Nam Lee - 2011AR

NAM LEE PRESSED METAL INDUSTRIES LIMITED
(Company Registration No. 197500362M)
31 Senoko Drive, Senoko Industrial Estate, Singapore 758216 Telephone: (65) 6257 5388 Facsimile: (65) 6758 8134 Email: pressed_metal@pacific.net.sg
Annual Report 2011
Strengthening Our Market Leadership
We offer no compromises on quality
Contents
02 Corporate Prole 04 Chairmans Statement 06 Board of Directors 08 Financial Highlights 10 Corporate Information 11 Corporate Governance 21 Report of the Directors 24 Statement by Directors 25 Independent Auditors Report 26 Consolidated Income Statement 27 Consolidated Statement of Comprehensive Income 28 Balance Sheets 29 Statements of Changes in Equity 32 Consolidated Statement of Cash Flows 33 Notes to the Financial Statements 83 Statistics of Shareholdings 85 Notice of Annual General Meeting Proxy Form
Corporate Prole
Our Company
Nam Lee Pressed Metal Industries Limited was incorporated on 10 March 1975 by the Yong family, which has been in the metal fabrication business since the 1950s. The family business was started by their father, the late Mr Yong Kwong Fae, who founded Chop Nam Lee, a sole proprietorship, to fabricate galvanised household products such as buckets and bath tubs. The Group commenced the design and manufacture of metal products for buildings in 1991 when it entered the HDB market and is a HDB-approved supplier. Today the Group remains the only worldwide third-party manufacturer of aluminium frames for container refrigeration units in the world for a major customer. Over the years, the Group has developed into a one-stop specialist for housing metal products, aluminium frames for container refrigeration units and a wide range of aluminium and steel products.
Experience, Know-How & Latest Technology

With the many years of experience in the business, its vertically-integrated production structure, well equipped facilities and skilled staff, Nam Lee Pressed Metal is able to offer the market complete service from design right through to installation, including the manufacture of tooling, jigs and xtures, metal fabrication, surface coatings and treatments, and the installation of the nal products. The fabrication activities are done through the Groups ve manufacturing plants which span the region. The plant in Singapore occupies a land area of 229,457 sq ft; the plants in Johore are under its wholly owned subsidiaries, NL Metals Sdn Bhd, NL Mechanical Engineering Sdn Bhd and Nam Lee Pressed Metal Sdn Bhd, located in Tampoi, Senai, Perkan Nenas and Gelang Patah and occupying land areas of 121,014 sq ft, 84,537 sq ft, 76,002 sq ft and 185,948 sq ft respectively.
Quality Foremost
Quality is never compromised at Nam Lee Pressed Metal and their efforts have been recognised when they were awarded the ISO 9002 certicate by the PSB in 1995. Another testament to its quality products was the HDB Quality Award for Supplier 1999 awarded to it by the HDB. Its philosophy and management practice of ensuring quality at every stage of production plus the forward-looking management ensures that Nam Lee Pressed Metal continues to progress and remain a competitive player in the metal building products and related market sectors.
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Nam Lee Pressed Metal Industries Limited
INTEGRITY QUALITY CUSTOMER SATISFACTION INNOVATION
are the pillars on which the success of Nam Lee Pressed Metal is built and they sum up the corporate values embraced by the Board, Management and Staff of Nam Lee Pressed Metal. I am condent that so long as we adhere to these core values Nam Lee Pressed Metal will make its mark as the preferred supplier for metal and aluminium products.
Mr Yong Koon Chin Chairman
Annual Report 2011
03
Message to Shareholders
On behalf of the Board of Directors, I am pleased to present the results of Nam Lee Pressed Metal Industries Limited and its subsidiaries for the financial year ended 30 September 2011 (FY 2011). Financial Highlights Group turnover increased 20.4% from S$139.0 million for the financial year ended 30 September 2010 (FY2010) to S$167.3 million for the financial year ended 30 September 2011 (FY2011). The growth was mainly attributed to an increase in the sales volume of aluminium industrial products. Gross profit increased 35.3% from S$23.4 million for FY2010 to S$31.6 million in FY2011, in line with the increase in turnover. Gross profit margin increased 2.1 percentage points from 16.8% for FY2010 to 18.9% for FY2011 mainly due to increased labour productivity and efficiency. Distribution costs increased 7.6% from S$2.0 million in FY2010 to S$2.2 million in FY2011 as a result of an increase in sales activities. In line with FY2011s higher business volume, Administrative expenses rose 21.5% from S$10.9 million in FY2010 to S$13.2 million and were mainly attributable to an increase in salaries and bonuses for management and administrative staff. Other operating costs increased from S$1.6 million in FY2010 to S$2.9 million in FY2011 mainly due to an increase in foreign exchange loss from S$0.4 million for FY2010 to S$1.1 million for FY2011. Other income decreased from $3.6 million in FY2010 to $0.2 million in FY2011, as the one-time gain on disposal of an available-for-sale financial assets of S$3.3 million in FY2010 did not recur in FY2011. The Groups effective tax rate for FY2011 was 17.7% compared to 17.0% in FY2010. In view of the above, the Group recorded Profit before tax of S$13.3 million in FY2011 compared to S$12.2 million in FY2010, while Profit net of tax was S$10.9 million versus S$10.1 million previously. The Groups balance sheet remained strong in FY2011. Total net assets increased 6.9% from S$93.5 million as at 30 September 2010 to S$99.9 million as at 30 September 2011 while net asset backing per ordinary share improved from 41.0 Singapore cents to 43.8 Singapore cents. Inventories decreased from S$42.0 million as at 30 September 2010 to S$36.6 million in line with the timely completion of several construction projects. Trade debtors increased from S$26.4 million as at 30 September 2010 to S$40.4 million as at 30 September 2011, mainly due to the increase in sales volume for the Groups aluminium industrial products as well as the effect from the restoration of the original credit terms of 60 days to a major customer during FY2011. Of the Trade debtors balance of S$40.4 million as at 30 September 2011, S$7.7 million is the total sum of contractual performance retention amounts that project customers are entitled to withhold payment pending their satisfactory acceptance of the projects handed over; while 95.1% of the remaining total balance of S$32.7 million has since been duly collected by the Group. Trade creditors, other creditors and accruals increased from S$12.4 million as at 30 September 2010 to S$18.7 million as at 30 September 2011, in line with the increase in cost of sales. The Groups operating activities in FY2011 generated net cash
A REVIEW OF FY2011
The Group delivered a robust performance in FY2011 with net profit attributable to shareholders increasing 8% year-on-year to S$10.9 million. Earnings per share based on the total of 226,760,928 ordinary shares issued rose from 4.37 Singapore cents as at 30 September 2010 to 4.79 Singapore cents as at 30 September 2011. On average, the Group recorded 2.1 percentage points improvement in gross profit margin to 18.9%. The bottomline growth was achieved on the back of 20.4% turnover growth to S$167.3 million, led by the recovery in demand for the Groups aluminium industrial products. The Groups building materials division also performed well inspite of very competitive industry conditions. Several construction projects-in-progress that were carried forward into FY2011 were smoothly completed. Shareholders should note that the Groups anticipated benefits from the Singapore governments plans to construct up to 22,000 new public housing ats in calendar year 2011 from 16,000 units in 2010, will only start contributing to the Groups financial results from FY2012. This delayed impact comes about as the Groups building products are typically delivered and installed during the final construction stage of such housing projects.
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ow of S$14.5 million compared to S$10.5 million in FY2010. As at 30 September 2011, total cash and cash equivalents have increased from S$15.7 million as at 30 September 2010 to S$24.1 million.
OPERATIONAL HIGHLIGHTS
Aluminium The Groups mainstay product categories, namely customengineered and fabricated aluminium parts for the industrial sector and a broad range of building and infrastructure products, continued to generate the major share of revenue and profit contribution, i.e., 86.2% of Group turnover and 82.1% of Group profit before tax. Sales increased by S$34.1 million yearon-year mainly due to the increase in sales volume of aluminium industrial products. Mild Steel Turnover of mild steel products reduced from S$28.0 million in FY2010 to S$22.5 million in FY2011 and accounted for 11.1% of Group profit before tax for FY2011. The decrease was in line with the completion of one of the Groups pre-fabricated bathroom unit projects in FY2010. Stainless Steel Turnover for stainless steel products remained constant at S$0.4 million in FY2010 and FY2011, corresponding to project specifications for both the private and public sector building projects that the Group undertook during the period.
quarter (1QFY2012) and the medias constant focus on widespread population unrest within the European, UK, Middle Eastern and Russian communities will worsen market confidence amidst a slowdown in global economic growth, including the US and China. The Group is thus cautiously bracing for the adverse uncertainties in its external environments to inevitably affect the demand for its aluminium industrial products in the short term. On the other hand, there are better prospects going forward for the Groups business of aluminium building and infrastructure products, with Singapore as its main market. The Group expects to ride on the Singapore Governments 2011 election commitment of providing more new public housing ats in the coming years. The Singapore Government has announced that the number of new public housing ats to be built will be increased to 25,000 in 2012, up from 22,000 in 2011 and 16,000 in 2010. The mass market demand for more affordable public housing is expected to remain resilient in the coming years. While the prevailing market environment for the building products industry remains very competitive and will continue to exert pressure on profit margin, the Groups sound fundamentals and long-term investments over the last few years in building a cost-effective production hub in the neighbouring Malaysian state of Johore within the Nusajaya special economic zone, will underpin the Groups strategy of selective competitiveness. Barring unforeseen circumstances in
its external environments, the Group expects to continue to be profitable.
DIVIDEND
In consideration of the Groups FY2011 results, the board of directors has recommended a total dividend of 1.5 cent per share comprising a final dividend of 1.0 cent per share plus a special dividend of 0.5 cent per share, which are similar to FY2010 dividends, for shareholder approval at the forthcoming Annual General Meeting.
ACKNOWLEDGEMENT
I wish to convey our heartfelt appreciation to our customers, business associates, vendors, shareholders and employees for their loyal support and dedication over the years. The road ahead will be tough with growing uncertainties arising from unprecedented developments in our geopolitical environments that require innovative solutions. Nevertheless, with our proven business partners continuing to stand by us as we forge ahead together and reap mutual benefits, the Group is confident of overcoming new challenges in FY2012. Sincerely, Mr Yong Koon Chin Chairman
OUTLOOK
Further adverse developments in the Eurozone sovereign debt contagion during the current October to December 2011
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Board of Directors
MR Yong Koon Chin

Chairman As Chairman of Nam Lee Pressed Metal Industries Limited and one of the three founders of the Group, Mr Yong brings with him more than 40 years of experience in the metal fabrication industry. He is responsible for overseeing the manufacturing operations of NL Metals. He has been a member of the Board since March 1975.
MR Yong Kin Sen

Managing Director (Executive) Mr Yong is one of the three founders of the Group and has built up extensive industry experience and business network in a career that spans over 40 years in the metal fabrication industry. He is responsible for the strategic direction, business planning development and overall management of the Group. He has been a member of the Board since March 1975.
MR Yong Poon Miew

Director (Executive) He is also a founder of the Group with 40 years of business experience in the metal fabrication industry. He is principally responsible for overseeing the manufacturing operations of NL Mechanical Engineering. He has been a member of the Board since March 1975.
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MR Khoo Ho Tong
Director (Independent) Mr Khoo is a practicing public accountant and a partner in a certified public accounting firm. He is the Chairman of the Audit Committee. He is a treasurer of the Asian Federation of Accountants. He is also a council member of the Institute of Certified Public Accountants of Singapore. Mr Khoo has been a member of the Board since September 1999.
MR C. Chandrasegar
Director (Independent) Mr Chandrasegar was appointed as an Independent Director on 1 March 2005 and is the Chairman for Nomination Committee. Mr Chandrasegar is an Advocate and Solicitor of the Supreme Court of Singapore, a Solicitor of England and Wales and a Legal Practitioner of New South Wales, Australia. He is a Notary Public and is a Commisioner of Oaths and is an author of 2 leading books on Mergers and Acquisitions in Singapore.
MR Tan Soo Kiat

Director (Independent) Mr Tan Soo Kiat is the Chairman of our Remuneration Committee and currently a director of Intergate Pte Ltd, a company engaged in the provision of corporate advisory services. With extensive experience in the banking and finance industry, he previously held senior financial appointments in several public-listed companies. Currently, he is also a Board member of a number of public companies listed on the Singapore Exchange. A Chartered Accountant, he graduated from University of Otago, New Zealand.
Annual Report 2011
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Financial Highlights
Turnover ($m)
180
161.6
150
167.3
143.2
139.0
120
113.1
90
60
30
2007
2008
2009
2010
2011
Prot Before Tax ($m)
14
13.3 12.2
12
10.2
10
8.4
8
5.9
2007
2008
2009
2010
2011
08
Turnover by Activities ($000)

22,554 463 29 144,248
2011
6,987 5,849 3,256
13,602 5,996 202
9,283 2,711 146
28,054
468 385
2007
127,196
2008
141,785
2009
100,992
2010
110,097
Prot Before Tax by Activities ($000)

1,480 867 44 10,930
2011
1,206 843
903 574 76
720 189 37
2,622
2007
497 7,663
2008
6,840
2009
4,938
2010
38 34 9,536
Aluminium Mild Steel Stainless Steel Others

Annual Report 2011 09
Corporate Information
Directors
Yong Koon Chin Chairman Yong Kin Sen Managing Director Yong Poon Miew Khoo Ho Tong Chidambaram Chandrasegar Tan Soo Kiat
Secretaries
Yong Kin Sen Susie Low
Registered Ofce
31 Senoko Drive Senoko Industrial Estate Singapore 758216
Auditors
Ernst & Young LLP Certified Public Accountants Ho Shyan Yan (since financial year ended 30 September 2009)
Bankers
United Overseas Bank Limited Standard Chartered Bank DBS Bank Ltd Australia and New Zealand Banking Group Limited (previously known as The Royal Bank of Scotland)
Share Registrar
Boardroom Corporate & Advisory Services Pte Ltd (formerly known as Lim Associates (Pte) Ltd) 50 Rafes Place #32-01 Singapore Land Tower Singapore 048623
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Corporate Governance
The Board and its management are committed to good standards of corporate governance and in the implementation of measures and practices recommended by the Code of Corporate Governance 2005 (the Code 2005) adopted by the Singapore Exchange Securities Trading Limited (SGX-ST). For effective corporate governance, the Company has put in place various self-regulatory and monitoring mechanisms. Board of Directors (Principles 1, 2 and 10) The Boards Conduct of Affairs The Board has overall responsibility for the corporate governance of the Company and supervises the management of the business and affairs of the Group. The Board sets the Groups strategic directions, reviews and approves major investments and funding decisions, reviews the financial performance of the Group and its system of internal controls. The Board works closely with the management and is supported by various subcommittees whose functions are described below. The Directors bring with them considerable experience in the fields of engineering, financial, law and business. They have separate and independent access to the management and the Company Secretary, whose role includes ensuring that Board procedures, applicable rules and regulations are complied with. Newly appointed directors are provided with background information about the Company and the Group and are invited to visit the Groups operations and facilities to have an understanding of the business operations. Directors receive updates from time to time, particularly on relevant laws and regulations, changing commercial risks and business conditions from the Companys relevant professional advisors. Directors may take independent professional advice and receive training at the Companys expense. The Executive Directors are responsible for the day-to-day operations and administration of the Company. Management provides the Board with reports of the Groups performance, financial position and prospects, which are reviewed by the Board at each Board meeting. Board Composition and Guidance The Board of Directors, which comprises six directors, is made up of three Executive Directors and three Independent Directors, making up at least one-third of the Board. The Nominating Committee has reviewed and is satisfied as to the independence of the respective Independent Directors. The Board is of the view that the current board size of six directors is appropriate and effective, taking into account the nature and scope of the Groups operations, and that the current Board comprises persons who as a group provide core competencies necessary to meet the Group objectives. Also, no single individual or a group dominates the Board. The Board, through the Nominating Committee, examines on an on-going basis the size and the composition of the Board to evaluate whether the Board is effective in carrying out its duties. Key information regarding the Directors of the Company is set out in the section Board of Directors on pages 6 and 7 of this Annual Report.
Annual Report 2011
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Directors Attendance at Board and Committee Meetings for the period from 1 October 2010 to 30 September 2011: Nominating Committee Meetings Held N/A 1 1 1 1 1 Attended N/A 1 1 1 1 1 Remuneration Committee Meetings Held N/A N/A N/A 2 2 2 Attended N/A N/A N/A 2 2 2
Board Meetings Held Yong Koon Chin Yong Kin Sen Yong Poon Miew Khoo Ho Tong Chidambaram Chandrasegar Tan Soo Kiat 4 4 4 4 4 4 Attended 4 4 4 4 4 4
Audit Committee Meetings Held N/A N/A N/A 5 5 5 Attended N/A N/A N/A 5 5 5
Chairman and Managing Director (Principle 3) Mr Yong Koon Chin is the Chairman while Mr Yong Kin Sen is the Managing Director of the Company. Both are executive directors and are siblings. The Managing Director has the executive responsibility for the overall direction and day-to-day operation of the Group. The Chairmans responsibilities include reviewing board papers before they are presented to the Board and ensures that the board members are provided with complete, adequate and timely information. He also assists in ensuring compliance with Companys guidelines on corporate governance. The Chairman ensures that board meetings are held when necessary and sets the board meeting agenda in consultation with the management and the Company Secretary. Board papers are sent to Board members in advance in order for the Directors to be adequately prepared for board meetings. Audit Committee (Principle 11) The Audit Committee (AC) comprises three members, all of whom are independent: Chairman Mr Khoo Ho Tong Members Mr Tan Soo Kiat Mr Chidambaram Chandrasegar The Board is of the opinion that the members of the AC have sufficient expertise and experience to discharge their duties.
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The AC functions include: (I) Review with the external and internal auditors, their audit plans, scope, the internal auditors evaluation of the adequacy of the internal control systems and ensure that co-ordination of audit effort is maximised where possible. Evaluate the steps taken to minimise any significant risks or exposures to the Company and its subsidiaries. Review the quarterly and annual financial statements including announcements to shareholders and the SGXST prior to submission to the Board. Recommend to the Board of Directors the nomination of the Companys external auditors. Review interested person transactions. Review the assistance given by the management to the Companys auditors. Review arrangements by which staff of the Company may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters and ensure that arrangements are in place for the independent investigations of such matters and for appropriate follow up actions.
(II) (III) (IV) (V) (VI) (VII)
The Board and the AC are satisfied that the appointments of different auditors for the Groups overseas subsidiaries and associates would not compromise the standard and effectiveness of the Groups audit. The AC, having reviewed the volume of non-audit services provided to the Company by the external auditors, is satisfied that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors. During the financial year, the AC met the external auditors without the presence of the management. The AC has recommended to the Board of Directors that the auditors, Ernst & Young LLP, be nominated for reappointment as auditors at the forthcoming Annual General Meeting of the Company. The AC has adopted a whistle-blowing policy which provides well defined and accessible channels in the Group through which employees may raise concerns in the event that they may encounter any improper conduct within the Group. The AC did not receive any complaint during the financial year. In October 2008, the Audit Committee Guidance Committee issued the Guidebook for Audit Committees in Singapore. The AC had discussed and noted the best practices as set out in the Guidebook. Where appropriate, the AC will use the best practices as a reference in discharging their duties and responsibilities. The Company has, to the best of its knowledge, complied with the Code 2005 in relation to the roles and responsibilities of the AC. Internal Controls and Internal Audit (Principles 12 & 13) The Board is responsible for ensuring that the management maintains a system of internal controls to safeguard shareholders investments and the Groups assets. The Board believes that the existing system of internal controls put in place is adequate in meeting the needs of the Groups operations. The internal audit function is outsourced to a certified public accounting firm. The internal auditors meet the professional standards set out in the Code and they report directly to the AC. The internal auditors periodically review the adequacy of and compliance with group policies, procedures and internal controls which are designed to manage risk and safeguard the Groups assets. The internal audit plan is subject to approval by the AC.
Annual Report 2011
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The Groups external auditors, Ernst & Young LLP, also contribute an independent perspective on the internal controls systems arising from their audit and report their findings to the AC. The AC, with the assistance of the internal auditors, is of the opinion that the Company is in compliance with the principles and practices as set out by the SGX-ST. There were no significant internal control weaknesses reported by the auditors and the Board is satisfied that existing controls are adequate. Nominating Committee (Principles 4 & 5) The Nominating Committee (NC) comprises five members, a majority of whom, including the Chairman, are independent. In addition, the NC Chairman is not, and not directly associated with, a substantial shareholder of the Company. The composition of the NC is as follows: Chairman Mr Chidambaram Chandrasegar Independent Director Members Mr Khoo Ho Tong Independent Director Mr Tan Soo Kiat Independent Director Mr Yong Poon Miew Executive Director Mr Yong Kin Sen Executive Director The NCs functions are as follows: (I) Review and recommend to the Board the retirement and re-election of directors in accordance with the Articles of Association of the Company. Every director including the Managing Director is subject to reelection once in every three years. Also, all newly appointed directors during the year will hold office until the next Annual General Meeting and will be eligible for re-election. Such directors are not taken into account in determining the number of directors who are to retire by rotation. Review and assess candidates for directorship before making recommendation to Board, taking into consideration the skills and experience required and the current composition of the Board. Determine the independence/non-independence of Directors. Evaluate the effectiveness of the Board as a whole and propose objective performance criteria to assess effectiveness of the Board.
(II) (III) (IV)
At the forthcoming annual general meeting and in accordance with the Articles of Association of the Company: Mr Yong Kin Sen, Mr Chidambaram Chandrasegar and Mr Tan Soo Kiat will retire under Article 104 of the Companys Articles of Association. They have signified their consents to continue in office and offered themselves for re-election. Mr Yong Koon Chin and Mr Khoo Ho Tong have both attained the age of 70 years and will retire in accordance with Section 153(6) of the Companies Act, Cap. 50. They have signified their consents to continue in office and have offered themselves for re-appointment. The NC has recommended their re-elections and re-appointments to the Board.
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Access to Information (Principle 6) All Directors have unrestricted access to the Companys records and information and independent access to senior management of the Company. The Company Secretary attends meetings of the Board, Audit, Remuneration and Nominating Committees. The Directors have separate and independent access to the Company Secretary who is responsible in ensuring that Board procedures are followed and requirements under the Companies Act are complied with. Remuneration Committee (Principles 7 & 8) The Remuneration Committee (RC) comprises three members, all of whom are independent: Chairman Mr Tan Soo Kiat Independent Director Members Mr Khoo Ho Tong Independent Director Mr Chidambaram Chandrasegar Independent Director The RCs functions are as follows: (i) (ii) (iii) Recommend a framework of remuneration for the Executive Directors for the Boards approval in consultation with the Chairman of the Board. Review and recommend long-term incentive scheme. Review the Non-Executive Directors remuneration in the form of Directors fees, having regard to the roles that the individual directors play. Non-Executive Directors fees are submitted for shareholders approval at the Annual General Meeting.
The RC ensures that the Directors compensations are adequately but not excessively remunerated. While none of the members of the RC specialises in the area of executive compensation, all members of the RC are knowledgeable in executive compensation matters gained through their industry experience. The RC may seek independent professional advice on remuneration of directors. Remuneration and Benefits of Directors and Key Executives (Principle 9) A. The Executive Directors have service contracts renewed for a term of one year on the terms and conditions contained therein. Other than the remuneration package disclosed in the table below, the Executive Directors do not enjoy any other incentives. Non-Executive Directors have no service contracts and their duration of office are specified in the Articles of Association. They are paid directors fees in consideration of their contribution to the Company.
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B. The Board has decided not to present the annual remuneration report of the Executive Directors for shareholders approval at the Annual General Meeting as their remuneration packages are covered in their service contracts. Non-Executive Directors fees are tabled for shareholders approval at the Annual General Meeting. The following table shows a breakdown (in percentage terms) of the average remuneration of the Directors and key executives during the year, which falls within broad bands for the year ended 30 September 2011. Profit Sharing % Directors fees % Total Compensation %
C.
Remuneration Bands
Salary %
Bonus %
Others %
S$500,000 and above Director Mr Yong Kin Sen S$250,000 S$499,000 Directors Mr Yong Koon Chin Mr Yong Poon Miew Below S$250,000 Directors Mr Khoo Ho Tong Mr Chidambaram Chandrasegar Mr Tan Soo Kiat Key Executives S$500,000 and above Mr Lim Hock Leong Below S$250,000 Mr Lim Ken Guan Miss Christine Phua Mr Tan Bee Kin Mr Michael Lee Mr Bennett Jude Bennit D. 78 68 81 83 80 22 32 19 17 20 100 100 100 100 100 39 61 100 100 100 100 100 100 100 48 48 51 51 1 1 100 100 39 60 1 100
There is no employee who is related to a Director whose remuneration exceeds S$150,000 in the Groups employment for the financial year ended 30 September 2011.
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Communication with Shareholders (Principles 14 and 15) The Company endeavours to maintain timely and effective communication with shareholders through timely and comprehensive announcements. The Company does not make selective disclosure to only certain groups of persons. It has adopted a policy of making all necessary disclosures in public announcements via SGXNET, press release, circulars for Extraordinary General Meetings and annual reports. The annual reports and circulars are sent to all shareholders and the notice of general meetings are advertised in the newspapers and announced via SGXNET. The Articles of Association allows a member to appoint not more than two proxies to attend and vote in his place at general meetings. At Annual General Meetings and Extraordinary General Meetings, shareholders are given the opportunity to express their views and to raise their queries to the Board on matters relating to the operations of the Group. The external auditors are also present at the Annual General Meetings to address shareholders queries about the conduct of audit and the preparation and content of the auditors report. Dealing in Securities The Company has adopted and implemented the SGX-ST Best Practices Guide with respect to the dealings in the securities of the Company by directors and key employees in the Group. In line with the best practices, the Company issued a quarterly letter to all Directors and employees informing them that they are not permitted to deal in the Companys shares during the period commencing two weeks before the announcement of the Companys financial statements for each of the first three quarters of its financial year and one month before the announcement of the Companys full year financial statements , or if they are in possession of unpublished price-sensitive information of the Company. The Directors and employees are discouraged from dealing in the Companys securities on short-term considerations. Interested Person Transactions Name of Interested Person Aggregate value of all interested person transactions during the financial year (excluding transactions less than S$100,000 and transactions conducted under shareholders mandate pursuant to Rule 920) S$000 360 Aggregate value of all interested person transactions conducted under shareholders mandate pursuant to Rule 920 (excluding transactions less than S$100,000) S$000 NA
Nam Lee Industries Pte Ltd
Material Contracts Other than the transactions with Nam Lee Industries Pte Ltd (as disclosed above), there were no material contracts between the Company and its subsidiaries involving the interests of the Managing Director, each director and each controlling shareholder.
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Risk Management (I) Dependence on public housing projects The Group is engaged in the design, fabrication, supply and installation of a wide range of steel and aluminium products, comprising building products for HDB housing projects and aluminium frames for container refrigeration units. Its metal building products cater to housing projects relating to new HDB flats and the Groups business is dependent on the demand for new HDB flats. The Group manages the risk on demand for HDB flats by focusing on HDB upgrading, industrial buildings and other public projects. Fluctuation in raw material prices The Groups key raw materials, namely mild steel, stainless steel and aluminium, are subject to price fluctuations. Any significant increase in the prices of mild steel, stainless steel and aluminium will adversely affect the Groups operating results. The Group manages the risk in fluctuation by buying the raw materials pegged to contracts requirements only and constantly sourcing for alternative sources of supply. Delays in project completion The Group is exposed to the risk of being liable for liquidated damages, which are pre-determined sums payable, in the event that it is unable to complete a project within the stipulated period of time due to factors attributable to the Group. The Group manages this risk by closely monitoring its projects by its qualified and experienced personnel. Dependence on foreign workers The Group, like many companies in Singapore, is dependent on foreign workers due to the shortage of Singaporean labour. Therefore, the Group is vulnerable to the shortage of foreign workers and any increase in foreign worker levies, which will result in an increase in the Groups operating costs and adversely affect the Groups operating results. The Group manages the risk of shortage of foreign workers by relocating labour intensive operations to its Malaysian plants. Financial risk management objectives and policies Please refer to Note 34 of the Notes to Financial Statements. Dependence on relationship with a major customer A major customer accounts for a substantial portion of our revenue. We are therefore dependent, to certain extent, on this major customer, as any cancellation of its sales and purchases would have an impact on our operations. Although we have long-term contract with our major customer, it may alter its present arrangements with us to our disadvantage, which would in turn have an impact on our operating income, business and financial position and consequently, our operating profits may, to a material extent, be adversely affected.
(II)
(III)
(IV)
(V) (VI)
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(VII) We will be affected by competition from competitors and new entrants The aluminium and steel products industry is competitive and such competition may increase in the near future due to the entry of new players in our aluminium and steel products business. In the event our competitors are able to provide comparable products at lower prices or respond to changes in market conditions more swiftly or effectively than we do, our business, results of operations and financial performance will be adversely affected. There is no assurance that we will be able to compete effectively with our existing and future competitors and adapt quickly to changing market conditions and trends. Any failure by us to remain competitive will adversely affect the demand for our business, our results of operations and financial performance.
(VIII) Our success depends on our ability to attract and retain key personnel The Groups success depends to a significant extent upon a number of key employees and senior management. The loss of service of one or more of these key employees, most of whom are not bound by formal long-term employment agreements, could have a material adverse effect on the Group. The Group believes that its future success will also depend in large part upon its ability to attract and retain highly skilled managerial personnel. Competition for such personnel is intense. The Group may not be successful in attracting and retaining the personnel it requires.
(IX) Dependence on demand for marine refrigerated containers The Group is engaged in the production of aluminium frames for container refrigeration units for the shipping industry. Thus the Groups business is dependent on the international shipping industrys demand for new refrigerated containers and any significant downturn in the demand for new refrigerated containers will have an adverse impact on the Groups operating results.
Information on Key Executives Mr Lim Hock Leong (Aged 57) Mr Lim is the General Manager and is responsible for the management of the daily operations of the Group, which include sales and marketing, investments and corporate finance. Mr Lim has over 24 years of working experience in the metal engineering and fabrication business since 1988. He joined the Company in 1988 as its Financial Controller after accumulating more than nine years of experience in the accounting and finance functions of three companies listed in Singapore. He was promoted to General Manager of the Company in 1996. He holds a Bachelor in Commerce (Accountancy) degree from the then Nanyang University. Mr Bennett Jude Bennit (Aged 51) Mr Bennit is the Project Manager of the Company and is responsible for the Groups site management. Mr Bennit joined the Company as a senior project engineer in 1992. He was promoted to the current position of Project Manager in 1998. Prior to joining the Company, Mr Bennit was an R & D Test Engineer of a container manufacturing company where he had worked for four years. Mr Bennit holds a Bachelor of Technology degree from the Regional Engineering College, Warangal, India. Ms Christine Phua (Aged 56) Ms Phua is the Material Procurement Manager of the Company. She is responsible for the Groups material planning and procurement and inventory management. Ms Phua joined Nam Lee Industries in 1974 and was promoted to the position of Material Procurement Manager in 1981. She has since acquired 29 years of experience in this area.
Annual Report 2011
19
Mr Lim Ken Guan (Aged 54) Mr Lim is the Financial Controller of the Company. He is responsible for the accounting, management reporting and taxation functions of the Group. He joined the Company in 1999. Prior to joining the Company, he has accumulated more than 19 years experience in accounting and finance. He is a Chartered Institute of Management Accountant and holds a Master in Business Administration from the University of Birmingham. Mr Michael Lee (Aged 47) Mr Lee is the Engineering Manager of the Company and is responsible for the Groups project. Prior to joining the Company in 2002, he was the Operations Manager in an engineering company. He has more than 21 years of experience in the aluminium industry. Mr Lee holds a Bachelor of Arts (Architectural Studies) from the National University of Singapore. Mr Tan Bee Kin (Aged 51) Mr Tan joined the Company as the Engineering Manager in 2001. He is responsible for the product design and project management. Prior to joining the Company, Mr Tan has 19 years of experience in management and design in Automation and Surface Treatment system. Mr Tan holds a Bachelor of Science (Engineering) degree from University of Aberdeen, UK.
20
Report of the Directors

The Directors are pleased to present their report to the members together with the audited consolidated financial statements of Nam Lee Pressed Metal Industries Limited (the Company) and its subsidiaries (collectively, the Group) and the balance sheet and statement of changes in equity of the Company for the financial year ended 30 September 2011. Directors The Directors of the Company in office at the date of this report are: Yong Koon Chin Yong Kin Sen Yong Poon Miew Khoo Ho Tong Chidambaram Chandrasegar Tan Soo Kiat Chairman Managing Director
Arrangements to enable directors to acquire shares and debentures Except as described below, neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the Directors of the Company to acquire benefits by means of the acquisition of shares or debentures of the Company or any other body corporate. Directors interests in shares and debentures The following Directors who held office at the end of the financial year had, according to the register of Directors shareholdings required to be kept under Section 164 of the Singapore Companies Act, Cap. 50, an interest in shares and share options of the Company as stated below:Held in name of directors Name of director At 1.10.10 At 30.9.11 At 21.10.11 At 1.10.10 Deemed interest At 30.9.11 At 21.10.11
Ordinary shares of the Company Yong Kin Sen Yong Koon Chin Yong Poon Miew Share options of the Company Khoo Ho Tong Chidambaram Chandrasegar Tan Soo Kiat 400,000 200,000 200,000 400,000 200,000 200,000 400,000 200,000 200,000 839,250 90,000 358,500 1,139,250 90,000 358,500 1,139,250 90,000 358,500 130,299,303 132,419,303 132,419,303 130,293,303 132,413,303 132,413,303 130,293,303 132,413,303 132,413,303
Messrs Yong Kin Sen, Yong Koon Chin and Yong Poon Miew, by virtue of their interest in more than 20% of the issued share capital of the Company, are deemed to have an interest in the issued share capital of the subsidiaries of the Company at the beginning and end of the financial year and as at 21 October 2011. Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares, share options, warrants or debentures of the Company, or of related corporations, either at the beginning of the financial year, or at the end of the financial year.
Annual Report 2011
21

Directors contractual benefits Except as disclosed in the financial statements, since the end of the previous financial year, no Director of the Company has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the Director, or with a firm of which the Director is a member, or with a Company in which the Director has a substantial financial interest. Options At the Extraordinary General Meeting held on 20 November 2007, shareholders approved the Nam Lee Employee Share Option Scheme (the Scheme) for the granting of options for the subscription of shares at a discount to selected employees and non-executive directors. The Scheme is administered by the Remuneration Committee, comprising three directors, Mr Tan Soo Kiat (Chairman), Mr Khoo Ho Tong and Mr Chidambaram Chandrasegar. In the previous financial year, the Company granted 800,000 options to non-executive directors of the Company and 7,400,000 options to employees of the Group. Details of all the options to subscribe for ordinary shares of the Company pursuant to the Scheme as at 30 September 2011 are as follows: Exercisable date 22 February 2011 22 February 2011 Total Expiry date 22 February 2016 22 February 2021 Exercise price ($) 0.258 0.258 Number of options 800,000 7,400,000 8,200,000
Details of the options to subscribe for ordinary shares of the Company granted to Directors of the Company pursuant to the Scheme are as follows: Aggregate options granted since commencement of plan to end of financial year 400,000 200,000 200,000 800,0001 Aggregate options exercised since commencement of plan to end of financial year
Name of director Khoo Ho Tong Chidambaram Chandrasegar Tan Soo Kiat Total
1
Options granted during financial year
Aggregate options outstanding as at end of financial year 400,000 200,000 200,000 800,000
These options are exercisable between 22 February 2011 and 22 February 2016 at the exercise price of S$0.258 if the vesting conditions are met.
Since the commencement of the employee share options plan till the end of the financial year:
l l l
No options have been granted to the controlling shareholders of the Company and their associates. No participant has received 5% or more of the total options available under the scheme. No options that entitle the holder to participate, by virtue of the options, in any share issue of any other corporation have been granted. The options granted under the Scheme were granted without any discount. Nam Lee Pressed Metal Industries Limited
22

Audit Committee The audit committee performed the functions specified in section 201B (5) of the Singapore Companies Act, Cap. 50. The functions performed are detailed in the Report on Corporate Governance. The audit committee comprises three members, all independent Directors. The members of the audit committee are: Khoo Ho Tong Chidambaram Chandrasegar Tan Soo Kiat Auditors Ernst & Young LLP have expressed their willingness to accept reappointment as auditors. Chairman Member Member
On behalf of the Board,
Yong Kin Sen Director
Yong Poon Miew Director
Singapore 3 January 2012
Annual Report 2011
23
Statement by Directors
We, Yong Kin Sen and Yong Poon Miew, being two of the Directors of Nam Lee Pressed Metal Industries Limited, do hereby state that, in the opinion of the Directors: (i) the accompanying balance sheets, consolidated income statement, consolidated statement of comprehensive income, statements of changes in equity, and consolidated statement of cash flows together with notes thereto 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 30 September 2011 and the results of the business, changes in equity and cash flows of the Group and the changes in equity of the Company for the year ended on that date, 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.
(ii)
On behalf of the Board,
Yong Kin Sen Director
Yong Poon Miew Director
Singapore 3 January 2012
24
Independent Auditors Report

to the Members of Nam Lee Pressed Metal Industries Limited
Report on the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of Nam Lee Pressed Metal Industries Limited (the Company) and its subsidiaries (collectively, the Group) set out on pages 26 to 82 which comprise the balance sheets of the Group and the Company as at 30 September 2011, the statements of changes in equity of the Group and the Company, and the consolidated income statement, consolidated statement of comprehensive income and consolidated statement of cash flows of the Group for the year then ended, and a summary of significant accounting policies and other explanatory information. Managements Responsibility for the Consolidated Financial Statements Management is responsible for the preparation of consolidated 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 a 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 consolidated 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 consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation of the consolidated 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 entitys 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 consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements of the Group and the balance sheet 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 30 September 2011 and the results, changes in equity and cash flows of the Group and the 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.
Ernst & Young LLP Public Accountants and Certified Public Accountants Singapore 3 January 2012
Annual Report 2011
25
Consolidated Income Statement

for the nancial year ended 30 September 2011
Note
2011 $000 167,294 (135,692) 31,602 (2,177) (13,200) (2,922)
2010 $000 139,004 (115,648) 23,356 (2,023) (10,860) (1,570) 8,903 7 (321) 3,641 12,230 (2,082) 10,148
Revenue Cost of sales Gross profit Distribution costs Administrative costs Other operating costs Profit from operating activities Interest income Finance costs Other income Profit before taxation Taxation Profit for the financial year Attributable to: Equity holders of the Company Non-controlling interests
13,303 8
7 8
(217) 227 13,321
(2,358) 10,963
10,869 94 10,963
9,913 235 10,148
Earnings per share (in cents) - Basic - Diluted
10 10
4.79 4.78
4.37 4.36
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
26
Consolidated Statement of Comprehensive Income

2011 $000 Profit for the financial year Other comprehensive income: Foreign currency translation Fair value adjustment Other comprehensive income for the year, net of tax Total comprehensive income for the year Attributable to: Equity holders of the Company Non-controlling interests 9,526 101 9,627 (744) (592) (1,336) 9,627 10,963
2010 $000 10,148
677 (467) 210 10,358
10,148 210 10,358
Annual Report 2011
27
Balance Sheets
as at 30 September 2011
Group Note 2011 $000 2010 $000
Company 2011 2010 $000 $000
Non-current assets Property, plant and equipment Investments Interest in subsidiaries Current assets Inventories Trade debtors Other debtors and deposits Prepayments Amounts due from subsidiaries (non-trade) Derivatives Cash and cash equivalents Current liabilities Trade creditors Other creditors and accruals Provision for warranty Amounts due to subsidiaries (non-trade) Term loans Derivatives Obligations under hire purchase contracts Provision for taxation Net current assets Non-current liabilities Term loans Obligations under hire purchase contracts Deferred taxation
11 12 13
25,729 845 26,574
28,683 1,564 30,247 42,018 26,368 524 1,381 126 15,692 86,109 6,483 5,943 865 1,458 422 2,110 17,281 68,828 2,872 275 2,409 5,556 93,519
4,395 845 15,396 20,636 10,945 34,908 147 150 14,205 15,210 75,565 2,467 10,020 59 8,543 1,751 151 149 1,924 25,064 50,501 1,168 296 531 1,995 69,142
5,546 1,564 15,396 22,506 6,987 39,091 87 140 14,166 126 11,929 72,526 15,183 3,784 73 1,111 1,244 293 1,323 23,011 49,515 2,102 140 863 3,105 68,916
14 15 16 17 18 34
36,582 40,418 928 448 24,125 102,501
19 20 21 17 22 18 23
6,841 11,862 977 1,962 151 245 2,751 24,789 77,712
22 23 24
1,700 398 2,196 4,294 99,992
Equity attributable to equity holders of the Company Share capital Retained earnings Capital reserves Foreign currency translation reserve Fair value adjustment reserve Share option reserve Non-controlling interests Total equity
25 26 27 28 29
52,944 46,919 104 (1,649) 498 591 99,407 585 99,992
52,944 36,471 3,084 (898) 1,090 344 93,035 484 93,519
52,944 15,308 498 392 69,142 69,142
52,944 11,674 2,980 1,090 228 68,916 68,916
28
Statements of Changes in Equity

Attributable to equity holders of the Company Discount on acquisition Retained Revaluation of a earnings reserve subsidiary $000 $000 $000 Foreign currency translation reserve $000 Total equity attributable to equity holders of the Company $000
Note
Share capital $000
Fair value adjustment reserve $000 (Note 28)
Share option reserve $000
Noncontrolling interests $000
Total equity $000
2011 Group Opening balance at 30 September 2010 Profit for the financial year Other comprehensive income: - Foreign currency translation - Fair value adjustment Total comprehensive income for the year, net of tax Contributions by and distributions to owners: - Cost of share-based options scheme - Reversal of surplus on revaluation of buildings on leasehold land upon disposal - Dividends on ordinary shares, net of tax Total contributions by and distributions to owners Closing balance at 30 September 2011 6 52,944 36,471 10,869 2,980 104 (898) 1,090 344 93,035 10,869 484 94 93,519 10,963
(751)
(592)
(751) (592)
(744) (592)
10,869
(751)
(592)
9,526
101
9,627
247
247
247
11 30
52,944
2,980 (3,401) (421) 46,919
(2,980) (2,980)
104
(1,649)
498
247 591
(3,401) (3,154) 99,407
585
(3,401) (3,154) 99,992
Annual Report 2011
29

Attributable to equity holders of the Company Discount on acquisition Retained Revaluation of a earnings reserve subsidiary $000 $000 $000 Foreign currency translation reserve $000 Total equity attributable to equity holders of the Company $000
Note
Share capital $000
Fair value adjustment reserve $000 (Note 28)
Share option reserve $000
Noncontrolling interests $000
Total equity $000
2010 Group Opening balance at 30 September 2009 Profit for the financial year Other comprehensive income: - Foreign currency translation - Fair value adjustment Total comprehensive income for the year, net of tax Contributions by and distributions to owners: - Cost of share-based options scheme - Dividends on ordinary shares, net of tax Total contributions by and distributions to owners Closing balance at 30 September 2010 6 30 52,944 28,826 9,913 2,980 104 (1,600) 1,557 84,811 9,913 274 235 85,085 10,148
702
(467)
702 (467)
(25)
677 (467)
9,913
702
(467)
10,148
210
10,358
52,944
(2,268) (2,268) 36,471
2,980
104
(898)
1,090
344 344 344
344 (2,268) (1,924) 93,035
484
344 (2,268) (1,924) 93,519
30

Fair value adjustment reserve $000 (Note 28) 2011 Company Opening balance at 30 September 2010 Profit for the financial year Other comprehensive income: - Fair value adjustment Total comprehensive income for the year, net of tax Contributions by and distributions to owners: - Cost of share-based options scheme - Reversal of surplus on revaluation of buildings on leasehold land upon disposal - Dividends on ordinary shares, net of tax Total contributions by and distributions to owners Closing balance at 30 September 2011 2010 Company Opening balance at 30 September 2009 Profit for the financial year Other comprehensive income: - Fair value adjustment Total comprehensive income for the year, net of tax Contributions by and distributions to owners: - Cost of share-based options scheme - Dividends on ordinary shares, net of tax Total contributions by and distributions to owners Closing balance at 30 September 2010 6 30 52,944 52,944 9,852 4,090 4,090 (2,268) (2,268) 11,674 2,980 2,980 1,557 (467) (467) 1,090 228 228 228 67,333 4,090 (467) 3,623 228 (2,268) (2,040) 68,916 6 11 30 52,944 52,944 11,674 4,055 4,055 2,980 (3,401) (421) 15,308 2,980 (2,980) (2,980) 1,090 (592) (592) 498 228 164 164 392 68,916 4,055 (592) 3,463 164 (3,401) (3,237) 69,142 Share option reserve $000 Share capital $000 Retained earnings $000 Revaluation reserve $000 Total equity $000
Note
Annual Report 2011
31
Consolidated Statement of Cash Flows

Note
2011 $000
2010 $000
Cash flows from operating activities Profit before tax Adjustments for: Depreciation of property, plant and equipment Property, plant and equipment written off (Gain)/loss on disposal of property, plant and equipment, net Gain on disposal of investments Realisation of fair value reserve Share option expense Write back of allowance for doubtful trade receivables Fair value loss/(gain) on derivatives Interest expense Interest income Dividend income Foreign currency translation adjustment Operating profit before working capital changes Decrease in inventories Increase in debtors Increase in creditors Cash generated from operations Income tax paid Interest income Interest paid Net cash provided by operating activities Cash flows from investing activities Purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Proceeds from disposal of investment Dividend income Net cash (used in)/generated from investing activities Cash flows from financing activities Repayment of finance lease obligations Proceeds from term loan drawdown Repayment of term loan drawdown Dividends paid Net cash flows used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents at 1 October Effect of exchange rate changes on cash and cash equivalents Cash and cash equivalents at 30 September
13,321 5 5 5, 8 8 8 5 5 7 8 3,860 261 (54) (8) (44) 247 277 217 (8) (51) 206 18,224 5,436 (13,521) 6,389 16,528 (1,818) 8 (217) 14,501
12,230 3,996 8 (428) (2,845) 344 (425) (126) 321 (7) (105) (191) 12,772 2,387 (4,791) 2,219 12,587 (1,754) 7 (321) 10,519
(1,989) 476 67 51 (1,395)
(2,105) 35 3,813 105 1,848
30
(486) 3,500 (4,168) (3,401) (4,555) 8,551 15,692 (118)
(634) (1,605) (2,268) (4,507) 7,860 7,882 (50) 15,692
33
24,125
32
Notes to the Financial Statements

30 September 2011
1.
Corporate information Nam Lee Pressed Metal Industries Limited (the Company) is a limited liability company, which is incorporated and domiciled in Singapore. Its immediate and also ultimate parent company is Nam Lee Holdings Pte Ltd, which is incorporated in Singapore. The registered office of the Company is located at 31 Senoko Drive, Senoko Industrial Estate, Singapore 758216. The principal activities of the Company include the design, fabrication, supply and installation of steel and aluminium products such as gates, door frames, staircase nosing and hand-railings, laundry racks, letter boxes, sliding windows and sliding doors for flats and houses and the supply of aluminium NT mainframes for container refrigeration units. The activities of the subsidiaries are those relating to the manufacture of aluminium NT mainframes, aluminium sliding windows, grilles, gates, drying racks, and other related steel-based and metal products and manufacturing and distribution of decoration materials. There have been no significant changes in the nature of these activities during the year. Summary of significant accounting policies Basis of preparation The consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the Company have been prepared in accordance with Singapore Financial Reporting Standards (FRS). The financial statements have been prepared on the historical cost basis except as disclosed in the accounting policies below. The financial statements are presented in Singapore Dollars (SGD or $) and all values in the tables are rounded to the nearest thousand ($000) except otherwise indicated. Changes in accounting policies The accounting policies adopted are consistent with those of the previous financial year except in the current financial year, the Group has adopted all the new and revised standards and Interpretations of FRS (INT FRS) that are effective for annual periods beginning on or after 1 October 2010. The adoption of these standards and interpretations did not have any effect on the financial performance or position of the Group and the Company.
2. 2.1
2.2
Annual Report 2011
33

30 September 2011
2. 2.3
Summary of significant accounting policies (contd) Standards issued but not yet effective The Group has not adopted the following standards and interpretations that have been issued but not yet effective: Effective for annual periods beginning on or after 1 January 2011 1 January 2011 1 January 2011 1 July 2011 1 July 2011 1 January 2012 1 1 1 1 1 1 1 1 1 1 1 1 January January January January January 1 July January January January January January January January 2011 2011 2011 2011 2011 2012 2013 2013 2013 2013 2013 2013 2013
Description Revised FRS 24 Related Party Disclosures Amendments to INT FRS 114 Prepayments of a Minimum Funding Requirement INT FRS 115 Agreements for the Construction of Real Estate Amendments to FRS 107 Disclosures Transfers of Financial Assets Amendments to FRS 101 Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters Amendments to FRS 12 Deferred Tax: Recovery of Underlying Assets Improvements to FRSs 2010 Amendments to FRS 101 First-time Adoption of Financial Reporting Standards Amendments to FRS 107 Financial Instruments: Disclosures Amendments to FRS 1 Presentation of Financial Statements Amendments to FRS 34 Interim Financial Reporting Amendments to INT FRS 113 Customer Loyalty Programmes Amendments to FRS 1 Presentation of Items of Other Comprehensive Income Revised FRS 19 Employee Benefits Revised FRS 27 Separate Financial Statements Revised FRS 28 Investments in Associates and Joint Ventures FRS 110 Consolidated Financial Statements FRS 111 Joint Arrangements FRS 112 Disclosure of Interests in Other Entities FRS 113 Fair Value Measurements
Except for revised FRS 24 and Amendments to FRS 1 the Directors expect that the adoption of the standards and interpretations above will have no material impact on the financial statements in the period of initial application. The nature of the impending changes in accounting policy on adoption of the Amendments to FRS 24 and Amendments to FRS 1 are described below: Revised FRS 24 Related Party Disclosures The revised FRS 24 clarifies the definition of a related party to simplify the identification of such relationships and to eliminate inconsistencies in its application. The revised FRS 24 expands the definition of a related party and would treat two entities as related to each other whenever a person (or a close member of that persons family) or a third party has control or joint control over the entity, or has significant influence over the entity. The revised standard also introduces a partial exemption of disclosure requirements for government-related entities. The Group is currently determining the impact of the changes to the definition of a related party has on the disclosure of related party transaction. As this is a disclosure standard, it will have no impact on the financial position or financial performance of the Group when implemented in 2012.
34

30 September 2011
2. 2.3
Summary of significant accounting policies (contd) Standards issued but not yet effective (contd) Amendments to FRS 1 Presentation of Items of Other Comprehensive Income The Amendments to FRS 1 Presentation of Items of Other Comprehensive Income (OCI) is effective for financial periods beginning on or after 1 July 2012. The Amendments to FRS 1 changes the grouping of items presented in OCI. Items that could be reclassified to profit or loss at a future point in time would be presented separately from items which will never be reclassified. As the Amendments only affect the presentations of items that are already recognised in OCI, the Group does not expect any impact on its financial position or performance upon adoption of this standard. Basis of consolidation Basis of combinations from 1 October 2010 The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the end of the reporting period. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances. All intro-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions and dividends are eliminated in full. Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Business combinations are accounted for by applying the acquisition method. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with FRS 39 either in profit or loss or as change to other comprehensive income. If the contingent consideration is classified as equity, it is not be remeasured until it is finally settled within equity. In business combinations achieved in stages, previously held equity interests in the acquiree are remeasured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss. The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any) is recognised on the acquisition date at fair value, or at the non-controlling interests proportionate share of the acquiree identifiable net assets. Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in the acquiree (if any), and the fair value of the Groups previously held equity interest in the acquiree (if any), over the net fair value of the acquirees identifiable assets and liabilities is recorded as goodwill. In instances where the latter amount exceeds the former, the excess is recognised as gain on bargain purchase in profit or loss on the acquisition date.
2.4
Annual Report 2011
35

30 September 2011
2. 2.4
Summary of significant accounting policies (contd) Basis of consolidation (contd) Basis of combinations prior to 1 October 2010 In comparison to the above mentioned requirements, the following differences applied: Business combinations are accounted for by applying the purchase method. Transaction costs directly attributable to the acquisition formed part of the acquisition costs. The non-controlling interest (formerly known as minority interest) was measured at the proportionate share of the acquirees identifiable net assets. Business combinations achieved in stages were accounted for as separate steps. Adjustments to those fair values relating to previously held interests are treated as a revaluation and recognised in equity. Any additional acquired share of interest did not affect previously recognised goodwill. When the Group acquired a business, embedded derivatives separated from the host contract by the acquiree were not reassessed on acquisition unless the business combination resulted in a change in the terms of the contract that significantly modified the cash flows that otherwise would have been required under the contract. Contingent consideration was recognised if, and only if, the Group had a present obligation, the economic outflow was more likely than not and a reliable estimate was determinable. Subsequent adjustments to the contingent consideration were recognised as part of goodwill. Subsidiaries A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities. The Group generally has such power when it directly or indirectly, holds more than 50% of the issued share capital, or controls more than half of the voting power, or controls the composition of the board of directors. In the Companys separate financial statements, investments in subsidiaries are accounted for at cost less any impairment losses. Transactions with non-controlling interests Non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and are presented separately in the consolidated statement of comprehensive income and within equity in the consolidated balance sheet, separately from equity attributable to owners of the Company. Changes in the Company owners ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and 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 interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the parent.
2.5
2.6
36

30 September 2011
2. 2.7
Summary of significant accounting policies (contd) Foreign currency The Groups consolidated financial statements are presented in Singapore Dollars, which is also the Companys functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. (a) Transactions and balances Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the closing rate of exchange ruling at the end of reporting period. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Exchange differences arising on the settlement of monetary items or on translating monetary items at the end of the reporting period are recognised in the profit or loss except for exchange differences arising on monetary items that form part of the Groups net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation. Consolidated financial statements For consolidation purpose, the assets and liabilities of foreign operations are translated into SGD at the rate of exchange ruling at the end of the reporting period and their profit or loss are translated at the exchange rates prevailing at the date of the transactions. The exchange differences arising on the translation are recognised in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in profit or loss. In the case of a partial disposal without loss of control of a subsidiary that includes a foreign operation, the proportionate share of the cumulative amount of the exchange differences are re-attributed to noncontrolling interest and are not recognised in profit or loss. For partial disposals of associates or jointly controlled entities that are foreign operations, the proportionate share of the accumulated exchange differences is reclassified to profit or loss. The Group has elected to recycle the accumulated exchange differences in the separate component of other comprehensive income that arises from the direct method of consolidation, which is the method the Group uses to complete its consolidation.
(b)
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30 September 2011
2. 2.8
Summary of significant accounting policies (contd) Property, plant and equipment All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with item will flow to the Group and the cost of the item can be measured reliably. Subsequent to recognition, buildings on leasehold land are measured at fair value less accumulated depreciation and impairment losses recognised after the date of the revaluation. Valuations are performed with sufficient regularity to ensure that the carrying amount does not differ materially from their fair value of the buildings on leasehold at the end of reporting period. All other categories of assets are stated at cost less accumulated depreciation and any accumulated impairment losses. When significant parts of property, plant and equipment are required to be replaced in intervals, the Company recognises such parts as individual assets with specific useful lives and depreciation, respectively. All other repair and maintenance costs are recognised in profit or loss as incurred. Any revaluation surplus is recognised in other comprehensive income and accumulated in equity under the asset revaluation reserve, except to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss, in which case the increase is recognised in profit or loss. A revaluation deficit is recognised in profit or loss, except to the extent that it offsets an existing surplus on the same asset carried in the asset revaluation reserve. Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. The revaluation surplus included in the asset revaluation reserve in respect of an asset is transferred directly to retained earnings on retirement or disposal of the asset. Depreciation is calculated on the straight line method to write off the cost or valuation of property, plant and equipment over their estimated useful lives. The estimated useful lives of property, plant and equipment are as follows: Leasehold land Buildings on freehold land Buildings on leasehold land Leasehold improvements Furniture and fittings Motor vehicles Office equipment Plant and machinery Tools Over the remaining period of lease up to a maximum of 61 years 50 years Lower of 50 years and over the remaining period of lease up to a maximum of 6 years 10 years 10 years 5 to 10 years 10 years 5 to 10 years 10 years
Assets under construction included in plant and machinery are not depreciated as these assets are not available for use. Freehold land has an infinite useful life and therefore is not depreciated. The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in the profit or loss in the year the asset is derecognised.
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30 September 2011
2. 2.9
Summary of significant accounting policies (contd) Impairment of non-financial assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment testing for an asset is required, the Group makes an estimate of the assets recoverable amount. An assets recoverable amount is the higher of an assets or cash-generating units fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets. Where the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows expected to be generated by the assets 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. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators. Impairment losses are recognised in the profit or loss in those expense categories consistent with the function of the impaired asset, except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation. An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the assets or cash-generating units recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the assets recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase.
2.10 Financial assets Initial recognition and measurement Financial assets are recognised when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. The Group determines the classification of its financial assets at initial recognition. When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs. Subsequent measurement The subsequent measurement of financial assets depends on their classification as follows: (a) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. This category includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by FRS 39. Derivatives, including separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
Annual Report 2011
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30 September 2011
2.
Summary of significant accounting policies (contd)
2.10 Financial assets (contd) (a) Financial assets at fair value through profit or loss (contd) The Group has not designated any financial assets upon initial recognition at fair value through profit or loss. Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value of the financial assets are recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss include exchange differences, interest and dividend income. Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value through profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognised in profit or loss. Reassessment only occurs if there is a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required. Loans and receivables Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less impairment. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. Available-for-sale financial assets Available-for-sale financial assets comprise equity securities. Equity investments classified as availablefor sale are those, which are neither classified as held for trading nor designated at fair value through profit or loss. After initial recognition, available-for-sale financial assets are subsequently measured at fair value. Any gains or losses from changes in fair value of the financial asset are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.
(b)
(c)
Derecognition A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned.
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30 September 2011
2.
2.11 Impairment of financial assets The Group assesses at each end of reporting period whether there is any objective evidence that a financial asset is impaired. (a) Assets carried at amortised cost For financial assets carried at amortised cost, the Group first assesses individually whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be recognised are not included in a collective assessment of impairment. If there is objective evidence that an impairment loss on financial assets carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows discounted at the financial assets original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The impairment loss is recognised in the profit or loss. When the asset becomes uncollectible, the carrying amount of impaired financial assets is reduced directly or if an amount was charged to the allowance account, the amounts charged to the allowance account are written off against the carrying value of the financial asset. To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. 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 was recognised, the previously recognised impairment loss is reversed to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss. Available-for-sale financial assets Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired. Significant is to be evaluated against the original cost of the investment and prolonged against the period in which the fair value has been below its original cost. If an available-for-sale financial asset is impaired, an amount comprising the difference between its acquisition cost (net of any principal repayment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss is transferred from other comprehensive income and recognised in profit or loss. Reversals of impairment loss in respect of equity instruments classified as available-for-sale are not recognised in profit or loss; increase in their fair value after impairment are recognised directly in other comprehensive income.
(b)
Annual Report 2011
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30 September 2011
2.
2.12 Cash and cash equivalents Cash and cash equivalents comprise cash on hand and at bank and short-term deposits that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. Cash and short term deposits carried in the balance sheets are classified and accounted for as loans and receivables under FRS 39. The accounting policy for this category of financial assets is stated in Note 2.10.
2.13 Trade and other debtors Trade and other debtors, including amounts due from subsidiaries are classified and accounted for as loans and receivables under FRS 39. An allowance is made for uncollectible amounts when there is objective evidence that the Group will not be able to collect the debt. Bad debts are written off when identified. Further details on the accounting policy for impairment of financial assets are stated in Note 2.10.
2.14 Inventories Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials determined on a first-in-first-out basis and in the case of finished products and work-in-progress, includes direct labour and attributable production overheads based on normal levels of activity. Where necessary, allowance is provided for damaged, obsolete and slow moving items to adjust the carrying value of inventories to the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
2.15 Financial liabilities Initial recognition and measurement Financial liabilities are recognised when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. The Group determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair value and in the case of other financial liabilities, plus directly attributable transaction costs. Subsequent measurement The measurement of financial liabilities depends on their classification as follows: (a) Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss includes financial liabilities held for trading and financial liabilities designated upon initial recognition at fair value through profit or loss. Financial liabilities are classified as held for trading if they are acquired for the purpose of selling in the near term. This category includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Subsequent to initial recognition, financial liabilities at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value of the financial liabilities are recognised in profit or loss.
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30 September 2011
2.
2.15 Financial liabilities (contd) (b) Other financial liabilities After initial recognition, other financial liabilities are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.
Derecognition A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the profit or loss.
2.16 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 an outflow of resources embodying economic benefits will be required to settle the obligation and the amount of the obligation can be estimated reliably. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as finance costs. A provision for warranty is recognised when the product is sold or service provided. Initial recognition is based on historical experience. The initial estimate of warranty-related costs is revised annually.
2.17 Employee benefits (a) Defined contribution plans The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. In particular, the Singapore companies in the Group make contributions to the Central Provident Fund scheme (CPF) and the Groups companies in Malaysia make contribution to the Employee Provident Fund scheme (EPF). Contributions to national pension schemes are recognised as an expense in the period in which the related service is performed. Employee leave entitlements Employee entitlements to annual leave are recognised as a liability when they accrue to employees. The estimated liability for leave is recognised for services rendered by employees up to the end of the reporting period.
(b)
Annual Report 2011
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30 September 2011
2.
2.17 Employee benefits (contd) (c) Employee share option plans Employees of the Group receive remuneration in the form of share options as consideration for services rendered. The cost of these equity-settled transactions with employees is measured by reference to the fair value of the options at the date on which the options are granted. This cost is recognised in profit or loss, with a corresponding increase in the employee share option reserve, over the vesting period. The cumulative expense recognised at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Groups best estimate of the number of options that will ultimately vest. The charge or credit to profit or loss for a period represents the movement in cumulative expense recognised as at the beginning and end of that period and is recognised in employee benefit expense. No expense is recognised for options that do not ultimately vest, except for options where vesting is conditional upon a market condition, which are treated as vested irrespective of whether or not the market condition is satisfied, provided that all other performance and/or service conditions are satisfied. The employee share option reserve is transferred to retained earnings upon expiry of the share options. When the options are exercised, the employee share option reserve is transferred to share capital if new shares are issued, or to treasury shares if the options are satisfied by the reissuance of treasury shares. In situations where equity instruments are issued and some or all of the goods or services received by the entity as consideration cannot be specifically identified, the unidentified goods or services received (or to be received) are measured as the difference between the fair value of the share-based payment and the fair value of any identifiable goods or services received at the grant date. This is then capitalised or expensed as appropriate.
2.18 Leases The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date: whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement. For arrangements entered into prior to 1 January 2005, the date of inception is deemed to be 1 January 2005 in accordance with the transitional requirements of INT FRS 104. As lessee Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred. Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term. Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.
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30 September 2011
2.
2.19 Revenue Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is made. Revenue is measured at the fair value of consideration received or receivable, taking into account contractually defined terms of payment and excluding sales taxes or duty. The Group assesses its revenue arrangements to determine if it is acting as principal or agent. The Group has concluded that it is acting as a principal in all of its revenue arrangements. The following specific recognition criteria must also be met before revenue is recognised: (a) Sale of goods Revenue from products supplied for the construction of flats and houses under construction is recognised when the products delivered and installed have been accepted and certified by professional engineers appointed by the main contractors. Revenue from the sales of goods for aluminium NT mainframes and other miscellaneous sales is recognised upon the transfer of significant risk and rewards of ownership to the customer which generally coincide with their delivery and acceptance. Interest income Interest income is recognised using the effective interest method. Dividend income Dividend income is recognised when the Groups right to receive payment is established.
(b)
(c)
2.20 Government grants Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. Where the grant relates to an asset, the fair value is recognised as deferred capital grant on the balance sheet and is amortised to profit or loss over the expected useful life of the relevant asset by equal annual instalments. Government grant shall be recognised in profit or loss on a systematic basis over the periods in which the entity recognises as expenses the related costs for which the grants are intended to compensate. Grants related to income are deducted against related expenses.
2.21 Income taxes (a) Current tax Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the end of the reporting period, in the countries where the Group operates and generates taxable income. Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.
Annual Report 2011
45

30 September 2011
2.
2.21 Income taxes (contd) (b) Deferred tax Deferred income tax is provided using the liability method on temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognised for all taxable temporary differences, except:
l
Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax credits and unused tax losses can be utilised except:
l
Where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred income tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred income 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 profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the end of each reporting period. Deferred income tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition. Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.
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30 September 2011
2.
2.21 Income taxes (contd) (c) Sales tax Revenues, expenses and assets are recognised net of the amount of sales tax except:
l
Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and Receivables and payables that are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables on the balance sheet.
2.22 Segment reporting For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 37, including the factors used to identify the reportable segments and the measurement basis of segmental information.
2.23 Related parties A related party is defined as follow: (a) A person or a close member of that persons family is related to the Group and Company if that person: (i) (ii) (iii) Has control or joint control over the Company. Has significant influence over the Company; or Is a member of the key management personnel of the Group or Company or of a parent of the Company.
(b)
An entity is related to the Group and the Company if any of the following conditions applies: (i) (ii) (iii) (vi) The entity and the Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others). One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member). Both entities are joint ventures of the same third party. One entity is a joint venture of a third entity and the other entity is an associate of the third entity.
Annual Report 2011
47

30 September 2011
2.
2.23 Related parties (contd) (v) The entity is a post-employment benefit plan for the benefit of employees of either the Company or an entity related to the Company. If the Company is itself such a plan, the sponsoring employers are also related to the Company. The entity is controlled or jointly controlled by a person identified in (a). A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).
(vi) (vii)
3.
Significant accounting judgments and estimates The preparation of the Groups consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the end of each reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future period. (a) Judgements made in applying accounting policies In the process of applying the Groups accounting policies, management has made the following judgements, apart from those involving estimations, which has the most significant effect on the amounts recognised in the financial statements: (i) Impairment of available-for-sale investments The Group records impairment charges on available-for-sale equity investments when there has been a significant or prolonged decline in the fair value below their cost. The determination of what is significant or prolonged requires judgement. In making this judgement, the Group evaluates, among other factors, historical share price movements and the duration and extent to which the fair value of an investment is less than its cost. For the financial year ended 30 September 2011 and 2010, no impairment loss was recognised for available-for-sale financial assets. Income taxes The Group has exposure to income taxes in numerous jurisdictions. Significant judgement is involved in determining the group-wide provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. The carrying amount of the Groups tax payables and deferred tax liabilities at 30 September 2011 were $2,751,000 and $2,196,000 (2010: $2,110,000 and $2,409,000) respectively.
(ii)
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30 September 2011
3.
Significant accounting judgments and estimates (contd) (a) Judgements made in applying accounting policies (contd) (iii) Determination of functional currency The Group measures foreign currency transactions in the respective functional currencies of the Company and its subsidiaries. In determining the functional currencies of the entities in the Group, judgment is required to determine the currency that mainly influences sales prices for goods and services. The functional currencies of the entities in the Group are determined based on managements assessment of the economic environment in which the entities operate and the entities process of determining sales prices.
(b)
Key sources of estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the end of each 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. (i) Depreciation of property, plant and equipment The property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives, which are common life expectancies applied in the industry. The carrying amount of the Groups property, plant and equipment at 30 September 2011 was $25,729,000 (2010: $28,683,000). Changes in the expected level of usage and technological development could impact the economic useful lives and the residual values of these assets, therefore future depreciation changes could be revised. Impairment of non-financial assets The Group assesses whether there are any indicators of impairment for all non-financial assets at each reporting date. The assets are tested for impairment when there are indicators that the carrying amount may not be recoverable. If such indicators exist, the recoverable amount (i.e. higher of the fair value less costs to sell and value in use) of the assets is estimated to determine the amount of impairment loss. Impairment of loans and receivables The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Groups loans and receivables at the end of reporting period is disclosed in Notes 15, 16, 17 and 34 to the financial statements.
(ii)
(iii)
4.
Revenue Revenue represents invoiced value of goods supplied. It excludes dividends, interest income and, in respect of the Group, intra-group transactions.
Annual Report 2011
49

30 September 2011
5.
Profit from operating activities This is stated after (charging)/crediting:Group Note 2011 $000 2010 $000
Cost of sales: Salaries and bonuses^ (excluding directors emoluments) Contribution to defined contribution plans Depreciation of property, plant and equipment* Operating lease expense Distribution costs: Salaries and bonuses^ (excluding directors emoluments) Contribution to defined contribution plans Depreciation of property, plant and equipment* Transportation expenses Administrative costs: Non audit fees paid to: - Auditors of the Company - Other auditors Salaries and bonuses^ (excluding directors emoluments) Contribution to defined contribution plans Directors of the Company - Fees - Remuneration - Contribution to defined contribution plans Directors of subsidiaries - Fees - Remuneration - Contribution to defined contribution plans Depreciation of property, plant and equipment* Share option expense Write back of allowance for doubtful trade receivables Accommodation expenses Other operating expenses: Property, plant and equipment written off Loss on disposal of property, plant and equipment Fair value loss on derivatives Foreign exchange loss, net
^ *
(18,003) (1,963) (3,196) (920)
(18,812) (1,896) (3,261) (953)
(203) (16) (88) (1,108)
(161) (17) (84) (1,064)
(77) (2) (5,786) (460) (108) (1,579) (10) (8) (113) (576) (247) 1,492
(55) (1) (4,701) (296) (108) (1,052) (3) (5) (427) (5) (651) (344) 425 1,288
15
(261) (277) (1,074)
(8) (436)
Included in Salaries and bonuses are cash grants from Jobs Credit Scheme for the Group of $nil (2010: $233,000). Depreciation for the Group is $3,860,000 (2010: $3,996,000) (Note 11).
50

30 September 2011
5.
Profit from operating activities (contd) Directors remuneration The number of Directors of the Company whose emoluments fall in the following bands:2011 $500,000 and above $250,000 to $499,999 Below $250,000 Total 1 2 3 6 2010 1 2 3 6
6.
Share option scheme Under the Nam Lee Employee Share Option Scheme (the Scheme), share options are granted to eligible employees and directors of the Company and subsidiaries. The Scheme is administered by the Remuneration Committee, who shall determine at its discretion, the number of shares over which the options are to be offered, taking into account criteria such as the rank, seniority, length of service, performance and potential for future contributions of the grantee and performance of the Group. Options granted to employees will have a life span of ten years whereas options granted to non-executive directors will have a life span of five years. The exercise price of the options shall be equal to the average of the last dealt prices for the Companys shares for the three consecutive trading days immediately preceding the relevant date of grant. There has been no cancellation or modification to the scheme during the financial year. Movement of share options during the financial year The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of, and movements in, share options during the year. 2011 No. Outstanding at 1 October - Granted during the year - Exercised during the year Outstanding at 30 September Exercisable at 30 September 8,200,000 8,200,000 8,200,000 WAEP ($) 0.258 0.258 0.258 No. 8,200,000 8,200,000 2010 WAEP ($) 0.258 0.258
The weighted average fair value of options granted in the prior year was $0.036. The weighted average remaining contractual life for these options is 8.5 years (2010: 9.5) years.
Annual Report 2011
51

30 September 2011
6.
Share option scheme (contd) Fair value of share options granted The fair value of share options is estimated at the grant date using the Black-Scholes model, taking into account the terms and conditions upon which the options share were granted. The inputs to the financial model used for the options granted are shown below: Vesting date Expected volatility (%) Risk-free interest rate (%) Expected life of option (years) Exercise price ($) Share price ($) 22 February 2011 27.00 0.35 4.25 0.258 0.27
The expected life of the share options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may also not necessarily be the actual outcome. No other features of the option grant were incorporated into the measurement of fair value. Finance costs Group 2011 $000 Interest expense on: - trust receipts - term loans - hire purchase contracts - others 2010 $000
7.
(179) (37) (1) (217)
(8) (252) (60) (1) (321)
8.
Other income Group 2011 $000 Other income Dividend income Gain on disposal of property, plant and equipment Gain on disposal of investments Realisation of fair value reserve Fair value gain on derivatives Others 2010 $000
51 54 8 44 70 227
105 428 2,845 126 137 3,641
52

30 September 2011
9.
Taxation Provision for taxation in respect of profit for the year: Group 2011 $000 Current taxation - Singapore - Foreign Deferred taxation - Singapore - Foreign Over/(under)-provision in prior years, net - current taxation - deferred taxation 2010 $000
(1,507) (576) 278 (373) (2,178) (376) 196 (2,358)
(1,383) (220) 176 (416) (1,843) (1) (238) (2,082)
The reconciliation between the tax expense and the product of accounting profit multiplied by the applicable tax rate for the years ended 30 September are as follows: Group 2011 $000 Profit before taxation Taxation at statutory tax rate of 17% (2010: 17%) Adjustments: Expenses not deductible for tax purposes Higher effective rates of other countries Utilisation of previously unrecognised deferred taxation Tax benefits from Productivity and Innovation Credit (PIC) Scheme Under-provision of current taxation in prior years Over/(under)provision of deferred taxation in prior years Income not subject to tax Partial tax exemption Others Current financial years taxation charge 13,321 (2,265) (623) (436) 990 32 (376) 196 9 60 55 (2,358) 2010 $000 12,230 (2,079) (191) (387) 509 (1) (238) 226 74 5 (2,082)
On 18 February 2011, the Singapore Budget was announced, with enhancements made to the Productivity and Innovation Credit (PIC) Scheme which is effective from Year of Assessment 2011. Under the PIC Scheme, businesses were entitled to enhanced deductions or allowances of amount of expenditure incurred (subject to an annual ceiling) on qualifying activities. The enhancements increased the PIC tax deduction to 400% (up from 250%) on the first $400,000 (up from $300,000) of qualifying expenditure. Tax benefits arising from PIC Scheme is estimated to be $32,000 (2010: $nil).
Annual Report 2011
53

30 September 2011
9.
Taxation (contd) As at 30 September 2011, certain subsidiaries in the Group have unutilised tax losses, unabsorbed capital allowances, and reinvestment allowances amounting to $nil (2010: $35,000), $56,000 (2010: $363,000) and $2,339,000 (2010: $5,957,000) respectively available to offset against future taxable profits for which no deferred tax asset is recognised due to uncertainty of their utilisation against future taxable profits. The use of these unutilised tax losses is subject to the agreement of the tax authorities and compliance with provisions of the relevant tax legislations. Earnings per share Basic earnings per share amounts are calculated by dividing profit for the year that is attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share amounts are calculated by dividing profit for the year that is attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares under the Option Scheme into ordinary shares. The following tables reflect the income statement and share data used in the computation of basic and diluted earnings per share for the years ended 30 September 2011 and 2010: Group 2011 $000 Profit net of tax for the year attributable to ordinary equity holders of the Company used in computation of basic anddiluted earnings per share 2010 $000
10.
10,869 No. of shares 000
9,913 No. of Shares 000 226,761 268 227,029 Cents 4.37 4.36
Weighted average number of ordinary shares for basic earnings per share computation Effect of dilutive share options Weighted average number of ordinary shares for diluted earnings per share computation
226,761 566 227,327 Cents
Basic earnings per share Diluted earnings per share
4.79 4.78
54

30 September 2011
11.
Property, plant and equipment

Buildings on freehold land $000 Buildings on leasehold land $000
Freehold Leasehold land land $000 $000 Group Cost and valuation: As at 1 October 2010 Cost Valuation Additions Reclassification Disposals/written off Foreign currency translation As at 30 September 2011 Representing: Cost Valuation
Leasehold improvements $000
Furniture and fittings $000
Motor Office Plant and vehicles equipment machinery $000 $000 $000
Tools $000
Total $000
2,886 2,886 (144) 2,742
593 593 (24) 569
5,107 5,107 50 (274) 4,883
3,716 3,716 (2,750) (42) 969
2,338 2,338 142 (30) (33) 2,417
762 762 53 (1) (21) 793
4,541 4,541 809 (796) (44) 4,510
2,010 2,010 216 (468) (28) 1,730
33,554 33,554 1,026 (98) (33) (696) 33,753
4,870 4,870 124 98 (164) (15) 4,913
56,661 3,716 60,422 2,420 (4,242) (1,321) 57,279
2,742 2,742
569 569
4,883 4,883
969 969
2,417 2,417
793 793
4,510 4,510
1,730 1,730
33,753 33,753
4,913 4,913
56,310 969 57,279
Accumulated depreciation: As at 1 October 2010 Charge for the year Disposals/written off Foreign currency translation As at 30 September 2011 Net book value: As at 30 September 2011
80 11 (3) 88
1,091 162 (48) 1,205
2,435 478 (2,750) (5) 158
1,727 101 (13) (12) 1,803
475 53 (1) (10) 517
2,938 360 (379) (39) 2,880
1,099 155 (321) (15) 918
19,089 2,294 (13) (348) 21,022
2,805 246 (82) (10) 2,959
31,739 3,860 (3,559) (490) 31,550
2,742
481
3,678
811
614
276
1,630
812
12,731
1,954
25,729
Annual Report 2011
55

30 September 2011
11.
Property, plant and equipment (contd)

Buildings on freehold land $000 Buildings on leasehold land $000
Freehold Leasehold land land $000 $000 Group Cost and valuation: As at 1 October 2009 Cost Valuation Additions Disposals/written off Foreign currency translation As at 30 September 2010 Representing: Cost Valuation
Motor Office Plant and vehicles equipment machinery $000 $000 $000
Tools $000
Total $000
2,728 2,728 158 2,886
566 566 27 593
4,771 4,771 37 299 5,107
3,716 3,716 45 3,761
2,158 2,158 163 (11) 28 2,338
712 712 29 (1) 22 762
4,645 4,645 18 (167) 45 4,541
1,722 1,722 270 (8) 26 2,010
32,461 32,461 1,521 (1,130) 702 33,554
4,763 4,763 93 14 4,870
54,526 3,716 58,242 2,131 (1,317) 1,366 60,422
2,886 2,886
593 593
5,107 5,107
3,761 3,761
2,338 2,338
762 762
4,541 4,541
2,010 2,010
33,554 33,554
4,870 4,870
56,661 3,761 60,422
Accumulated depreciation: As at 1 October 2009 Charge for the year Disposals/written off Foreign currency translation As at 30 September 2010 Net book value: As at 30 September 2010
66 11 3 80
885 160 46 1,091
1,860 570 5 2,435
1,638 87 (7) 9 1,727
415 52 (1) 9 475
2,623 416 (139) 38 2,938
913 177 (4) 13 1,099
17,630 2,268 (1,123) 314 19,089
2,539 255 11 2,805
28,569 3,996 (1,274) 448 31,739
2,886
513
4,016
1,326
611
287
1,603
911
14,465
2,065
28,683
56

30 September 2011
11.

Buildings on leasehold land $000 Company Cost and valuation: As at 1 October 2010 Cost Valuation Additions Reclassification Transfer to subsidiaries Disposals/written off As at 30 September 2011 Representing: Cost Valuation
Motor vehicles $000
Office equipment $000
Plant and machinery $000
Tools $000
Total $000
2,750 2,750 (2,750)
1,426 1,426 (29) 1,397
268 268 268
2,883 2,883 779 (796) 2,866
1,251 1,251 104 (453) 902
9,750 9,750 231 (98) (191) (5) 9,687
3,266 3,266 16 98 (120) 3,260
18,844 2,750 21,594 1,130 (311) (4,033) 18,380
1,397 1,397
268 268
2,866 2,866
902 902
9,687 9,687
3,260 3,260
18,380 18,380
Accumulated depreciation: As at 1 October 2010 Charge for the year Transfer to subsidiaries Disposals/written off As at 30 September 2011 Net book value: As at 30 September 2011
2,292 458 (2,750)
1,410 (13) 1,397
254 7 261
1,754 219 (379) 1,594
759 70 (314) 515
7,239 541 (29) 7,751
2,340 189 (62) 2,467
16,048 1,484 (91) (3,456) 13,985
1,272
387
1,936
793
4,395
Annual Report 2011
57

30 September 2011
11.

Buildings on leasehold land $000 Company Cost and valuation: As at 1 October 2009 Cost Valuation Additions Transfer to subsidiaries Disposals/written off As at 30 September 2010 Representing: Cost Valuation
Motor vehicles $000
Office equipment $000
Plant and machinery $000
Tools $000
Total $000
2,750 2,750 2,750
1,426 1,426 1,426
268 268 268
2,994 2,994 16 (127) 2,883
1,105 1,105 147 (1) 1,251
10,849 10,849 56 (1,155) 9,750
3,291 3,291 16 (41) 3,266
19,933 2,750 22,683 235 (1,196) (128) 21,594
2,750 2,750
1,426 1,426
268 268
2,883 2,883
1,251 1,251
9,750 9,750
3,266 3,266
18,844 2,750 21,594
Accumulated depreciation: As at 1 October 2009 Charge for the year Transfer to subsidiaries Disposals/written off As at 30 September 2010 Net book value: As at 30 September 2010
1,742 550 2,292
1,407 3 1,410
245 9 254
1,654 227 (127) 1,754
659 101 (1) 759
7,747 557 (1,065) 7,239
2,150 216 (26) 2,340
15,604 1,663 (1,091) (128) 16,048
458
16
14
1,129
492
2,511
926
5,546
58

30 September 2011
11.
Property, plant and equipment (contd) Revaluation of buildings on leasehold land The Groups properties as at 30 September 2011 are:Name of building/location No. 2 & 2A Jalan Tampoi 7, Kawasan Perusahaan Tampoi 81200 Johor Bahru, Johor, Malaysia No. 50 Jalan Industri Taman Perindustrian, Pekan Nenas 81500 Pekan Nenas Pontian Johor Darul Takzim PTD 123273 HS(D) 330749 Mukim Pulai PTD 123274 HS(D) 330750 Mukim Pulai Nusa Jaya Industri Park 1 Johor, Malaysia PLO 101, Jalan Cyber 5, Kawasan Perindustrian Senai III, 814000 Senai, Johor Darul Tazim Factory and office premises 61-year lease commencing from 24.9.2003 Description Factory and office premises Tenure of land Freehold
Factory and office premises
Freehold
Factory premises
Freehold
The Groups buildings on leasehold land at PLO 101, Jalan Cyber 5, Senai, was independently valued by Regroup Associates (Johore) Sdn Bhd at $1,580,000 as at 11 June 2008. The valuations are based on fair market value, being the amount at which the property could be exchanged between a willing buyer and a willing seller in the current market conditions. Management believe the carrying value of the leasehold building is not materially different from its fair value. If buildings on leasehold land were measured using the cost model, the net book value of buildings on leasehold land would be $834,000 (2010: $970,000). Derecognition of buildings on leasehold land The Group has ceased ownership of the buildings on leasehold land at 31 Senoko Drive and 25 Senoko Road upon expiry of the lease in June 2011. Thereafter, the Group has entered into an operating lease to continue using the same premises up to June 2014 (Note 32). Assets held under finance lease During the year, the Group acquired plant and machinery and motor vehicles with an aggregate cost of $83,000 (2010: $26,000) and $348,000 (2010: $nil) respectively by means of finance leases. The cash outflow on acquisition of plant and equipment amounted to $1,989,000 (FY2010: $2,105,000). The net book value of plant and machinery and motor vehicles held under finance leases as at 30 September 2011 was $264,000 (2010: $262,000) and $1,400,000 (2010: $1,122,000) respectively for the Group and $198,000 (2010: $233,000) and $1,053,000 (2010: $684,000) respectively for the Company.
Annual Report 2011
59

30 September 2011
12.
Investments Group and Company 2011 2010 $000 $000 Available-for-sale financial assets - quoted equity investments
845
1,564
13.
Interest in subsidiaries Company 2011 2010 $000 $000 Unquoted equity shares, at cost Impairment losses Carrying value of investments 15,703 (307) 15,396 15,703 (307) 15,396
The subsidiaries as at 30 September 2011 are: Name of company (Country of incorporation) Company Cost of investment 2011 2010 $000 $000 Percentage of equity held by the Group 2011 2010 % %
Principal activities (Place of business)
Held by Company * NL Metals Sdn Bhd (Malaysia) Manufacture of NT mainframe, aluminium sliding windows, grilles, gates and other related metal products (Malaysia) Manufacture of mainframe, grilles, gates, drying racks, hopper, other metal and steel-based products (Malaysia) Manufacture of metal fabricated products (Malaysia) Manufacture of metal fabricated products (Malaysia) Manufacturing of building metal products (Indonesia) 1,957 1,957 100 100
NL Mechanical Engineering Sdn Bhd (Malaysia)
562
562
100
100
Nam Lee Pressed Metal Sdn Bhd (Malaysia) Nam Lee Industries Sdn Bhd (Malaysia) P.T. Nam Lee Metal Industries (Indonesia)
1,322
1,322
100
100
1,078
1,078
100
100
307
307
100
100
60

30 September 2011
13.
Interest in subsidiaries (contd) Name of company (Country of incorporation) Company Cost of investment 2011 2010 $000 $000 Percentage of equity held by the Group 2011 2010 % %
Principal activities (Place of business)
Held by Company @ Creative Holdings (HK) Limited (Hong Kong) Investment holding and distribution of decoration materials (Hong Kong) Fabrication, installation and supply of building materials and products (Singapore) 477 477 59 59
## Nam Lee Pressed Metal Pte Ltd (Singapore)
10,000
10,000
100
100
15,703 Held through subsidiary @ Foshan Nanhai Creative Glass and Metal Limited (Peoples Republic of China)
Audited by Ernst & Young, Malaysia
15,703
Manufacturing of decoration materials (Peoples Republic of China)
59
59
# Not required to be audited by laws of country of incorporation @ Not required to be disclosed under SGX listing rule 717 ## Audited by Ernst & Young LLP, Singapore
14.
Inventories Group 2011 $000 Balance sheet: Finished goods: - at sites - at premises Work-in-progress Raw materials Stock in transit (raw materials) Total inventories at lower of cost and net realisable value 2010 $000 Company 2011 2010 $000 $000
7,351 658 3,180 19,054 6,339 36,582
9,350 2,958 4,591 21,180 3,939 42,018
96 261 4,622 5,966 10,945
7 366 812 2,226 3,576 6,987
Included in the consolidated income statement are inventories recognised as an expense amounting to $98,100,000 (2010: $72,244,000) and inventories written down amounting to $nil (2010: $968,000).
Annual Report 2011
61

30 September 2011
15.
Trade debtors Group 2011 $000 External parties Subsidiaries 40,418 40,418 2010 $000 26,368 26,368 Company 2011 2010 $000 $000 29,480 5,428 34,908 10,285 28,806 39,091
External parties Trade debtors are non-interest bearing and are generally on 30 to 90 days terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition. As at 30 September 2011 and 2010, the amounts of trade debtors denominated in the following foreign currency are as follows: Group and Company 2011 2010 $000 $000 United States Dollars 26,359 8,970
Subsidiaries Amounts due from subsidiaries are non-interest bearing and is repayable on demand. These amounts are unsecured and are to be settled in cash. Receivables that are past due but not impaired The Group has trade receivables amounting to $5,511,000 (2010: $3,950,000) that are past due at the end of reporting period but not impaired. These receivables are unsecured and the analysis of their aging at the end of reporting period is as follows: Group 2011 $000 Trade receivables past due but not impaired: Lesser than 30 days 30 - 60 days 61- 90 days 91 - 120 days More than 120 days 2010 $000
1,693 23 1,406 722 1,667 5,511
817 755 345 79 1,954 3,950
62

30 September 2011
15.
Trade debtors (contd) Receivables that are impaired As at 30 September 2011 and 2010, the Groups trade receivables are not impaired. The movement of the allowance accounts are as follows: Group and Company 2011 2010 $000 $000 At 1 October Allowance written back At 30 September 425 (425)
16.
Other debtors and deposits Group 2011 $000 Other debtors Deposits 398 530 928 2010 $000 217 307 524 Company 2011 2010 $000 $000 72 75 147 21 66 87
17.
Amounts due from/(to) subsidiaries (non-trade) The amounts due from/(to) subsidiaries are non-interest bearing and are repayable on demand. These amounts are unsecured and are to be settled in cash. Derivatives Group and Company 2011 Contract notional amount $000 Forward currency contracts Commodity swap Total financial assets/(liabilities) at fair value through profit or loss classified as held for trading 5,402 Assets/ (Liabilities) $000 (151) Contract notional amount $000 3,600 2010 Assets/ (Liabilities) $000 126
18.
5,402
(151)
3,600
126
Forward currency contracts are used to hedge foreign currency risk arising from the Groups purchases denominated in Euro for which firm commitments existed during the reporting period. All forward currency contracts were matured and realised in the reporting period.
Annual Report 2011
63

30 September 2011
18.
Derivatives (contd) The commodity swap agreements are intended to hedge against the volatility of commodity purchases for a period between 1 to 10 months based on existing sales agreements. These contracts are entered for future scheduled sales. Trade creditors Group 2011 $000 External parties Subsidiaries 6,841 6,841 2010 $000 6,483 6,483 Company 2011 2010 $000 $000 2,467 2,467 2,904 12,279 15,183
19.
External parties Trade creditors are non-interest bearing and are normally settled on 60 days terms. As at 30 September 2011 and 2010, trade creditors denominated in foreign currencies are as follows: Group 2011 $000 Hong Kong Dollars United States Dollars 51 1,532 2010 $000 535 1,844 Company 2011 2010 $000 $000 51 1,168 84 1,566
Subsidiaries Amounts due to subsidiaries are non-interest bearing and is repayable on demand. These amounts are unsecured and are to be settled in cash. Other creditors and accruals Group 2011 $000 Sundry creditors Accrued operating expenses Deposits 350 11,471 41 11,862 2010 $000 413 5,472 58 5,943 Company 2011 2010 $000 $000 16 9,964 40 10,020 4 3,740 40 3,784
20.
Other creditors and accruals are non-interest bearing and have an average term of 2 months.
64

30 September 2011
21.
Provision for warranty A provision is recognised for expected warranty claims on installation and construction projects, based on past experience of the level of repairs and returns. Assumptions used to calculate the provision for warranties were based on current sales levels and current information available about the claims. It is expected that most of these costs will be incurred in the next financial year. Based on actual historical warranty claims experience, management assessed that the provision for maintenance warranties exceeded the amount necessary to cover outstanding warranty claims on products sold. Accordingly, $14,000 (2010: $58,000) of the warranty provision has been reversed. Movements in provision for warranty are as follows: Group 2011 $000 Balance at beginning of financial year Provision made during the year Reversal Balance at end of financial year 865 126 (14) 977 2010 $000 650 273 (58) 865 Company 2011 2010 $000 $000 73 (14) 59 131 (58) 73
22.
Term loans As at year-end, term loan of $2,919,000 (2010: $3,346,000) is unsecured, denominated in Singapore dollar, bears interest at 3.29% (2010: 5%) per annum. The loan is repayable by the year 2013. As at year-end, term loans of $743,000 (2010: $984,000) denominated in Malaysia Ringgit were drawn down by a subsidiary from a bank and secured by a corporate guarantee by the Company. Interest is at 1.25% per annum over the commercial bank base lending rate and it bears interest at a rate of 5.20% (2010: 4.54%) per annum. The loan is repayable by the year 2015. Group 2011 $000 Due within one year Due after one year 1,962 1,700 3,662 2010 $000 1,458 2,872 4,330 Company 2011 $000 1,751 1,168 2,919 2010 $000 1,244 2,102 3,346
Annual Report 2011
65

30 September 2011
23.
Obligations under hire purchase contracts The Group leases certain plant and machinery and motor vehicles under hire purchase arrangements that are non-cancellable within one year. These contracts are classified as finance leases and expire within the next 1 to 5 years (2010: 1 to 5 years). These leases have purchase options but with no renewal option and escalation clauses. Discount rates implicit in the leases ranged from 3.2% to 6.47% (2010: 3.20% to 6.43%) per annum. Future minimum lease payments under the hire purchase contracts together with the present value of the net minimum lease payments are as follows: Present value of payments 2011 $000 Present value of payments 2010 $000
Minimum payments 2011 $000 Group Within one year After one year but not more than five years Total minimum lease payments Less: Amounts representing finance charges Present value of minimum lease payments Company Within one year After one year but not more than five years Total minimum lease payments Less: Amounts representing finance charges Present value of minimum lease payments 163 313 476 (31) 445 269 419 688 (45) 643
Minimum payments 2010 $000
245 398 643 643
449 289 738 (41) 697
422 275 697 697
149 296 445 445
308 145 453 (20) 433
293 140 433 433
66

30 September 2011
24.
Deferred taxation Group 2011 $000 Deferred tax liabilities/(assets) Excess of tax depreciation over book depreciation of property, plant and equipment Revaluation of buildings on leasehold land Revaluation of available-for-sale investment to fair value Other timing differences 2010 $000 Company 2011 2010 $000 $000
2,038 113 45 2,196
2,047 93 225 44 2,409 1,980 47 478
436 105 (10) 531 863 (212)
545 93 225 863 1,112 (153)
Balance at beginning of financial year Foreign currency translation (Reversed)/provided during the year Charged directly to equity: Revaluation of available-for-sale investment to fair value Balance at end of financial year Tax consequences of proposed dividends
2,409 (61) (40)
(112) 2,196
(96) 2,409
(120) 531
(96) 863
There are no income tax consequences (2010: nil) attached to the dividends to the shareholders proposed by the Company but not recognised as a liability in the financial statements (Note 30). Share capital Group and Company 2011 2010 $000 $000 Issued and fully paid ordinary shares: Balance at beginning and end of year 226,760,928 ordinary shares
25.
52,944
52,944
The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restriction. The ordinary shares have no par value.
Annual Report 2011
67

30 September 2011
26.
Capital reserves Capital reserves represent revaluation reserve and discount on acquisition of a subsidiary amounting to $nil (2010: $2,980,000) and $104,000 (2010: $104,000) respectively at the end of the financial year. Included in revaluation reserve is the increase in fair value of leasehold buildings, net of tax, and reversal to the extent that such reversal relates to an increase on the same assets previously recognised in other comprehensive income. For acquisitions before year 2001, where the cost of acquisition of a subsidiary is less than the fair value of the net assets acquired, the discount on acquisition is accounted for as capital reserve arising on consolidation. There is no retrospective adjustment for the discount on acquisition previously taken up as capital reserve arising on consolidation. The movement of capital reserves are as follows: Group Note Balance at beginning of year Reversal of surplus on revaluation of buildings on leasehold land upon disposal Balance at end of year 2011 $000 3,084 11 (2,980) 104 2010 $000 3,084 3,084 Company 2011 2010 $000 $000 2,980 (2,980) 2,980 2,980
27.
Foreign currency translation reserve The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Groups presentation currency. Fair value adjustment reserve Fair value adjustment reserve records the cumulative fair value changes of available-for-sale investments until they are derecognised or impaired. Group and Company 2011 2010 $000 $000 Opening balance at 1 October Fair value adjustment for investment Realisation of fair value reserves Aggregate deferred tax asset on adjustments during the year Closing balance at 30 September 1,090 (660) (44) 112 498 1,557 2,282 (2,845) 96 1,090
28.
29.
Share option reserve Share option reserve represents the equity-settled share options granted to employees (Note 6). The reserve is made up of the cumulative value of services received from employees recorded over the vesting period commencing from the grant date of equity-settled share options, and is reduced by the expiry or exercise of the share options. Nam Lee Pressed Metal Industries Limited
68

30 September 2011
30.
Dividends Group and Company 2011 2010 $000 $000 Dividends paid during the financial year: - Final dividend of 1 cent per share (2010: 1 cent ) and special dividend of 0.5 cent per share (2010: nil) under tax exempt (2010: tax exempt), in respect of previous year
3,401
2,268
A final dividend in respect of year ended 2011 of 1.0 cent per share (2010: 1.0 cent) and special dividend of 0.5 cent per share (2010: 0.5 cent) under tax exempt 1-tier system amounting to $3,401,000 (2010: $3,401,000) was proposed by the Board subsequent to the financial year-end. The dividend proposed is not accounted for until it has been approved by the Annual General Meeting. The amount will be accounted for as an appropriation of revenue reserves in the year ending 30 September 2012. Related party transactions An entity or individual is considered a related party if i) it possesses the ability (directly or indirectly) to control or exercise significant influence over the operating and financial decisions of the Group or vice versa; or ii) it is subject to common control or common significant influence. (a) Sale and purchases of goods and services Significant transactions with subsidiaries, related companies and related party during the year on terms agreed between the parties are as follow: Group 2011 $000 Sales to subsidiaries Purchases from subsidiaries Sales of plant and equipment to subsidiaries Sales to a minority shareholder of a subsidiary Purchases from a minority shareholder of a subsidiary Rental recharge to a subsidiary Rental charged by a company owned by directors (360) 2010 $000 (360) Company 2011 2010 $000 $000 80,088 (99,569) 691 461 (360) 46,683 (50,787) 126 1,236 (360)
31.
Company owned by directors Certain directors of the Company, through their 100% (2010: 100%) equity interest in a related company, had charged Nam Lee Pressed Metal Industries Limited for an annual factory rental of $360,000 (2010: $360,000).
Annual Report 2011
69

30 September 2011
31.
Related party transactions (contd) (b) Compensation of key management personnel Group 2011 $000 Salaries, bonus and other related expenses Contributions to defined contribution plans Total compensation paid to key management personnel Comprise amounts paid to: - Directors of the Company - Other key management personnel 3,042 66 3,108 2010 $000 2,465 66 2,531
1,697 1,411 3,108
1,595 936 2,531
32.
Commitments and contingencies Operating lease commitments The Group leases certain properties under lease agreements that are non-cancellable within a year. The leases contain provision for rental adjustments and the Group is restricted from subleasing the leased equipment to third parties. Rental for leasehold land has been prepaid. Future minimum lease payments for all leases with initial or remaining terms of one year or more are as follows: Group 2011 $000 Not later than one year Later than one year but not later than five years Later than five years 1,066 3,275 5 4,346 2010 $000 710 1,015 1,725 Company 2011 $000 815 2,786 3,601 2010 $000 314 314
Capital expenditure commitments The Group has approved and contracted for the following capital commitments in the ordinary course of business: Group 2011 $000 Capital commitments in respect of property, plant and equipment 58 2010 $000 60
70

30 September 2011
33.
Cash and cash equivalents Group 2011 $000 Fixed deposits Cash and bank balances 126 23,999 24,125 2010 $000 127 15,565 15,692 Company 2011 2010 $000 $000 126 15,084 15,210 127 11,802 11,929
Cash and cash equivalents denominated in major foreign currencies at 30 September 2011 and 2010 are as follows: Group 2011 $000 Malaysian Ringgit United States Dollars Hong Kong Dollars 1,329 4,390 113 2010 $000 1,601 8,150 98 Company 2011 2010 $000 $000 4,390 8,150
Fixed deposits are made for varying periods of between 7 days and 1 month depending on the immediate cash requirements of the Group and earn interest at the respective short-term deposit rates. The weighted average effective interest rate of short-term deposits is 0.06% (2010: 0.03%) per annum. Financial risk management objectives and policies The Groups principal financial instruments, other than derivative financial instruments, comprise bank loans, cash and short-term deposits. The main purpose of these financial instruments is to raise finance for the Groups operations. The Group has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations. The Group also enters into derivative transactions such as forward currency contracts and commodity swap. The purpose is to manage the currency risks and purchase price volatility arising from the Groups operations. The main risks arising from the Groups financial instruments are interest rate risk, liquidity risk, foreign exchange risk, credit risk and market risk. The board approves, authorises and agrees policies for managing each of these risks and they are summarised below. (a) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of the Groups and the Companys financial instruments will fluctuate because of changes in market interest rates. The Groups and the Companys exposure to interest rate risk arises primarily from their floating rate cash at bank balances for the financial year. The Groups policy is to obtain the most favourable interest rates available without increasing its foreign currency exposure. Surplus funds are placed with reputable banks to generate interest income for the Group.
34.
Annual Report 2011
71

30 September 2011
34.
Financial risk management objectives and policies (contd) (b) Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting financial obligations due to shortage of funds. The Groups exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group actively manages its debt maturity profile, operating cash flows and availability of committed credit facilities to ensure that all refinancing, repayment and funding needs are met. The Group strives to maintain a sufficient level of banking facilities to meet its funding requirements and utilise trust receipts and loans and hire purchase contracts for this purpose. The table below summarises the maturity profile of the Group and Companys financial assets and liabilities at the end of the reporting period based on contractual undiscounted repayment obligations. 2011 1 year or less $000 Group Financial assets: Trade and other debtors and deposits Derivatives Cash and cash equivalents Total undiscounted financial assets Financial liabilities: Trade and other creditors and accruals Derivatives Obligations under hire purchase contracts Term loans Total undiscounted financial liabilities Total net undiscounted financial assets/ (liabilities) 1 to 5 years $000 Total $000 1 year or less $000 2010 1 to 5 years $000 Total $000
41,346 24,125 65,471
41,346 24,125 65,471
26,892 126 15,692 42,710
26,892 126 15,692 42,710
18,703 151 269 2,057 21,180 44,291
419 1,732 2,151 (2,151)
18,703 151 688 3,789 23,331 42,140
12,426 449 1,660 14,535 28,175
289 3,027 3,316 (3,316)
12,426 738 4,687 17,851 24,859
72

30 September 2011
34.
Financial risk management objectives and policies (contd) (b) Liquidity risk (contd) 2011 1 year or less $000 Company Financial assets: Trade and other debtors and deposits Amounts due from subsidiaries (non-trade) Derivatives Cash and cash equivalents Total undiscounted financial assets Financial liabilities: Trade and other creditors and accruals Derivatives Amounts due to subsidiaries (non-trade) Obligations under hire purchase contracts Term loans Total undiscounted financial liabilities Total net undiscounted financial assets/ (liabilities) 1 to 5 years $000 Total $000 1 year or less $000 2010 1 to 5 years $000 Total $000
35,055 14,205 15,210 64,470
35,055 14,205 15,210 64,470
39,178 14,166 126 11,929 65,399
39,178 14,166 126 11,929 65,399
12,487 151 8,543 163 1,819 23,163 41,307
313 1,182 1,495 (1,495)
12,487 151 8,543 476 3,001 24,658 39,812
18,967 1,111 308 1,381 21,767 43,632
145 2,189 2,334 (2,334)
18,967 1,111 453 3,570 24,101 41,298
(c)
Foreign exchange risk The Group has transactional currency exposures arising from sales or purchases that are denominated in a currency other than the respective functional currencies of Group entities, primarily SGD, Malaysian Ringgit (Ringgit) and Hong Kong Dollar (HKD). The foreign currencies in which these transactions are denominated are mainly United States Dollars (USD). Approximately 56% (2010: 49%) of the Groups sales are denominated in currencies other than functional currencies of the Group entities whilst almost 34% (2010: 14%) of costs are denominated in foreign currencies. Certain sales transactions of the Company have been billed in USD. However, the pricing decisions for these sales transactions are made in the functional currency of the Company. The Group hedges its foreign currency exposure in respect of forecasted sales or purchases. The Group uses forward exchange contracts or commodity swaps to hedge its foreign currency risk and they are entered into when a firm commitment for a sale or purchase is secured. Most of the forward exchange contracts or commodity swaps have maturities of less than one year after the end of the reporting period.
Annual Report 2011
73

30 September 2011
34.
Financial risk management objectives and policies (contd) (c) Foreign exchange risk (contd) The Group and the Company also hold cash and short-term deposits denominated in foreign currencies for working capital purposes. At the end of the reporting period, such foreign currency balances are mainly in USD. As disclosed in Note 2.7, exchange differences on the Groups net investments in the foreign subsidiaries are dealt with through the foreign currency translation reserve. The following table demonstrates the sensitivity of the Groups profit net of tax to a reasonably possible change in USD against SGD, with all other variables held constant. Group 2011 $000 USD/SGD - strengthened 3% (2010: 3%) - weakened 3% (2010: 3%) 2010 $000
728 (728)
380 (380)
(d)
Credit risk Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Groups exposure to credit risk arises primarily from trade receivables. The Group trades only with recognised and creditworthy third parties. It is the Groups policy to monitor receivable balances on an ongoing basis with the result that the Groups exposure to bad debts is not unduly significant. With respect to credit risk arising from the other financial assets, which comprise cash and cash equivalents, other receivables (including related parties balances) and quoted equity investments, the Groups exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments. The Group determines concentrations of credit risk by monitoring trade receivables by product-type on an on-going basis. The credit risk concentration profile of the Groups trade receivables at the end of the reporting period is as follows: Group 2011 $000 By product types: Aluminium Mild Steel Stainless Steel Others % of total $000 2010 % of total
36,375 3,682 361 40,418
90 9 1 100
20,352 5,314 383 319 26,368
77 20 2 1 100
74

30 September 2011
34.
Financial risk management objectives and policies (contd) (d) Credit risk (contd) At the end of the reporting period, there is no significant concentration of credit risk except for the amounts due from a major customer amounting to approximately 66% (2010: 34%) of total trade receivables. However, the good credit history of this customer reduces the risk to the Group to an acceptable level. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheets. Financial assets that are neither past due nor impaired Trade and other receivables that are neither past due nor impaired are with creditworthy debtors with good payment record with the Group. Cash and fixed deposits and quoted equity instruments are placed with or entered into with reputable financial institutions. Financial assets that are either past due or impaired Information regarding financial assets that are either past due or impaired is disclosed in Note 15 (Trade debtors). Market price risk Market price risk is the risk that the fair value of future cash flows of the Groups financial instruments will fluctuate because of changes in market prices (other than interest or exchange rates). The Group is exposed to equity price risk arising from its investment in quoted equity instruments. These instruments are quoted on the SGX-ST in Singapore and are classified as held for available-for-sale financial assets. The Group does not have exposure to commodity price risk. Sensitivity analysis for equity price risk At the end of the reporting period, if the value of the available-for-sale assets had been 2% (2010: 2%) higher/lower with all other variables held constant, the Groups fair value adjustment reserve in equity would have been $14,027 (2010: $25,962) higher/lower, as a result of an increase/decrease in the fair value of equity instruments classified as available-for-sale.
(e)
Annual Report 2011
75

30 September 2011
35.
Fair value of financial instruments The fair value of a financial instrument is the amount of which the instrument could be exchanged or settled between knowledgeable and willing parties in an arms length transaction, other than in a forced or liquidation sale. (a) Fair value of financial instruments that are carried at fair value The following table shows an analysis of financial instruments carried at fair value by level of fair value hierarchy: Group and Company 2011 $000 Quoted prices in active markets for identical instruments Level 1 Financial asset: Available-for-sale investments Financial liability: Derivatives - Commodity swap Significant other observable inputs Level 2
Note
12
845
18
Group and Company 2010 $000 Quoted prices in active markets for identical instruments Level 1
151
Note
Significant other observable inputs Level 2
Financial assets: Available-for-sale investments Derivatives - Forward currency contracts Fair value hierarchy
12 18
1,564
126
The Group classifies fair value measurement using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy have the following levels: Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 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). There have been no transfers between Level 1 and Level 2 during the financial years ended 2011 and 2010.
76

30 September 2011
35.
Fair value of financial instruments (contd) (a) Fair value of financial instruments that are carried at fair value (contd) Determination of fair value Quoted equity instruments (Note 12): Fair value is determined by direct reference to their bid price quotations in an active market at the end of the reporting period. Derivatives (Note 18): Forward currency contracts and commodity swap agreements are valued using a valuation technique with market observable inputs. The most frequently applied valuation techniques include forward pricing and swap models, using present value calculations. The models incorporate various inputs including foreign exchange spot and forward rates. Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value The management has determined that the carrying amounts of cash and short-term deposits, current trade and other receivables, current trade and other payables and amounts due from/to subsidiaries, based on their notional amounts, reasonably approximate their fair values because these are mostly short-term in nature or are repriced frequently within a year. The fair values of the hire purchase liabilities and term loans are not materially different from their carrying values as at 30 September 2011. Classification of financial instruments Set out below is a comparison by category of carrying amounts of all the Groups financial instruments that are carried in the financial statements: Loans and receivables $000 2011 Assets Property, plant and equipment Investments Inventories Trade debtors Other debtors and deposits Prepayments Cash and cash equivalents 40,418 928 24,125 65,471 845 845 25,729 36,582 448 62,759 25,729 845 36,582 40,418 928 448 24,125 129,075 Available-forsale assets $000 Non-financial assets $000
(b)
(c)
Total $000
Annual Report 2011
77

30 September 2011
35.
Fair value of financial instruments (contd) (c) Classification of financial instruments (contd) Financial liabilities through profit or loss $000 2011 Liabilities Trade creditors Other creditors and accruals Provision for warranty Derivatives Term loans Obligation under hire purchase contracts Provision for taxation Deferred taxation 151 151 6,841 11,862 3,662 643 23,008 977 2,751 2,196 5,924 6,841 11,862 977 151 3,662 643 2,751 2,196 29,083
Liabilities at amortised cost $000
Non-financial liabilities $000
Total $000
Financial assets through Loans profit or and loss receivables $000 $000 2010 Assets Property, plant and equipment Investments Inventories Trade debtors Other debtors and deposits Prepayments Derivatives Cash and cash equivalents 126 126 26,368 524 15,692 42,584 1,564 1,564 28,683 42,018 1,381 72,082 28,683 1,564 42,018 26,368 524 1,381 126 15,692 116,356 Availablefor-sale assets $000 Nonfinancial assets $000
Total $000
78

30 September 2011
35.
Fair value of financial instruments (contd) (c) Classification of financial instruments (contd) Liabilities at amortised cost $000 2010 Liabilities Trade creditors Other creditors and accruals Provision for warranty Term loans Obligation under hire purchase contracts Provision for taxation Deferred taxation 6,483 5,943 4,330 697 17,453 865 2,110 2,409 5,384 6,483 5,943 865 4,330 697 2,110 2,409 22,837
Non-financial liabilities $000
Total $000
36.
Capital management The primary objective of the Groups capital management is to ensure that it maintains an appropriate capital structure in order to support its business and maximise shareholder value. The Group manages its capital structure and makes adjustment to it, in the light of changes in economic conditions. To maintain or adjust the capital structure, the Group may increase borrowings or adjust the dividend payment to shareholders as and when appropriate. No changes were made in the objectives, policies or processes during the years ended 30 September 2011 and 30 September 2010. The Group is required to maintain certain minimum tangible networth and debt service coverage ratio (being ratio of cash available for debt servicing to interest and principal payments). These externally imposed capital requirement has been compiled by the Group for the financial years ended 2011 and 2010. The Group is currently in net cash position. The Group will continue to be guided by prudent financial policies of which gearing is an important aspect. 2011 $000 Term loans Total gross debt Shareholders Funds Share capital Other reserves Retained earnings 3,662 3,662 2010 $000 4,330 4,330
52,944 (456) 46,919 99,407
52,944 3,620 36,471 93,035 5%
Gross debt equity ratio
4%
Annual Report 2011
79

30 September 2011
37.
Segment information For management purposes, the Group is organised into business units based on their products and services, and has four reportable operating segments as follows: (a) The aluminium segment Aluminum products on building construction and other industrial uses, such as: curtain walls, cladding windows and container refrigeration units. The mild steel segment Mild steel products on pre-fabricated toilet projects, door frame and entrance gate for building construction projects. The steel segment This segment comprises of stainless steel products, such as drying rack and hoppers use in upgrading projects. Others Others include glasses and shower screen for building construction projects.
(b)
(c)
(d)
Except as indicated above, no operating segments have been aggregated to form the above reportable operating segments. Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise corporate assets and expenses. Transfer prices between operating segments are on an arms length basis in a manner similar to transactions with third parties.
80

30 September 2011
37. Segment information (contd) Business segments

Aluminium 2011 2010 $000 $000 Segment revenue: Sales to external customers Results: Depreciation Segment results Balance sheet Additions to non-current assets Segment assets Segment liabilities (3,353) 10,916 (3,438) 6,942 (333) 1,478 (424) 1,909 (173) 866 (133) 27 (1) 43 (1) 25 [A]18 3,327 (3,860) 13,321 (3,996) 12,230 Mild Steel 2011 2010 $000 $000 Stainless steel 2011 2010 $000 $000 Others 2011 2010 $000 $000 Adjustments 2011 2010 $000 $000 Consolidated 2011 2010 $000 $000
144,248
110,097
22,554
28,054
463
468
29
385
167,294
139,004
2,065 105,989
1,549 92,291
273 16,937
496 19,218
81 6,085
84 4,506
1 64
2 341
2,420
2,131 116,356
129,075
16,292
10,808
2,503
1,916
514
169
522
398
[B]9,252
9,546
29,083
22,837
Nature of adjustments to arrive at amounts reported in the consolidated financial statements. Note A The following items are added to/(deducted from) segment profit to arrive at Profit before tax presented in the consolidated income statement: Group 2011 $000 Interest income Interest expense Unallocated income 8 (217) 227 18 2010 $000 7 (321) 3,641 3,327
Annual Report 2011
81

30 September 2011
37. Segment information (contd) Note B The following items are added to segment liabilities at total liabilities reported in the consolidated balance sheet: Group 2011 $000 Deferred tax liabilities Provision for taxation Term loans Obligations under hire purchase contracts 2,196 2,751 3,662 643 9,252 Geographical information Revenue and non-current assets information based on the geographical location of customers and assets respectively are as follows: Revenue from external customers 2011 2010 $000 $000 Singapore Malaysia Peoples Republic of China Hong Kong 163,276 3,397 621 167,294 134,486 2,405 2,113 139,004 2010 $000 2,409 2,110 4,330 697 9,546
Non-current assets 2011 2010 $000 $000 6,400 19,144 183 2 25,729 7,643 20,829 211 2 28,685
Non-current assets information presented above consist of property, plant and equipment, as presented in the consolidated balance sheet. Information about major customers In the current financial year, revenue from two major customers amounted to $114 million arising from sales by aluminium segment and $15 million arising from sales by aluminium and mild steel segments respectively. In the previous financial year, revenue from two major customers amounted to $63 million arising from sales by aluminium segment and $14 million arising from sales by aluminium and mild steel segments respectively. Authorisation of financial statements for issue The financial statements for the year ended 30 September 2011 were authorised for issue in accordance with a resolution of the Directors on 3 January 2012.
38.
82
Statistics of Shareholdings
as at 19 December 2011
SHAREHOLDERS INFORMATION AS AT 19 DECEMBER 2011 Issued and fully paid-up capital Number of shares Class of shares Voting rights : : : : S$52,944,000 226,760,928 Ordinary share fully paid with equal voting rights One vote per share
The Company does not hold any treasury shares as at 19 December 2011. STATISTICS OF SHAREHOLDINGS DistribUtion of Shareholdings No. of Shareholders 773 1,312 764 16 2,865
Size of Shareholdings 1 1,000 999 10,000
% 26.98 45.79 26.67 0.56 100.00
No. of Shares 552,240 4,339,110 40,447,147 181,422,431 226,760,928
% 0.24 1.91 17.84 80.01 100.00
10,001 1,000,000 1,000,001 and above Total
SUBSTANTIAL SHAREHOLDERS (As recorded in the Register of Substantial Shareholders) Direct Interest Nam Lee Holdings Pte Ltd Yong Koon Chin Yong Kin Sen Yong Poon Miew
Notes: * Deemed interest in shares held by Nam Lee Holdings Pte Ltd. ** Deemed interest in shares held by spouse and Nam Lee Holdings Pte Ltd.
% 58.39 0.04 0.50 0.16
Deemed Interest 132,413,303* 132,419,303** 132,413,303*
% 58.39 58.39 58.39
132,413,303 90,000 1,139,250 358,500
Annual Report 2011
83
Statistics of Shareholdings
as at 19 December 2011
TwentY Largest Shareholders No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Total Name Nam Lee Holdings Pte Ltd Lie Tjoei Tjoe Chua Kee Tee HL Bank Nominees (S) Pte Ltd Wang Jung Hsin UOB Kay Hian Pte Ltd Kwa Ching Tze Hong Leong Finance Nominees Pte Ltd Mayban Nominees (S) Pte Ltd Phillip Securities Pte Ltd Wang Wang Chew Kim Eng Securities Pte. Ltd. Goh Teow Hee Yong Kin Sen OCBC Securities Private Ltd Tan Pheck Gee Seah Sin Loo Lim & Tan Securities Pte Ltd Raffles Nominees (Pte) Ltd Yong Han Lim Adrian (Yang Hanlin Adrian) No. of Shares 132,413,303 7,995,250 7,017,500 5,537,750 5,472,500 5,018,250 4,649,250 2,954,750 1,837,500 1,427,000 1,368,750 1,357,750 1,160,000 1,139,250 1,044,628 1,029,000 955,500 848,500 827,000 812,500 184,865,931 % 58.39 3.53 3.09 2.44 2.41 2.21 2.05 1.30 0.81 0.63 0.60 0.60 0.51 0.50 0.46 0.45 0.42 0.37 0.36 0.36 81.49
PERCENTAGE OF SHAREHOLDING IN PUBLICS HANDS 40.91% of the Companys shares are held in the hands of public. Accordingly, the Company has complied with Rule 723 of the Listing Manual of the SGX-ST.
84
Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN that the Annual General Meeting of NAM LEE PRESSED METAL INDUSTRIES LIMITED (the Company) will be held at Ruby Suite, Orchid Country Club, 1 Orchid Club Road, Singapore 769162 on Tuesday, 31 January 2012 at 9.45 a.m. (or as soon thereafter following the conclusion or adjournment of the Extraordinary General Meeting of the Company to be held at 9.30 a.m. on the same day and at the same place) for the following purposes: AS ORDINARY BUSINESS 1. 2. 3. 4. To receive and adopt the Directors Report and the Audited Accounts of the Company for the year ended 30 September 2011 together with the Auditors Report thereon. (Resolution 1) To declare a one-tier tax-exempt final dividend of 1.0 cent per share for the year ended 30 September 2011 (2010: 1.0 cent per share). (Resolution 2) To declare a one-tier tax-exempt special dividend of 0.5 cent per share for the year ended 30 September 2011 (2010: 0.5 cent per share). (Resolution 3) To re-elect the following Directors of the Company retiring pursuant to Article 104 of the Articles of Association of the Company: Mr Yong Kin Sen Mr Chidambaram Chandrasegar Mr Tan Soo Kiat (Resolution 4) (Resolution 5) (Resolution 6)
Mr Yong Kin Sen will, upon re-election as a Director of the Company, remain as a member of the Nominating Committee and will be considered non-independent. Mr Chidambaram Chandrasegar will, upon re-election as Director of the Company, remain as Chairman of the Nominating Committee and a member of the Audit and Remuneration Committees and will be considered independent. Mr Tan Soo Kiat will, upon re-election as Director of the Company, remain as Chairman of the Remuneration Committee and a member of the Audit and Nominating Committees and will be considered independent. To re-appoint the following directors of the Company retiring under Section 153(6) of the Companies Act, Cap. 50, to hold office from the date of this Annual General Meeting until the next Annual General Meeting of the Company: [See Explanatory Note (i)] Mr Yong Koon Chin Mr Khoo Ho Tong (Resolution 7) (Resolution 8)
5.
Mr Khoo Ho Tong will, upon re-appointment as a Director of the Company, remain as Chairman of the Audit Committee and a member of the Nominating and Remuneration Committees and will be considered independent. To approve the payment of Directors fees of S$114,000 for the year ending 30 September 2012, payable quarterly in arrears (2011: S$108,000). (Resolution 9) To re-appoint Ernst & Young LLP as the Auditors of the Company and to authorise the Directors of the Company to fix their remuneration. (Resolution 10) To transact any other ordinary business which may properly be transacted at an Annual General Meeting.
6. 7. 8.
Annual Report 2011
85

AS SPECIAL BUSINESS To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without any modifications: 9. Authority to issue shares That pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806 of the Listing Manual of the Singapore Exchange Securities Trading Limited, the Directors of the Company be authorised and empowered to: (a) (i) (ii) issue shares in the Company (shares) whether by way of rights, bonus or otherwise; and/or make or grant offers, agreements or options (collectively, Instruments) that might or would require shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) options, warrants, debentures or other instruments convertible into shares,
(b)
at any time and upon such terms and conditions and for such purposes and to such persons as the Directors of the Company may in their absolute discretion deem fit; and (notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue shares in pursuance of any Instruments made or granted by the Directors of the Company while this Resolution was in force,
provided that: (1) the aggregate number of shares (including shares to be issued in pursuance of the Instruments, made or granted pursuant to this Resolution) to be issued pursuant to this Resolution shall not exceed fifty per centum (50%) of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of shares to be issued other than on a pro rata basis to shareholders of the Company shall not exceed twenty per centum (20%) of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (2) below); (subject to such calculation as may be prescribed by the Singapore Exchange Securities Trading Limited) for the purpose of determining the aggregate number of shares that may be issued under sub-paragraph (1) above, the total number of issued shares (excluding treasury shares) shall be based on the total number of issued shares (excluding treasury shares) in the capital of the Company at the time of the passing of this Resolution, after adjusting for: (a) (b) (c) new shares arising from the conversion or exercise of any convertible securities; new shares arising from exercising share options or vesting of share awards which are outstanding or subsisting at the time of the passing of this Resolution; and any subsequent bonus issue, consolidation or subdivision of shares;
(2)
(3)
in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Listing Manual of the Singapore Exchange Securities Trading Limited for the time being in force (unless such compliance has been waived by the Singapore Exchange Securities Trading Limited) and the Articles of Association of the Company; and unless revoked or varied by the Company in a general meeting, such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier. [See Explanatory Note (ii)] (Resolution 11)
(4)
86

10. Authority to issue shares under the Nam Lee Employee Share Option Scheme That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors of the Company be authorised and empowered to offer and grant options under the Nam Lee Employee Share Option Scheme (the Scheme) and to issue from time to time such number of shares in the capital of the Company as may be required to be issued pursuant to the exercise of options granted by the Company under the Scheme, whether granted during the subsistence of this authority or otherwise, provided always that the aggregate number of additional ordinary shares to be issued pursuant to the Scheme shall not exceed fifteen per centum (15%) of the total number of issued shares (excluding treasury shares) in the capital of the Company from time to time and that such authority shall, unless revoked or varied by the Company in a general meeting, continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier. [See Explanatory Note (iii)] (Resolution 12) Renewal of Share Buy Back Mandate That approval be and is hereby given:(a) for the purposes of Sections 76C and 76E of the Companies Act, Chapter 50 of Singapore (the Companies Act), the exercise by the Directors of Nam Lee Pressed Metal Industries Limited (the Company) of all the powers of the Company to purchase or otherwise acquire issued ordinary shares in the capital of the Company (the Shares) not exceeding in aggregate the Maximum Limit (as hereafter defined), at such price or prices as may be determined by the Directors of the Company from time to time up to the Maximum Price (as hereafter defined), whether by way of:(i) an on-market share acquisition (On-Market Purchase) transacted on the Singapore Exchange Securities Trading Limited (SGX-ST) trading system, through one or more duly licensed stockbrokers appointed by the Company for such purpose; and/or off-market share acquisition (Off-Market Purchase) pursuant to an equal access scheme(s) as may be determined or formulated by the Directors in their discretion, which scheme(s) shall satisfy all the conditions prescribed by the Companies Act, and otherwise be in accordance with all other laws, the Listing Manual and other regulations and rules of the SGX-ST, (the Mandate);
11.
(ii)
(b)
unless varied or revoked by the Company in general meeting, the authority conferred on the Directors of the Company pursuant to the Mandate may be exercised by the Directors of the Company at any time and from time to time, on and from the date of passing of this Resolution up to:(i) (ii) (iii) the date on which the next annual general meeting of the Company is held or required by law to be held; or the date on which the authority conferred by the Mandate is revoked or varied by the Company in general meeting, whichever is the earlier; or the date on which the Share buy back is fulfilled up to the full extent of the Mandate; and
(c)
the Directors of the Company and/or any of them be and is hereby authorised to do such acts and things (including, without limitation, enter into all transactions, arrangements and agreements and executing such documents) as they and/or he may consider necessary or expedient to give effect to this resolution.
In this resolution: Maximum Limit means that number of Shares representing 10% of the issued ordinary share capital of the Company as at the date of the passing of this Resolution; and
Annual Report 2011
87

Maximum Price in relation to a Share to be purchased or acquired, means the price paid per Share which does not exceed 5% above the average of the closing market prices of the Shares over the last 5 market days, on which transactions in the Shares were recorded, before the day on which the purchases are made and deemed to be adjusted for any corporate action which occurs after the relevant 5-day period. The Maximum Price shall apply to both On-Market Purchases and Off-Market Purchases and shall exclude brokerage fees, commission, stamp duties payable, applicable goods and services tax, clearance fees and other related expenses. [See Explanatory Note (vi)] (Resolution 13)
By Order of the Board
Yong Kin Sen Company Secretary Singapore, 16 January 2012
Explanatory Notes: (i) (ii) The effect of the Ordinary Resolutions 7 and 8 proposed in item 5 above, is to re-appoint directors of the Company who are over 70 years of age. The Ordinary Resolution 11 in item 9 above, if passed, will empower the Directors of the Company, effective until the conclusion of the next Annual General Meeting of the Company, or the date by which the next Annual General Meeting of the Company is required by law to be held or such authority is varied or revoked by the Company in a general meeting, whichever is the earlier, to issue shares, make or grant Instruments convertible into shares and to issue shares pursuant to such Instruments, up to a number not exceeding, in total, 50% of the total number of issued shares (excluding treasury shares) in the capital of the Company, of which up to 20% may be issued other than on a pro-rata basis to shareholders. For determining the aggregate number of shares that may be issued, the total number of issued shares (excluding treasury shares) will be calculated based on the total number of issued shares (excluding treasury shares) in the capital of the Company at the time this Ordinary Resolution is passed after adjusting for new shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the time when this Ordinary Resolution is passed and any subsequent bonus issue, consolidation or subdivision of shares. The Ordinary Resolution 12 in item 10 above, if passed, will empower the Directors of the Company, effective until the conclusion of the next Annual General Meeting of the Company, or the date by which the next Annual General Meeting of the Company is required by law to be held or such authority is varied or revoked by the Company in a general meeting, whichever is the earlier, to issue shares in the Company pursuant to the exercise of options granted or to be granted under the Scheme up to a number not exceeding in aggregate (for the entire duration of the Scheme) fifteen per centum (15%) of the total number of issued shares (excluding treasury shares) in the capital of the Company from time to time. The Ordinary Resolution 13 proposed in item 11 above, if passed, will empower the Directors of the Company effective until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier, to repurchase ordinary shares of the Company by way of market purchases or off-market purchases of up to ten per centum (10%) of the total number of issued shares (excluding treasury shares) in the capital of the Company at the Maximum Price as defined in the Ordinary Resolution. The rationale for, the authority and limitation on, the sources of funds to be used for the purchase or acquisition including the amount of financing and the financial effects of the purchase or acquisition of ordinary shares by the Company pursuant to the Share Purchase Mandate on the audited consolidated financial accounts of the Group for the financial year ended 30 September 2011 are set out in greater detail in the Letter to Shareholders attached.
(iii)
(iv)
Notes: 1. 2. A Member entitled to attend and vote at the Annual General Meeting (the Meeting) is entitled to appoint not more than two proxies to attend and vote in his/her stead. A proxy need not be a Member of the Company. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 31 Senoko Drive, Senoko Industrial Estate, Singapore 758216 not less than forty-eight (48) hours before the time appointed for holding the Meeting.
88
Proxy Form
(Please see notes overleaf before completing this Form)
IMPORTANT: 1. For investors who have used their CPF monies to buy Nam Lee Pressed Metal Industries Limiteds shares, this Report is forwarded to them at the request of the CPF Approved Nominees and is sent solely FOR INFORMATION ONLY. 2. This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them. 3. CPF investors who wish to attend the Meeting as an observer must submit their requests through their CPF Approved Nominees within the time frame specified. If they also wish to vote, they must submit their voting instructions to the CPF Approved Nominees within the time frame specified to enable them to vote on their behalf.

Company Registration No. 197500362M (Incorporated In The Republic of Singapore)
I/We, of being a member/members of NAM LEE PRESSED METAL INDUSTRIES LIMITED (the Company), hereby appoint: Name Address and/or (delete as appropriate) Name Address or failing the person, or either or both of the persons, referred to above, the Chairman of the Meeting as my/our proxy/proxies to vote for me/us on my/our behalf at the Annual General Meeting (the Meeting) of the Company to be held on Tuesday, 31 January 2012 at 9.45 a.m. (or as soon thereafter following the conclusion or adjournment of the Extraordinary General Meeting of the Company to be held at 9.30 a.m. on the same day and at the same place) and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the Resolutions proposed at the Meeting as indicated hereunder. If no specific direction as to voting is given or in the event of any other matter arising at the Meeting and at any adjournment thereof, the proxy/proxies will vote or abstain from voting at his/her discretion. The authority herein includes the right to demand or to join in demanding a poll and to vote on a poll. (Please indicate your vote For or Against with a tick [] within the box provided.) No. 1 2 3 4 5 6 7 8 9 10 11 12 13 Resolutions relating to: Directors Report and Audited Accounts for the year ended 30 September 2011 Payment of proposed one-tier tax-exempt final dividend Payment of proposed one-tier tax-exempt special dividend Re-election of Mr Yong Kin Sen as a Director Re-election of Mr Chidambaram Chandrasegar as a Director Re-election of Mr Tan Soo Kiat as a Director Re-appointment of Mr Yong Koon Chin as a Director Re-appointment of Mr Khoo Ho Tong as a Director Approval of Directors fees amounting to S$114,000 Re-appointment of Ernst & Young LLP as Auditors Authority to issue new shares Authority to issue shares under the Nam Lee Employee Share Option Scheme Renewal of Share Buy Back Mandate day of 2012 Total number of Shares in: (a) CDP Register (b) Register of Members Signature of Shareholder(s) or, Common Seal of Corporate Shareholder
* Delete where inapplicable
NRIC/Passport No.
Proportion of Shareholdings No. of Shares %
NRIC/Passport No.
Proportion of Shareholdings No. of Shares %
For
Against
Dated this
No. of Shares
&
Notes: 1. Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of Shares. If you have Shares registered in your name in the Register of Members, you should insert that number of Shares. If you have Shares entered against your name in the Depository Register and Shares registered in your name in the Register of Members, you should insert the aggregate number of Shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the Shares held by you. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend and vote in his/her stead. A proxy need not be a member of the Company. Where a member appoints two proxies, the appointments shall be invalid unless he/she specifies the proportion of his/her shareholding (expressed as a percentage of the whole) to be represented by each proxy. Completion and return of this instrument appointing a proxy shall not preclude a member from attending and voting at the Meeting. Any appointment of a proxy or proxies shall be deemed to be revoked if a member attends the meeting in person, and in such event, the Company reserves the right to refuse to admit any person or persons appointed under the instrument of proxy to the Meeting. The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 31 Senoko Drive, Senoko Industrial Estate, Singapore 758216 not less than forty-eight (48) hours before the time appointed for the Meeting. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under the hand of an officer or attorney duly authorised. Where the instrument appointing a proxy or proxies is executed by an attorney on behalf of the appointor, the letter or power of attorney or a duly certified copy thereof must be lodged with the instrument. A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore.
2. 3. 4.
5. 6.
7.
General: The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible, or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of Shares entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have Shares entered against his name in the Depository Register as at fortyeight (48) hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.
Strengthening Our Market Leadership
We offer no compromises on quality

(Company Registration No. 197500362M)
31 Senoko Drive, Senoko Industrial Estate, Singapore 758216 Telephone: (65) 6257 5388 Facsimile: (65) 6758 8134 Email: pressed_metal@pacific.net.sg
Annual Report 2011

(Incorporated in the Republic of Singapore) (Company Registration Number: 197500362M)
Directors: Yong Koon Chin Yong Kin Sen Yong Poon Miew Khoo Ho Tong Chidambaram Chandrasegar Tan Soo Kiat Date: 16 January 2012 To:
Designation: Chairman & Executive Director Managing Director (Executive) Executive Director Independent Director Independent Director Independent Director
Registered Office: 31 Senoko Drive Senoko Industrial Estate Singapore 758216
The Shareholders of Nam Lee Pressed Metal Industries Limited
Dear Sir/Madam, THE PROPOSED RENEWAL OF THE SHARE BUY BACK MANDATE
All capitalized terms herein shall bear the meanings ascribed to them in the Schedule titled Definitions to this Letter.
1. INTRODUCTION The Directors wish to refer Shareholders to (a) the Notice of AGM convening the 2012 AGM and (b) Ordinary Resolution 13 in relation to the proposed renewal of the Mandate of the Company. The sole purpose of this Letter is to provide Shareholders with information relating to the abovementioned proposal to be tabled at the 2012 AGM and may not be relied upon by any persons (other than Shareholders) or for any other purpose. The SGX-ST assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Letter. 2. 2.1 PROPOSED RENEWAL OF THE SHARE BUY BACK MANDATE Background & Rationale for the Mandate Shareholders had approved the Mandate at the extraordinary general meeting of the Company held on 31 January 2011. By way of renewal of the Mandate, the Board seeks approval to make purchases from time to time, in the aggregate, of up to 10% of the issued Share capital of the Company as at the date of the 2012 AGM, at Share prices of up to but not exceeding the Maximum Price. The proposed Mandate will give the Directors the flexibility to purchase the Shares of the Company if and when circumstances permit. The Directors believe that Share buy backs provide the Company and its Directors with a mechanism to facilitate the return to Shareholders of surplus cash over and above the Companys ordinary capital requirements, in an expedient and costefficient manner. It also allows the Directors to exercise flexibility and control over the Companys capital structure, dividend payout and cash reserves and to enhance the EPS. 1
The Directors will only undertake buy back of Shares in circumstances which the Directors believe would benefit the Company and its Shareholders, taking into account factors such as prevailing market conditions and the availability of surplus cash. 2.2 Authority and Limits of the Mandate The authority and limitations placed on the purchase or acquisitions of Shares by the Company pursuant to the Mandate, are substantially the same as that previously approved by Shareholders, and for the benefit of Shareholders are summarised below:(a) Maximum Number of Shares Only Shares which are issued and fully paid may be purchased or acquired by the Company. The total number of Shares which may be purchased or acquired by the Company pursuant to the Mandate is limited to that number of Shares representing not more than 10% of the issued ordinary share capital of the Company as at the date of the forthcoming 2012 AGM (or any adjournments thereof) at which the Mandate is approved. Any of the Shares held by the Company as treasury shares shall be disregarded for purposes of computing the 10% limit. As an illustration, based on the Companys 226,760,928 Shares issued as at the Latest Practicable Date, and assuming that no further Shares are issued, and no Shares are held by the Company as treasury shares, on or prior to the 2012 AGM, not more than 22,676,092 Shares (representing not more than 10% of the issued ordinary shares of the Company as at that date) may be bought by the Company pursuant to the proposed Mandate. (b) Duration of Authority Purchases or acquisitions of Shares may be made, at any time and from time to time, on or from the date of the 2012 AGM at which the Mandate is approved up to, the earliest of:(i) (ii) the date on which the next AGM of the Company is held or required by law to be held; the date on which the authority conferred by the Mandate is revoked or varied by the Company in general meeting, whichever is the earlier; or the date on which the Share buy back is fulfilled up to the full extent of the Mandate.
(iii) (c)
Manner of Purchase or Acquisition of Shares The Shares may be purchased or acquired by way of:(i) an on-market share acquisition (the On-Market Purchase) transacted on the SGXST trading system, through one or more duly licensed stockbrokers appointed by the Company for such purpose; and/or an off-market share acquisition (the Off-Market Purchase) pursuant to an equal access scheme(s) as may be determined or formulated by the Directors in their discretion, which scheme(s) shall satisfy all the conditions prescribed by the Companies Act, and otherwise be in accordance with all other laws, the Listing Manual and other regulations and rules of the SGX-ST.
(ii)
(d)
Information on Off-Market Purchases As prescribed by the Companies Act, an equal access scheme must satisfy all the following conditions:(i) offers for the purchase or acquisition of Shares shall be made to every person who holds issued Shares, to purchase or acquire the same percentage of their issued Shares; all of those persons shall be given a reasonable opportunity to accept the offers made; and the terms of all the offers must be the same, except that there shall be disregarded:(a) differences in consideration attributable to the fact that offers may relate to Shares with different accrued dividend entitlements; if applicable, differences in consideration attributable to the fact that offers relate to Shares with different amounts remaining unpaid; and differences in the offers introduced solely to ensure that each person is left with a whole number of Shares.
(ii)
(iii)
(b)
(c)
In addition, the Listing Manual requires that in the making of an Off-Market Purchase, the Company must issue an offer document to all Shareholders which must contain at least the following information:(i) (ii) (iii) (iv) the terms and conditions of the offer; the period and procedures for acceptances; the reasons for the proposed share buy back; the consequences, if any, of share buy backs by the Company that will arise under the Takeover Code or other applicable takeover rules; whether the share buy back, if made, would have any effect on the listing of the Shares on the SGX-ST; and details of any share buy back made by the Company in the previous 12 months (whether On-Market Purchases or Off-Market Purchases), specifying the total number of Shares purchased, the purchase price per Share or the highest and lowest prices paid for the purchases, where relevant, and the total consideration paid for the purchases.
(v)
(vi)
(e)
Maximum Price to be Paid for the Shares The Directors may determine the purchase price to be paid per Share for any Share buy backs. However the price paid per Share shall be subject to a Maximum Price, which shall be a price which does not exceed 5% above the average of the closing market prices of the Shares over the last 5 Market Days, on which transactions in the Shares were recorded, before the day on which the purchases are made and deemed to be adjusted for any corporate action which occurs after the relevant 5-day period (the Maximum Price). The Maximum Price shall apply to both On-Market Purchases and Off-Market Purchases and shall exclude brokerage fees, commission, stamp duties payable, applicable goods and services tax, clearance fees and other related expenses.
2.3
Status of Purchased Shares The Shares purchased by the Company may be held in treasury as treasury shares. Upon the purchase of the treasury shares, the Company will be registered as a member in respect of the treasury shares but will not have the right to attend or vote at meetings or receive dividends in respect to them. The Companies Act currently restricts the maximum permitted holding, as treasury shares, of the number of Shares of the relevant class of shares to 10%. Any treasury share which exceeds this must either be disposed of or cancelled within 6 months after the limit is first exceeded. Disposal options (exercisable at any time) available to the Company holding treasury shares are as follows:(a) (b) sell the treasury shares (or any of them) for cash; transfer the treasury shares (or any of them) for the purposes of or pursuant to an employees share scheme; transfer the treasury shares (or any of them) as consideration for acquisitions of shares or other assets; cancel the treasury shares (or any of them); or sell, transfer or otherwise use the treasury shares for such other purposes as the Minister of Finance may by order prescribe.
(c)
(d) (e)
Pursuant to the Companies Act, Shares bought back by the Company, unless kept as treasury shares, are cancelled immediately on purchase or acquisition. All rights and privileges attached to the purchased Shares shall expire upon cancellation. 2.4 Source of Funds In buying back Shares, the Company shall only apply funds legally available in accordance with its Articles of Association, and the applicable laws in Singapore. The Company may not buy back its Shares on the SGX-ST for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of the SGX-ST respectively. The Companies Act provides that purchases and acquisitions of Shares may be made out of the Companys capital or profits so long as the Company is solvent. For this purpose, the Company is solvent if:(a) it is able to pay its debts in full at the time that payment is made for Shares under the Mandate, and will be able to pay its debts as they fall due in the normal course of business during the period of 12 months immediately following the date of such payment; and the value of the Companys assets is not less than the value of its liabilities (including contingent liabilities) and will not after the proposed purchase or acquisition become less than the value of its liabilities (including contingent liabilities).
(b)
In determining, for the above purposes, whether the value of the Companys assets is less than the value of its liabilities (including contingent liabilities), the Directors or the Companys management (a) must have regard to the most recent financial statements of the Company and all other circumstances that the Directors or the management know or ought to know affect, or may affect, the value of the Companys assets and the value of the Companys liabilities (including contingent liabilities); and (b) may rely on valuations of assets or estimates of liabilities that are reasonable in the circumstances. Where the value of contingent liabilities are required to be determined, the Directors or management may take into account the likelihood of the contingency occurring and any claim that the Company is entitled to make and can reasonably expect to be met to reduce or extinguish the contingent liability.
The Company intends to use its internal funds to undertake share buy backs. As such, the Company has not and does not intend to borrow funds (other than the Companys financing of its operations in the usual course of its business) to finance the buy back of Shares. 2.5 Financial Impact Pursuant to the Companies Act, Shares bought back by the Company, unless kept as treasury shares, are cancelled immediately on purchase or acquisition. All rights and privileges attached to the purchased Shares shall expire upon cancellation. Where the consideration paid by the Company for the purchase or acquisition of the Shares (excluding related brokerage, goods and services tax, stamp duties and clearance fees) is paid for using:(a) the Companys capital and / or profits, it will reduce the amount available for the Companys operations permitted under the Act; or the Companys profits, it will reduce the amount available for distribution of dividends by the Company,
(b)
the net tangible assets of the Company and the consolidated net tangible assets of the Group will be reduced by the dollar value of the Shares bought. The Directors believe that even if the Company exercises the Mandate in full and acquires up to 22,676,092 Shares, it will not have any material impact on the earnings of the Company and the consolidated earnings of the Group for the current financial year. For illustrative purposes only, assuming the Company had exercised the Mandate in full and purchased 22,676,092 Shares at the Maximum Price of S$0.28245 for each Share (based on the average of the last dealt prices of the Shares for the 5 Market Days on which the Shares were traded on the SGX-ST immediately preceding the Latest Practicable Date), on the issued share capital above, the financial effects of the purchase or acquisition of the Shares by the Company pursuant to the Mandate by way of purchases made:(a) (b) (c) (d) entirely out of capital and held as treasury shares; entirely out of profits and held as treasury shares; entirely out of capital and cancelled; and entirely out of profits and cancelled,
based on the latest audited financial statements of the Company for FY2011 are set out below:(a) Purchases or Acquisitions Made Entirely out of Capital and Held as Treasury Shares Company As at FY2011 S$000 Share capital Reserves Retained earnings 52,944 890 15,308 69,142 Minority interests Treasury shares Total Equity Net tangible assets Current assets Current liabilities Working capital Total liabilities Total number of Shares (000) Net tangible assets per Share (Cents) Debt equity ratio (%) Working capital ratio Earnings per Share (Cents) 69,142 69,142 75,565 25,064 50,051 27,059 226,761 After share buy back S$000 52,944 890 15,308 69,142 (6,405) 62,737 62,737 69,160 25,064 44,096 27,509 204,084 As at FY2011 S$000 52,944 (456) 46,919 99,407 585 99,992 99,992 102,501 24,789 77,712 29,083 226,761 Group After share buy back S$000 52,944 (456) 46,919 99,407 585 (6,405) 93,587 93,587 96,096 24,789 71,307 29,083 204,084
30.491
30.740
44.095
45.857
4.87 3.014 1.788
5.36 2.759 1.986
4.31 4.134 4.793
4.60 3.876 5.325
(b)
Purchases or Acquisitions Made Entirely out of Profits and Held as Treasury Shares Company As at FY2011 S$000 Share capital Reserves Retained earnings 52,944 890 15,308 69,142 Minority interests Treasury shares Total Equity Net tangible assets Current assets Current liabilities Working capital Total liabilities Total number of Shares (000) Net tangible assets per Share (Cents) Debt equity ratio (%) Working capital ratio Earnings per Share (Cents) 69,142 69,142 75,565 25,064 50,051 27,059 226,761 After share buy back S$000 52,944 890 15,308 69,142 (6,405) 62,737 62,737 69,160 25,064 44,096 27,509 204,084 As at FY2011 S$000 52,944 (456) 46,919 99,407 585 99,992 99,992 102,501 24,789 77,712 29,083 226,761 Group After share buy back S$000 52,944 (456) 46,919 99,407 585 (6,405) 93,587 93,587 96,096 24,789 71,307 29,083 204,084
30.491
30.740
44.095
45.857
4.87 3.014 1.788
5.36 2.759 1.986
4.31 4.134 4.793
4.60 3.876 5.325
(c)
Purchases or Acquisitions Made Entirely out of Capital and Cancelled Company As at FY2011 S$000 Share capital Reserves Retained earnings 52,944 890 15,308 69,142 Minority interests Treasury shares Total Equity Net tangible assets Current assets Current liabilities Working capital Total liabilities Total number of Shares (000) Net tangible assets per Share (Cents) Debt equity ratio (%) Working capital ratio Earnings per Share (Cents) 69,142 69,142 75,565 25,064 50,501 27,059 226,761 After share buy back S$000 46,539 890 15,308 62,737 62,737 62,737 69,160 25,064 44,096 27,059 204,084 As at FY2011 S$000 52,944 (456) 46,919 99,407 585 99,992 99,992 102,501 24,789 77,712 29,083 226,761 Group After share buy back S$000 46,539 (456) 46,919 93,002 585 93,587 93,587 96,096 24,789 71,307 29,083 204,084
30.491
30.740
44.095
45.857
4.87 3.014 1.788
5.36 2.759 1.986
4.31 4.134 4.793
4.60 3.876 5.325
(d)
Purchases or Acquisitions Made Entirely out of Profits and Cancelled Company As at FY2011 S$000 Share capital Reserves Retained earnings 52,944 890 15,308 69,142 Minority interests Treasury shares Total Equity Net tangible assets Current assets Current liabilities Working capital Total liabilities Total number of Shares (000) Net tangible assets per Share (Cents) Debt equity ratio (%) Working capital ratio Earnings per Share (Cents) 69,142 69,142 75,565 25,064 50,501 27,059 226,761 After share buy back S$000 52,944 890 8,903 62,737 62,737 62,737 69,160 25,064 44,096 27,059 204,084 As at FY2011 S$000 52,944 (456) 46,919 99,407 585 99,992 99,992 102,501 24,789 77,712 29,083 226,761 Group After share buy back S$000 52,944 (456) 40,514 93,002 585 93,587 93,587 96,096 24,789 71,307 29,083 204,084
30.491
30.740
44.095
45.857
4.87 3.014 1.788
5.36 2.759 1.986
4.31 4.134 4.793
4.60 3.876 5.325
The financial impact is the same whether the Shares are purchased via On-Market Purchases or Off-Market Purchases. The Group had a balance of S$24,125,000 in cash as at 30 September 2011. Assuming the buy back of up to 22,676,092 Shares at the maximum price of S$0.28245 per Share, the Companys cash reserves would be reduced by S$6,404,862 and, all other things remaining the same, the working capital and net tangible assets of the Group and the Company would be reduced by the dollar value of the Shares purchased. The consolidated net tangible assets value per Share after the buy back of 22,676,092 Shares would be increased to S$0.45.
As illustrated in the tables above, the purchase of the Shares would reduce the current assets and Shareholders funds of the Group and the Company accordingly. This would result in an increase in the debt equity ratio of the Company and the Group. The consolidated EPS as a result of the buy back of 22,676,092 Shares would be increased from 4.793 cents to 5.325 cents. The actual impact on the debt equity and working capital ratio of the Company would depend on the number of Shares purchased and the price or prices at which the Shares are purchased. The actual impact on the respective ratios will depend on the number and price of the Shares bought back. The Directors do not propose to exercise the Mandate to such an extent that it would have a material adverse effect on the working capital requirements of the Company. The acquisition and purchase of Shares will only be effected after considering relevant factors such as the working capital requirements, availability of surplus cash and other financial resources, the expansion and investment plans of the Group, and the prevailing market conditions. The Mandate will be exercised with a view to enhancing the EPS of the Group. Shareholders should note that the financial effects illustrated above are for illustrative purposes only. In particular, it is important to note that the above analysis is based on the latest audited financial statements of the Company and the Group as at 30 September 2011, and are not representative of the Groups future financial performance. Although the Mandate would authorise the Company to buy back up to 10% of the Companys issued Shares, the Company may not necessarily buy back all 10% of the issued Shares in full. In particular, the maximum number of shares that the Company may purchase under the Act is limited by the solvency requirements set out in the Act, as described in section 2.4 of this Circular. 2.6 Taxation Section 10J of the Income Tax Act stipulates that when a company buys back its own shares from a shareholder using funds other than contributed capital of the company, the payment by the company shall be deemed to be a dividend paid by the company to the shareholder. Shareholders are advised to obtain independent professional advice if they are uncertain about the impact of Share buy backs on their overall tax position, whether in Singapore or in other jurisdictions in the world. 2.7 Reporting Requirements The Companies Act and the Listing Manual require the Company to make the following reports in relation to the Mandate:(a) To lodge a copy of the Shareholders resolution approving the Mandate with ACRA within 30 days of the passing of such resolution; To notify ACRA of an acquisition or purchase of Shares on the SGX-ST or otherwise within 30 days. Such notification shall be in the prescribed form and shall include:(i) (ii) (iii) (iv) the date of the acquisition or purchase; the total number of Shares acquired or purchased; the number of Shares cancelled; the number of Shares held as treasury shares;
(b)
10
(v)
the Companys issued share capital before the acquisition or purchase and after such acquisition or purchase; the amount of consideration paid by the Company for the acquisition or purchase; and whether the Shares were purchased or acquired out of the profits or the capital of the Company.
(vi) (vii)
(c)
Pursuant to the Listing Manual, to report purchases of Shares to the SGX-ST in the forms prescribed which shall include details including, inter alia, the maximum number of Shares authorized for purchase, the date of purchase, the price paid and the number of issued Shares remaining in the share capital of the company after purchase, and to make an announcement to the public:(i) in the case of On-Market Purchases, not later than 9.00 a.m. on the trading day following any day on which the Company makes a On-Market Purchase; and in the case of Off-Market Purchases, not later than 9.00 a.m. on the second trading day following the close of acceptance of offers made by the Company.
(ii)
2.8
Suspension of buy back of Shares As the Company would be considered an insider in relation to any buy back of Shares, the Company will not buy Shares after a price sensitive development has occurred or has been the subject of a decision until such time as the price sensitive information has been publicly announced. In particular, the Company will not purchase or acquire any of its Shares during the period commencing two (2) weeks before the announcement of the Companys financial results for each of the first three quarters of its financial year and one (1) month before the announcement of the Companys full year financial results.
2.9
Listing Status on SGX-ST The Listing Manual requires a listed company to ensure 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 is at all times held by the public. As defined in the Listing Manual, the public refers to persons other than the directors, chief executive officer, substantial shareholders, or controlling shareholders of the company and its subsidiaries, as well as the associates (as defined in the Listing Manual) of such persons. As at the Latest Practicable Date, there are 92,753,875 Shares held in the hands of the public (as defined above), representing 40.91% of the issued share capital of the Company. Assuming the Company exercises the Mandate in full and purchases the maximum of 10% of its issued share capital from such public Shareholders, the number of Shares in the hands of the public would be reduced to 70,077,783 Shares, representing 30.91% of the issued share capital of the Company. Accordingly, as at the Latest Practicable Date, the Company is of the opinion that there is a sufficient number of issued Shares held by public Shareholders which would permit the Company to undertake purchases and acquisitions of its Shares up to the full 10% limit pursuant to the Mandate without adversely affecting the listing status of the Shares on SGX-ST, causing market illiquidity, or adversely affecting the orderly trading of Shares. The Directors will use their best efforts to ensure that purchase of Shares would not result in the number of Shares remaining in the hands of the public falling to such a level as to cause market illiquidity or adversely affect the listing status of the Company.
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2.10 Takeover Implications under the Takeover Code Pursuant to Appendix 2 of the Takeover Code, an increase of a shareholders proportionate interest in the voting rights of the Company resulting from a share buy back by the Company will be treated as an acquisition for the purposes of Rule 14 of the Takeover Code (Rule 14). Under Rule 14, a Shareholder and persons acting in concert with the Shareholder will incur an obligation to make a mandatory takeover offer if, inter alia, he and persons acting in concert with him increase their voting rights in the Company to 30% or more or, if they, together holding between 30% and 50% of the Companys voting rights, increase their voting rights in the Company by more than 1% in any period of 6 months. Persons acting in concert comprise individuals or companies who, pursuant to an agreement or understanding (whether formal or informal), co-operate, through the acquisition by any of them of shares in a company to obtain or consolidate effective control of that company. Unless the contrary is established, the following individuals and companies will be presumed to be acting in concert with each other:(a) the following companies:(i) (ii) (iii) (iv) (v) (vi) (vii) a company; the parent company of (i); the subsidiaries of (i); the fellow subsidiaries of (i); the associated companies of any of (i), (ii), (iii) or (iv); companies whose associated companies include any of (i), (ii), (iii), (iv) or (v); and any person who has provided financial assistance (other than a bank in the ordinary course of business) to any of the above for the purchase of voting rights; and
(b)
a company with any of its directors (together with their close relatives, related trusts as well as companies controlled by any of the directors, their close relatives and related trusts).
For this purpose, ownership or control of 20% but not more than 50% of the voting rights of a company will be regarded as the test of associated company status. Consequently, a Director and persons acting in concert (as such term is defined in the Takeover Code) with him could, depending on the level of increase in his or their interest in the Company, become obliged to make a mandatory offer in accordance with Rule 14 as a result of the Companys buy back of Shares. Unless exempted, Directors of the Company and persons acting in concert with them will incur an obligation to make a takeover offer under Rule 14 of the Takeover Code if, as a result of the Company purchasing or acquiring its Shares, the voting rights of such Directors and their concert parties would increase to 30% or more, or if the voting rights of such Directors and their concert parties fall between 30% and 50% of the Companys voting rights, the voting rights of such Directors and their concert parties would increase by 1% in any period of 6 months. Based on the shareholdings of the Directors and the substantial Shareholders in the Company as at the Latest Practicable Date, none of the Directors nor the substantial Shareholders will become obligated to make a mandatory offer by reason only of the buy back of 22,676,092 Shares by the Company pursuant to the Mandate.
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The Directors are not aware of any Shareholder or group of Shareholders acting in concert who may become obligated to make a mandatory offer in the event that the Directors exercise the power to buy back Shares pursuant to the Mandate. Shareholders who are in doubt as to their obligations, if any, to make a mandatory takeover offer under the Takeover Code as a result of share buy backs by the Company are advised to consult their professional advisers and/or the SIC and/or other relevant authorities at the earliest opportunity. The circumstances under which Shareholders, including Directors and persons acting in concert with them respectively, will incur an obligation to make a takeover offer under Rule 14 of the Takeover Code after a purchase or acquisition of Shares by the Company are set out in Appendix 2 of the Takeover Code. 2.11 Buy back of Shares Under Existing Mandate Under the existing Mandate as approved at the extraordinary general meeting of the Company held on 31 January 2011, the Shareholders authorized the purchase of up to 22,676,092 Shares. No shares have been bought back by the Company under the existing Mandate since approval of the existing Mandate up to the Latest Practicable Date. 3. INTERESTS OF SUBSTANTIAL SHAREHOLDERS As at the Latest Practicable Date, the interests of the substantial Shareholders of the Company (that is, persons whose direct and indirect interests in the Companys issued share capital are equal to or more than 5%) are as follows:-
Direct Interest
No. of Shares Directors Yong Kin Sen(1) Yong Poon Miew(2) Yong Koon Chin(2) Khoo Ho Tong C. Chandrasegar Tan Soo Kiat Substantial Shareholders Nam Lee Holdings Pte Ltd
Notes: (1)
Deemed Interest
No. of Shares %
Total Interest
No. of Shares %
1,139,250 358,500 90,000
0.50 0.16 0.04
132,419,303 132,413,303 132,413,303
58.39 58.39 58.39
133,558,553 132,771,803 132,503,303
58.89 58.55 58.43
132,413,303
58.39
132,413,303
58.39
Mr Yong Kin Sen is deemed to be interested in shares held by his spouse, and also in shares held by Nam Lee Holdings Pte Ltd of which he is a director and shareholder. Messrs Yong Poon Miew and Yong Koon Chin are deemed to be interested in shares held by Nam Lee Holdings Pte Ltd, of which they are directors and shareholders.
(2)
13
4.
DIRECTORS RECOMMENDATION Having fully considered the rationale, the benefit and the information relating to the proposed renewal of the Mandate, the Directors are of the opinion that the proposed renewal of the Mandate is in the interests of the Company. Accordingly, they recommend that Shareholders vote in favour of the Ordinary Resolution 13 in respect of the proposed renewal of the Mandate to be proposed at the 2012 AGM.
5.
ANNUAL GENERAL MEETING The 2012 AGM, notice of which is set out on pages 85 to 88 of the Annual Report, will be held at Orchid Country Club, 1 Orchid Club Road, Singapore 769162 on 31 January 2012 at 9.45 a.m. (or as soon thereafter following the conclusion or adjournment of the Extraordinary General Meeting of the Company to be held at 9.30 a.m. on the same day and at the same place) for the purpose of, inter alia, considering and, if thought fit, passing, with or without any modifications, Ordinary Resolution 13 on the renewal of the Mandate as set out in the Notice of AGM.
6.
DIRECTORS RESPONSIBILITY STATEMENT The Directors collectively and individually accept full responsibility for the accuracy of the information given in this Letter and confirm after making all reasonable enquiries, that to the best of their knowledge and belief, this Letter constitutes full and true disclosure of all material facts about the proposed renewal of the Mandate, the Company and its subsidiaries and the Directors are not aware of any facts the omission of which would make any statement in this Letter misleading. Where information in the Letter has been extracted from published or otherwise publicly available sources or obtained from a named source, the sole responsibility of the Directors has been to ensure that such information has been accurately and correctly extracted from those sources and/or reproduced in the Letter in its proper form and context.
7.
INSPECTION OF DOCUMENTS The following documents may be inspected at the registered office of the Company during normal business hours from the date hereof up to and including the date of the 2012 AGM:(a) (b) the Memorandum and Articles of Association of the Company; and the Annual Report of the Company for FY2011.
Yours faithfully
for and on behalf of the Board of Directors of Nam Lee Pressed Metal Industries Limited Yong Kin Sen Managing Director
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SCHEDULE DEFINITIONS
In this Letter, the following definitions apply throughout unless otherwise stated: ACRA Act or Companies Act : : The Accounting and Regulatory Authority of Singapore The Companies Act of Singapore, Chapter 50, as amended or modified from time to time Annual General Meeting The annual report of the Company for the financial year ended 30 September 2011 The Board of Directors of the Company The Central Depository (Pte) Limited Nam Lee Pressed Metal Industries Limited A person holding office as a director for the time being of the Company and/or its subsidiaries, as the case may be Earnings Per Share The financial year ended or ending 30 September for the Company The Company and its subsidiaries and Group Company shall mean any one of the companies in the Group The latest practicable date prior to the printing of this Letter, being 11 January 2012 This letter dated 16 January 2012 to the Shareholders The listing manual of the SGX-ST The general mandate to authorise the Directors to exercise all the powers of the Company to purchase or otherwise acquire its issued Shares as set out in paragraph 2 of this Letter A day on which the SGX-ST is open for trading in securities Has the meaning ascribed to it in paragraph 2.2(e) of this Letter The notice of AGM, set out on pages 85 to 88 of the Annual Report Has the meaning ascribed to it in paragraph 2.2(c) of this Letter Has the meaning ascribed to it in paragraph 2.2(c) of this Letter Ordinary resolution number 13 as set out in the Notice of AGM Singapore Exchange Securities Trading Limited Ordinary share(s) in the capital of the Company
AGM Annual Report
: :
Board CDP Company Director
: : : :
EPS FY or Financial Year Group
: : :
Latest Practicable Date
Letter Listing Manual Mandate
: : :
Market Day Maximum Price Notice of AGM Off-Market Purchase On-Market Purchase Ordinary Resolution 13 SGX-ST Share(s)
: : : : : : : :
15
Shareholder(s)
Registered holder(s) of Shares or in the case of depositors, depositors who have shares entered against their names in the Depository Register Securities Industry Council The Singapore Code on Take-overs and Mergers Singapore dollar The annual general meeting of the Company to be held on 31 January 2012, notice of which is set out on pages 85 to 88 of the Annual Report Percentage or per centum
SIC Takeover Code S$ or $ 2012 AGM
: : : :
% or per cent
The terms depositor, depository agent and Depository Register shall have the respective meanings ascribed to them in section 130A of the Companies Act. Words importing the singular, shall where applicable, include the plural and vice versa, and words importing the masculine gender shall, where applicable, include the feminine and neuter genders. Any reference to a time of day in this Letter shall be a reference to Singapore time. Any reference in this Letter to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defined under the Companies Act used in this Letter shall have the meaning assigned to it under the Companies Act. The total of figures listed in certain tables included in this Letter may not be the same as the arithmetic sum of the figures. Any such discrepancies are due to rounding.
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NAM LEE PRESSED METAL INDUSTRIES LIMITED

(Company Registration No. 197500362M)

NAM LEE PRESSED METAL INDUSTRIES LIMITED

Annual Report 2011

Strengthening Our Market Leadership

We offer no compromises on quality

Experience, Know-How & Latest Technology

Nam Lee Pressed Metal Industries Limited

INTEGRITY QUALITY CUSTOMER SATISFACTION INNOVATION

Annual Report 2011

Nam Lee Pressed Metal Industries Limited

its external environments, the Group expects to continue to be profitable.

Annual Report 2011

MR Yong Koon Chin

MR Yong Kin Sen

MR Yong Poon Miew

Nam Lee Pressed Metal Industries Limited

MR Tan Soo Kiat

Annual Report 2011

Prot Before Tax ($m)

Nam Lee Pressed Metal Industries Limited

Turnover by Activities ($000)

6,987 5,849 3,256

13,602 5,996 202

9,283 2,711 146

Prot Before Tax by Activities ($000)

Aluminium Mild Steel Stainless Steel Others

Nam Lee Pressed Metal Industries Limited

Annual Report 2011

Nam Lee Pressed Metal Industries Limited

(II) (III) (IV) (V) (VI) (VII)

Annual Report 2011

(II) (III) (IV)

Nam Lee Pressed Metal Industries Limited

Annual Report 2011

Nam Lee Pressed Metal Industries Limited

Nam Lee Industries Pte Ltd

Annual Report 2011

Nam Lee Pressed Metal Industries Limited

Annual Report 2011

Nam Lee Pressed Metal Industries Limited

Report of the Directors

Annual Report 2011

Report of the Directors

Options granted during financial year

Report of the Directors

On behalf of the Board,

Yong Kin Sen Director

Yong Poon Miew Director

Singapore 3 January 2012

Annual Report 2011

On behalf of the Board,

Yong Kin Sen Director

Yong Poon Miew Director

Singapore 3 January 2012

Nam Lee Pressed Metal Industries Limited

Independent Auditors Report

Annual Report 2011

Consolidated Income Statement

2011 $000 167,294 (135,692) 31,602 (2,177) (13,200) (2,922)

(217) 227 13,321

9,913 235 10,148

Earnings per share (in cents) - Basic - Diluted