors;

(x) reviewing the Group’s interested person transactions; and

(xi) investigating any matter within its Terms of Reference and conducting other reviews as required by the Listing Manual of

SGX-ST.

The AC has full access to and co-operation by Management and reasonable resources to enable it to discharge its functions

properly. The AC meetings are held with the internal and external auditors and by invitation, any Director and representatives from

Management. The AC also meets with the external and internal auditors, without the presence of Management, at least once a

year.

110

Principle 11: Audit Committee (cont’d)

The AC has undertaken a review of all non-audit services provided by the external auditors and is of the opinion that the provision

of such services would not affect the independence of the external auditors. During the financial year ended 31 March 2011, fees

for non-audit services paid to auditors of the Company and other auditors amounted to S$26,000 and S$206,000 respectively

(2010 : S$26,000 and S$200,000 respectively).

The AC and the Board are satisfied that the appointment of different auditors for its subsidiaries or associates would not compromise

the standard and effectiveness of the audit of the Group.

The AC has also put in place a policy, whereby staff of the Group may raise concerns about possible improprieties in matters of

financial reporting, fraudulent acts and other matters and ensure that arrangements are in place for independent investigations of

such matters and appropriate follow up actions.

Principle 12: Internal Controls

The Company’s Internal Audit Department (“IAD”) carries out a review of the effectiveness of the Group’s material internal

controls, including financial, operational and compliance controls, and risk management policies and systems, to the extent of

their scope as laid out in their internal audit plan. In addition, material non-compliance and internal control weaknesses, if any,

noted by the Company’s external auditors, Deloitte & Touche LLP (“DT”), during their statutory audit, and the external auditors’

recommendations to address such non-compliance and weaknesses, are reported to the AC.

Management with the assistance of the IAD follows up on DT’s recommendations as part of its role in the review of the Company’s

internal control systems.

Based on the information and reports provided by the IAD and DT, nothing has come to the AC’s attention that suggests internal

control processes are not satisfactory for the nature and volume of business conducted.

Principle 13: Internal Audit

The IAD is staffed by four people, and supervised by a Senior Manager. The IAD is independent from the activities it audits. It reports

directly to the Chairman of the AC, and to the Managing Director administratively.

Reports from the IAD are tabled at each of the AC’s regular meetings, which are held on a quarterly basis. The AC also reviews

and approves the IAD annual audit plans and resources to ensure that it has the capabilities to adequately perform its functions.

The IAD has adopted the Standards for Professional Practice of Internal Auditing set by the Institute of Internal Auditors in carrying

out its duties.


111


Remuneration Committee

Principle 7: Procedures for Developing Remuneration Policies

Principle 8: Level and Mix of Remuneration

Principle 9: Disclosure on Remuneration

The Remuneration Committee (“RC”) currently consists of three Independent Non-Executive Directors. The Committee is

knowledgeable with executive compensation.

The RC’s Terms of Reference are primarily to:

(i) review and recommend to the Board in consultation with Management and the Chairman of the Board, a framework of

remuneration and to determine the specific remuneration packages and terms of employment for each of the Executive

Directors and senior executives/divisional directors (those reporting directly to the Chairman of the Board) of the Group

including those employees related to the Executive Directors and controlling shareholders of the Group;

(ii) recommend to the Board in consultation with Management and the Chairman of the Board, the Company’s share option or

any long-term incentive schemes which may be set up from time to time and to do all acts necessary in connection therewith;

and

(iii) carry out its duties in the manner that it deemed expedient, subject always to any regulations or restrictions that may be

imposed upon the RC by the Board of Directors from time to time.

In reviewing the remuneration of Directors, the RC considers the employment conditions within the industry of comparable

companies, as well as the Company’s performance and the performance of Directors.

1. Table shows breakdown of Directors’ remuneration for the financial year ended 31 March 2011 (in percentage terms):

Name of Director (1) Salary (2) Bonus (2) FeesOther

benefits Total

% % % % %

S$750,000 to below S$1,000,000

Brian Li Yiu Cheung 61 35 - 4 100

S$500,000 to below S$750,000

Leung Pak Chuen 65 32 - 3 100

Victor Lo Chung Wing 63 35 - 2 100

S$250,000 to below S$500,000

Andrew Chuang Siu Leung 83 10 - 7 100

Eric Ng Siu Kai 81 12 - 7 100

Below S$250,000

Lim Ah Doo - - 100 - 100

Lim Hock Beng - - 100 - 100

Phua Bah Lee - - 100 - 100

Wong Man Kit - - - - -

112

Principle 7: Procedures for Developing Remuneration Policies (cont’d)

Principle 8: Level and Mix of Remuneration (cont’d)

Principle 9: Disclosure on Remuneration (cont’d)

2. Table shows breakdown of top five key executives’ remuneration, which are within the S$300,000 to S$550,000 band, for

the financial year ended 31 March 2011 (in percentage terms):

Name of key executive (1) Salary (2) Bonus (2) FeesOther

benefits Total

% % % % %

Alec Malcolm Chanin 82 - - 18 100

John Simon Davies 86 6 - 8 100

Stephen John Halsall 77 10 - 13 100

Martin Klaassen 81 6 - 13 100

Nigel Wood 58 29 - 13 100

Note:(1) In alphabetical order of the Directors’ or key executives’ last names.(2) Include contribution to post-retirement benefits.

During the financial year, an employee who is the daughter of Mr Victor Lo Chung Wing, received a remuneration which was

more than S$150,000 but less than S$250,000. Save as aforementioned, no employee of the Company and its subsidiaries was an

immediate family member of a Director and whose remuneration exceeded S$150,000 during the financial year ended 31 March

2011. “Immediate family” means, in relation to a person, the person’s spouse, child, adopted child, stepchild, brother, sister and

parent.

The remuneration policy for staff adopted by the Company comprises a base salary and a variable bonus that is linked to the

performance of the Company and individual staff. In addition, options offered pursuant to the Company’s Share Option Scheme

1999 (the “1999 Scheme”) also provided incentives to the staff to excel in their performance. The duration of the 1999 Scheme

reached its maximum period of ten years on 31 March 2010 and ceased to operate accordingly. However, options previously

granted under the 1999 Scheme continue to be exercisable in accordance with the regulations of the 1999 Scheme.

Information regarding the 1999 Scheme is disclosed in the Directors’ Report.

Communication with Shareholders

Principle 14: Communication with Shareholders

Principle 15: Promoting Greater Participation by Shareholders

Announcements of results are released through the SGXNET. The Company also updates such information on the Company’s

website.


113


Principle 14: Communication with Shareholders (cont’d)

Principle 15: Promoting Greater Participation by Shareholders (cont’d)

The Company does not practise selective disclosure. Price sensitive information is first publicly released, either before the Company

meets with any group of investors or investment analysts or simultaneously with such meetings, if necessary. Results and annual

reports are announced or issued within the mandatory period and are available on the Company’s website.

The Company communicates with its investors on a regular basis and attends to their queries. All shareholders of the Company

receive a copy of the annual report and notice of Annual General Meeting (“AGM”). The notice of the AGM is also advertised in

a newspaper.

At AGMs, shareholders are given the opportunity to communicate their views and ask questions regarding the Group. Board

members, Chairmen of the AC, NC and RC and the external auditors are also available to address questions raised at the AGM.

The Company’s Articles of Association allows a shareholder of the Company to appoint one or two proxies to attend and vote at

all general meetings on his/her behalf.

Dealing in Securities

The Group has adopted a Code of Best Practices on Securities Transactions with respect to dealings in securities by Directors and

officers of the Group.

Directors and officers are prohibited from dealing in the Company’s securities two weeks before the announcement of the

Company’s first three quarters’ results, and one month before the announcement of the Company’s full year results, ending on

the date of the relevant announcement of the results. Directors and officers are also prohibited from dealing in the Company’s

securities when they are in possession of potentially price sensitive information.

Directors and officers are also not expected to deal in the Company’s securities on considerations of a short-term nature.

The Company has complied with its Code of Best Practices on Securities Transactions.

Risk Management Policies and Processes

Management is in charge of the Group’s risk management policies and processes and reports to the Board in respect of significant

risks to the Group’s operations.

Material Contracts

Save as disclosed under the section on Interested Person Transactions below, there is no material contract entered into by the

Company and its subsidiaries involving the interests of the Chairman, Executive Vice Chairman, Managing Director, Directors or the

controlling shareholders, either still subsisting at the end of the financial year or if not then subsisting, entered into since the end

of the previous financial year.

114

Interested Person Transactions

The Company has adopted an internal policy in respect of any transaction with interested persons and has set out the procedures

for review and approval of the Company’s interested person transactions. The Company’s disclosure in accordance with Rule 907

of the SGX-ST Listing Manual in respect of interested person transactions for the financial year ended 31 March 2011 is as follows:

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 conducted

under shareholders’ mandate pursuant to Rule 920 during

the financial year under review (excluding transactions less than

S$100,000)

2011 2010 2011 2010

S$’000 S$’000 S$’000 S$’000

Licence fee expense:

KH Technology Corporation (1) 1,025 1,011 - -

Sales:

Light Engine Ltd - - 2,941 432

Lighthouse Technologies Limited and subsidiaries - - 640 46

Rental expenses:

Gold Peak Industries (Holdings) Limited 516 525 - -

Guarantee of banking facilities:

Lighthouse Technologies Limited (2) 9,955 15,785 - -

Purchases of property, plant and equipment:

Gold Peak Industries (Holdings) Limited - 162 - -

Note:(1) The licence fee was paid and payable pursuant to a Master Patent Licence Agreement approved by the shareholders during

an Extraordinary General Meeting of the Company held on 10 December 1997.

(2) At an Extraordinary General Meeting of the Company held on 16 October 2009, shareholders approved the continuation of

the provision of guarantees in respect of the banking facilities extended to Lighthouse Technologies Limited, on the terms

and conditions set out in a circular to shareholders dated 1 October 2009. By 19 November 2010, the Group had been fully

discharged from these guarantees.


115


Directors’ Attendance at Board and Committee Meetings

The attendance of each Director at Board and Committee meetings during the financial year ended 31 March 2011 is as follows:

Board composition and committees Board Audit CommitteeNominating Committee

Remuneration Committee

No. of meetings No. of meetings No. of meetings No. of meetings

Held Attended Held Attended Held Attended Held Attended

Victor Lo Chung Wing 6 5 NA NA 1 1 NA NA

Leung Pak Chuen 6 6 NA NA 1 1 NA NA

Brian Li Yiu Cheung 6 4 NA NA NA NA NA NA

Andrew Chuang Siu Leung 6 6 NA NA NA NA NA NA

Wong Man Kit 6 6 NA NA NA NA NA NA

Eric Ng Siu Kai 6 6 NA NA NA NA NA NA

Lim Ah Doo 6 6 5 5 1 1 1 1

Phua Bah Lee 6 5 5 4 1 1 1 1

Lim Hock Beng 6 5 5 5 1 1 1 1

NA – not applicable

116

Class of equity securities : Ordinary shares

Number of issued shares : 521,358,482

Number of issued shares excluding treasury shares : 510,466,482

Voting rights : One vote per share

Treasury shares

Number of treasury shares : 10,892,000Percentage of treasury shares against the number of

issued shares excluding treasury shares : 2.13%

Analysis of size of shareholdings

Size of shareholding Number of shareholders % Number of shares %

1 - 999 87 4.84 23,502 0.01

1,000 - 10,000 1,124 62.58 4,762,980 0.93

10,001 - 1,000,000 568 31.63 36,040,099 7.06

1,000,001 and above 17 0.95 469,639,901 92.00

1,796 100.00 510,466,482 100.00

Public float

As at 20 June 2011, approximately 17.92% of the Company’s shares are held in the hands of the public. Accordingly, the Company

has complied with Rule 723 of the Listing Manual of Singapore Exchange Securities Trading Limited, which requires that at least

10% of the total number of issued shares excluding treasury shares (excluding preference shares and convertible equity securities)

in a class that is listed to be in the hands of the public.

Substantial shareholders

(as shown in the Register of Substantial Shareholders)

Direct Interest Deemed Interest

Name of substantial shareholder Number of shares % Number of shares %

Gold Peak Industries (Holdings) Limited 414,098,443 81.12 - -

Victor Lo Chung Wing (1) - - 414,398,443 81.18

Andrew Ng Sung On (2) 378,412 0.07 414,098,443 81.12

Note:(1) Mr Victor Lo Chung Wing’s deemed interest in 414,398,443 (approximately 81.18%) of the issued shares, excluding treasury

shares, of the Company arises pursuant to (i) his aggregate direct and deemed interests in the issued shares of Gold Peak Industries

(Holdings) Limited (“Gold Peak”) of approximately 29.68%, and Gold Peak’s direct interest in 414,098,443 issued shares of the

Company and (ii) his holding of 300,000 issued shares of the Company through HSBC (Singapore) Nominees Pte Ltd.

(2) Mr Andrew Ng Sung On’s deemed interest in 414,098,443 (approximately 81.12%) of the issued shares, excluding treasury

shares, of the Company arises pursuant to his aggregate direct and deemed interests in the issued shares of Gold Peak of

approximately 28.81%, and Gold Peak’s direct interest in 414,098,443 issued shares of the Company.

As at 20 June 2011

shaReholDings statistics GP Industries Limited Annual Report 2010-11

117

shaReholDings statistics GP Industries Limited Annual Report 2010-11

Twenty largest shareholders

No. Name of shareholder Number of shares %

1 Gold Peak Industries (Holdings) Limited 414,098,443 81.12

2 Mighty Holdings Limited 7,315,000 1.43

3 Citibank Nominees Singapore Pte Ltd 7,027,955 1.38

4 Diamond Coin Holdings Limited 6,870,000 1.34

5 UOB Kay Hian Pte Ltd 6,358,461 1.25

6 Ablewood International Limited 5,830,000 1.14

7 Artful Enterprises Limited 3,974,000 0.78

8 Kim Eng Securities Pte. Ltd. 3,171,541 0.62

9 OCBC Securities Private Ltd 2,850,901 0.56

10 Gu Jian Lin 2,272,000 0.44

11 Phillip Securities Pte Ltd 1,671,812 0.33

12 HSBC (Singapore) Nominees Pte Ltd 1,663,641 0.33

13 Leung Pak Chuen 1,608,000 0.32

14 Brian Li Yiu Cheung 1,465,000 0.29

15 Wong Wai Kan 1,398,827 0.27

16 HL Bank Nominees (S) Pte Ltd 1,045,000 0.20

17 DBS Nominees Pte Ltd 1,019,320 0.20

18 Chiam Toon Chew 895,896 0.18

19 Bank of Singapore Nominees Pte Ltd 700,000 0.14

20 Tan Seok Ling 673,409 0.13

471,909,206 92.45

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