KODA LTD 2010 Annual Report

A N N UA L R EPO R T 2010
KODA LTD ANNUAL REPORT 2010
Redening Lifestyle
Our Vision
To be a reputable, protable and signicant global original manufacturer of furniture.
We must be the most effective value-formoney manufacturer. We must remain design-relevant. We must invest in Research & Development. We must ensure that our products remain affordable and accessible. We must ensure we have the right people with the right skills. We must deliver to our shareholders value and investment comfort.
Our Mission
content
01 02 04 05 08 10 12 20 21 36 about koda board of directors management prole results at glance global presence chairmans statement managing directors statement corporate structure report on corporate governance nancial content
KODA LTD ANNUAL REPORT FY 2010
1.
about
From our humble beginnings in 1972, Koda has turned into a leading Original Design Manufacturer (ODM) and could possibly be the largest dining room furniture exporter in SouthEast Asia. Led by a management team with a combined experience of more than 100 years, Koda has made significant investments in Vietnam, Malaysia and China. Koda has been recognised by Forbes Asia under the category of Best Under A Billion Company in 2006 and profiled by CSIL Milano in its Top World Furniture Manufacturers Report 2006 as one of the top 200 major furniture manufacturers worldwide. Luxury defined, Koda distinguishes itself by its aesthetically pleasing design mastery, technically feasible concepts and practically oriented craftsmanship with its patience of not seeing R&D micro-management a fuss and design trifles a bother we are just exacting about every single detail of our designs. While exuding design sophistication and elegance, we have also been instilling a sense of responsibility to balance aesthetics with the environment by infusing GREEN in the materials we use; in the process we engage; and in the products we develop. Kodas designs are intensive and our product range is extensive whether in occasional pieces or collection themes we design and produce furniture for the dining room, living room, bedroom and outdoor/garden furniture.
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board of directors
01 02 03 04
01. Mr. Koh Teng Kwee (TK)

Founder and Non-executive Chairman
Singapore (IFFS) and the Singapore Furniture Industry Park in Kunshan, China. He was also appointed the Chairman of IFFS Pte Ltd and the International Furniture Centre Steering Committee, with the objectives of growing the IFFS as a world class trade show and positioning Singapore as a premier furniture hub for the global market. James also spearheaded the 3-year Local Enterprise Association Development program, a multi-agency program that aims to enhance competitiveness of various industries. In July 2009, James was invited to be a member of the Economic Strategies Committee, an initiative by the Ministry of Finance to develop strategies for Singapore to seize growth opportunities as a global city in order to achieve sustained and inclusive growth. James was appointed to the Board in 1980 and holds a Diploma in Management Studies from the Singapore Institute of Management. 03. Mr. Ernie Koh Jyh Eng (Ernie)
Executive Director, Sales & Marketing
Groups marketing strategies for new market penetration and devising of pricing plans. Ernie is also instrumental in identifying the latest design trends and dealing with changing consumer preferences. Ernie has been with the Group for more than 16 years. During his tenure, he has rapidly expanded Kodas market share, reaching out to more than 200 customers across more than 50 countries throughout the globe. Ernie was appointed to the Board in 2001 and holds a BSc. in Marketing from the University of Oregon (USA) and an MBA in International Marketing from the San Francisco State University (USA). He was last re-elected to the Board at the 2008 AGM. 04. Mdm. Koh Shwu Lee (Shwu Lee)
Executive Director, Finance & Administration
T.K., founder of Koda, nurtured the company during its formative years. A visionary with more than 45 years of experience in the furniture industry, T.K. has been providing the Group with valuable insight and advising the Group on its growth strategies and design initiatives. He is instrumental in advising us on design trends and the product development process. T.K. was appointed to the Board in 1980. He is our Non-Executive Chairman. He was a certified craftsman from the City & Guild Advanced Craft Institute (UK) and a Senior Craft Teacher at the Adult Education Board before he founded the company. T.K. was last re-elected to the Board at the 2009 Annual General Meeting (AGM). 02. Mr. James Koh Jyh Gang (James)
Deputy Chairman and Managing Director
James spearheads the growth strategies for the Groups operations. With significant experience garnered through the initiation of various industry wide projects in Singapore, Vietnam and China, James has been able to successfully formulate our business expansion strategies, strengthen supply chain management, broach new design concepts and manage our international marketing investments. James served as the President of the Singapore Furniture Industries Council (SFIC) for two terms. During his illustrious tenures James initiated several industry wide projects, most notably the International Furniture Fair
Ernie manages the Groups Sales and Marketing functions. He has significant experience in international marketing and corporate branding. He is at the helm of the Groups marketing initiatives, particularly in customer relationship management, client base diversification, trade fairs participation, new product launches and marketing talent recruitment. More specifically, he is in charge of our furniture fairs management, responsible for formulating the
Shwu Lee manages the Groups Management Information Systems (MIS), administration, finance, logistics and human resource functions. She is at the forefront of the Groups administration and plays an integral part in the daily operations that forms the backbone of the organization. In particular, she is responsible for the Groups capital investment evaluation, credit control management, cash flow planning, budgetary control and documentary credit review. Shwu Lee has been with the Group for more than 20 years. She has recently been tasked
3.
board of directors
05 06 07
to oversee our Malaysia operations where she reviews management accounts and reports, analyses variance reports, manages credit risks, initiates internal control procedures, oversees expansion plans and formulates human resource policies. Shwu Lee was appointed to the Board in 2001 and holds a BA from the National University of Singapore. She was last re-elected to the Board in the 2008 AGM.
Christopher holds a BSc. in Economics (1st Class) from the University College of Wales and an MBA from the London Business School. He is a member of the Institute of Chartered Accountants of Scotland, a Master Stockbroker of the Securities, Investment and Derivatives Association of Australia and a Fellow of the Hong Kong Society of Accountants, the Singapore Institute of Directors and the Australian Institute of Directors. Christopher was last re-elected to the Board at the 2009 AGM.
property development company listed on the Singapore Exchange. He serves as the Treasurer & Finance Committee Chairman of Care Corner Singapore entities and Advisor of Neighbour Ring Community Services which provide a wide scope of community services. A Certified Public Accountant with the Institute of Certified Public Accountants of Singapore, Wah Tiong holds a Bachelor of Accountancy and a Graduate Diploma in Social Work from the National University of Singapore. He was last re-elected to the Board at the 2009 AGM.
05. Mr. Christopher Chong Meng Tak (Christopher)

Independent Director
06. Mr. Chan Wah Tiong (Wah Tiong)

07. Mr. Sim Cheng Huat (Sim)

Christopher, is our lead Independent Director, Chairman of the Audit Committee and a member of our Nominating and Remuneration Committee. He is a partner of ACH Investments Pte Ltd, a corporate advisory firm, and brings to Koda significant corporate governance and financial market experience. Christopher is an Independent Director of other companies listed in Australia and Singapore. He is also an advisor to several regional families, international funds and private corporations. Christopher, a multiaward winning analyst, was the CEO of HSBC Securities (Singapore) Pte Ltd (formerly known as HSBC James Capel Securities Pte Ltd), Executive Director of Kay Hian Holdings (formerly known as Kay Hian James Capel Ltd) and senior advisor to the NYSE-listed Indonesia Fund.
Wah Tiong is an Independent Director of Koda, Chairman of the Groups Nominating and Remuneration Committee and member of the Audit Committee. He is the Chief Executive Officer of All Saints Home, a non-profit organisation that provides residential nursing care. He brings extensive and valuable financial and accounting experience to the Group, having served as an external auditor, Financial Analyst, an Accountant, Finance Director and Financial Controller of several companies (local and multinational) in manufacturing, trading, construction industries and non-profit sectors. Wah Tiong was appointed the Groups Independent Director in 2001. He is also an Independent Director of Hiap Hoe Limited, a
Sim was appointed as Independent Director of Koda, a member of the Audit Committee and Nominating and Remuneration Committee in 2008. He has extensive experience in international trade, market development and banking experience, having served as Commercial Secretary in the Singapore Embassy in New York, Alternate Executive Director of Asian Development Bank (Manila, Philippines), senior managerial positions at International Enterprise (IE) Singapore and other private enterprises. He is currently a Director of Broadbase Technologies Pte Ltd, and as an Advisor to Investment & Promotion Board of the Riau Islands Province. Sim holds a Bachelor of Arts degree from the New York University . He was appointed to the Board in March 2008.
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management prole
01 02
CORPORATE OFFICE (SINGAPORE)

01. Mr. Teh Wing Kwan (Teh)
Chief Financial Officer
VIETNAM OPERATIONS
02. Mr. Eric Ong Kah Meng (Eric)
General Director of Rossano Design Co., Ltd
Teh specializes in accounting, financial management, tax planning, and merger & acquisition evaluation. More specifically, he oversees the Groups financial functions relating to corporate finance, financial reporting, regional taxation and restructuring exercises for the Group. He manages investor relations, deals with the Audit Committee of Koda and reviews our Groups performance, financial position and funding structure. Teh has had significant experience, having been a professional in corporate finance management for a group of companies engaged in manufacturing and as a Group Internal Auditor for a conglomerate listed on Bursa Malaysia (formerly known as Kuala Lumpur Stock Exchange). He also held senior positions in several Public Accountant firms. Teh is a Fellow of the Association of Chartered Certified Accountants (United Kingdom), a Certified Public Accountant of the Institute of Certified Public Accountants of Singapore, a Full Member of the Singapore Institute of Directors and a Chartered Accountant of the Malaysian Institute of Accountants. Teh is also the Director of the Groups subsidiaries in Malaysia.
Eric, one of the founders of Rossano, has more than 20 years regional experience in the furniture industry, specializing in the operation and management of furniture retail business in Singapore, Malaysia and Vietnam. Eric has been in Vietnam since 1992 and has since successfully developed and launched the Rossano brand. Rossano is a multiaward winning brand in Vietnam notable awards were the prestigious 2006 Golden Dragon Award, recognizing Rossano as one of the best foreigninvested enterprises as granted by Ministry of Industry Vietnam, Ministry of Construction Vietnam and Saigon Marketing Magazines. Eric received a commendation from the Ho Chi Minh Export Processing and Industrial Zone Authority in 2004 for his contribution to the economic development of Ho Chi Minh City. Eric is responsible for factory operations and retail business development of Rossano.
5.
results at a glance
CONSOLIDATED PROFIT AND LOSS STATEMENTS
YEAR ENDED 30 JUNE
Revenue
Up by US$6.5 million due mainly to overall market recovery in the US and UK but growth was somehow affected by our realignment of production facilities in Vietnam which caused disruptions.
Gross profit
2010 US$000 Revenue Cost of sales Gross profit Other operating income Selling and distribution costs Administrative expenses Other operating expenses Finance costs Profit (Loss) before income tax Income tax expense Profit (Loss) after income tax Attributable to: Equity holders of the parent Minority interest 271 24 295 44,265 (32,864) 11,401 606 (4,201) (7,206) (329) (92) 179 116 295
2009 US$000 37,775 (27,887) 9,888 934 (3,772) (6,958) (94) (141) (143) (133) (276)
Change % 17.2 17.8 15.3 (35.1) 11.4 3.6 250.0 (34.8) NA NA NA
Up by US$1.5 million on the back of higher revenues but we achieved slightly lower gross margin, which fell by 0.4 percentage point to 25.8% as a result of higher factories depreciation, materials prices and wages.
Other operating income
Fell by US$0.3 million there was a capital gain of US$0.4 million on disposal of fixed assets in FY2009.
Selling and distribution costs
Increased by US$0.4 million due mainly to higher logistic costs (road transport costs and containers handling fees) and higher retail showrooms rental.
Administrative expenses
(297) 21 (276)
NA 14.3 NA
Increased by US$0.2 million due mainly to higher office depreciation and bank charges. The weaker US$ also meant higher S$ dollar and RM-denominated operating expenses.
Other operating expenses
Increased by US$0.2 million due mainly to provisions for slow-moving and obsolete stocks.
Income tax expense
Net tax credit due to reversal of overprovision for income tax and reduction in deferred tax liabilities.
Equity holders of the parent
A turnaround reported a full year profit of US$0.27 million compared to a net operating of US$0.7 million last year (excluding capital gain of US$0.4 million in FY2009)
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results at a glance
CONSOLIDATED BALANCE SHEETS (ASSETS)
AS AT JUNE 30
CURRENT ASSETS
Cash and bank balances 2010 US$000 ASSETS Current assets Cash and bank balances Trade receivables Other receivables and prepayments Inventories Total current assets Inventories 2009 US$000
Remained relatively constant at US$3.4 million. Working capital requirements were mainly financed by borrowings.
Trade receivables
Fell by US$0.5 million on better collection cycles turnover period was just below one month.
3,410 3,460 3,027 12,014 21,911
3,488 3,964 3,100 9,458 20,010
Increased by US$2.6 million a strategical move to build raw materials buffer stock and semi-finished components ahead of confirmed orders to improve production efficiency in meeting increasingly shorter lead time. NON-CURRENT ASSETS
Property, plant and equipment
Non-current assets Property, plant and equipment Intangible asset Available-for-sale investment and other assets Goodwill on consolidation Total non-current assets Total assets
14,699 354 857 728 16,638 38,549
13,272 373 769 728 15,142 35,152
Increased by US$1.4 million due mainly to new machines and progress payments for new facilities in Vietnam.
Intangible assets
Our investment in branding for outdoor & garden furniture to be amortized over its economic useful life.
7.
results at a glance
CONSOLIDATED BALANCE SHEETS (LIABILITIES)
AS AT JUNE 30
CURRENT LIABILITIES
Bank overdraft and bills payable 2010 US$000 LIABILITIES AND EQUITY Current liabilities Bank overdraft and bills payable Trade payables Other payables and accruals Income tax payable Finance lease obligations: current portion Long-term bank loans: current portion Total current liabilities Non-current liabilities Finance lease obligations Long-term bank loans Total non-current liabilities Capital and reserves Issued capital Capital reserves Currency translation reserve Retained earnings Equity attributable to shareholders Minority interests Total equity 2009 US$000
Increased by US$3.3 million due mainly to higher working capital loans taken up to finance inventories investment.
Trade payables
Increased by US$0.2 million rose slower compared to increase in purchases (on the back of higher revenues) as a result of us paying our suppliers faster.
Other payables and accruals
3,714 3,614 2,439 86 212 10,065
406 3,446 2,126 257 250 380 6,865
Increased by US$0.3 million due mainly higher customers deposits and accrued workers wages (higher headcount for Malaysia operations and higher minimum wages for Vietnam operations).
Income tax payable
657 214 871
499 95 594
Fell by US$0.3 million due mainly to overprovision for tax in previous financial years and tax payments during the year.
Long-term payable (finance lease obligations and long-term bank loans)
4,040 2,206 560 19,990 26,796 817 27,613 38,549
4,040 2,193 298 20,197 26,728 965 27,693 35,152
Fell by US$0.2 million due to continuous repayments of loans principle. CAPITAL & RESERVES
Total Liabilities and Equity Equity attributable to shareholders
Increased by US$0.07 million after accounting for current year earnings, higher currency translation reserve and last-year dividends payments.
Minority interests
Representing the 30% share of Rossanos net asset by the minority shareholder fell by US$0.15 million after accounting current year earnings (which was partially affected by the weakened Vietnamese Dong) and dividends paid to the minority shareholder.
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global presence
9.
COUNTRIES WE SELL TO:

Europe
Belgium Croatia Cyprus Denmark France Georgia Germany Greece Ireland Italy Latvia Malta Norway Poland Portugal Romania Russia Federation Spain Sweden Switzerland The Netherlands Ukraine United Kingdom
Americas
Canada Costa Rica Mexico Panama U.S.A
South / Latin America

Argentina Puerto Rico
Middle East
Bahrain Israel Kuwait Lebanon Omam Saudi Arabia United Arab Emirates
Others
Algeria Morocco South Africa
Pacic
Australia New Zealand
Asia
Bangladesh Cambodia China Hong Kong Japan Malaysia Pakistan Singapore South Korea Taiwan Thailand The Philippines Vietnam
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chairmans statement
11.
chairmans statement
DEAR SHAREHOLDERS,
THE RESULT IS THAT OUR COMPANY IS NOW BACK TO PROFITS EVEN THOUGH IT WAS NOT AS MUCH AS I WANTED TO BUT I AM QUITE HAPPY WITH THE OVERALL TRADE VOLUME WE DID.
Koh Teng Kwee Non-Executive Chairman
Another year has past, so quickly for some and not so for others. Those who worked hard find that time flies. I think my children and the management have worked hard. I have been pushing them hard also. The result is that our company is now back to profits even though it was not as much as I wanted to but I am quite happy with the overall trade volume we did. The world economy looks like it is getting better, but we cannot be too sure because sometimes I read good news and sometimes I also get to know quite a number of not-so-steady stats. The US dollar is also weak and we need to study its market impact.
I am already 77 when I write this report but I still travel a lot to stay healthy, I take vitamins and I watch my diet everyday. I go to Vietnam, Malaysia, China and any other places where I see opportunities. When I walked around our factories, I asked a lot of questions I like to ask questions and have meetings so that I can understand more about our operations about stocks, products, production, sourcing and sometimes, office administration also. In general, our factories and containers loading look busier than last year. We can and must do more, so that we can continue to declare and pay out dividends for all our faithful shareholders like you. Thank you for your support and stay with us through good and bad times. Non-Executive Chairman Koh Teng Kwee
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managing directors statement
FOR WHATEVER STRATEGIES WE HAVE IN MIND BE IT ORGANIC OR SYNERGISTIC M&A WE ARE GATHERING PACE RATHER THAN LOSING STEAM. TO WORK THROUGH THESE STRATEGIES, WE ARE COMPELLED TO REMAIN FOCUSED INWARDLY AND REGIONALLY.
James Koh Jyh Gang Deputy Chairman & Managing Director
Dear Stakeholders Much has been talked about the worlds most disruptive recession, the aftermath of the crisis, gloomy prediction of the spillover and dashing of stability hopes. Much has also been talked about the fiscal stimuli around the globe, redistribution of world resources, revival of depressed investments and returning of investment crews. Having said that, we dont deserve bottles of champagne, I know. I cant write much about a howling success in our recovery. Even so, I do feel a little bucked up by our stillpretty-helpful revenues growth and then see that what was previously unprofitable, is profitable.
Overview Experiencing the existential financial crisis and facing somehow a freakish revival, this report is still far from stellar. In FY2010, revenues to our key markets were generally higher and we recovered from the depressed operating loss position last year. On the commercial front, our massive new models expansion continued apace as new designs were desperately needed during these desperate days to sustain margins. For the commercial runs, we have re-engineered our production lines, acquired new machines, geared up workers training for improved output efficiency in supporting these commercial decisions.
13.

We had a gripe nevertheless, on the flipside of it. Marketing staff jostling at the till and scrambling to have their orders delivered by the factories with us having a need, almost every week if not every day, to mollify some of the long-awaited customers. The orders backlog somehow caused an outcry at Production due to increased designs complexity. Production yelled at R&D for specs confirmation while R&D was eagerly trailing Engineering for new products costing. After all, it bounced Marketing to negotiate for better pricing. This transitional learning curve was rather annoying and disruptive but leastwise manageable. The good news, however, is that most of our clients were finally happy to have their LC extended for the good products. There were however good commercial reasons behind the flutter. I can afford the resultant short-term disruptions at the factories but I cannot afford to see my products development slowing down or dying off into market irrelevance at the expense of our long-term growth. Economists may agree but opportunists may oppose the theory of swapping short-term pain for long-term gain, which to me makes commercial sense even though I am neither an economist nor opportunist but I agree with consensus! This partially explained why our capacity utilization during 4Q10 fell below the optimal level we would have liked, due to the bottleneck we temporarily faced but explained why our overall margins did not fall as much as one would have expected, due to the new designs we successfully launched. Our major trading currency also our functional currency has been in US$. The weakened US$, to a larger extent, meant higher S$-denominated head office expenses which caused our administrative expenses to rise but to a lesser extent, meant lower cost of funds which have helped us to save on some interest expense. During the year, we borrowed more in US$ and the lower financing costs allowed us to better leverage on our monies for higher inventories investment and capital expenditure budgets with our low gearing position of just below 0.2 times. On a positive note, we have cleared most of our backlog for our clients whom we used to temper and placate. They continue snapping up orders for the new designs and we are now backed by a strong orders book of about US$13 million, a portion of which is also backed by cash deposits and letters of credit. This proves that our role as one of the principal suppliers for our key accounts has not disappeared despite the fact that the average orders size fell, reflecting that the markets may not be as rich as before but it is not wimpy either when one has good products to offer and price them right. Encouragingly, we are also running at levels above where we were around this time last year.
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FINANCIAL PERFORMANCE
Summarized profit and loss account For the year ended June 30
US$000 Revenue Gross profit Profit (loss) before income tax Income tax credit (expense) current year Net profit (loss) after current year tax provision Income tax prior year Net profit (loss) after tax Attributable to: Equity holders of the parent Minority interests
2010 44,265 11,401 179 116 295 295
2009 37,775 9,888 (143) (133) (276) (276)
2008 54,944 16,014 5,079 (415) 4,664 (365) 4,299
2007 60,063 17,409 7,980 (225) 7,755 7,755
2006 48,117 13,038 4,834 (103) 4,731 4,731
271 24 295
(297) 21 (276) (0.22) (0.32)
4,200 99 4,299 3.1 4.7
7,232 523 7,755 5.4 8.3
4,716 15 4,731 3.5 5.4
Earnings (Loss) per share (US cents)* Earnings (Loss) Earnings per share (S cents)* Note:
0.20 0.28
* EPS for FY2006 has been re-computed based on the enlarged number of shares of 133,690,000 (inclusive of 1-for-5 bonus issue) ** EPS (S cents) have been computed based on average US$:S$ exchange rates
Revenues and Profits You have read that our revenues were higher despite the transitional production upsets we had as a result of our intense desire for a successful new designs launch during the year. You have further learned that our revenues were however lower than what we would have liked given the experient learning curve. To a certain extent, we have also seen the impact of exchange rates on our operating expenses and finance costs whilst not pushing aside other commercial factors which have caused our selling and administrative expenses to rise. There was also a capital gain of US$0.4 million in FY2009 which had helped to reduce our net loss position to US$0.3 million last year and comparably, other income fell sharply during the year under review. Thus, our turnaround in FY2010 with a net profit of US$0.3 million would have been more credible excluding the non-recurring capital gain. Expectation on market condition has brightened somewhat. Worldwide, except EU and Canada, we clinched more deals with us recording US$44.3 million in revenues, a year-on-year revenues growth of 17.2% or US$6.5 million. Some of our winning designs from the intensified R&D efforts managed to draw in clients enquiries and secure better-priced orders. Notably, more than 60% of our revenues were derived from our key markets amidst lingering uncertainty in the US and UK/EU while seeing sustainable revenues coming from the emerging-affluent segments in Asia Pacific and United Arab Emirates, with our rare appearance in North Africa as well. Our local retail and franchise sales in Vietnam were also sustainably strong but the translated dollar-sales was lower as a result of the weakened Vietnamese Dong.
15.

17.8% 9.9% 43.7% 4.4% 22.3% 1.9% 2.1% 8.2% 25.8% 16.7%
Year ended 30 June 2010 US$000 7,871 4,393 19,362 1,963 9,850 826 44,265 30 June 2009 US$000 6,275 4,698 13,148 3,109 9,754 791 37,775
Change 1,596 (305) 6,214 (1,146) 96 35 6,490
12.4%
United Kingdom
34.8%
Europe America Canada Asia-Pacific Others Total Revenues
2010
United Kingdom Europe North America Canada Asia Pacic Others
2009
But then, the facilities realignment process during 4Q10 temporarily flapped departmental flows and clipped productivity in the newly expanded office and buildings, which also at the same time started to depreciate. While our revenues for 4Q10 were 27.9% higher than 4Q09, it would have been higher without this transitional learning curve which perplexed us a little (but at least it was not in a mess). While our R&D costs for new designs were higher and the learning curve was irritating, we managed to sell more and at better prices, compensating the costs pressure we had and minimized our gross margin fall. These intensified R&D efforts are also not without its blow. Get it right, we will be able to see sustainable margins (25% 27%, if not higher), maintain supply-chain credibility and enlarge market share at least we did. Get it wrong, we will see more of those supposed-to-be in things become load of cack. During the year, the get-it-right partially explained why our gross margin was relatively constant at about 26% with revenues to the US and UK growing as much as 40% when these markets sort of recovered. The get-it-wrong, however has resulted in us making a provision for slow-moving stocks of US$0.2 million under other operating expenses on the ground of accounting prudence. Selling and distribution costs increased by 11.4% or US$0.4 million to US$4.2 million due largely to higher logistic costs and retail-related expenses. Specifically that: the number of containers trucked out from our factories to ports was higher as a result of higher revenues. The road transport costs were also generally higher for each container, which were further burdened by higher unit handling fees for containers loading. As a result, logistic costs rose;
Gross profit grew by US$1.5 million to US$11.4 million given our higher revenues base, but at a pace just slightly slower than our revenues growth due largely to the moderately higher raw material prices, inflationary workers wages and new facilities depreciation. While our average selling prices were somewhat 5% 7% higher, we are still catching up with the costs escalation and time lag to pass on such costs continues to exist. At the same time, we continued to spend quite a fistful of dollars relative to our size in new designs which partially caused our cost of sales to rise further. We did debate as to whether we should cut back our R&D investments by an average 20% 30% to save on fixed costs when the market sentiment itself was rather unsettled. At long last, we were inclined to believe that if we dont bet on price-slashing strategy for our products, we would have to count on smart and whipping lines of our products. We would rather latch on commercial risks for good margins potential than be blasted for hanging on to the existing market share for too long and watching its slow decline into insignificance. Consequently, the number of new designs launched during the international furniture fairs was substantially higher and realignment of production facilities in Vietnam was concurrently required to put these new designs into commercial production run.
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Rentals for our retail showrooms in Vietnam were higher. Confidence has improved and momentum has increased in the real estate in Ho Chi Minh City with commercial rental catching up with this market sentiment. Rossano-Vietnam gave its grudging acceptance of higher rent per square meter for its showrooms which are strategically located but they are not sumptuously styled and extravagantly decorated in the busy districts. trembling when we signed off our sales contracts but regretfully, a small fraction of our debts was still required to be written off. Bank charges were, as a result, much higher; the Vietnamese Dong has weakened against the US$ which meant lower office and operating expenses in Vietnam. About the same time, the US$ has also weakened against Ringgit Malaysia (RM) and the S$ which meant more expensive running costs for our Malaysia factory and head office expenses at home. Our RM and S$-denominated expenses were however proportionately higher than that of the Dong-denominated expenses and the resultant gap of which caused US$-denominated administrative expenses to rise.
Administrative expense rose a moderate 3.6% or US$0.2 million to US$7.2 million due largely to higher bank charges and higher translated office expenses in US$. Specifically that: we strongly believe that it will be more sensible to align our revenues growth with broader economic growth. It is thus more sensible for us to look at credit quality rather than credit growth particularly when the economic conditions are fragile and spending sentiment is still flimsy. We scrutinized clients credit background, insured open-accounts debts and monitored collection cycles at least our hands were not
Considering all these, we recovered losses from previous year. We made a net profit of US$0.3 million this year compared to a net operating loss of US$0.7 million (capital gain not counted) last year.
FINANCIAL POSITION
Summarized balance sheet As at June 30
US$000 Property, plant and equipment Other investments and assets Goodwill on consolidation Total non-current assets Current assets Current liabilities Net current assets (liabilities) Total non-current liabilities Minority interest Equity attributable to shareholders Net assets value per share (US cents) Net assets value per share (S cents)*
2010 14,699 1,211 728 16,638 21,911 (10,065) 11,846 (871) (817) 26,796 20.7 29.0
2009 13,272 1,142 728 15,142 20,010 (6,865) 13,145 (594) (965) 26,728 20.0 29.0
2008 13,528 1,228 728 15,484 22,249 (7,086) 15,163 (1,452) (1,109) 28,086 21.0 28.6
2007 10,764 1,121 728 12,613 23,189 (7,849) 15,340 (2,171) (1,120) 24,662 18.4 25.0
2006 10,190 1,459 728 12,377 16,740 (7,562) 9,178 (3,386) (563) 17,606 13.2 18.0
* Net Asset Value per share have been computed based on the US$:S$ closing rates
17.

While I was analyzing this section, my head flopped to one side to wedge my Nokia talking about various key ratios and my eyes fixated on the various points of assets and liabilities. I tumbled through the numbers trying to flesh out more details and I started to draw arrows flying around pointing assets to liabilities, cash to borrowings, borrowings back to working capital assets it was like crayon drawings at school but I see myself doing this more often nowadays. We are altogether sure. Many businesses struggled in sluggish business condition because of overzealous expansion plans, and also because of overstretched financial position. We know we cant blur and blear ourselves in this aspect we cant afford to and the safer thing for us to do when it comes to money-spending (or any wallet-wilting things in fact) is to drill this so-called prudent hesitation every time we have a major capital expenditure. Sometimes it could be a baffling problem which may hinder growth initiatives. Much as before, our financial position continued to be predictably prudent and slowly progressed. Overall net assets position has almost an invisible change as at 30 June 2010 but just fine, it seems. Assets and Liabilities Total assets investment increased by US$3.4 million to US$38.6 million. Reflecting more of a rebound in our orders books, there was an additional US$2.6 million in inventories investment. Completing our new facilities in Vietnam, there was a total US$1.4 million in progress payments and new machines. Emphasizing on credit control, there was an improvement in our collection cycles with our trade receivables falling by US$0.5 million. Total liabilities increased by US$3.5 million to US$10.9 million, almost in line with the increase in our total assets. Leveraging on lower US$ funding costs, we borrowed quite a fair bit. We drew down additional US$3.3 million in trade finance facilities and relied on a slightly higher suppliers credit of US$0.2 million to finance our purchases on the back of higher revenues and our strategical buffer stocks plans. The total assets position appeared obviously adequate in covering that of the total liabilities with a reasonably low gearing level for our funding structure. That is to say, for every US$1 in debts, we had a financial backing of about US$3.52 worth of assets; and for every US$1 in assets, we borrowed just US$0.18 cents. Shareholders Equity You had entrusted funds of US$26.8 million with us covering your initial capital, profits we accumulated for you over the years after the total cash dividends you received and other non-distributable reserves which act as a buffer for possible assets value fluctuation and currency translation movements. Quite disappointing, I know, the Return on Equity of just 1% was probably slightly better than your US$ or S$ fixed deposits rates here. This year, we have also planned to return a small 1.8% of your entrusted funds by proposing a final dividend of half-a-Singapore cent which works out to be some 2.5% dividend yield based on our current share price. Generally, the slowly progressed shareholders equity remains fundamentally safe.
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CASH FLOWS
Summarized cash flows statement For the year ended June 30
US$000 Operating cash flows before working capital changes Net cash (used in) from operating activities Net cash used in investing activities Net cash from (used in) financing activities Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year
2010 1,474 (1,045) (1,831) 2,798 (78) 3,488 3,410
2009 329 (420) (505) (692) (1,617) 5,105 3,488
2008 6,078 3,120 (3,282) (570) (732) 5,837 5,105
2007 9,056 5,752 (528) (1,859) 3,365 2,472 5,837
2006 6,232 8,162 (3,461) (2,923) 1,778 694 2,472
Operating cash flows before working capital changes or in other words, also means cash profits before income tax increased sharply to US$1.5 million as a result of our return-to-profit position, much higher provisions for depreciation, bad debts and slow-moving stocks which are non-cash related expenses and the need to account for net effects on currency translation difference for our group operations. During the year, we invested more in stocks, paid cash dividends (your FY2009 dividends and cash distribution to minority shareholders in Rossano) and income tax as usual but were partly relieved with faster collection cycles and longer suppliers credit term. As a result we used up US$1.0 million in net cash for operating activities. Net cash used in investing activities increased by US$1.8 million given our expansion plans in Vietnam. There was also additional net cash from financing activities of US$2.8 million as the low US$ funding costs prompted us to borrow more for our working capital and capital expenditure investments. To sum up, slightly more than one-third of our current year cash flows requirement was funded by internally-generated funds and the remaining balance was matched by the corresponding increase in borrowings. Considering all these, our cash and cash equivalents fell slightly by US$0.08 million to US$3.4 million.
Investment ratios and other key financial indicators

Table 1
Year ended/ As at June 30 Gross profit margin (%) Net profit margin (%) Inventory turnover: average (days) Trade receivable turnover (days) Return on equity (%) Quick ratio (times) Current ratio (times) Gearing (times) Interest cover (times)
2010 25.8 0.6 133 29 1.0 1.0 2.2 0.2 2.9
2009 26.2 124 38 1.5 2.9 0.1
2008 29.1 7.6 80 28 15.0 1.9 3.1 0.1 28.0
2007 29.0 12.0 70 32 29.3 1.9 3.0 0.1 32.4
2006 27.1 9.8 54 37 26.8 1.5 2.2 0.3 15.4
19.

When you have your calculator in front of you for these, I guess your dominant mood was much of the perceptibly boring as reflected in our average share price, which continues to lag behind our NAV per share of S 29 cents. Check Table 1 please. Earnings per share sharp improvement compared to the loss per share position last year but not extremely notable yet. For every share you own, probably still far from you would expect, we earn you US$0.20 cents (S$0.28 cents). Net Asset Value per share remained relatively constant. For every share you own, it was backed by US 20.1 cents (S 28.1 cents) worth of net asset as at 30 June 2010. Dividend per share the proposed final dividend of S 0.5 cents, if you approve, would remain the same as last year. After all, these countries are still really serious volume market, where more than 70% of our US/UK/EU sales still happen and there are always good reasons to be cautious as these markets carry much greater weight than just the short-term volume hopes for us. While scratching my head in thinking of how to stabilize our supply to these markets, we are also thinking of how to enlarge our market segments and diversify our supply chain. The PRC and Indonesia in these aspects are a current big talking point in our recent strategy meetings. Apart from these market strategies, effective products strategies are as crucial. We are certainly doing more than just tweaking and toying the modern paint-and-plain designs where we would have to offer style, sense and value as well considering economic conditions being far from conducive to sumptuous living. Value-buy would probably become less tricky to sell. The entire process management on these renewed product strategies as you have read in the previous sections did stump us for a while, but there were not nasty problems to resolve. Having invested in innovative designs for our current modern contemporary products range, we are also finding ways to enlarge types of products we could offer the modern classical or Victorian-style furniture are something appealing to me and I see their market potential. Talking about this, we are looking into available sources, again from the PRC and Indonesia. For whatever strategies we have in mind be it organic or synergistic M&A we are gathering pace rather than losing steam. To work through these strategies, we are compelled to remain focused inwardly and regionally. Thank you the management, shareholders, customers, suppliers, bankers and business associates your continual support is at all times important.
Going forward We are now mingled in various jumbled macro-economies factors which have been confusing enough for us to chart realistic growth strategies. Generally, I know the economic conditions look fragile but it is not slipping back. I think the market recovery is not completely behind us but it appears volatile, I also see that the economic headwinds facing our supply-chain is erratic although many seem to be moderating. Then again, I must say our competitive advantage did help us to drive our trade volume higher and reversed us from losses despite these wandering market conditions while preparing us for a sustainable upturn trend. Whilst we are prepared to foster a return to optimum factories utilization rates, preferably 80% 90% and work towards the market potential in a context of margins stability, preferably 25% 27%, we cannot possibly be ignorant of or choose to ignore what is happening at the moment in the main countries which we have been selling to. Specifically, I know that the impact of Wall Street money-printing machine appears to be decelerating, unemployment data remains stubbornly high, fear of renewed weakness in the housing industry continues to exist, consumers confidence could fall again people are still thinking of what they really need rather than what they seriously like. These not-too-good perceptions stem from the terrible things which we have seen as to how the great economic powers could also cause troubles.
James Koh Jyh Gang Managing Director
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corporate structure
KODA WOODCRAFT SDN BHD

MALAYSIA 100%
KODA VIETNAM CO., LTD

VIETNAM 100%
JATAT FURNITURE INDUSTRIES SDN BHD

MALAYSIA 100%
KODA INTERNATIONAL LTD

VIETNAM 100%
KODA FURNITURE (DONGGUAN) CO., LTD

CHINA 100%
KODA INDOCHINE COMPANY LTD

VIETNAM 100%
OUTDOOR LIVING PTE LTD

OUTDOOR LIVING SINGAPORE 100%
KODA SAIGON COMPANY LTD

VIETNAM 100%
RICHIN FURNITURE DCOR PTE LTD

100% RICHIN SINGAPORE 70% 50%
DEVON LIFESTYLE LIMITED

NEW ZEALAND
ROSSANO DESIGN CO., LTD

VIETNAM 35%
21.
report on corporate governance

The Board of Directors and Management are committed to setting in place corporate governance practices to provide the structure through which the objectives of protection of shareholders interests and enhancement of long term shareholder value are met and by complying with the principles and guidelines of the Singapore Code of Corporate Governance 2005 (the Code) issued by the Ministry of Finance. This report outlines the Companys corporate governance practices with specific reference made to the Code. The Board is pleased to confirm that the Company has generally complied with the Code, save for deviation with reference to Guideline 3.1 (Chairman and CEO should be separate persons) which is explained in this report. 1. The Boards Conduct of its Affairs The Board must meet at least four times a year. Generally the Board meets more than 4 times a year. Additional meetings are held at such other times as and when required to review and adjust the medium and longer term strategic plans and to address any specific significant matters that may arise. The attendance of the Directors at Board meetings and Board committees, as well as the frequency of such meetings is disclosed in this Report. The principal functions of the Board are: a. b. enhancing the long term value of the Company for shareholders; charting the corporate strategy and direction of the Group, including but not limited to approval of broad policies, strategies and financial objectives of the Group; c. d. supervision and monitoring of the Groups management; together with the help of the Audit Committee, overseeing the processes for evaluating the adequacy of internal controls, management controls, risk management, financial reporting and compliance; e. f. g. the approval of annual budgets, proposals for acquisitions, investments and disposals; the approval of nominations to the Board and appointment of key personnel; and the review of corporate governance practices.
An Executive Committee was formed to supervise the management of the business and affairs of the Company and reduces the administrative time, inconvenience and expenses associated with the convening of Board Meetings and circulation of Board resolutions, without compromising our corporate objectives and adversely affecting the day to day operations of the Company. The Executive Committee comprises Mr Koh Teng Kwee, Mr James Koh Jyh Gang, Mr Koh Jyh Eng and Mdm Koh Shwu Lee and Mr Teh Wing Kwan. Matters which require the Boards approval include the following: i. ii. the review of the annual budget and the performance of the Group; review of key activities and business strategies;
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iii. iv. approval of the corporate strategy and direction of the Group; approval of transactions involving a conflict of interest for a substantial shareholder or a director or interested person transactions; v. vi. vii viii. ix. material acquisitions and disposals; acceptances of bank facilities; corporate or financial restructuring and share issuances; declaration of dividends and other returns to shareholders; and appointment of new directors.
A newly-appointed director will be given a formal letter setting out his duties and obligations upon his appointment and he will undergo an orientation program to be familiar with the Groups businesses and governance practices. The Directors are informed of developments relevant to the Group, including changes in laws, regulations and risks that may impact the Group. Non-executive Directors are encouraged to purchase shares in the Company and to hold them till they leave the Board. 2. Boards Composition and Balance The Board comprises seven Directors, three of whom are non-executive, independent directors. The Board and the Nominating and Remuneration Committee is of the view that there is no individual or small group of individuals dominating the Boards decision making process and the Boards current size is appropriate for facilitating effective decision making. The Board has a good balance of directors who have extensive business, financial, accounting and management experience. The diverse and objective judgment of the independent and non-executive directors on corporate affairs and their experience and contributions are valuable to the Company. Profiles of the Directors are set out on page 2 and 3 of this Annual Report. 3. Chairman and Managing Director Mr Koh Teng Kwee, a non-executive Director and the founder of the Group, assumes the role of Chairman. Mr James Koh Jyh Gang, is the Deputy Chairman and Managing Director. The Chairman, Mr Koh Teng Kwee, is the father of the Deputy Chairman and Managing Director, Mr James Koh Jyh Gang. The separation of the roles of Chairman of the Board and Managing Director is to ensure that the working of the Board and the executive responsibility of the Groups business are kept distinct, increasing the accountability and capacity of the Board for independent decision making.
23.

The Chairman shall: a. in consultation with the Managing Director, schedule meetings that enable the Board to perform its duties responsibly while not interfering with the flow of the Groups operations; b. c. prepare meeting agenda in consultation with the Managing Director; in consultation with the Managing Director, exercise control over quality, quantity and timeliness of the flow of information between Management and the Board; and d. assist in ensuring compliance with the Groups guidelines on corporate governance.
As the Chairman and the Managing Director are related, Mr Christopher Chong Meng Tak has been appointed as the Lead Independent Director. As the Lead Independent Director, Mr Chong is the contact person for Shareholders in situations where the Shareholders have concerns or issues which communication with our Chairman or Managing Director is inappropriate or where such communication has failed to resolve the concerns or issues raised. The Managing Director, Mr James Koh Jyh Gang, is youthful and healthy. Nevertheless the Board has adopted a succession policy in the event that the Managing Director is unable to fulfill his duties for whatever reason. The Board conducts regular scheduled meetings and ad-hoc Board meetings are convened when warranted by circumstances relating to matters that are material to the Group. The Board meets at least four times a year. Telephonic attendance and video conferencing at Board meetings are allowed under the Companys articles of association. The number of meetings held and the attendance of each director at every Board and Board Committees meetings during the financial year ended 30 June 2010 are as follows: Nominating & Remuneration Committee
Name
Board
Audit Committee
Executive Committee
No. of No. of No. of No. of No. of No. of No. of No. of meetings meetings meetings meetings meetings meetings meetings meetings attended held attended held attended held attended held Koh Teng Kwee James Koh Jyh Gang Koh Jyh Eng Koh Shwu Lee Christopher Chong Meng Tak Chan Wah Tiong Sim Cheng Huat 6 6 6 6 6 6 6 4 6 6 6 6 6 6 NA NA NA NA 4 4 4 NA NA NA NA 4 4 4 NA NA NA NA 1 1 1 NA NA NA NA 1 1 1 6 6 6 6 NA NA NA 1 6 6 6 NA NA NA
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4. Board Membership The Nominating and Remuneration Committee comprises three members, all of whom are independent. The Nominating and Remuneration Committee is chaired by Mr Chan Wah Tiong and has as its members, Mr Christopher Chong Meng Tak and Mr Sim Cheng Huat. The Nominating and Remuneration Committee meets when necessary to discuss issues of Board appointments or matters relating to remuneration. The functions of the Nominating and Remuneration Committee include the following: a. b. c. assisting the Board to enhance the long term value of the Company for shareholders; recommendations to the Board on all Board appointments or re-appointments; assessment of the effectiveness of the Board as a whole and the contributions of each director to the effectiveness of the Board; d. e. determination of the independence of the members of the Board; recommendations to the Board of a framework of remuneration for the Board and key executives, which covers all aspects of remuneration, including but not limited to directors fees, salaries, allowances, bonuses, options and benefits in kind; f. determining specific remuneration packages for each executive Director.
For appointment of new directors to the Board, the Nominating and Remuneration Committee would, in consultation with the Board, evaluate and determine the selection criteria with due consideration to the mix of skills, knowledge and experience of the existing Board. The Nominating and Remuneration Committee does so by first evaluating the existing strengthens and capabilities of the Board, assess the likely future needs of the Board, assess whether this need can be fulfilled by the appointment of one person and if not, then to consult the Board with respect to the appointment of two persons, seek likely candidates widely and source resumes for review, undertake background checks on the resumes received, narrow this list of resumes to a short list and then to invite the shortlisted candidates to an interview which may include a briefing of the duties required to ensure that there are no expectations gap. The Nominating and Remuneration Committee will seek candidates widely and beyond persons directly known to the Directors and is empowered to engage professional search firms and also give due consideration to candidates identified by any persons. The Nominating and Remuneration Committee will interview all potential candidates in frank and detailed meetings and make recommendations to the Board for approval. Pursuant to the Articles of Association of the Company, new Directors must submit themselves for re-election at the next Annual General Meeting (AGM). In addition, an election of Directors shall take place each year at the Annual General Meeting, where not less than one-third of the Directors shall retire from office by rotation but are eligible for re-election. Under the Articles of Association of the Company, the Managing Director, Mr James Koh Jyh Gang is not subject to retirement by rotation or be taken into account in determining the number of Directors to retire.
25.

The Nominating and Remuneration Committee in determining whether to recommend a Director for re-appointment will have regard to such Directors contribution and performance to the Group and whether such Director has been adequately carrying out his or her duties as a Director. The Nominating and Remuneration Committee is in the process of adopting internal guidelines to address the competing time commitments that are faced when Directors serve on multiple boards. However, the Nominating and Remuneration Committee notes that such Directors have been taking independent actions to address the issue. For instance, the Nominating and Remuneration Committee has been informed by Mr Christopher Chong Meng Tak that he has retired from two Boards to cover duties over and above what is normally expected of a director, he has, with the approval of that Board, appointed an alternate director to cover these additional responsibilities. The Nominating and Remuneration Committee is satisfied that adequate time and attention have been given to the affairs of the Company, through attendance at meetings of the Board and Board Committees, including electronic and telephone communications, by all Directors. The Directors standing for re-election at the forthcoming Annual General Meeting are Mr Sim Cheng Huat, Mdm Koh Shwu Lee and Mr Koh Teng Kwee. Mr Sim Cheng Huat and Mdm Koh Shwu Lee are retiring pursuant to Article 91 of the Companys Articles of Association and are eligible for re-election. Mr Koh Teng Kwee, being over the age of 70 years is seeking re-election in accordance with section 153(6) of the Companies Act, Cap. 50. The Nominating and Remuneration Committee, after assessing their contributions and performance has recommended Mr Sim Cheng Huat, Mdm Koh Shwu Lee and Mr Koh Teng Kwee for re-election at the forthcoming Annual General Meeting. Every year, the Nominating and Remuneration Committee reviews and affirms the independence of the Companys Independent Directors. Each Director is required to complete a Directors Independence Checklist on an annual basis to confirm his independence. The checklist is drawn up based on the guidelines provided in the Code and further requires each Director to assess whether he considers himself independent despite not being involved in any of the relationships identified in the Code. The Nominating and Remuneration Committee then reviews the checklist to determine whether the Director is independent. The Nominating and Remuneration Committee is of the view that all the Independent Directors, namely Mr Christopher Chong Meng Tak, Mr Chan Wah Tiong and Mr Sim Cheng Huat, are independent. The Nominating and Remuneration Committee met once during the last financial year. 5. Board Performance The Nominating and Remuneration Committee is tasked with the assessment of the Boards and Directors performance. The performance criteria used by the Nominating and Remuneration Committee includes the evaluation of the size and composition of the Board, the Boards access to information, Board processes and accountability and the Boards performance in relation to discharging its principal functions and responsibilities, the Directors standards of conduct and such financial targets as the Nominating and Remuneration Committee considers appropriate. In assessing the individual Directors performance and the effectiveness of the Board, the Nominating and Remuneration Committee takes into consideration
.26

the individual Directors industry knowledge and/or functional expertise, contribution and workload requirements. The Board, however, notes that the financial indicators provide only a snapshot of the Companys performance, and do not fully reflect on-going risk or measure the sustainable long-term wealth and value creation of the Company. The Nominating and Remuneration Committee in considering the re-appointment of a Director evaluates such directors contribution and performance, such as his or her attendance at meetings of the Board or Board committees, where applicable, participation, candour and any special contributions. 6. Access to Information Directors are regularly updated by Management on the developments within the Group so that they are equipped to participate fully at Board Meetings. Board papers are prepared for each Board Meeting and include information from Management on the financial, business and corporate issues to enable the Directors to be properly briefed on issues to be raised at Board Meetings. All Directors have unrestricted access to the Companys records and information and the independent Directors have access to all levels of key personnel in the Group. At least one of the two joint Company Secretaries is in attendance at Board meetings, Audit Committee meetings and Nominating and Remuneration Committee meetings. All the Directors have separate and independent access to both the joint Company Secretaries. The Company Secretaries are responsible for ensuring that Board procedures are followed and that applicable rules and regulations are complied with. Should the Directors, whether as a group or individually, in furtherance of their duties require independent professional advice, the Directors may, with the consent of the Chairman only or with the consent of the Audit Committee only, appoint a professional advisor to render advice at the Companys expense. 7. Remuneration Matters The composition of the Nominating and Remuneration Committee and its functions are set out on pages 24 and 25 of this Report. No member of the Nominating and Remuneration Committee shall be involved in any deliberation nor decision making in respect of any compensation to be offered or granted to him or in respect of his effectiveness as a Director. The Nominating and Remuneration Committee has access to expert advice inside and outside the Group, if necessary, on matters of executive compensation. The Company has in place service contracts for each of its executive Directors which sets out the framework of their remuneration. The Nominating and Remunerating Committee will, upon the expiry of such service contracts, recommend to the Board a framework of remuneration for the Board and key executives and determine specific remuneration packages for each executive Director. The Nominating and Remuneration Committees recommendations will be made in consultation with the Chairman and submitted for endorsement by the entire Board.
27.

8. Level and Mix of Remuneration The Groups remuneration policy is to provide compensation packages appropriate to attract, retain and motivate the Directors and key personnel required to run the Group successfully. The Company is of the view that performance-related elements of remuneration should form a significant proportion of the total remuneration package of executives and should be designed to align their interests with those of shareholders and link rewards to corporate and individual performance. The Company has in place an employee profit sharing scheme pursuant to which executives and management staff (excluding the Directors of the Company) whose job responsibilities have an impact on the performance and profitability of their department or section are eligible. The limitation of profit sharing to a maximum of six months of an eligible employees salary as described in the Companys Prospectus dated 8 January 2002 remains unchanged. The Company is of the opinion that further long term incentives are not required given the significant number of shares held by the Executive Directors. The remuneration of non-executive Directors should be appropriate to the level of contribution, taking into account factors such as effort and time spent and responsibilities of the Directors. Non-executive Directors shall not be over-compensated to the extent that their independence may be compromised. The Board will, if necessary, consult experts on the remuneration of non-executive Directors. The Board will recommend the remuneration of the non-executive Directors for approval at the AGM. Service contracts entered into by the Company with Directors have a fixed appointment period and are not to be excessively long or with onerous removal clauses. The Nominating and Remuneration Committee considers what compensation the Directors contracts of service would entail in the event of early termination and aims to be fair and avoid rewarding poor performance. The Nominating and Remuneration Committee also considers whether Directors should be eligible for benefits under long-term incentive schemes, such as share option schemes. Currently, the Company has in place an employee share option scheme, however to date, no options have been granted pursuant to such employee share option scheme. Details of remuneration paid to the Directors are set out below: The Directors receiving remuneration from the Group for the year ended 30 June 2009 and 30 June 2010: Number of Directors Remuneration band S$500,000 and above S$250,000 to S$499,999 Below S$249,999 Total 2010 1 6 7 2009 1 6 7
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Disclosure on Remuneration Allowances and other benefits %
Salary % Directors S$500,000 and above S$250,000 to S$499,999 James Koh Jyh Gang Below S$250,000 Koh Teng Kwee Koh Jyh Eng Koh Shwu Lee Christopher Chong Meng Tak Chan Wah Tiong Sim Cheng Huat Key personnel of the Group Below S$250,000 Teh Wing Kwan Chia See Tee Ong Kah Meng 87 45 92 90 77 80 83
Bonus %
Fees %
Total %
10
100
8 6 7
100 100 100
2 17 13
100 100 100 100 100 100
7 40 8
6 15
100 100 100
The directors fees paid to the independent Directors, being Mr Christopher Chong Meng Tak, Mr Chan Wah Tiong and Mr Sim Cheng Huat for FY2010 were S$35,000, S$28,000 and S$18,000 respectively. There are set fees paid for being a lead independent director/Chairman of the Audit Committee, Chairman of the Nominating and Remuneration Committee and director. Thus directors fees payable were based on the responsibilities of the Directors and the amount of their time spent. The proposed directors fees are subject to approval of shareholders at the AGM. 9. Accountability The Company recognises that the Board should provide shareholders with a balanced and understandable assessment of the Groups performance, position and prospects on a regular basis and adopts the practice of communicating major developments in its business and operations to the SGX-ST, its shareholders and its employees. The Company announces its financial results on a quarterly basis via SGXNET.
29.

Management provides the Directors with balanced and understandable management accounts of the Groups performance prior to Board meetings and as and when necessary. The Directors also have separate and independent access to all levels of key personnel in the Group. In line with the requirements of SGX-ST negative assurance confirmations on interim financial results were issued by the Board confirming that to the best of its knowledge, nothing had come to the attention of the Board which would render the Companys quarterly results to be false or misleading in any material respect. 10. Audit Committee The Audit Committee comprises three members, all of whom are independent. The Audit Committee is chaired by Mr Christopher Chong Meng Tak and has as its members, Mr Chan Wah Tiong and Mr Sim Cheng Huat. The Board recognises that the Audit Committee is responsible for reviewing the results of the Groups audit and cost effectiveness. The chairman of the Audit Committee is an independent Director and no individual is able to dominate the Audit Committees decision making process. The members of the Audit Committee are appropriately qualified to discharge their responsibilities: Mr Christopher Chong Meng Tak has a BSc. Econ (1st Class) from the University College of Wales, an MBA from the London Business School and is a member of the Institute of Chartered Accountants of Scotland, a Fellow of the Australian Securities & Derivatives Industry Association, a Fellow of the Australian Institute of Directors, a member and ex-Honorary Treasurer of the Hong Kong Institute of Investment Analysts and a Fellow of the Hong Kong Society of Accountants; Mr Chan Wah Tiong is a Certified Public Accountant with the Institute of Certified Public Accountants of Singapore and holds a Bachelor of Accountancy from the National University of Singapore; Mr Sim Cheng Huat has over forty years of international trade, market development and banking experience. The Audit Committee has met four times during the last financial year. The Committee reviewed the following, where relevant, with the executive Directors and the external auditors: a. the audit plan of the external auditors and results of their examination and evaluation of the Groups systems of internal accounting controls; b. c. the Groups financial and operating results and accounting policies; the financial statements of the Company and the consolidated financial statements of the Group before their submission to the Board and the external auditors report on those financial statements;
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d. the appointment and independence of the external auditors of the Company, review of the scope and results of the audit and its cost-effectiveness; e. interested person transactions involving transactions between the Group and Directors or associates of Directors.
The Audit Committee has explicit authority to investigate any matter within the scope of its duties and is authorised to obtain independent professional advice. It has full access to and co-operation of the management and reasonable resources to enable it to discharge its duties properly. It also has full discretion to invite any executive director or executive officer or any other person to attend its meetings. The Audit Committee meets with the external and internal auditors separately, at least once a year, without the presence of management to review any areas of audit concern. Individual members of the Audit Committee also engage the external and internal auditors separately in ad hoc meetings. The external auditors have unrestricted access to the Audit Committee. The Audit Committee has undertaken a review of all non-audit services provided by the external auditors and has confirmed that such non-audit services would not in the Audit Committees opinion, affect the independence of the external auditors. The Audit Committee has recommended to the Board the nomination of Deloitte & Touche for re-appointment as external auditors of the Company at the forthcoming AGM. The Board has put in place whistle-blowing procedures pursuant to which staff of the Company may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters. Pursuant to such whistle-blowing procedures, employees are free to submit complaints confidentially or anonymously to the chairman of the Audit Committee and in this regard a dedicated email address has been set up which is accessible only by the chairman of the Audit Committee and/or a designated member of the Audit Committee. The procedures for submission of complaints have been explained to all employees of the Group. All complaints are to be treated as confidential and are to be brought to the attention of the Audit Committee. Assessment, investigation and evaluation of complaints are conducted by or at the direction of the Audit Committee and the Audit Committee, if it deems appropriate, may engage at the Companys expense independent advisors. Following investigation and evaluation of a complaint, the Audit Committee will then decide on recommended disciplinary or remedial action, if any. The action so determined by the Audit Committee to be appropriate shall then be brought to the Board or to the appropriate members of senior management for authorisation or implementation respectively.
31.

11. Internal Control and Risk Management The Group has a system of internal controls designed to provide reasonable assurance that assets are safeguarded, proper accounting records are maintained and that financial information used for financial reporting is reliable. The Board recognises that no internal control system could provide absolute assurance against the occurrence of material errors, poor judgment in decision-making, human errors, losses, fraud or other irregularities. The system is designed to manage rather than eliminate the risk of failure to achieve the business objectives. Internal and external audit reports on any material non-compliance or internal control weaknesses, including financial, operational and compliance controls and recommendations for improvements are submitted to the Audit Committee for review semi-annually. The Audit Committee requires the external auditor to perform the internal audit to IIA standard. The Audit Committee reviews the effectiveness of the actions taken by management based on the recommendations made by the internal and external auditors to the Audit Committee. The Audit Committee is satisfied that there are adequate internal controls within the Group taking into account the nature and size of the Groups business and operations. The Board believes that the system of internal controls and risk management maintained by the Company is adequate to safeguard shareholders investment and the Companys assets. 12. Key Operational Risks The Board is aware of the operational risks which may adversely affect the Groups operating results if any of these risk factors and uncertainties develops into actual events. The Board uses a probability-impact risk matrix to assess risk. The following is a non-exhaustive list of some of the key operational risks which affect our Group. Macro Economic Risk The Groups business is sensitive to global economic conditions. The global economic slowdown has resulted in lower consumer confidence and reduced purchasing power with consumers changing their spending pattern to save more for necessities. Furniture purchase is discretionary and has inevitably been affected by the generally weak economic factors and such market uncertainties. In the event of a prolonged economic downturn, demand for our furniture is likely to be affected and this will have an adverse impact on the Groups operating results. Design Risk The Groups business segments have been design-intensive and its operating results depend heavily on the Groups ability to continually design products which are market-oriented and production-feasible, failing which the Groups operating results will be adversely affected. Change in customers ordering pattern As a result of recent market uncertainties, the Companys clients have now placed orders in smaller batches and expect goods to be delivered faster; switching part of the stock holding risks to the suppliers. To meet shorter lead time, the Group would have to increase raw materials stocks and produce semi-finished components ahead of confirmed orders in accordance with its internal orders projection, which means investment in
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inventories would be higher and warehousing facilities would be larger. In the event that the Groups customers do not order goods in quantities and specifications as projected, the Group may have to make provisions for slow-moving stocks or stock obsolescence and its operating results will be affected by such provisions. Increasing credit risks Whilst the Groups current bad debts risk is currently low and existing receivables turnover period remains manageable, clients expect longer credit terms as a result of changing market conditions in the countries which the Group has been selling to. The extension of credit terms means increasing credit risk which would need to be closely monitored. The increasing credit risk may result in the Group having a need to make provision for doubtful debts and incur additional costs in collecting payments. Any bad debt provisions and write-offs will have a negative impact on the Groups net operating margins. Supplies of raw materials the Group purchases raw materials such as wood, leather, fabrics and finishes for its production. The prices of these raw materials are generally sensitive to the world crude oil prices and any increase in the crude oil prices is likely to increase production costs. The production cycles are also dependent on the ability of the Groups suppliers to supply raw materials at acceptable terms such as quantity, quality, prices, specifications and lead time - failing which the Groups production cycles may be disrupted and its operating results may also be adversely be affected. Risk of Fire The extensive use of wood, chemicals, lacquers and solvents increase the risk of fire. Several fires have occurred at the Groups factories in the past (the risk of fire in those instances was fully insured). Whilst the Group takes every precaution against fire, there is no assurance there will be no major fire occurrence in the future and the occurrence of a major fire will adversely the Groups operations. Labor supply Approximately one-quarter of the Groups production capacity is located in Malaysia for which the workers are mainly from Bangladesh, Myanmar and Vietnam. The employment of these foreign workers is subject to quota and other immigration rules as imposed by the Malaysian Government. Tightening of and adverse changes made to such rules may result in the Group not being able to source sufficient workers and find suitable replacements its Malaysia operations and the operating results of the Group may be partially affected. Changes in tax legislation (Vietnam) There were previously changes made to the tax legislations in Vietnam resulting in additional and retrospective tax liabilities incurred by one of the Companys subsidiaries in Vietnam (Rossano Design Co., Ltd (Rossano)). Except for Rossano, the Companys Vietnam-based subsidiaries are currently enjoying concessionary tax rates. However, if the Vietnamese government were to revise these concessionary tax rates upwards or for whatever reasons, withdraw these tax incentives granted to our Vietnam-based subsidiaries, the effective tax rates would be significantly higher and this will adversely affect the Groups net profit margin. Port facilities disruption in Vietnam The Groups operations in Vietnam incurred incurred Congestion and Terminal charges in the past and also experienced an exceptionally long waiting time for port access in Vietnam resulting in the Vietnam operations not being able to receive and deliver goods on time. Should the Vietnam operation encounter such disruptions again in the future, the distribution costs would be higher and the production cycles may be adversely affected.
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13. Internal Audit The Company has appointed Messrs Yang Lee & Associates as the internal auditor to review the Groups internal control system. The internal auditor will plan its internal audit reviews in consultation with, but independent of the Management. The internal audit plan will be submitted to the Audit Committee for approval prior to the commencement of the internal audit. The Audit Committee will review the activities of the internal auditors on a regular basis, including overseeing and monitoring of the implementation of improvement required on internal control weaknesses identified. The internal auditor adopts the Standards for the Professional Practice of Internal Auditing set by the Institute of Internal Auditors. The internal auditor reports directly to the Audit Committee. 14. Communication with Shareholders The Directors are mindful of their obligation to provide shareholders with timely disclosure of material information that is presented in a fair and objective manner. Shareholders and other investors are provided regularly with: a. b. c. An Annual Report; Quarterly financial results and other financial announcements as required; A powerpoint presentation on the state of the Company (available when the Company holds results briefing after the announcement of its financial statements); d. e. f. Press releases and other announcements on important developments; A website and portal (www.kodaonline.com); and Replies to email queries from shareholders.
On the Companys website investors will find information about the Company, its products, its directors, contact details and under the Investor Relations link will find all the information the Company has released. In FY2010 the Company released 14 number of reports and announcements or on average 4 per quarter. Financial results, annual reports, press releases on the performance and major developments in the business and operations of the Group and any other material announcements are released through SGXNET and are available on the Companys website. The financial statements as well as the accompanying press release are released onto the SGX-ST website. For first half and full year results announcements, results briefing by management is held for analysts. The Company also engages external investor relation consultant firm to support the Group in promoting the communication with shareholders and the investment community.
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The Company also holds analyst briefing of important events at least twice a year. All shareholders will receive the annual report of the Company and notice of AGM by post and through notices published in the newspapers within the mandatory period. The shareholders can also access information on the Group at the Groups corporate website at www.kodaonline.com. The website provides, inter alia, all publicly disclosed financial information, corporate announcements, press releases, annual reports and profiles of the Group. The Board regards the AGM as an opportunity to communicate directly with shareholders and encourages greater shareholder participation. The Chairman and the other Directors attend the AGM and are available to answer questions from shareholders at the AGMs. External auditors are also present to assist Directors in addressing any relevant queries from shareholders. 15. Code on Securities Transactions by Officers In compliance with the best practices on dealings in securities set out in the SGX-ST Listing Manual, the Company has adopted its own internal compliance code to provide guidance to its officers with regards to dealing by the Company and its officers in the Companys securities. Directors and employees of the Company have been advised not to deal in the Companys shares on short-term considerations or when they are in the possession of unpublished price-sensitive information. In addition, dealings in the Companys share and during the period commencing one month (in the case of full year announcements) or two weeks (in the case of quarterly result announcements) before any announcement of the Companys financial statements and ending on the date of announcement of the results is prohibited. 16. Interested Person Transactions (IPT) The Group has set up a procedure to record and report IPT. All the IPT were concluded on normal commercial terms and the value of each IPT during the financial year ended 30 June 2010 did not exceed $100,000. There were no material contracts entered into by the Company and its subsidiaries involving the interest of the substantial shareholder or director, which are either subsisting at the end of the financial year or, if not then subsisting, entered into since the end of the previous financial year. 17. Material Contracts Since the end of the previous financial year, the Company and its subsidiary companies did not enter into any material contracts involving the interests of any Directors or any controlling shareholders of the Company or their associates and there are no such material contracts still subsisting at the end of the financial year.
35.

18. SGX Checklists The Board has accepted and uses the following checklist when required: Acquisitions and Realisations Compliance checklist. Annual Report Compliance checklist. Bonus Issue Compliance checklist. Financial Results Review checklist. Placement Compliance checklist. Rights Issue Compliance checklist. Share Split Compliance checklist. Share Buyback Compliance checklist.
nancial content
37 41 43 45 46 47 49 104 105 106 108 report of the directors independent auditors report statements of nancial positions consolidated statement of comprehensive income statements of changes in in equity consolidated statement of cash ows notes to nancial statements statement of directors freehold land, leasehold land & buildings statistics of shareholdings notice of annual general meeting proxy form
37.
report of the directors

The directors present their report together with the audited consolidated financial statements of the Group and statements of financial position and statement of changes in equity of the Company for the financial year ended June 30, 2010. 1 DIRECTORS The directors of the Company in office at the date of this report are: Koh Teng Kwee James Koh Jyh Gang Koh Jyh Eng Koh Shwu Lee Christopher Chong Meng Tak Chan Wah Tiong Sim Cheng Huat 2 ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE BENEFITS BY MEANS OF THE ACQUISITION OF SHARES AND DEBENTURES Neither at the end of the financial year nor at any time during the financial year did there subsist any arrangement whose object is to enable the directors of the Company to acquire benefits by means of the acquisition of shares or debentures in the Company or any other body corporate. 3 DIRECTORS INTERESTS IN SHARES AND DEBENTURES The directors of the Company holding office at the end of the financial year had no interests in the share capital and debentures of the Company and related corporations as recorded in the register of directors shareholdings kept by the Company under Section 164 of the Singapore Companies Act except as follows: Direct interests At beginning At end of year of year Indirect interests At beginning At end of year of year
Names of directors and company in which interests are held Koda Ltd Ordinary shares Koh Teng Kwee James Koh Jyh Gang Koh Jyh Eng Koh Shwu Lee Christopher Chong Meng Tak
15,177,120 26,092,592 13,185,520 12,755,520 144,000
15,177,120 26,092,592 13,185,520 12,755,520 144,000
9,421,920 36,000 432,000
9,421,920 36,000 432,000
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By virtue of Section 7 of the Singapore Companies Act, Koh Teng Kwee and James Koh Jyh Gang are deemed to have an interest in the Company and in all the related corporations of the Company. The directors interests as at July 21, 2010 were the same as those at the end of the financial year. 4 DIRECTORS RECEIPT AND ENTITLEMENT TO CONTRACTUAL BENEFITS Since the beginning of the financial year, no director has received or become entitled to receive a benefit which is required to be disclosed under Section 201(8) of the Singapore Companies Act, by reason of a contract made by the Company or a related corporation with the director or with a firm of which he is a member, or with a company in which he has a substantial financial interest except for salaries, bonuses and other benefits as disclosed in the financial statements. There were certain transactions (as disclosed in the financial statements) with corporations in which certain directors have an interest. 5 OPTIONS TO TAKE UP UNISSUED SHARES a) The Koda Share Option Scheme (Share Option Scheme) was approved by the shareholders at the Extraordinary Meeting held on December 6, 2001. The Share Option Scheme is administered by a committee of directors (Share Option Committee) comprising Christopher Chong Meng Tak, Chan Wah Tiong and James Koh Jyh Gang. Under the Share Option Scheme, an option entitles the option holder to subscribe for a specific number of new ordinary shares in the Company comprised in the option at a subscription price per share determined with reference to the market price of the shares at the time of grant of the option. The Share Option Committee may at its discretion, fix that subscription price at a discount of up to 20% off market price. The consideration for the grant of an option is $1.00. Options granted with the subscription price set at the market price shall only be exercised after the first anniversary but before the fifth anniversary of the date of grant of that option. Options granted with the market price set at a discount to the market price shall only be exercised after the second anniversary but before the fifth anniversary of the date of grant of that option. The shares under option may be exercised in whole or in part on the payment of the relevant subscription price. Options granted will lapse when the option holder ceases to be a full-time employee of the Company or any company of the Group subject to certain exceptions at the discretion of the Company. There were no options to take up unissued shares of the Company granted pursuant to the Share Option Scheme. b) During the financial year, no options to take up unissued shares of the subsidiaries were granted.
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6 OPTIONS EXERCISED During the financial year, there were no shares of the Company or any corporation in the Group issued by virtue of the exercise of an option to take up unissued shares. 7 UNISSUED SHARES UNDER OPTIONS At the end of the financial year, there were no unissued shares of the Company or any corporation in the Group under option. 8 AUDIT COMMITTEE The Audit Committee of the Company is chaired by Christopher Chong Meng Tak, an independent director, and includes Chan Wah Tiong, an independent director, Sim Cheng Huat, an independent director and James Koh Jyh Gang, an executive director. The Audit Committee has met thrice since the last Annual General Meeting (AGM) and has reviewed the following, where relevant, with the executive directors and external and internal auditors of the Company: a) the audit plans and results of the internal auditors examination and evaluation of the Groups systems of internal accounting controls; b) c) the Groups financial and operating results and accounting policies; the financial statements of the Company and the consolidated financial statements of the Group before their submission to the directors of the Company and external auditors report on those financial statements; d) the half-yearly and annual announcements as well as the related press releases on the results and financial position of the Company and the Group; e) f) the co-operation and assistance given by the management to the Groups external and internal auditors; and the re-appointment of the external auditors of the Group.
The Audit Committee has full access to and has the co-operation of the management and has been given the resources required for it to discharge its function properly. It also has full discretion to invite any director and executive officer to attend its meetings. The external and internal auditors have unrestricted access to the Audit Committee. The Audit Committee has recommended to the directors the nomination of Deloitte & Touche LLP for re-appointment as external auditors at the forthcoming AGM of the Company.
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9 AUDITORS The auditors, Deloitte & Touche LLP, have expressed their willingness to accept re-appointment.
ON BEHALF OF THE DIRECTORS
................................................ James Koh Jyh Gang
................................................ Koh Shwu Lee Singapore September 30, 2010
41.
independent auditors report to the members of koda ltd

We have audited the accompanying financial statements of Koda Ltd (the Company) and its subsidiaries (the Group) which comprise the statements of financial position of the Group and the Company as at June 30, 2010, the statement of comprehensive income, statement of changes in equity and statement of cash flows of the Group and the statement of changes in equity of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes as set out on pages 43 to 103. Managements Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the Act) and Singapore Financial Reporting Standards. This responsibility includes: 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 account and balance sheet and to maintain accountability of assets; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
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independent auditors report to the members of koda ltd

Opinion In our opinion, (a) the consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at June 30, 2010 and of the results, changes in equity and cash flows of the Group and changes in equity of the Company for the year ended on that date; and (b) the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.
Deloitte & Touche LLP Public Accountants and Certified Public Accountants Singapore
Aric Loh Siang Khee Partner (Appointed on October 27, 2006) Singapore September 30, 2010
43.
statements of nancial position

JUNE 30, 2010 GROUP Note ASSETS Current assets Cash and bank balances Trade receivables Other receivables and prepayments Inventories Total current assets Non-current assets Investment in subsidiaries Goodwill Available-for-sale investments Club memberships Property, plant and equipment Intangible asset Deferred tax assets Total non-current assets Total assets 10 11 12 13 14 15 16 728 496 211 14,699 354 150 16,638 38,549 728 483 211 13,272 373 75 15,142 35,152 12,299 496 192 927 3 13,917 27,760 11,668 483 192 735 3 13,081 26,386 6 7 8 9 3,410 3,460 3,027 12,014 21,911 3,488 3,964 3,100 9,458 20,010 747 5,890 6,715 491 13,843 643 5,081 6,547 1,034 13,305 2010 US$000 2009 US$000 2010 US$000 COMPANY 2009 US$000
LIABILITIES AND EQUITY Current liabilities Bills payables Trade payables Other payables Current portion of obligations under finance leases Current portion of long-term bank loan Income tax payable Total current liabilities 20 21 86 212 10,065 250 380 257 6,865 56 212 5,352 26 380 61 6,248 17 18 19 3,714 3,614 2,439 406 3,446 2,126 2,904 972 1,208 406 4,412 963
See accompanying notes to financial statements.
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statements of nancial position

JUNE 30, 2010 GROUP Note Non-current liabilities Obligations under finance leases Long-term bank loan Total non-current liabilities Capital, reserves and non-controlling interests Share capital Capital reserves Currency translation reserve Accumulated profits Equity attributable to equity holders of the Company Non-controlling interests Total equity Total liabilities and equity 26,796 817 27,613 38,549 26,728 965 27,693 35,152 21,928 21,928 27,760 19,991 19,991 26,386 22 23 4,040 2,206 560 19,990 4,040 2,193 298 20,197 4,040 30 17,858 4,040 17 15,934 20 21 657 214 871 499 95 594 266 214 480 52 95 147 2010 US$000 2009 US$000 2010 US$000 COMPANY 2009 US$000
45.
consolidated statement of comprehensive income

YEAR ENDED JUNE 30, 2010 GROUP Note Revenue Cost of sales Gross profit Other operating income Distribution costs Administrative expenses Other operating expenses Finance costs Profit (Loss) before income tax Income tax credit (expense) Profit (Loss) for the year Other comprehensive income: Currency translation differences Available-for-sale investments Other comprehensive income for the year, net of tax Total comprehensive income (loss) for the year 24 2010 US$000 44,265 (32,864) 11,401 606 (4,201) (7,206) (329) (92) 179 116 295 2009 US$000 37,775 (27,887) 9,888 934 (3,772) (6,958) (94) (141) (143) (133) (276)
25
26 27 28 29
191 13 204 499
(626) (21) (647) (923)
Profit attributable to: Owners of the Company Non-controlling interests
271 24 295
(297) 21 (276)
Total comprehensive income (loss) attributable to: Owners of the Company Non-controlling interests
546 (47) 499
(906) (17) (923)
Earnings (Loss) per share (US cents) Basic Diluted 30 30 0.20 (0.22) (0.22)
0.20
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statements of changes in equity

YEAR ENDED JUNE 30, 2010 Attributable Currency Share capital US$000 GROUP Balance at July 1, 2008 Total comprehensive loss for the year Capitalisation of accumulated profits of a subsidiary Dividends (Note 31) Dividend paid to non-controlling shareholders Balance at June 30, 2009 Total comprehensive income for the year Dividends (Note 31) Dividend paid to non-controlling shareholders Balance at June 30, 2010 4,040 2,206 560 19,990 26,796 (101) 817 (101) 27,613 4,040 2,193 13 298 262 20,197 271 (478) 26,728 546 (478) (127) 965 (47) (127) 27,693 499 (478) 1,985 (1,985) (452) (452) (452) 4,040 229 (21) 886 (588) 22,931 (297) 28,086 (906) 1,109 (17) 29,195 (923) Capital reserves US$000 translation Accumulated reserve US$000 profits US$000 to equity holders of the company US$000 Noncontrolling interests US$000 Total US$000
COMPANY Balance at July 1, 2008 Total comprehensive income for the year Dividends (Note 31) Balance at June 30, 2009 Total comprehensive income for the year Dividends (Note 31) Balance at June 30, 2010 4,040 4,040 4,040 38 (21) 17 13 30 7,389 8,997 (452) 15,934 2,402 (478) 17,858 11,467 8,976 (452) 19,991 2,415 (478) 21,928
47.
consolidated statement of cash ows

YEAR ENDED JUNE 30, 2010 GROUP 2010 US$000 Operating activities Profit (Loss) before income tax Adjustments for: Bad debts written off Inventories written off Amortisation of intangible asset Depreciation of property, plant and equipment Dividend income from available-for-sale investments Interest income Interest expense Loss (Gain) on disposal of property, plant and equipment net Exchange difference arising on foreign currency translation Operating cash flows before movements in working capital Trade receivables Other receivables and prepayments Inventories Trade payables Other payables Cash (used in) generated from operations Dividends paid Dividends paid to non-controlling interests of subsidiaries Interest paid Interest received Income tax paid Net cash used in operating activities 75 216 21 1,208 (157) 92 13 (173) 1,474 429 73 (2,772) 168 313 (315) (478) (101) (92) 157 (216) (1,045) 67 18 18 1,010 (1) (127) 141 (423) (231) 329 224 1,046 (902) 239 (264) 672 (452) (127) (141) 127 (499) (420) 179 (143) 2009 US$000
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consolidated statement of cash ows

YEAR ENDED JUNE 30, 2010 GROUP 2010 US$000 Investing activities Proceeds from disposal of property, plant and equipment Purchase of property, plant and equipment (Note A) Dividend received from available-for-sale investments Net cash used in investing activities Financing activities Increase in bills payables Repayment of long-term bank loans Proceeds from long-term bank loans Repayment of finance leases Net cash generated from (used in) financing activities Net decrease in cash and bank balances Cash and bank balances at beginning of year Cash and bank balances at end of year 3,308 (399) 350 (461) 2,798 (78) 3,488 3,410 303 (380) (615) (692) (1,617) 5,105 3,488 203 (2,034) (1,831) 737 (1,243) 1 (505) 2009 US$000
Note A: Purchase of property, plant and equipment During the financial year, the Group acquired property, plant and equipment with aggregate cost of US$2,489,000 (2009: US$1,243,000) of which US$455,000 (2009: US$Nil) was acquired under hire purchase arrangement. Cash payment of US$2,034,000 (2009: US$1,243,000) was made to purchase the property, plant and equipment.
49.
notes to nancial statements

JUNE 30, 2010 1 GENERAL The Company (Registration No. 198001299R) is incorporated in the Republic of Singapore with its principal place of business and registered office at 28 Defu Lane 4, Singapore 539424. The Company is listed on the Mainboard of the Singapore Exchange Securities Trading Limited. The financial statements are expressed in United States dollars. The principal activities of the Company are those relating to the business of manufacturers and dealers of furniture of all kinds and investment holding. The principal activities of the subsidiaries are disclosed in Note 10 to the financial statements. The consolidated financial statements of the Group and the statements of financial position and statement of changes in equity of the Company for the year ended June 30, 2010 were authorised for issue by the Board of Directors on September 30, 2010. 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING The financial statements are prepared in accordance with the historical cost convention, except as disclosed in the accounting policies below, and are drawn up in accordance with the provisions of the Singapore Companies Act and Singapore Financial Reporting Standards (FRS). ADOPTION OF NEW AND REVISED STANDARDS In the current financial year, the Group has adopted all the new and revised FRSs and Interpretations of FRS (INT FRS) that are relevant to its operations and effective for annual periods beginning on or after July 1, 2009. The adoption of these new/revised FRSs and INT FRSs does not result in changes to the Groups and Companys accounting policies and has no material effect on the amounts reported for the current or prior years except as disclosed below: FRS 1 Presentation of Financial Statements (Revised) FRS 1 (2008) has introduced terminology changes (including revised titles for the financial statements) and changes in the format and content of the financial statements. In addition, the revised Standard requires the presentation of a third statement of financial position at the beginning of the earliest comparative period presented if the entity applies new accounting policies retrospectively or makes retrospective restatements or reclassifies items in the financial statements. FRS 23 Borrowing Costs (Revised) FRS 23 (Revised) is effective for annual periods beginning on or after January 1, 2009 and eliminates the option available under the previous version of FRS 23 to recognise all borrowing costs immediately as an expense. An entity shall capitalise borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. As the change in accounting policy is to be applied prospectively, there is no impact on amounts reported for 2009.
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JUNE 30, 2010 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) FRS 27 (Revised) Consolidated and Separate Financial Statements; and FRS 103 (Revised) Business Combinations FRS 27 (Revised) is effective for annual periods beginning on or after July 1, 2009. FRS 103 (Revised) is effective for business combinations for which the acquisition date is on after the beginning of the first annual reporting period beginning on or after July 1, 2009. Apart from matters of presentation, the principal amendments to FRS 27 that impact the Group concern the accounting treatment for transactions that result in changes in a parents interest in a subsidiary. The changes are adopted prospectively for transactions after the date of adoption of the revised standard and, therefore, no restatements are required in respect of transactions prior to the date of adoption. There has been no change in the Groups interests in its subsidiaries in the current financial year other than liquidation of dormant subsidiary. Similarly, FRS 103 is concerned with accounting for business combination transactions. The changes to the Standard are significant, but their impact can only be determined once the detail of future business combination transactions is known. The amendments to FRS 103 are adopted prospectively for transactions after the date of adoption of the revised standard and, therefore, no restatements are required in respect of transactions prior to the date of adoption. There has been no business combination in the current financial year. Amendments to FRS 107 Financial Instruments: Disclosures Improving Disclosures about Financial Instruments The amendments to FRS 107 expand the disclosures required in respect of the fair value measurements and liquidity risk. The Group has elected not to provide comparative information for these expanded disclosures in the current year in accordance with the transitional reliefs offered in these amendments. FRS 108 Operating Segments The Group adopted FRS 108 with effect from July 1, 2009. FRS 108 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. In contrast, the predecessor Standard (FRS 14 Segment Reporting) required an entity to identify two sets of segments (Business and Geographical), using a risks and rewards approach, with the entitys system of internal financial reporting to key management personnel serving only as the starting point for the identification of such segments. There is no change in the Groups reportable segments as a result of the adoption of FRS 108. The comparatives have been restated to conform to the requirements of FRS 108.
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JUNE 30, 2010 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) FRS 108 Operating Segments (Continued) The management anticipates that the adoption of the other FRSs, INT FRSs and amendments to FRS that were issued at the date of authorisation of these financial statements but not effective until future periods will not have a material impact on the financial statements of the Group and of the Company in the period of their initial adoption. BASIS OF CONSOLIDATION The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by other members of the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation. Non-controlling interests in subsidiaries are identified separately from the Groups equity therein. The interest of noncontrolling shareholders may be initially measure either at fair value or at the non-controlling interests proportionate share of the fair value of the acquirees identifiable net assets. The choice of measurement basis is made on an acquisition-byacquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance. Changes in the Groups interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. The carrying amounts of the Groups interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount of which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company. When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted for (i.e. reclassified to profit or loss or transferred directly to retained earnings) in the same manner as would be required if the relevant assets or liabilities were disposed of. The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under FRS 39 Financial Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition of an investment in an associate or jointly controlled entity.
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JUNE 30, 2010 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) FRS 108 Operating Segments (Continued) In the Companys financial statements, investments in subsidiaries are carried at cost less any impairment in net recoverable value that has been recognised in profit or loss. BUSINESS COMBINATIONS Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration of each acquisition is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquire. Acquisition-related costs are recognised in profit or loss as incurred. Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments (see below). All other subsequent changes in the fair value of contingent consideration classified as an asset or liability are accounted for in accordance with relevant FRSs. Changes in the fair value of contingent consideration classified as equity are not recognised. Where a business combination is achieved in stages, the Groups previously held interests in the acquired entity are remeasured to fair value at the acquisition date (i.e. the date the Group attains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of. The acquirees identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under the FRS are recognised at their fair value at the acquisition date, except that: deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with FRS 12 Income Taxes and FRS 19 Employee Benefits respectively; liabilities or equity instruments related to the replacement by the group of an acquirees share-based payment awards are measured in accordance with FRS 102 Share-based Payment; and assets (or disposal groups) that are classified as held for sale in accordance with FRS 105 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see below), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.
53.

JUNE 30, 2010 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) FRS 108 Operating Segments (Continued) The measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and circumstances that existed as of the acquisition date and is subject to a maximum of one year. FINANCIAL INSTRUMENTS Financial assets and financial liabilities are recognised on the Groups statements of financial position when the Group becomes a party to the contractual provisions of the instrument. Financial assets Investments are recognised and de-recognised on a trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value plus transaction costs, except for those financial assets classified as at fair value through profit or loss which are initially measured at fair value. Other financial assets are classified into the following specified categories: available-for-sale financial assets and loans and receivables. The classification depends on the nature and purpose of financial assets and is determined at the time of initial recognition. Effective interest method The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial instrument, or where appropriate, a shorter period. Income and expense is recognised on an effective interest basis for debt instruments. Available-for-sale financial assets Certain shares and debt securities held by the Group are classified as being available for sale and are stated at fair value at cost, less impairment if any. Fair value is determined in the manner described in Note 4. Gains and losses arising from changes in fair value are recognised directly in other comprehensive income with the exception of impairment losses, interest calculated using the effective interest method and foreign exchange gains and losses on monetary assets which are recognised directly in profit or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in other comprehensive income and accumulated in revaluation reserve is included in profit or loss. Dividends on available-for-sale equity instruments are recognised in profit or loss when the Groups right to receive payments is established. The fair value of available-for-sale monetary assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at end of the reporting period. The change in fair value attributable to translation differences that result from a change in amortised cost of the asset is recognised in profit or loss, and other changes are recognised in other comprehensive income. The available-for-sale financial assets are stated at cost where fair values cannot be reliably measured.
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JUNE 30, 2010 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Financial assets (Continued) Loans and receivables Trade and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables and are measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest method, except for short-term receivables when the recognition of interest would be immaterial. Impairment of financial assets Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the financial asset have been impacted. For financial assets carried at amortised cost, the amount of the impairment is the difference between the assets carrying amount and the present value of estimated future cash flow, discounted at the original effective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of receivables where the carrying amount is reduced through the use of an allowance account. When a receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited to the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent the carrying amount of the financial asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. In respect of available-for-sale equity instruments, any subsequent increase in fair value after an impairment loss, is recognised directly in other comprehensive income. Derecognition of financial assets The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
55.

JUNE 30, 2010 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Financial liabilities and equity instruments Classification as debt or equity Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs. Bank borrowings Interest-bearing bank loans are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the Groups accounting policy for borrowing costs. Trade and other payables Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest method, with interest expense recognised on an effective yield basis. Derecognition of financial liabilities The Group derecognises financial liabilities when, and only when, the Groups obligations are discharged, cancelled or they expire. INVENTORIES Inventories are stated at the lower of cost (weighted average method) and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable value represents the estimated selling price less all estimated costs to completion and costs to be incurred in marketing, selling and distribution. LEASES Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
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JUNE 30, 2010 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Financial liabilities and equity instruments (Continued) The Group as lessor Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which use benefit derived from the leased asset is diminished. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term. The Group as lessee Assets held under finance leases are recognised as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statements of financial position as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to profit or loss unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Groups general policy on borrowing costs. Contingent rentals are recognised as expenses in the periods in which they are incurred. Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred. In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. CLUB MEMBERSHIPS Club memberships are stated at cost less impairment losses recognised when the carrying amount exceeds the estimated recoverable amount. PROPERTY, PLANT AND EQUIPMENT Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the statement of financial position at their costs or revalued amounts, being the fair value at the date of revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations are performed with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair values at the end of the reporting period.
57.

JUNE 30, 2010 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Financial liabilities and equity instruments (Continued) Any revaluation increase arising on the revaluation of such land and buildings is recognised in other comprehensive income and accumulated in asset revaluation reserve, except to the extent that it reverses a revaluation decrease for the same asset previously recognised in profit or loss, in which case the increase is credited to profit or loss to the extent of the decrease previously charged. A decrease in carrying amount arising on the revaluation of such land and buildings is charged to profit or loss to the extent that it exceeds the balance, if any, held in the asset revaluation reserve relating to a previous revaluation of that asset. Plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is charged so as to write off the cost or valuation of assets, other than freehold land and construction-inprogress over their estimated useful lives, using the straight-line method, on the following bases: Leasehold land and buildings Plant and machinery Office equipment Motor vehicles over terms of lease of 12/3% to 4% 10% to 162/3% 10% to 331/3% 10% to 25%
The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis. Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, if there is no certainty that the lessee will obtain ownership by the end of the lease term, the asset shall be fully depreciated over the shorter of the lease term and its useful life. The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amounts of the asset and is recognised in the profit or loss. GOODWILL Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the acquisition date). Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any noncontrolling interest in the acquire and the fair value of the acquirers previously held equity interest (if any) in the entity over net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the Groups interest in the fair value of the acquirees identifiable net assets exceeds the sum of consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirers previously held equity interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.
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JUNE 30, 2010 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Financial liabilities and equity instruments (Continued) Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Groups cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period. On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. INTANGIBLE ASSETS Intangible assets acquired separately Intangible assets acquired separately are reported at cost less accumulated amortisation and accumulated impairment losses. Intangible assets with finite useful lives are amortised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives are not amortised. Each period, the useful lives of such assets are reviewed to determine whether events and circumstances continue to support an indefinite useful life assessment for the asset. Such assets are tested for impairment in accordance with the policy below. Internally-generated intangible assets research and development expenditure Expenditure on research activities is recognised as an expense in the period in which it is incurred. An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following have been demonstrated: the technical feasibility of completing the intangible asset so that it will be available for use or sale; the intention to complete the intangible asset and use or sell it; the ability to use or sell the intangible asset;
59.

JUNE 30, 2010 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Financial liabilities and equity instruments (Continued) Internally-generated intangible assets research and development expenditure (Continued) how the intangible asset will generate probable future economic benefits; the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and the ability to measure reliably the expenditure attributable to the intangible asset during its development.
The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognised, development expenditure is charged to profit or loss in the period in which it is incurred. Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets acquired separately. IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS EXCLUDING GOODWILL At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
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JUNE 30, 2010 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Financial liabilities and equity instruments (Continued) Internally-generated intangible assets research and development expenditure (Continued) Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. GOVERNMENT GRANTS Government grant is recognised as income over the periods necessary to match it with the costs for which it is intended to compensate, on a systematic basis. Government subsidy that is receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs is recognised in profit or loss in the period in which it becomes receivable. PROVISIONS Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle that obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. REVENUE RECOGNITION Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.
61.

JUNE 30, 2010 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Financial liabilities and equity instruments (Continued) Sale of goods Revenue from the sale of goods is recognised when all the following conditions are satisfied: the Group has transferred to the buyer the significant risks and rewards of ownership of the goods; the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; the amount of revenue can be measured reliably; it is probable that the economic benefits associated with the transaction will flow to the entity; and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Interest income Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assets net carrying amount. Rental income Rental income is recognised on a straight-line basis over the term of the relevant lease. Dividend income Dividend income from investments is recognised when the shareholders rights to receive payment have been established. BORROWING COSTS Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
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JUNE 30, 2010 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Financial liabilities and equity instruments (Continued) Dividend income (Continued) All other borrowing costs are recognised in profit or loss in the period in which they are incurred. RETIREMENT BENEFIT COSTS Payments to defined contribution retirement benefit plans are charged as an expense as they fall due. Payments made to state-managed retirement benefit schemes, such as the Singapore Central Provident Fund, are dealt with as payments to defined contribution plans where the Groups obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan. EMPLOYEE LEAVE ENTITLEMENT Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the end of the reporting period. INCOME TAX Income tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or tax deductible. The Groups liability for current tax is calculated using tax rates (and tax laws) that have been enacted or substantively enacted in countries where the Company and its subsidiaries operate by the end of the reporting period. Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
63.

JUNE 30, 2010 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Financial liabilities and equity instruments (Continued) Dividend income (Continued) Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised based on the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items credited or debited directly to equity or other comprehensive income, in which case the tax is also recognised directly in equity or other comprehensive income, or where they arise from the initial accounting for a business combination. In the case of a business combination, the tax effect is taken into account in calculating goodwill or determining the excess of the acquirers interest in the net fair value of the acquirees identifiable assets, liabilities and contingent liabilities over cost. FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION The individual financial statements of each Group entity are measured and presented in the currency of the primary economic environment in which the entity operates (its functional currency). The consolidated financial statements of the Group and statement of financial position of the Company are presented in United States dollars, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements. In preparing the financial statements of the individual entities, transactions in currencies other than the entitys functional currency are recorded at the rates of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the end of the reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in other comprehensive income. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in other comprehensive income.
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JUNE 30, 2010 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Financial liabilities and equity instruments (Continued) Dividend income (Continued) For the purpose of presenting consolidated financial statements, the assets and liabilities of the Groups foreign operations (including comparatives) are expressed in United States dollars using exchange rates prevailing at the end of the reporting period. Income and expense items (including comparatives) are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in the Groups translation reserve. Such translation differences are recognised in profit or loss in the period in which the foreign operation is disposed of. On consolidation, exchange differences arising from the translation of the net investment in foreign entities (including monetary items that, in substance, form part of the net investment in foreign entities), and of borrowings and other currency instruments designated as hedges of such investments, are taken to the foreign currency translation reserve. Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate. CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise cash on hand, demand deposits that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. 3 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY In the application of the Groups accounting policies, which are described in Note 2, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. (i) Critical judgements in applying the Groups accounting policies Management did not make any material judgements that have significant effect on the amounts recognised in the financial statements except for those affecting accounting estimates as disclosed in Note 3(ii).
65.

JUNE 30, 2010 3 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (Continued) (ii) Key sources of estimation uncertainty (Continued) The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below. a) Allowances for doubtful debts The Group makes allowances for doubtful debts based on an assessment of the recoverability of trade and other receivables where events or changes in circumstances indicate that the balances may not be collectible. The identification of doubtful debts require the use of judgement and estimates. Where the expectation is different from the original estimate, such differences will impact the carrying value of trade and other receivables and doubtful debts expenses in the period in which such estimate have been changed. The carrying amounts of the Groups trade and other receivables are disclosed in Notes 7 and 8 respectively. b) Allowances for inventories Management determines whether an allowance for stock obsolescence or slow-moving stock or for any shortfall in net realisable value of inventories by reviewing the inventory listing on a periodic basis. The review involves a comparison of the carrying value of the inventory items with the respective net realisable value as well as the forecasted demand for the inventories. Arising from the review, management sets up the necessary allowance for obsolete and slow-moving inventories or for any short fall in the net realisable value of the inventories. The carrying amounts of the Groups inventories are disclosed in Note 9. c) Impairment of property, plant and equipment The Group assesses annually whether property, plant and equipment exhibit any indication of impairment. The recoverable amounts of property, plant and equipment will be determined based on value-in-use calculations. These calculations require the use of judgement and estimates. The carrying amounts of the Groups property, plant and equipment are disclosed in Note 14. d) Impairment of goodwill Determining whether goodwill is impaired requires an estimation of the value-in-use of the cash-generating units to which goodwill has been allocated. The value-in-use calculation requires the management to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. The carrying amount of goodwill is disclosed in Note 11.
.66

JUNE 30, 2010 3 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (Continued) (ii) Key sources of estimation uncertainty (Continued) e) Impairment of investment in subsidiaries Determining whether investments in subsidiaries are impaired requires an estimation of the value in use of these investments. The value in use calculation requires the Company to estimate the future cash flows expected from these investments and a suitable discount rate in order to calculate present value. The carrying amount of investments in subsidiaries is disclosed in Note 10. f) Amortisation of intangible assets The Group assesses the useful life of brand name acquired to be 20 years based on the management estimations. The carrying amounts of the Groups intangible assets are disclosed in Note 15. 4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (a) Categories of financial instruments The following table sets out the financial instruments as at the end of the reporting period. Group 2010 US$000 Financial assets Loan and receivables (including cash and bank balances) Available-for-sale financial assets 8,771 496 9,854 483 13,234 496 12,087 483 2009 US$000 2010 US$000 Company 2009 US$000
Financial liabilities Amortised cost 10,936 7,202 5,832 6,334
67.

JUNE 30, 2010 4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (Continued) (b) Financial risk management policies and objectives The Group has documented financial risk management policies. These policies set out the Groups overall business strategies and its risk management philosophy. The Groups overall financial risk management programme seeks to minimise potential adverse effects of financial performance of the Group. The Board of Directors provides written principles for overall financial risk management and written policies covering specific areas, such as market risk (including foreign exchange risk, interest rate risk, equity price risk), credit risk, liquidity risk, cash flow interest rate risk, use of derivative financial instruments and investing excess cash. Such written policies are reviewed annually by the Board of Directors and periodic reviews are undertaken to ensure that the Groups policy guidelines are complied with. The Group does not hold or issue derivative financial instruments. There has been no change to the Groups exposure to these financial risks or the manner in which it manages and measures the risk. Market risk exposures are measured using sensitivity analysis indicated below. (i) Foreign currency risk management The Group transacts business in various foreign currencies including Chinese Renminbi (RMB), the Singapore dollar (SGD), the Vietnam Dong (VND), the Hong Kong dollar (HKD), Euro (EUR), the Malaysian Ringgit (RM), and the New Zealand dollar (NZD) and therefore is exposed to foreign exchange risk. The Group does not enter into any derivative financial investments to hedge this risk. The Group uses natural hedges that arise from offsetting assets and liabilities that are denominated in foreign currencies.
.68

JUNE 30, 2010 4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (Continued) (b) Financial risk management policies and objectives (Continued) (i) Foreign currency risk management (Continued) At the reporting date, the carrying amounts of monetary assets and monetary liabilities denominated in currencies other than the respective Group entities functional currencies are as follows: RMB US$000 2010 Group Assets Cash and bank balances Trade receivables Other receivables Total Liabilities Trade payables Other payables Finance leases Total Company Assets Cash and bank balances Trade receivables Other receivables Total Liabilities Trade payables Other payables Finance leases Total SGD US$000 VND US$000 Others US$000
77 210 287
102 4 28 134
879 87 1,732 2,698
277 1 10 288
604 14 618
18 225 322 565
1,309 479 421 2,209
77 210 287
102 4 28 134
28 1 10 39
604 14 618
8 225 322 555
69.

JUNE 30, 2010 4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (Continued) (b) Financial risk management policies and objectives (Continued) (i) Foreign currency risk management (Continued) RMB US$000 2009 Group Assets Cash and bank balances Trade receivables Other receivables Total SGD US$000 VND US$000 Others US$000
48 11 59
46 8 35 89
662 10 672
110 110
Liabilities Trade payables Other payables Finance leases Total
159 21 180
6 22 77 105
1,537 88 1,625
Company Assets Cash and bank balances Trade receivables Other receivables Total
48 11 59
46 8 35 89
112 112
Liabilities Trade payables Other payables Finance leases Total
159 21 180
6 22 77 105
.70

JUNE 30, 2010 4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (Continued) (b) Financial risk management policies and objectives (Continued) (i) Foreign currency risk management (Continued) Foreign currency sensitivity The following table details the sensitivity to a 10% increase and decrease in the relevant foreign currencies against the functional currency of each Group entity. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents managements assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. A positive number below indicates an increase in profit where functional currency of each Group entity strengthens by 10% against the foreign currency. For a 10% weakening of the functional currency of each Group entity against the foreign currency, there would be an equal and opposite impact on the profit. RMB Impact 2010 2009 US$000 US$000 Group Profit or loss (33) (12) (43) (2) 49 (95) 29 11 SGD Impact 2010 2009 US$000 US$000 VND Impact 2010 2009 US$000 US$000 Others Impact 2010 2009 US$000 US$000
Company Profit or loss (33) (12) (42) (2) 4 11
Any change in foreign currency rates does not result in gains or losses recognised directly in equity or other comprehensive income of the Group and the Company. The Groups sensitivity to foreign exchange rate changes has decreased during the current period mainly due to decrease in monetary liabilities denominated in Vietnam Dong. The Companys exposure arose mainly due to balances due from/to subsidiaries and bank balances which are not denominated in US$. In managements opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk as the year end exposure does not reflect the exposure during the year. Vietnam Dong denominated sales are seasonal with lower sales volumes in the last quarter of the financial year, which results in a reduction in Vietnam Dong receivables at year end.
71.

JUNE 30, 2010 4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (Continued) (b) Financial risk management policies and objectives (Continued) (ii) Interest rate risk management Summary quantitative data of the Groups interest-bearing financial instruments can be found in section (v) of this Note. The Groups policy is to maintain cash equivalents and borrowings in fixed rate instruments. The Group sometimes borrows at variable rates. Interest rate sensitivity The sensitivity analyses below have been determined based on the exposure to interest rates for both derivatives and non-derivative instruments at the end of the reporting period and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents managements assessment of the possible change in interest rates. If interest rates had been 50 basis points higher or lower and all other variables were held constant, the Groups profit for the year ended June 30, 2010 would increase/decrease by US$24,000 (2009: by US$8,000). This is mainly attributable to the Groups exposure to interest rates on its interest bearing borrowings. Any change in interest rates does not result in gains or losses recognised in equity of the Group. The Companys profit and loss and equity are not significantly affected by the changes in interest rates as most of the interest-bearing instruments carry fixed interest and are measured as amortised cost and the floating rate instruments are not material to the Group. (iii) Equity price risk management The Group and Company are exposed to equity risks arising from equity investments classified as availablefor-sale. Available-for-sale equity investments are held for strategic rather than trading purposes. The Group and Company do not actively trade available-for-sale investments. Further details of these equity investments can be found in Note 12 to the financial statements.
.72

JUNE 30, 2010 4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (Continued) (b) Financial risk management policies and objectives (Continued) (iii) Equity price risk management (Continued) Equity price sensitivity The sensitivity analysis below have been determined based on the exposure to equity price risks at the reporting date. In respect of available-for-sale equity investments, if the closing market prices on the last market day of the financial year had been 10% higher/lower while all other variables were held constant: the Groups net profit for the year ended June 30, 2010 would have been unaffected as the equity investments are classified as available-for-sale and no investments were disposed of; and the Groups asset revaluation reserves would increase/decrease by US$3,000 (2009: US$2,000).
The Groups sensitivity to equity prices has changed from the prior year due to changes in market price. (iv) Credit risk management Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Groups exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by the counterparty limits that are reviewed and approved by the management annually. Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable and, where appropriate, letter of credit will be obtained on the trade receivables. The Group does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristic except as described below.
73.

JUNE 30, 2010 4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (Continued) (b) Financial risk management policies and objectives (Continued) (iv) Credit risk management (Continued) The Group defines counterparties as having similar characteristics if they are related entities. Concentration of credit risk did not exceed 5% of gross monetary assets at any time during the year except as described below: GROUP AND COMPANY 2010 US$000 With 5 (2009: 5) customers: Trade receivables 1,715 2,182 2009 US$000
The carrying amount of financial assets recorded in the financial statements, grossed up for any allowances for impairment losses, represents the Groups and the Companys maximum exposure to credit risk without taking account of the value of any collateral obtained for trade receivables as follow: GROUP 2010 US$000 Carrying amount (Note 7) Less: Amount covered by letters of credits from customers Less: Credit insurance Maximum exposure to credit risk (784) (1,599) 1,077 (540) (2,135) 1,289 (784) (1,599) 3,507 (540) (2,135) 2,406 3,460 2009 US$000 3,964 2010 US$000 5,890 COMPANY 2009 US$000 5,081
(v)
Liquidity risk management In the management of the liquidity risk, the Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance the Groups operations and mitigate the effects of fluctuations in cash flows. Short-term funding is obtained from overdraft facilities and short-term bank loans. Any temporary shortfall of funds of the Company or its subsidiaries would be managed by obtaining short-term financing within the Group.
.74

JUNE 30, 2010 4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (Continued) (b) Financial risk management policies and objectives (Continued) (v) Liquidity risk management (Continued) Liquidity and interest risk analyses Non-derivative financial assets The following table details the expected maturity for non-derivative financial assets. The tables below have been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets except where the Group and the Company anticipate that the cash flow will occur in a different period. Weighted average effective interest rate % Group 2010 Non-interest bearing Fixed interest rate instruments Total
On demand or within 1 year US$000
Adjustment US$000
Total US$000
7,656 1,171 8,827
(56) (56)
7,656 1,115 8,771
2009 Non-interest bearing Fixed interest rate instruments Total Company 2010 Non-interest bearing
8,784 1,134 9,918
(64) (64)
8,784 1,070 9,854
13,234
13,234
2009 Non-interest bearing
12,087
12,087
75.

JUNE 30, 2010 4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (Continued) (b) Financial risk management policies and objectives (Continued) (v) Liquidity risk management (Continued) Liquidity and interest risk analyses (Continued) Non-derivative financial liabilities The following tables detail the remaining contractual maturity for non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group and Company can be required to pay. The table includes both interest and principal cash flows. Weighted average effective interest rate % Group 2010 Non-interest bearing Finance lease liability (fixed rate) Variable interest rate instruments Fixed interest rate instruments Total 4.3 6 3.7 6,053 90 3,937 220 10,300 722 228 950 51 51 (120) (223) (22) (365) 6,053 743 3,714 426 10,936 On demand or within 1 year US$000 Within 2 to 5 years US$000 More than 5 years US$000 Adjustment US$000 Total US$000
2009 Non-interest bearing Finance lease liability (fixed rate) Variable interest rate instruments Fixed interest rate instruments Total 6 6 5.4 5,572 265 430 401 6,668 619 100 719 (135) (24) (26) (185) 5,572 749 406 475 7,202
.76

JUNE 30, 2010 4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (Continued) (b) Financial risk management policies and objectives (Continued) (v) Liquidity risk management (Continued) Liquidity and interest risk analyses (Continued) Non-derivative financial liabilities (Continued) Weighted average effective interest rate % Company 2010 Non-interest bearing Finance lease liability (fixed rate) Variable interest rate instruments Fixed interest rate instruments Total 4.3 2.1 3.7 2,180 58 2,965 220 5,423 264 228 492 51 51 (51) (61) (22) (134) 2,180 322 2,904 426 5,832 On demand or within 1 year US$000 Within 2 to 5 years US$000 More than 5 years US$000 Adjustment US$000 Total US$000
2009 Non-interest bearing Finance lease liability (fixed rate) Variable interest rate instruments Fixed interest rate instruments Total 2 2 5.4 5,375 27 414 401 6,217 56 116 172 (5) (8) (42) (55) 5,375 78 406 475 6,334
77.

JUNE 30, 2010 4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (Continued) (b) Financial risk management policies and objectives (Continued) (vi) Fair values of financial assets and financial liabilities The carrying amounts of cash and cash equivalents, trade and other current receivables and payables, bank borrowing, and other liabilities approximate their respective fair values due to the relatively short-term maturity of these financial instruments. The fair values of other classes of financial assets and liabilities are disclosed in the respective notes to financial statements. The fair values of financial assets and financial liabilities are determined as follows: the fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices; and the fair value of other financial assets and financial liabilities are determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions and dealer quotes for similar instruments. The Group classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputs using in making the measurement. The fair value hierarchy has the following levels: Level 1 Level 2 Quoted prices (unadjusted) in active markets for identical assets or liabilities. 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 prices). Level 3 Inputs for the asset and liability that are not based on observable market data (unobservable inputs). Financial assets measured at fair value at June 30, 2010: Level 1 US$000 Available-for-sale-investments Quoted equity shares (Note 12) 31
.78

JUNE 30, 2010 4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (Continued) (c) Capital risk management policies and objectives The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance and to ensure that all externally imposed capital requirements are complied with. The capital structure of the Group consists of debt, which includes the borrowings disclosed in Notes 17, 20 and 21, cash and cash equivalents and equity attributable to equity holders of the parent, comprising share capital, reserves and accumulated profits as presented in the Groups statement of changes in equity. The Group reviews its capital structure periodically. It balances its overall capital structure through the payment of dividends and new share issues as well as the issue of new debt or the redemption of existing debt. The Groups overall strategy remains unchanged from 2009. 5 RELATED PARTY TRANSACTIONS Related parties are entities with common direct or indirect shareholders and/or directors. Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions. Some of the Groups transactions and arrangements are with related parties and the effects of these on the basis determined between the parties are reflected in these financial statements. The balances are unsecured, interest-free and repayable on demand unless stated otherwise. Significant related party transactions with an entity in which a shareholder and director of the Company has equity interests are as follows: GROUP 2010 US$000 Supply of raw materials to subcontractor Purchase of goods 2009 US$000 (330) 1,610
79.

JUNE 30, 2010 5 RELATED PARTY TRANSACTIONS (Continued) Compensation of directors and key management personnel The remuneration of directors and other members of key management during the year are as follows: GROUP 2010 US$000 Short-term benefits Post-employment benefits 1,085 39 2009 US$000 1,062 37
The remuneration of directors and key management is determined by the board of directors having regard to the performance of the Company and individuals. 6 CASH AND BANK BALANCES GROUP 2010 US$000 Cash at bank Cash on hand 3,367 43 3,410 2009 US$000 3,458 30 3,488 2010 US$000 728 19 747 COMPANY 2009 US$000 633 10 643
Cash at bank includes short-term deposits with an original maturity of three months or less amounting to US$1,115,000 (2009: US$1,070,000) for the Group which bear effective interest at an average rate of 1% to 5% (2009: 2% to 6%) per annum.
.80

JUNE 30, 2010 7 TRADE RECEIVABLES GROUP 2010 US$000 Outside parties Subsidiaries (Note 10) Related parties (Note 5) 3,440 20 3,460 2009 US$000 3,582 382 3,964 2010 US$000 3,028 2,842 20 5,890 COMPANY 2009 US$000 3,163 1,536 382 5,081
The average credit period on sale of goods is 30 days (2009: 30 days). No interest is charged on the trade receivables. Trade receivables are provided for based on estimated irrecoverable amounts from the sale of goods, determined by reference to past default experience. Before accepting any new customer, the Group will assess the potential customers credit quality and defines credit limits by customer. Limits attributed to customers are reviewed periodically. In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is disclosed in Note 4(b)(iv). Accordingly, management believes that there is no credit provision required based on review in 2010.
81.

JUNE 30, 2010 7 TRADE RECEIVABLES (Continued) The table below is an analysis of trade receivables as at end of reporting period: GROUP 2010 US$000 Not past due and not impaired Past due but not impaired (i) Total 3,054 406 3,460 2009 US$000 3,472 492 3,964 2010 US$000 5,695 195 5,890 COMPANY 2009 US$000 4,791 290 5,081
(i)
Aging of receivables that are past due but not impaired <6 months 6 months to 9 months 9 months to 12 months >12 months (ii) 393 4 2 7 406 407 28 57 492 186 1 2 6 195 290 290
(ii) 8
Due from long standing customers with no clear indicators of past credit default experience.
OTHER RECEIVABLES AND PREPAYMENTS GROUP 2010 US$000 Subsidiaries (Note 10) Related parties (Note 5) Receivables from disposal of property, plant and equipment Deposits Prepayments Value added tax recoverable Others 369 1,126 1,443 66 3,027 1,073 348 698 748 110 3,100 23 118 21 6,715 25 184 54 6,547 23 2009 US$000 123 2010 US$000 6,536 17 COMPANY 2009 US$000 6,166 118
.82

JUNE 30, 2010 9 INVENTORIES GROUP 2010 US$000 Raw materials Work in progress Finished goods Less: Allowance for inventories 7,126 2,130 3,029 12,285 (271) 12,014 2009 US$000 5,184 1,471 2,939 9,594 (136) 9,458 2010 US$000 9 482 491 491 COMPANY 2009 US$000 1,034 1,034 1,034
Movement in allowance for inventories: Balance at beginning of the year Charged to profit and loss Utilised Balance at end of the year 136 216 (81) 271 185 (49) 136 38 (38)
10
INVESTMENT IN SUBSIDIARIES COMPANY 2010 US$000 Unquoted equity shares, at cost Less: Allowance for impairment loss 12,299 12,299 Movements in allowance for impairment loss: Balance at beginning of year Written off on liquidation Balance at end of year 78 (78) 78 78 2009 US$000 11,746 (78) 11,668
The amounts due to/from subsidiaries are unsecured, interest-free and repayable on demand.
83.

JUNE 30, 2010 10 INVESTMENT IN SUBSIDIARIES (Continued) Details of the subsidiaries are described below: Proportion of ownership interest and Subsidiaries voting power held 2010 2009 % % 100 100 Cost of investment 2010 2009 US$000 US$000 1,352 1,352
Principal activities and country of incorporation/operations
Jatat Furniture Industries Sdn Bhd (1)
Timber merchants and manufacturers, exporters, wholesalers and retailers of furniture (Malaysia) Production of wooden furniture, steel furniture, inlaying of marble on wood and interior decoration (Vietnam) Production of wooden furniture, steel furniture, inlaying of marble on wood and interior decoration (Vietnam) Timber merchants and manufacturers, exporters, wholesalers and retailers of furniture (Malaysia) Fabrication and leather upholstery of furniture (Vietnam) Wholesale and distribution of furniture (New Zealand) Manufacturing and export of furniture (China) Investment holding (Singapore)
Koda International Ltd
(1)
100
100
1,526
1,526
Koda Vietnam Co., Ltd
(1)
100
100
200
200
Koda Woodcraft Sdn Bhd
(1)
100
100
3,081
3,081
Rossano Design Co., Ltd (1) **
70
70
53
53
Devon Lifestyle Co., Ltd
(2)
100
100
Koda Furniture Dongguan Co., Ltd (3) Richin Furniture Dcor Pte Ltd
100
100
750
750
70
70
1,890
1,890
.84

JUNE 30, 2010 10 INVESTMENT IN SUBSIDIARIES (Continued) Details of the subsidiaries are described below: (Continued) Proportion of ownership interest and Subsidiaries voting power held 2010 % Outdoor Living Pte Ltd Koda Indochine Co., Ltd Koda Saigon Co., Ltd
(1) (1)
Principal activities and country Cost of investment 2010 US$000 63 1,560 1,824 2009 US$000 63 929 1,824 Investment holding (Singapore) Dormant (Vietnam) Production of wooden furniture, steel furniture, inlaying of marble on wood and interior decoration. (Vietnam) of incorporation/operations
2009 % 100 100 100
100 100 100
Zenith Asia Limited
(4)
70
12,299
78 11,746
Dormant (United Kingdom)
Notes on subsidiaries: * ** Held by subsidiary. 35% held by the Company and 50% held by Richin Furniture Dcor Pte Ltd.
Note on auditors: The above subsidiaries are audited by Deloitte & Touche LLP Singapore except for the subsidiaries that are indicated below:
(1)
Audited by overseas practices of Deloitte Touche Tohmatsu. Audited by Gilligan Sheppard Ltd, New Zealand (GSL). Audited by Dongguan City Dong Cheng Certified Public Accountants, China (DCDC). In March 2010, Zenith Asia Limited (the subsidiary), a 70% owned subsidiary company was dissolved voluntarily. The Board of Directors and the Audit Committee of the Company have reviewed the firm profile of GSL and DCDC, and having considered that these are not significant subsidiaries, the Board of Directors and the Audit Committee are satisfied that their appointment would not compromise the standard and effectiveness of the audit of the Group.
(2)
(3)
(4)
The net assets of each subsidiary referred to in (2) and (3) above are less than 20% of the net assets of the Group as at the year end.
85.

JUNE 30, 2010 11 GOODWILL GROUP 2010 US$000 At cost 728 2009 US$000 728
The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. The recoverable amount of the cash generating unit (CGU), Rossano Design Co., Ltd, is determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the period. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGU. The growth rates are based on industry growth forecasts. Changes in selling prices and direct costs are based on past practices and expectation of future changes in the market. The Group prepares cash flow forecasts derived from the most recent financial budgets approved by management and extrapolates cash flows for the following two years based on an estimated growth rate of 10% to 20% per annum. This rate does not exceed the average long-term growth rate for the relevant markets. The rate used to discount the forecasted cash flows from the above is 10% (2009: 10%).
.86

JUNE 30, 2010 12 AVAILABLE-FOR-SALE INVESTMENTS GROUP AND COMPANY 2010 2009 US$000 US$000 Unquoted equity shares, at cost: Koda Wood Industries Pte Ltd (Note a) Others (Note b) Quoted equity shares, at fair value Less: Allowance for impairment 465 31 496 496 Movements in allowance for impairment loss: Balance at beginning of year Utilised Balance at end of year 92 (92) 92 92 465 92 18 575 (92) 483
a)
This represents a 19.9% equity interest in Koda Wood Industries Pte Ltd (Koda Wood), a company incorporated in Singapore. A director of the Company holds the remaining 80.1% equity interest in Koda Wood. The Company has an option to acquire the remaining 80.1% equity interest from the director. Management is of the view that the likelihood of the Company exercising the option to acquire the additional equity interest is remote since the date of grant. This represents a 19.9% equity interest in a major customer, a company incorporated in New Zealand. In 2010, the Group wrote off the impairment of US$92,000 due to the liquidation of the company.
b)
The fair values of the unquoted equity shares in (a) held by the Group cannot be reliably measured and accordingly the investments in these shares are stated at cost, less impairment if any. 13 CLUB MEMBERSHIPS GROUP 2010 US$000 Club memberships, at cost Impairment loss 280 (69) 211 2009 US$000 280 (69) 211 COMPANY 2010 2009 US$000 US$000 192 192 192 192
87.

JUNE 30, 2010 14 PROPERTY, PLANT AND EQUIPMENT Leasehold land and buildings US$000 Plant and machinery US$000 Constructioninprogress US$000
Freehold land US$000 GROUP Cost or valuation: At July 1, 2008 Currency realignment Additions Transfer Transfer from prepayment Disposals At June 30, 2009 Currency realignment Additions Transfer Transfer from prepayment Disposals At June 30, 2010 Comprising: June 30, 2010 At cost At valuation June 30, 2009 At cost At valuation
Office equipment US$000
Motor vehicles US$000
Total US$000
1,315 (91) 1,224 100 1,324
9,254 (228) 189 1,853 1,242 (1,545) 10,765 209 46 43 (4) 11,059
6,450 (222) 806 119 (92) 7,061 131 570 200 (183) 7,779
1,157 (40) 146 18 (13) 1,268 (2) 125 (42) 1,349
980 (8) 24 (22) 974 (3) 556 (309) 1,218
1,990 78 (1,990) 78 (7) 1,192 (200) 1,063
21,146 (589) 1,243 1,242 (1,672) 21,370 428 2,489 43 (538) 23,792
1,324 1,324 1,224 1,224
8,570 2,489 11,059 7,759 3,006 10,765
7,779 7,779 7,061 7,061
1,349 1,349 1,268 1,268
1,218 1,218 974 974
1,063 1,063 78 78
19,979 3,813 23,792 17,140 4,230 21,370
Accumulated depreciation: At July 1, 2008 Currency realignment Depreciation Disposals At June 30, 2009 Currency realignment Depreciation Disposals
2,547 (54) 355 (191) 2,657 68 382 (1) 3,106
3,987 (163) 443 (78) 4,189 5 559 (110) 4,643
712 (25) 108 (6) 789 21 142 (40) 912
372 (3) 104 (10) 463 15 125 (171) 432
7,618 (245) 1,010 (285) 8,098 109 1,208 (322) 9,093
Carrying amount: At June 30, 2010 At June 30, 2009
1,324 1,224
7,953 8,108
3,136 2,872
437 479
786 511
1,063 78
14,699 13,272
.88

JUNE 30, 2010 14 PROPERTY, PLANT AND EQUIPMENT (Continued) Freehold land, leasehold land and buildings of certain subsidiaries were revalued by independent valuer, Jones Lang Wootton, by reference to market evidence of recent transactions for similar properties as at June 30, 2008. The revaluation resulted in an increase in the carrying value, revaluation surplus and deferred tax liabilities of US$249,000, US$191,000 and US$58,000 respectively. At June 30, 2010, had the freehold land and leasehold land and buildings been carried at cost less accumulated depreciation and accumulated impairment losses, their carrying amounts would have been approximately US$7,825,000 (2009 : US$7,940,000). During the financial year, a subsidiary company entered into an agreement for the construction of a new factory in Vietnam. The total contract value of the factory is expected to be approximately US$1.2 million and the commitment for future capital expenditure is approximately US$190,000. Leasehold building US$000 COMPANY Cost or valuation: At July 1, 2008 Additions Disposals At June 30, 2009 Additions Disposals At June 30, 2010 Comprising: June 30, 2010 Cost Valuation Total June 30, 2009 Cost Valuation Total Accumulated depreciation: At July 1, 2008 Depreciation Disposals At June 30, 2009 Depreciation Disposals At June 30, 2010 Carrying amount: At June 30, 2010 At June 30, 2009 809 (47) 762 1 (4) 759 1,155 154 1,309 4 (60) 1,253 423 9 (6) 426 23 (1) 448 708 (22) 686 460 (253) 893 3,095 163 (75) 3,183 488 (318) 3,353 Plant and machinery US$000 Office equipment US$000 Motor vehicles US$000 Total US$000
2 757 759
2 757 759
52 757 809 735 35 (21) 749 10 (1) 758
1,004 23 1,027 41 (1) 1,067
321 33 (4) 350 25 375
265 67 (10) 322 56 (152) 226
52 757 809 2,325 158 (35) 2,448 132 (154) 2,426
1 13
186 282
73 76
667 364
927 735
89.

JUNE 30, 2010 14 PROPERTY, PLANT AND EQUIPMENT (Continued) The leasehold building of the Company is stated at directors valuation as at June 30, 1983 based on the professional valuation made by Messrs Associated Property Consultants Pte Ltd in November 1981. Regular revaluations have not subsequently been performed on the leasehold building as the directors valuation was performed prior to January 1, 1984. At June 30, 2010, had the leasehold building been carried at cost less accumulated depreciation and accumulated impairment losses, the carrying amount would have been US$ Nil (2009 : US$Nil). The Company has motor vehicles with carrying amounts of US$465,000 (2009: US$115,000) under finance lease agreements (Note 20). 15 INTANGIBLE ASSET GROUP 2010 US$000 Brand name Cost: Balance at beginning of year Currency realignment Balance at end of year Accumulated amortisation: Balance at beginning of year Currency realignment Charge to profit or loss Balance at end of year Carrying amount: At beginning of year 373 461 20 21 41 2 18 20 393 2 395 461 (68) 393 2009 US$000
At end of year
354
373
In 2008, the Group acquired the Devon brand name from an investee for a purchase consideration of NZ$602,000 (equivalent to US$461,000). The brand name is amortised over the estimated useful life of 20 years.
.90

JUNE 30, 2010 16 DEFERRED TAX ASSETS (LIABILITIES) GROUP 2010 US$000 Deferred tax assets: Balance at beginning of year Credit to profit or loss (Note 28) Currency realignment Balance at end of year 133 94 (19) 208 110 4 19 133 3 3 3 3 2009 US$000 2010 US$000 COMPANY 2009 US$000
Deferred tax liabilities: Balance at beginning and end of year (58) (58)
Net
150
75
The balance comprises mainly the tax effect of: Tax loss carry forwards Revaluation of property Net 208 (58) 150 133 (58) 75 3 3 3 3
17
BILLS PAYABLES GROUP 2010 US$000 Bills payable 3,714 2009 US$000 406 2010 US$000 2,904 COMPANY 2009 US$000 406
The bank facilities of the Company with a balance of US$2,904,000 (2009: US$406,000) as at the end of reporting period are secured by a negative pledge on the Companys assets. The legal mortgage on the Companys leasehold building was discharged during the current financial year as the lease will expire in November 2013. The bank facilities of subsidiaries with a balance of US$810,000 (2009: Nil) as at the end of reporting period are secured by a legal mortgage on the subsidiarys leasehold land and buildings and guaranteed by the Company. The above credit facilities bear interest at rates ranging from 1.20% to 5% (2009 : 1.25% to 5%) per annum.
91.

JUNE 30, 2010 18 TRADE PAYABLES GROUP 2010 US$000 Subsidiaries (Note 10) Outside parties 3,614 3,614 2009 US$000 3,446 3,446 2010 US$000 413 559 972 COMPANY 2009 US$000 4,318 94 4,412
The average credit period on purchases of goods is 30 days (2009: 30 days). No interest is charged on the trade payables. 19 OTHER PAYABLES GROUP 2010 US$000 Accrued expenses Refundable deposits received Others 1,300 1,065 74 2,439 2009 US$000 1,107 929 90 2,126 2010 US$000 264 913 31 1,208 COMPANY 2009 US$000 231 709 23 963
.92

JUNE 30, 2010 20 OBLIGATIONS UNDER FINANCE LEASES GROUP Present value Minimum lease payments 2010 US$000 Amounts payable under finance leases: Within one year In the second to fifth years inclusive After five years Less: Future finance charges Present value of lease obligations Less: Amount due for settlement within 12 months (shown under current liabilities) Amount due for settlement after 12 months 657 499 266 52 (86) (250) (56) (26) 743 749 743 749 322 78 322 78 662 42 832 (89) 505 849 (100) 617 40 743 499 749 254 42 366 (44) 57 86 (8) 226 40 322 52 78 128 344 86 250 70 29 56 26 2009 US$000 of minimum lease payments 2010 US$000 2009 US$000 Minimum lease payments 2010 US$000 2009 US$000 COMPANY Present value of minimum lease payments 2010 US$000 2009 US$000
It is the Groups policy to lease certain of its motor vehicles under finance leases. The average lease term is 7 years (2009: 10 years). For the year ended June 30, 2010, the average effective borrowing rate was 4% to 5% (2009: 4% to 7%) per annum for the Group and the Company. Interest rates are fixed at the contract date, and thus expose the Group to fair value interest rate risk. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. The Groups and Companys obligations under finance leases are secured by the lessors charge over the leased assets. The fair value of the Groups and Companys obligations approximates their carrying amount.
93.

JUNE 30, 2010 21 LONG-TERM BANK LOAN GROUP AND COMPANY 2010 US$000 Bank loan Less: Current portion Non-current portion 426 (212) 214 2009 US$000 475 (380) 95
The Group and the Company has the following principal bank loans: a) a loan of US$331,000 (2009: US$Nil). The loan is repayable over 36 monthly instalments of US$9,722 per month commencing from May 2010. Repayments will commence in April 2010 and will continue until October 2029. The loan is unsecured and bears interest of at 3.7% per annum. b) a loan of US$95,000 (2009: US$475,000). The loan is repayable over 60 monthly instalments of US$31,667 per month commencing from September 2005. The bank loan as at end of reporting period is secured by a negative pledge on the Companys assets. The legal mortgage on the Companys leasehold building was discharged during the current financial year as the lease will expire in November 2013. The loan bear interest at 5.4% (2009: 5.4%) per annum for the first 3 years and 1.5% per annum above the Singapore Inter-Bank Offer Rate for subsequent years. The effective interest rate for the year was 3.7% (2009: 13%) per annum. 22 SHARE CAPITAL GROUP AND COMPANY 2010 Issued and paid up: At beginning of year and at end of year 133,690,000 133,690,000 4,040 4,040 2009 2010 US$000 2009 US$000 Number of ordinary shares
The Company has one class of ordinary shares with no par value, and which carry no right to fixed income.
.94

JUNE 30, 2010 23 CAPITAL RESERVES Property revaluation reserve US$000 GROUP Balance at July 1, 2008 Capitalisation of accumulated profits of a subsidiary Loss on available-for-sale investments Balance at June 30, 2009 Gain on available-for-sale investments Balance at June 30, 2010 249 249 249 (20) (21) (41) 13 (28) 1,985 1,985 1,985 229 1,985 (21) 2,193 13 2,206 Investments revaluation reserve US$000
Other reserve US$000
Total US$000
COMPANY Balance at July 1, 2008 Loss on available-for-sale investments Balance at June 30, 2009 Gain on available-for-sale investments Balance at June 30, 2010 58 58 58 (20) (21) (41) 13 (28) 38 (21) 17 13 30
The property revaluation reserve arises on the revaluation of land and buildings. When revalued land or buildings are sold, the portion of the property revaluation reserve that relates to that asset, and is effectively realised, is transferred directly to retained earnings. The investments revaluation reserve arises on the revaluation of available-for-sale financial assets. When a revalued financial asset is sold, the portion of the reserve that relates to that financial asset, and is effectively realised, is recognised in profit or loss. When a revalued financial asset is impaired, the portion of the reserve that relates to that financial asset is recognised in profit or loss. Other reserve represents the capitalisation of accumulated profits of a subsidiary. 24 REVENUE This represents the invoiced value of goods sold.
95.

JUNE 30, 2010 25 OTHER OPERATING INCOME GROUP 2010 US$000 Gain on disposal of property, plant and equipment Rental income Interest income on bank balances Exchange gain Dividend income from available-for-sale investments Others 180 157 182 87 606 2009 US$000 423 174 127 188 1 21 934
26
OTHER OPERATING EXPENSES GROUP 2010 US$000 Bad debt written off related party Inventories written off Loss on disposal of property, plant and equipment Others 75 216 13 25 329 2009 US$000 67 18 9 94
27
FINANCE COSTS GROUP 2010 US$000 Interest expense on: Bank loan Finance leases Bills payable 34 49 9 92 24 92 25 141 2009 US$000
.96

JUNE 30, 2010 28 INCOME TAX (CREDIT) EXPENSE GROUP 2010 US$000 Current tax: Singapore Foreign Deferred tax (Over) Under provision in prior years Income tax (credit) expense 53 (94) (75) (116) 2009 US$000 125 (4) 12 133
Koda International Ltd is incorporated in Vietnam and assessable income generated from the investment made by the Company pursuant to the subsidiarys investment licence dated May 29, 2002 is subject to a corporate income tax rate of 10%. The subsidiary is entitled to corporate income tax exemption for four years from the first profit-making year and a reduction of 50% for the following four years. Assessable income generated from the additional investment made pursuant to the subsidiarys investment licence dated January 18, 2005 is subject to a corporate income tax rate of 10% for the first fifteen years and 28% thereafter. The subsidiary is also entitled to a one year tax exemption from the date the additional investment was put into operation and a 50% tax reduction for the following four years on this additional investment. The income tax for the current financial year is calculated using a rate of 5% which had been enacted by the end of the reporting period. Koda Vietnam Co., Ltd is incorporated in Vietnam and is subjected to a corporate income tax rate of 25% on its assessable income. The income tax for the current financial year is calculated using a rate of 25% which had been enacted by the end of the reporting period. Koda Saigon Co., Ltd is incorporated in Vietnam and is subjected to a corporate income tax rate of 10% on its assessable income. The subsidiary is entitled to a corporate income tax exemption for the first four years from the first profit-making year and a reduction of 50% for the following four years. The income is exempted from income tax for the current financial year as this is the first profit-making year. Rossano Design Co., Ltd is incorporated in Vietnam and assessable income generated from this subsidiary is subject to corporate income tax at the rate of 15%. The subsidiary is entitled to a corporate income tax exemption for two years from the first profit making year (2001). In accordance with the tax finalisation minute issued by Ho Chi Minh City Tax Office in September 2005 during the subsidiarys 2004 tax audit, the subsidiary was awarded a 50% tax reduction for 7 years starting from January 1, 2004 in accordance with Circular No. 88/2004/TT-BTC issued by the Ministry of Finance. Accordingly, the subsidiary has been making provisions for its income tax liability at the reduced rate of 7.5% since January 1, 2004 to June 30, 2007. According to revised tax legislation issued in 2009, the 7.5% concessionary rate is only applicable to foreign companies who export certain percentage of their products. As the subsidiarys exports did not meet the required percentage, its applicable income tax has been increased from 7.5% (previously granted concessionary tax rate) to 15% retrospectively from July 1, 2004 onwards. Domestic income tax is calculated at 17% (2009: 17%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions.
97.

JUNE 30, 2010 28 INCOME TAX (CREDIT) EXPENSE (Continued) The total (credit) charge for the year can be reconciled to the accounting profit (loss) as follows: GROUP 2010 US$000 Profit (Loss) before income tax 179 2009 US$000 (143)
Tax at the domestic tax rate of 17% (2009: 17%) Tax effect of expenses that are not deductible in determining taxable profit Effect of concessionary tax rate Effect of deferred tax assets not recognised Double tax deduction Effect of different tax rates of subsidiaries operating in other jurisdictions (Over) Under provision in prior year Total income tax (credit) expense
30 196 (158) 4 (11) (102) (75) (116)
(24) 276 (381) 165 (15) 100 12 133
29
PROFIT (LOSS) FOR THE YEAR GROUP 2010 US$000 Directors remuneration: Directors of the Company Directors of the subsidiaries Fees to directors of the Company Employee benefits expense (including directors remuneration) Costs of defined contribution plans included in employee benefits expense Audit fees paid to: Auditors of the Company Auditors of the subsidiaries Non-audit fees paid to: Auditors of the Company Cost of inventories recognised as expense Inventories written off to net realisable value Amortisation of intangible assets Government subsidy job credits 4 23,054 216 21 (58) 3 20,481 18 18 (100) 52 63 43 60 625 252 58 10,439 531 766 226 57 8,436 421 2009 US$000
.98

JUNE 30, 2010 30 EARNINGS (LOSS) PER SHARE Basic earnings (loss) per ordinary share is calculated on the Groups profit after income tax attributable to the owners of the company of US$271,000 (loss for 2009: US$297,000) divided by 133,690,000 (2009: 133,690,000) ordinary shares in issue during the financial year. There is no dilution as no share options were granted or outstanding during the financial year. 31 DIVIDENDS GROUP AND COMPANY 2010 US$000 Final dividend of 0.5 (2009: 0.5) Singapore cents per share in respect of previous financial year 478 452 2009 US$000
Subsequent to the end of the financial year, the directors of the Company recommended that a final dividend be paid at 0.5 Singapore cent (2009: 0.5 Singapore cent) per ordinary share 1 tier tax-exempt amounting to S$668,000 (equivalent to US$478,000) [2009: S$668,000 equivalent to US$462,000] for the financial year just ended. The proposed dividends are not accrued as a liability for the current financial year in accordance with FRS 10 Events After the end of the reporting period. 32 SEGMENT INFORMATION Business segments The Group determines its operating segments based on internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess their performance. The Group is organised into business units based on their products on which information is prepared and reportable to the Groups chief operating decision maker for the purposes of resources allocation and assessment of performance. The Group is principally engaged in four reportable segments, namely chairs and tables, outdoor and garden furniture, bedroom furniture and occasional and other furniture. Information regarding the Groups reporting segments is presented below.
99.

JUNE 30, 2010 32 SEGMENT INFORMATION (Continued) Business segments (Continued) (i) Segment revenue and results The following is an analysis of the Groups revenue and results by reportable segment: Segment Revenue Year ended June 30, 2010 US$000 Chairs and tables Outdoor and garden furniture Bedroom furniture Occasional and other furniture Total Finance costs Other operating income Other expenses Profit (Loss) before tax Income tax credit (expense) Consolidated profit (loss) for the year Non-controlling interests Profit (Loss) attributable to equity holders of the Company 271 (297) 33,225 1,578 1,227 8,235 44,265 Year ended June 30, 2009 US$000 27,254 1,352 1,766 7,403 37,775 Segment profit/(loss) Year ended June 30, 2010 US$000 70 (164) (19) 107 (6) (92) 606 (329) 179 116 295 (24) Year ended June 30, 2009 US$000 (867) 146 (91) (30) (842) (141) 934 (94) (143) (133) (276) (21)
Revenue reported above represents revenue generated from external customers. There were no inter-segment sales in the year. The accounting policies of the reportable segments are the same as the Groups accounting policies described in Note 2. Segment profit represents the profit earned by each segment without allocation of finance costs, other operating income, other expenses and income tax credit (expense). This is the measure reported to the chief decision maker for the purposes of resource allocation and assessment of segment performance.
.100

JUNE 30, 2010 32 SEGMENT INFORMATION (Continued) Business segments (Continued) (ii) Segment assets and liabilities Year ended June 30, 2010 US$000 Segment assets Chairs and tables Outdoor and garden furniture Bedroom furniture Occasional and other furniture Total segment assets Unallocated Consolidated assets 24,074 1,143 891 5,967 32,075 6,474 38,549 21,225 1,053 1,375 5,766 29,419 5,733 35,152 Year ended June 30, 2009 US$000
Segment liabilities Chairs and tables Outdoor and garden furniture Bedroom furniture Occasional and other furniture Total segment liabilities Unallocated Consolidated liabilities 4,543 216 168 1,126 6,053 4,883 10,936 4,020 199 260 1,093 5,572 1,887 7,459
For the purchase of monitoring segment performance and allocating resources between segments, the chief operating decision maker monitors the tangible, intangible and financial assets attributable to each segment. All assets are allocated to reportable segments other than other financial assets and tax assets. Assets used jointly by reportable segments are allocated on the basis of the revenues earned by individual reportable segments.
101.

JUNE 30, 2010 32 SEGMENT INFORMATION (Continued) Business segments (Continued) (iii) Other segment information Depreciation and amortisation Year ended Year ended June 30, 2010 US$000 Chairs and tables Outdoor and garden furniture Rattan furniture Bedroom furniture Occasional and other furniture (iv) Geographical information The Groups revenue from external customers and information about its segment assets (non-current assets including only property, plant and equipment and intengible asset) by geographical location are detailed below: Revenue from external customers Year ended Year ended June 30, 2010 US$000 United States of America United Kingdom Vietnam Canada New Zealand Australia Spain Korea Others 19,181 7,871 3,786 1,963 1,751 1,664 1,131 1,122 5,796 44,265 June 30, 2009 US$000 12,746 6,275 3,743 3,109 1,612 1,678 882 833 6,897 37,775 907 64 33 225 1,229 June 30, 2009 US$000 729 54 47 198 1,028 Additions to non-current assets Year ended Year ended June 30, 2010 US$000 1,868 89 69 463 2,489 June 30, 2009 US$000 897 44 58 244 1,243
Non-current assets Year ended Year ended June 30, 2010 US$000 8,408 396 6,249 15,053 June 30, 2009 US$000 8,025 424 5,196 13,645
.102

JUNE 30, 2010 32 SEGMENT INFORMATION (Continued) Business segments (Continued) (v) Information about major customers Included in revenues arising from sales of chairs and table of US$33,225,000 (2009: US$27,254,000), (see Note 32 (i) above) are revenue of approximately US$5,444,000 (2009: US$4,224,000) which arose from sales to Groups largest customer. 33 CONTINGENT LIABILITIES GROUP 2010 US$000 Bank guarantees (unsecured) 213 2009 US$000 294
34
OPERATING LEASE COMMITMENTS The Group as lessee GROUP 2010 US$000 Minimum lease payments under operating leases recognised as an expense in the year 1,236 997 110 91 2009 US$000 2010 US$000 COMPANY 2009 US$000
At the end of the reporting period, the commitments in respect of non-cancellable operating leases for the rental of office premises were as follows: GROUP 2010 US$000 Future minimum lease payments payable: Within one year In the second to fifth year inclusive After five years Total 1,101 3,281 1,560 5,942 866 1,678 1,442 3,986 122 296 418 87 297 384 2009 US$000 2010 US$000 COMPANY 2009 US$000
103.

JUNE 30, 2010 34 OPERATING LEASE COMMITMENTS (Continued) Operating lease payments represent the Groups obligations in relation to rental payable for average contractual periods of 5 to 48 years. The Group as lessor GROUP 2010 US$000 Rental income under operating lease 180 2009 US$000 174 2010 US$000 121 COMPANY 2009 US$000 117
At the end of the reporting period, the Group has contracted with tenants for the following future minimum lease receivables. GROUP 2010 US$000 Future minimum lease payments receivable: Within one year In second to fifth year inclusive 175 149 324 173 173 121 149 270 78 78 2009 US$000 2010 US$000 COMPANY 2009 US$000
.104
statement of directors
In the opinion of the directors, the consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company as set out on pages 43 to 103 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 June 30, 2010, and of the results, changes in equity, cash flows of the Group and the changes in equity of the Company for the financial year then ended and at the date of this statement there are reasonable grounds to believe that the Company will be able to pay its debts when they fall due.
ON BEHALF OF THE DIRECTORS
................................................ James Koh Jyh Gang
................................................ Koh Shwu Lee Singapore September 30, 2010
105.
freehold land, leasehold land & buildings

AS AT JUNE 30, 2010 Location Head Office & Warehouse(1) 28 Defu Lane 4 Singapore 539424 Malaysia Site(2) PTD 42786 & 7 Mukim Senai-Kulai Johor, Malaysia Vietnam Factory(3) No. 8, Road No 1 Tan Tao Industrial Park, Binh Tan District, Ho Chi Minh City, Vietnam Vietnam Factory(3) Lot No.10, Street No.1 Tan Tao Industrial Park, Binh Tan District, Ho Chi Minh City, Vietnam Vietnam Factory(3) No.1, Road No.1A, Tan Tao Industrial Park Binh Tan District, Ho Chi Minh City, Vietnam Vietnam Land Lot A1, A4 & A5 Thuan Dao Industrial Zone Ben Luc District Long An Province, Vietnam Investment Property(4) No. 18 Jalan Perindustrian Senai Industrial Estate, Johor Darul Takzim, Malaysia Size 49,731 sf Regular Payments Annual lease payment of S$155,436 pa (subject to 7.6% annual increase) na Expiry 2013 Lessor Housing & Development Board na
394,784 sf
Freehold
36,300 sf
nil
2047
ITACO-The Corporation for Investment Construction Business Exploration TAN TAO Concentrate Industrial Park ITACO-The Corporation for Investment Construction Business Exploration TAN TAO Concentrate Industrial Park Tan Tao Services Utilization Office and Warehousing Trade Co., Ltd. (TASERCO)
38,750 sf
nil
2047
118,400 sf
Annual lease payment of US$208,268 payable for 10 years from Oct 2002 to Oct 2012
2047
544,573 sf
na
2053
Development Investment Joint Venture Company of Ben Luc Industrial Park
87,120 sf
na
2045
Perbadanan Kemajuan Ekonomi Negeri Johor
1. The leasehold property located in Singapore as stated in the Companys books is based on a professional valuation made in November 1981. For information purposes, a second professional valuation of this property was carried out by Knight Frank Pte Ltd in June 2001 which valued the property at $1.6 million. The Company, however, continues to record this leasehold property at its existing book carrying value based on the November 1981 professional valuation on the ground of prudence as the leasehold property has a remaining lease period of about 3 years as at 30 June 2010. 2. Based on professional valuation made by Messrs Jones Lang Wootton in July 2008, this property was valued at RM9.9 million. 3. These properties were acquired under finance lease. 4. Based on professional valuation made by Messrs Jones Lang Wootton in July 2008, this property was valued at RM2.3 million. na RM not applicable Ringgit Malaysia
.106
statistics of shareholdings
AS AT 16 SEPTEMBER 2010 DISTRIBUTION OF SHAREHOLDINGS SIZE OF SHAREHOLDINGS 1 999 1,000 10,000 10,001 1,000,000 1,000,001 AND ABOVE TOTAL NO. OF SHAREHOLDERS 414 442 320 17 1,193 % 34.70 37.05 26.82 1.43 100.00 NO. OF SHARES 106,934 2,068,720 23,490,963 108,022,980 133,689,597 % 0.08 1.55 17.57 80.80 100.00
TWENTY LARGEST SHAREHOLDERS NO. NAME 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 JAMES KOH JYH GANG KOH TENG KWEE KOH JYH ENG KOH SHWU LEE THE ESTATE OF TAN SONG LIANG DB NOMINEES (S) PTE LTD CITIBANK NOMINEES SINGAPORE PTE LTD TAN KIA HONG KOH SHWU LING PHILLIP SECURITIES PTE LTD DBS NOMINEES PTE LTD KOH SHUH JEN KIM ENG SECURITIES PTE. LTD. WEE HIAN KOK RAFFLES NOMINEES (PTE) LTD OCBC SECURITIES PRIVATE LTD POH IK TNG LALCHAND JETHANAND DARYANANI TEH WING KWAN THAM KWOK CHOY TOTAL NO. OF SHARES 26,092,592 15,177,120 13,185,520 12,755,520 9,421,920 5,374,000 5,085,600 4,524,000 3,978,320 1,977,200 1,844,350 1,728,960 1,644,278 1,427,000 1,335,000 1,271,600 1,200,000 1,000,000 899,640 800,000 110,722,620 % 19.52 11.35 9.86 9.54 7.05 4.02 3.80 3.38 2.98 1.48 1.38 1.29 1.23 1.07 1.00 0.95 0.90 0.75 0.67 0.60 82.82
107.
statistics of shareholdings
AS AT 16 SEPTEMBER 2010 Substantial Shareholders (as recorded in the Register of Substantial Shareholders as at 16 September 2010) Number of Shares each fully paid Name of Substantial Shareholder James Koh Jyh Gang Koh Teng Kwee(1) Koh Jyh Eng(2) Koh Shwu Lee(3) The estate of Tan Song Liang(1) Direct Interest 26,092,592 15,177,120 13,185,520 12,755,520 9,421,920 % 19.52 11.35 9.86 9.35 7.05 Indirect Interest 9,421,920 36,000 432,000 15,177,120 % 7.05 0.03 0.32 11.35
Notes: (1) The late Mdm Tan Song Liang was married to Mr Koh Teng Kwee. Both Mr Koh Teng Kwees and estate of Tan Song Liangs indirect interests arise by virtue of their interests in each others shareholdings. (2) Mr Koh Jyh Engs indirect interest comprises 36,000 shares held by his wife, Mdm Wong Sau Wai. (3) Mdm Koh Shwu Lees indirect interest comprises 432,000 shares held by her husband, Mr Kavin Seow Soo Yeow.
Percentage of shareholding held in the hands of public As at 16 September 2010, the percentage of shareholding in the Company held in the hands of public is approximately 37.95%. At least 10% of the Companys equity securities are held by the public at all times and the Company is in compliance with Rule 723 of the SGX-ST Listing Manual.
.108
notice of annual general meeting

NOTICE IS HEREBY GIVEN that the Annual General Meeting of the Company will be held at The Pines, 30 Stevens Road, Singapore 257840 on Thursday, 28 October 2010 at 10.00 a.m. for the following purposes: AS ORDINARY BUSINESS 1. To receive and adopt the Audited Accounts for the financial year ended June 30, 2010 together with the Reports of the Directors and the Auditors of the Company. 2. To declare a final dividend of S$0.005 per ordinary share in respect of the financial year ended June 30, 2010. 3. To re-elect as a Director, Mr Sim Cheng Huat who is retiring under Article 91 of the Companys Articles of Association: Mr Sim Cheng Huat will, upon re-election as a Director of the Company, remain a member each of the Audit Committee and the Nominating and Remuneration Committee and will be considered independent of management. 4. To re-elect as a Director, Mdm Koh Shwu Lee who is retiring under Article 91 of the Companys Articles of Association. 5. To consider and, if thought fit, pass the following resolution: That Mr Koh Teng Kwee, who is above 70 years of age and whose office as Director shall be vacant at the conclusion of this Annual General Meeting in accordance with section 153(2) of the Companies Act, Cap 50 be and is hereby re-appointed as a Director of the Company to hold office until the next Annual General Meeting. 6. 7. To approve Directors fees of S$81,000 for the financial year ended June 30, 2010. To re-appoint Messrs Deloitte & Touche LLP as the Companys Auditors and to authorise the Directors to fix their remuneration. 8. To transact any other business that may be transacted at an Annual General Meeting. (Resolution 7) (Resolution 5) (Resolution 6) (Resolution 4) (Resolution 3) (Resolution 2) (Resolution 1)
AS SPECIAL BUSINESS 9. To consider and, if thought fit, to pass the following resolution as an Ordinary Resolution, with or without modifications: That pursuant to Section 161 of the Companies Act, Cap. 50 and the listing rules of the Singapore Exchange Securities Trading Limited, authority be and is hereby given to the Directors to allot and issue:
109.

(i) (ii) (iii) Shares in the capital of the Company (whether by way of bonus, rights or otherwise); or convertible securities; or additional convertible securities arising from adjustments made to the number of convertible securities previously issued in the event of rights, bonus or capitalisation issues; or (iv) shares arising from the conversion of convertible securities in (ii) and (iii) above,
at any time and upon such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fit provided that the aggregate number of shares and convertible securities to be issued pursuant to this Resolution does not exceed fifty per cent (50%) which limit may, until 31 December 2010 or such later date as may be determined by the Exchange Securities Trading Limited (SGX-ST), be increased to one hundred per cent (100%) for the Company to undertake pro-rata renounceable rights issue of the total number of issued shares excluding treasury shares or such other limit as may be prescribed by the SGX-ST as at the date of this Resolution, of which the aggregate number of shares and convertible securities to be issued other than on a pro-rata basis to shareholders of the Company does not exceed fifteen per cent (15%) of the total number of issued shares excluding treasury shares or such other limit as may be prescribed by the Singapore Exchange Securities Trading Limited as at the date of this Resolution, and, unless revoked or varied by the Company in general meeting, such authority shall continue in force until the conclusion of the next Annual General Meeting or the expiration of the period within which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier. For the purpose of determining the aggregate number of shares that may be issued pursuant to this Resolution, the percentage of the total number of issued shares excluding treasury shares is based on the total number of issued shares excluding treasury shares at the date of this Resolution after adjusting for new shares arising from the conversion of exercise of any convertible securities or employee stock options in issue as at the date of this Resolution and any subsequent consolidation or subdivision of the Companys shares. [See Explanatory Note (I)] 10. To consider and, if thought fit, pass the following resolution as an ordinary resolution, with or without modifications: That subject to and pursuant to the share issue mandate in resolution 8 above being obtained, authority be and is hereby given to the Directors to issue new shares other than on a pro-rata basis to shareholders of the Company at an issue price per new share which shall be determined by the Directors in their absolute discretion provided that such price shall not (i) of the issue is made on or before 31 December 2010, or such other date as may be determined by the SGX-ST, represent more than a 20% discount for new shares to the weighted average price per share or (ii) if the issue is made after 31 December 2010, or such other date as may be determined by the SGX-ST, represent more than a 10% discount for new shares to the weighted average price per share, determined in accordance with the requirements of the SGX-ST. [See Explanatory Note (II)] (Resolution 9) (Resolution 8)
.110

11. To consider and, if thought fit, pass the following ordinary resolution with or without any modifications: That the Board of Directors of the Company be and is hereby authorised to offer and grant options in accordance with the provisions of the Koda Share Option Scheme (the Scheme) and pursuant to Section 161 of the Companies Act, Cap 50, to allot and issue from time to time such number of shares in the capital of the Company as may be required to be issued pursuant to the exercise of the options under the Scheme provided always that the aggregate number of shares to be issued pursuant to the Scheme shall not exceed fifteen per cent (15%) of the total number of issued shares in the capital of the Company from time to time and provided also that, subject to such adjustments as may be made to the Scheme as a result of any variation in the capital structure of the Company. [See Explanatory Note (III)] 12. To consider and, if thought fit, pass the following ordinary resolution with or without any modifications: That the Board of Directors of the Company be and is hereby authorised to offer and grant awards (Awards) in accordance with the provisions of the Performance Share Plan (the Performance Share Plan) and pursuant to Section 161 of the Companies Act, Cap. 50, to allot and issue from time to time such number of shares in the capital of the Company as may be required to be issued pursuant to the vesting of Awards under the Performance Share Plan provided always that the total number of new shares to be issued pursuant to the Awards granted under the Performance Share Plan, when added to the number of new shares issued and issuable in respect of: (i) (ii) all Awards granted under the Performance Share Plan; and all options granted under the Scheme, (Resolution 10)
shall not exceed fifteen per cent (15%) of the issued share capital of the Company from time to time. [See Explanatory Note (IV)] 13. To consider and, if thought fit, to pass the following resolution as an Ordinary Resolution, with or without modifications: That: (a) for the purposes of Sections 76C and 76E of the Companies Act, Cap. 50 (the Companies Act), the exercise by the Directors of all powers of the Company to purchase or otherwise acquire Shares, not exceeding in aggregate the Prescribed Limit (as hereinafter defined), at such price(s) as may be determined by the Directors from time to time up to the Maximum Price (as hereinafter defined), whether by way of: (Resolution 11)
111.

(i) (ii) market purchase(s) (each a Market Purchase) on the SGX-ST; or off-market purchase(s) (each an Off-Market Purchase) effected otherwise than on the SGX-ST in accordance with any equal access scheme(s) as may be determined or formulated by the directors of the Company as they consider fit, which scheme(s) shall satisfy all the conditions prescribed by the Companies Act; (iii) and otherwise in accordance with all other laws and regulations and rules of the SGX-ST as may for the time being be applicable, be and is hereby authorised and approved generally and unconditionally (the Share Purchase Mandate); (b) unless varied or revoked by the Company in general meeting, the authority conferred on the Directors pursuant to the Share Purchase Mandate may be exercised by the Directors at any time and from time to time during the period commencing from the passing of this Resolution 12 and expiring on the earlier of: (i) (ii) the date on which the next annual general meeting of the Company is held; or the date by which the next annual general meeting of the Company is required by law to be held; (c) in this Resolution 12: Prescribed Limit means 10% of the number of issued Shares as at the date of passing of this Resolution 12; and Maximum Price in relation to a Share to be purchased or acquired, means an amount (excluding ancillary expenses such as brokerage, commission, stamp duties, applicable goods and services tax, clearance fees and other related expenses) not exceeding: (i) (ii) in the case of a Market Purchase, 105% of the Average Closing Price of the Shares; and in the case of an Off-Market Purchase pursuant to an equal access scheme, 115% of the Average Closing Price of the Shares; where: Average Closing Price means the average of the closing market prices of a Share over the last five market days on which transactions in the Shares were recorded on the SGX-ST immediately preceding the date of the Market Purchase by the Company or, as the case may be, the date of the making of the offer pursuant to the Off-Market Purchase, and deemed to be adjusted for any corporate action that occurs after the relevant five-day period; and date of the making of the offer means the date on which the Company announces its intention to make an offer for the purchase or acquisition of Shares from holders of Shares, stating therein the relevant terms of the equal access scheme for effecting the Off-Market Purchase; and
.112

(d) the Directors and each of them be and are hereby authorised to deal with the shares purchased by the Company, pursuant to the Share Purchase Mandate in any manner as they think fit, which is allowable under the Companies Act. (e) the Directors and each of them be and are hereby authorised to complete and do all such acts and things (including executing such documents as may be required) as they or he may consider necessary, desirable or expedient to give effect to the transactions contemplated by this Resolution 12. [See Explanatory Note (V)] (Resolution 12)
Notice of Books Closure Date and Payment Date for Final Dividend Notice is hereby given that the Transfer Books and the Register of Members of the Company will be closed at 5.00 p.m. on 11 November 2010 (the Books Closure Date) for the purpose of determining the entitlement of Shareholders to the final dividend of S$0.005 per ordinary shares in respect of the financial year ended 30 June 2010 (the Final Dividend). Shareholders whose shares are deposited with the Central Depository (Pte) Limited (CDP), whose securities account with CDP are credited with Shares as at 5.00 p.m. on the Books Closure Date will be entitled to the Final Dividend on the basis of the number of shares standing to the credit of their securities accounts with CDP as at 5.00 p.m. on such date. Duly completed registrable transfers in respect of shares in the Company received up to the close of business at 5.00 p.m. on 11 November 2010 by the Companys Share Registrar, Boardroom Corporate & Advisory Services Pte. Ltd. at 50 Raffles Place #3201, Singapore Land Tower, Singapore 048623, will be registered to determine shareholders entitlements to the Final Dividend. The Final Dividend, if approved by members at the Annual General Meeting to be held on 28 October 2010, will be paid on or about 23 November 2010. By Order of the Board Ong Beng Hong/Tan Swee Gek Secretaries 13 October 2010
113.

Explanatory Note: I. The Ordinary Resolution proposed in item 9 above, if passed, will empower the Directors from the passing of the above Meeting until the date of the next Annual General Meeting, to allot and issue shares and convertible securities in the Company up to an amount not exceeding, in total, 50% (or one hundred per cent (100%) in the event of a pro-rata renounceable rights issue) of the issued shares in the capital of the Company at the time of passing of this resolution, of which up to 20% may be issued other than on a pro-rata basis to shareholders. II. The Ordinary Resolution proposed under item 10 above, if passed, will authorise the Directors to issue new shares (other than on a pro-rata basis to shareholders of the Company) at an issue price of up to 20% discount or 10% discount to the weighted average price per share. III. The Ordinary Resolution proposed under item 11 above, if passed, will authorise the Directors to offer and grant options in accordance with the provisions of the Scheme and pursuant to Section 161 of the Companies Act, Chapter 50 to allot and issue shares under the Scheme. The Scheme was approved by the shareholders of the Company in general meeting on 6 December 2001. IV. The Ordinary Resolution proposed under item 12 above, if passed, will authorise the Directors to offer and grant award of shares in accordance with the provisions of the Share Performance Plan and pursuant to Section 161 of the Companies Act, Cap. 50 to allot and issue shares under the Share Performance Plan. The Share Performance Plan was approved by the shareholders of the Company in general meeting on 28 October 2008. Please refer to the Circular dated 10 October 2008 for further details. V. The Ordinary Resolution proposed under item 13 above, if passed, will empower the Directors of the Company, from the date of this Annual General Meeting until the date the next annual general meeting is to be held or is required by law to be held, whichever is the earlier, to make purchases (whether by way of Market Purchases or Off-Market Purchases on an equal access scheme) from time to time of up to 10% of the total number of issued Shares excluding any Shares which are held as treasury shares by the Company, at prices up to but not exceeding the Maximum Price. 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 Shares by the Company pursuant to the Share Purchase Mandate are set out in greater detail in the Letter to Shareholders dated 13 October 2010.
Notes: (1) A member entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy or proxies (not more than two) to attend and vote on his/her behalf. A proxy need not be a member of the Company. (2) The instrument appointing a proxy or proxies must be under the hand of the appointor or of his/her 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. (3) The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 28 Defu Lane 4, Singapore 539424 at least 48 hours before the time fixed for the Meeting.
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Proxy Form
KODA LTD
(Incorporated in the Republic of Singapore) (Company Registration No. 198001299R)
I/We of being a member/members of Koda Ltd (the Company) hereby appoint
(Name) (Address) Proportion of my/our Shareholding (%) No. of shares %
Name
Address
NRIC/ Passport Number
and/or (delete as appropriate) Proportion of my/our Shareholding (%) No. of shares %
Name
Address
NRIC/ Passport Number
as my/our proxy/proxies to vote for me/us on my/our behalf at the Annual General Meeting of the Company, to be held at The Pines, 30 Stevens Road, Singapore 257840 on 28 October 2010 at 10.00 a.m., and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the Resolutions to be proposed at the Meeting as indicated hereunder. If no specific direction as to voting is given, the proxy/proxies will vote or abstain from voting at his/their discretion, as he/they will on any other matter arising at the Meeting. No. Resolutions Relating To: Ordinary Business 1. 2. 3. 4. 5. 6. 7. Adoption of Reports and Accounts Declaration of final dividend Re-appointment of Mr Sim Cheng Huat Re-appointment of Mdm Koh Shwu Lee Re-appointment of Mr Koh Teng Kwee Approval of Directors Fees Re-appointment of Auditors Special Business 8 9. 10. 11. 12. Authority to allot and issue new shares Authority to issue shares at a discount of up to 20% Authority to allot and issue new shares pursuant to the Koda Share Option Scheme Authority to allot and issue new shares pursuant to the Companys Share Performance Plan Approval of the renewal of Share Buy Back Mandate For Against
(Please indicate with a cross [X] in the space provided whether you wish your vote to be cast for or against the Resolutions as set out in the Notice of the Meeting.) Dated this day of 2010 Total number of Shares held
Signature of Shareholder(s) or Common Seal Important: Please read notes overleaf
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, Cap. 50), 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 registered in 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.
2. A member entitled to attend and vote at the Meeting is entitled to appoint one or two proxies to attend and vote in his stead.
3. Where a member appoints more than one proxy, the appointments shall be invalid unless he specifies the proportion of his shareholding (expressed as a percentage of the whole) to be represented by each proxy.
4. A proxy need not be a member of the Company.
5. The instrument appointing a proxy or proxies must be deposited at the Companys registered office at 28 Defu Lane 4, Singapore 539424, not less than 48 hours before the time set for the Meeting.
6. 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 common seal or under the hand of its attorney or a duly authorised officer.
7. Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter of power of attorney or a duly certified copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy; failing which the instrument may be treated as invalid.
8. The Company shall be entitled to reject a Proxy Form which is incomplete, improperly completed, illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified on the Proxy Form. In addition, in the case of shares entered in the Depository Register, the Company may reject a Proxy Form if the member, being the appointor, is not shown to have Shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.
corporate information
Board of Directors Koh Teng Kwee
Non-Executive Chairman
James Koh Jyh Gang

Deputy Chairman / Managing Director
Ernie Koh Jyh Eng

Auditors Deloitte & Touche Certied Public Accountants 6 Shenton Way #32-00 DBS Building Tower Two Singapore 068809 Audit Partner Aric Loh Siang Khee Date of Appointment 27 October 2006 Principal Bankers United Overseas Bank Limited 80 Rafes Place UOB Plaza 1 Singapore 048624 Alliance Bank Ground Floor, No. 1 & 3, Jalan Perang, Taman Pelangi, 80400 Johor Bahru, Johor Malaysia Hongkong and Shanghai Banking Corporation 21 Collyer Quay #08-01 HSBC Building Singapore 049320
Koh Shwu Lee

Christopher Chong Meng Tak

Chan Wah Tiong

Sim Cheng Huat

Company Secretaries Ong Beng Hong Tan Swee Gek Registered Ofce & Principal Place of Work 28 Defu Lane 4 Singapore 539424 Share Registrar Boardroom Corporate & Advisory Services Pte. Ltd 50 Rafes Place #32-01 Singapore Land Tower Singapore 048623
Contact key management at: James Koh Jyh Gang

Deputy Chairman / Managing Director
Koh Shwu Lee

jameskoh@kodaltd.com Ernie Koh Jyh Eng

shwulee@kodaltd.com Teh Wing Kwan

Chief Financial Ofcer
ernie@kodaltd.com
wkteh@kodaltd.com
www.kodaonline.com
Redening Lifestyle
Company Registration No: 198001299R 28 Defu Lane 4 Singapore 539424 T +65 6282 9882 F +65 6287 7328 E koda@kodaltd.com

KODA LTD 2010 Annual Report

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A N N UA L R EPO R T 2010

KODA LTD ANNUAL REPORT 2010

To be a reputable, protable and signicant global original manufacturer of furniture.

KODA LTD ANNUAL REPORT FY 2010

KODA LTD ANNUAL REPORT FY 2010

01. Mr. Koh Teng Kwee (TK)

KODA LTD ANNUAL REPORT FY 2010

05. Mr. Christopher Chong Meng Tak (Christopher)

06. Mr. Chan Wah Tiong (Wah Tiong)

07. Mr. Sim Cheng Huat (Sim)

KODA LTD ANNUAL REPORT FY 2010

CORPORATE OFFICE (SINGAPORE)

KODA LTD ANNUAL REPORT FY 2010

Change % 17.2 17.8 15.3 (35.1) 11.4 3.6 250.0 (34.8) NA NA NA

KODA LTD ANNUAL REPORT FY 2010

3,410 3,460 3,027 12,014 21,911

3,488 3,964 3,100 9,458 20,010

14,699 354 857 728 16,638 38,549

13,272 373 769 728 15,142 35,152

KODA LTD ANNUAL REPORT FY 2010

3,714 3,614 2,439 86 212 10,065

406 3,446 2,126 257 250 380 6,865

657 214 871

4,040 2,206 560 19,990 26,796 817 27,613 38,549

4,040 2,193 298 20,197 26,728 965 27,693 35,152

Total Liabilities and Equity Equity attributable to shareholders

KODA LTD ANNUAL REPORT FY 2010

KODA LTD ANNUAL REPORT FY 2010

COUNTRIES WE SELL TO:

South / Latin America

KODA LTD ANNUAL REPORT FY 2010

KODA LTD ANNUAL REPORT FY 2010

KODA LTD ANNUAL REPORT FY 2010

managing directors statement

KODA LTD ANNUAL REPORT FY 2010

managing directors statement

KODA LTD ANNUAL REPORT FY 2010

managing directors statement

2010 44,265 11,401 179 116 295 295

2009 37,775 9,888 (143) (133) (276) (276)

2008 54,944 16,014 5,079 (415) 4,664 (365) 4,299

2007 60,063 17,409 7,980 (225) 7,755 7,755

2006 48,117 13,038 4,834 (103) 4,731 4,731

(297) 21 (276) (0.22) (0.32)

4,200 99 4,299 3.1 4.7

7,232 523 7,755 5.4 8.3

4,716 15 4,731 3.5 5.4

KODA LTD ANNUAL REPORT FY 2010

managing directors statement

Change 1,596 (305) 6,214 (1,146) 96 35 6,490

Europe America Canada Asia-Pacific Others Total Revenues

KODA LTD ANNUAL REPORT FY 2010

managing directors statement

KODA LTD ANNUAL REPORT FY 2010

managing directors statement

KODA LTD ANNUAL REPORT FY 2010

managing directors statement

2010 1,474 (1,045) (1,831) 2,798 (78) 3,488 3,410

2009 329 (420) (505) (692) (1,617) 5,105 3,488

2008 6,078 3,120 (3,282) (570) (732) 5,837 5,105

2007 9,056 5,752 (528) (1,859) 3,365 2,472 5,837

2006 6,232 8,162 (3,461) (2,923) 1,778 694 2,472