annual report 2007 - 联合早报网ir.zaobao.com.sg/nhceramics/pages/nhceramics2007ar.pdf · NH CERAMICS LTD annual report 2007 05 b) Project Management of Contracts The bulk of

annual report 20071 & 3 Tuas Avenue 8, Jurong Industrial Estate,Singapore 639217E-mail: [email protected]: 6861 2626Fax: 6861 4023www.nhceramics.com.sg

NH Ceramics04-01 cover.indd 1 1/9/2008 2:49:55 PM

CONTENTS

01 Corporate Profile02 Chairman’s Statement and Operations Review06 Board of Directors07 Key Management Staff08 General Information09 Corporate Governance Report14 Directors’ Report16 Statement by Directors17 Independent Auditors’ Report18 Balance Sheets19 Consolidated Profit and Loss Account20 Statement of Changes in Equilty21 Consolidated Cash Flow Statement23 Notes to the Financial Statements56 Statistics of Shareholdings58 Notice of Annual General Meeting Proxy Form

NH Ceramics04-01 cover.indd 2 1/9/2008 2:49:56 PM

CORPORATE PROFILE

NH CERAMICS LTD annual report 200701

Since establishment, NH Ceramics Ltd, through its wholly-owned operating subsidiary of 44 years, Nam Huat Tiling & Panelling Co. Pte. Ltd, continues to stock, supply and distribute an extensive range of premier grade ceramics, marble, granite tile products to Architects, Developers, Contractors and Home Owners.

NH Ceramics has always been focused to fulfill customer satisfaction with quality products and services. We attribute our resilience and unique selling proposition to the unwavering support of and close collaboration with world-renowned manufactures and the professionalism and commitment of our staff.

NH CERAMICS LTD

1 & 3 Tuas Avenue 8, Jurong Industrial Estate, Singapore 639217e-mail: [email protected]: 6861 2626 Fax:6861 4023website: http://www.nhceramics.com.sg

WHOLLY-OWNED SUBSIDIARIES

Nam Huat Tiling & Panelling Co. Pte. Ltd.1 & 3 Tuas Avenue 8,Jurong Industrial Estate,Singapore 639217 Tel: 6861 2626 Fax: 6861 4023e-mail: [email protected] website: http://www.nhceramics.com.sg

Nam Tat Pte. Ltd.3 Tuas Avenue 8,Jurong Industrial Estate,Singapore 639217Tel: 6861 3444 Fax: 6861 5304

Nam Hong Properties Pte. Ltd.3 Tuas Avenue 8,Jurong Industrial Estate,Singapore 639217Tel: 6861 1248 Fax: 6861 5956

Showroom3 Tuas Avenue 8,Jurong Industrial Estate,Singapore 639217Tel: 6861 3444 Fax: 6861 5304Mon – Fri : 9.30am – 5pmSat: 9.30am – 12pm / Sun & PH: Closed

FY2007 CHAIRMAN’S STATEMENT & OPERATIONS REVIEW

The Company

The financial year ended 30 September 2007 was a watershed year for the Group as the building materials

industry faced a new buoyant construction industry on the rebound after a challenging decade of difficulties

and austerity.

The construction industry sprang alive in 2007, engaging a broad spectrum of residential and commercial

developmental projects, brought on by economic growth and improved private sector confidence. These

developments carry a renewed demand for premium grade finishing materials, particularly premium grade

ceramic tiles and exquisite marble products; and developers, architects and designers putting emphasis on

aesthetics and quality.

Amidst these promising industry conditions, NH Ceramics Ltd (the “Company”) secured crucial equity

participation from a group of Investors, in the form of a $6.049 million convertible loan arrangement, which

was subsequently capitalized in an issue of a total of 230 million new shares by the Company in October

2007, after the FY2007 Balance Sheet date of 30 September 2007. Together with an issue of 10 million new

shares by the Company in satisfaction of a referral fee, the new Investors took up a 75.42% equity stake in the

enlarged capital of the Company.

Significantly, the new Investors, who are entrepreneurs and businessmen of high net worth, contributed further

strength and expertise to the Group by their participation on the Board. Mr Kenny Lim Oon Cheng and Mr

Von Lee Yong Miang were appointed as Non-Executive Director and Executive Director respectively on 25

April 2007.

The new Board reviewed the business operations of all the subsidiaries of the Group, focusing on core

competencies, and worked with management and staff in reducing operating and other costs expeditiously

and significantly; disposing of non-profitable assets; and redeploying resources to maximize revenues and ride

the recovery in the construction industry.

Review of the Performance of the Company

and its Principal Subsidiaries

The operating subsidiaries of the Group are Nam Huat Tiling & Panelling Co. Pte. Ltd. (“NHTP”), Nam Tat Pte.

Ltd. (“NT”) and Nam Hong Properties Pte. Ltd. (“NHP”).

The Group recorded a turnover of $7.90 million for the 15 months of FY2007 ended 30 September 2007, a

decrease of 34.2% ($4.11 million) from the turnover of $12.01 million for the 12 months of FY2006 ended 30

June 2006.

For FY2007, the Group incurred a loss after tax of $4.97 million. This compares against a loss after tax of

$2.70 million in FY2006.

The $2.27 million increase in Group losses resulted mainly from a $5.67 million loss from:

- Decrease in gross profits arising from increase in provision for stock obsolescence $2.72 million

- Loss of profits from decrease in turnover $0.95 million

- Increase in professional fees and interest expenses $0.62 million

- Increase in provision for bad and doubtful debts $0.43 million

- Additional provision for tax $0.41 million

- Increase in loss from disposal of property, plant and equipment $0.30 million

- Decrease in gross profits arising from decrease in selling prices $0.24 million

$5.67 million



This was offset by a $3.40 million gain from:

- Director’s loan written off $1.60 million

- Reversal of impairment losses on property, plant and equipment $0.77 million

- Decrease in salaries and CPF contributions $0.52 million

- Increase in gain in other income $0.31 million

- Decrease in operating expenses and depreciation $0.20 million

$3.40 million

The Directors are pleased to note, however, that the key areas of operating losses in the Group, have been

curtailed and addressed in the on-going restructuring of operations and redeployment of resources conducted

from April 2007.

Financial resources have also been directed to enhance the engagement of NHTP in the active projects

market for building materials. NHTP has proceeded to secure new contracts for the supply of premium

marbles/granites and ceramic tiles to prestigious projects, including:

Project Name Developer Supply Value

TATE RESIDENCE Hong Leong Holdings Ltd $5.4 million

NASSIM RESIDENCE Hong Leong Holdings Ltd $2.3 million

CARABELLE Sim Lian Construction Pte Ltd $0.9 million

SKY @eleven SPH – Times Development Pte Ltd $0.5 million

NHTP is currently in negotiations for supply of premium marbles and granites for a number of prestigious

condominium projects and also engaged in the specifications and bid for the supply of premium materials for

commercial and industrial developments.

Current Developments – Post Balance Sheet Date

Subsequent to the close of FY2007 ended 30 September 2007, NHTP has entered into agreements to rent

out its leasehold properties as follows:

A) 1&3 Tuas Avenue 8, Singapore- 2 units JTC detached E7 factories (land area =18,600 sqm / built-in area =8,140 sqm)

B) #01-10 E-Centre@Redhill, Jalan Bukit Merah, Singapore- Industrial shop unit (259 sqm)

The tenants are well-reputed and established corporations, independent and unrelated to each other, or any

director or substantial shareholder of the Group.

The properties are rented out on a 3-year basis, with an option for a further 3 years with the rates to be revised

according to prevailing market rates.

The rental income from these properties are expected to generate a net surplus in excess of $1 million (after

deducting taxes, maintenance, interests and other costs accruing on these properties), on an annualised

basis, with effect from the current financial year ending 30 September 2008.

NHTP has also entered into agreement to re-locate its operations and showroom to a 5,800 sqm premises

in Sungei Kadut Industrial Estate. The new premises are selected on the merit of location, size and cost for

NHTP to focus and expand on its core project business in the supply of ceramic tiles and marble/granites for

project work.

Prospectus-type information relating to risk management policies and procedures as required by Rule 1204(4)(b)(iv)

a) Quality, Delivery & Performance of Products

The ceramic tile products offered by NHTP are all imported from foreign manufacturers, to be supplied against

locally specified standards and conditions of contract. Any failure, defects, delays or non-compliance in

the process of manufacture, shipments, conditions and performance of the products against contracted

obligations would result in serious adverse consequences and losses.

Marble tiles and panels, being natural derivatives, are extremely unpredictable and problematic in conformance

to required specifications or expectations. These can lead to controversies and resultant losses and project

penalties.

With a track record in excess of 40 years in this industry, we have a policy of working with a select few, of

reputable ceramic tile manufacturers and stones (marble/granite) quarries/factories. Only stable and selected

marble types, which the directors are confident and comfortable with, are procured and offered for projects,

which require large quantities of consistent quality materials.

Besides developing strong commercial relationships with proven brands and sources, we also focus on

cultivating values of integrity, fairness, cordiality, confidence and trust with our principals, in mutual close

collaboration to compete against others. These ensure not only minimisation of defects and defaults, but

greatly enhance our performance and success in our work.


FY2007 CHAIRMAN’S STATEMENT & OPERATIONS REVIEW


b) Project Management of Contracts

The bulk of the Group’s turnover are derived from NHTP’s project business, which requires especially in-depth

product knowledge, understanding and experience involving contractual and customary laws and practices,

and operational complications. Mistakes and oversight in project management can lead to significant losses

and penalties.

Each of our sector sales teams in NHTP is led by an executive director of NHTP, each of whom has more than

25 years experience in this industry. The managing director is also involved in the project management team

for contracts that exceed $500,000 in value or are of a complex nature.

c) Customers Credit Exposure

The risk of payment defaults is high, especially in those difficult years of the Construction Industry where many

contractors had financial difficulties.

The payment terms required by or accorded to each account in NHTP are decided by the respective project

manager, sector director, and managing director. Aging of accounts receivables and collections are monitored

weekly by the financial controller and managing director.

A series of measures will be implemented once an account exceeds its approved limits or payments are

overdue.

d) Fluctuations in Foreign Exchange Rates

Up to 80% of all our products sold are imported in Euro Dollars and United States Dollars. There is also a

long time lag between our commitment on contracts, denominated in Singapore Dollars, and the imports in

foreign currencies. We are exposed to fluctuations in foreign exchange rates which can be detrimental to our

contract profitabilities.

We actively monitor foreign currency requirements arising from contractual and other expected import

commitments and hedge our foreign currencies for periods of up to 12 months. The hedging exercises are

carried out jointly by the managing director and financial controller. Hedging is done for approximately up to

60% of expected currency exposure.

Commentary on prospects for the current Financial Year

With the restructuring of operations, redeployment of assets and relocation of operations of the Group, the

Directors envisage a recovery in the performance of the Group.

Barring any unforeseen circumstances, the Directors anticipate a return to profitability for the Group for FY2008

ending 30 September 2008.

Von Lee Yong MiangExecutive Chairman

NH CERAMICS LTD

Von Lee Yong Miang Executive Chairman

VON LEE YONG MIANG is the Executive Chairman of the Group. He is responsible for business development,

and strategic planning, including financial and management directions of the Group. He is also the Group

Executive Chairman of Expand Group of Companies, which is involved in General Building Construction,

Residential and Industry Property Development, Design & Build, Electrical and Mechanical Engineering and

Stainless Steel/Anodized Aluminium Manufacturing. Mr Lee holds a Bachelor of Civil Engineering Degree from

the Nanyang Technological University of Singapore.

Paul Goh Moh Chye Managing Director

PAUL GOH is the Managing Director and is responsible for the general management of the Group. Prior to

joining the Group in 1980, he worked as an auditor with an international public accounting firm and as an officer

trainee with an international bank. Mr Goh holds a Bachelor of Accountancy Degree from the then University

of Singapore. He is a Fellow of the Institute of Certified Public Accountants of Singapore. In his personal

capacity, Mr Goh has served as a Town Councillor with the Tanjong Pagar Town Council; Chairman of Duxton

Plain Community Centre; Patron of Tanjong Pagar Community Club; Vice-Chairman and Treasurer of Tanjong

Pagar Citizens’ Consultative Committee; President of Outram Park Shopping Complex Association; member

of Advisory Council on Community Relations in Defence (ACCORD); member of SAF Employers’ Award

Committee; member of Sub-Committee For Domestic Businesses as part of the Committee on Singapore’s

Competitiveness; member of Sub-Committee One as part of Singapore’s SME 21 Committee and member of

the SME21 Implementation Committee.

Kenny Lim Oon Cheng Non-Executive Director

KENNY LIM OON CHENG is a Non-Executive Director of the Group. He has held various management

positions in the areas of Operation, Trading and Finance. Mr Lim has been involved in the Marine Industry,

particularly in the field of Oil Trading and Marine Transportation for more than 20 years. He holds a Bachelor of

Science (Honours) Degree in Finance from the University of Maryland, USA.

Ong Siew Peng Independent Director

ONG SIEW PENG is an Independent Director and also the Chairman of the Audit Committee. Since 2001,he

has been an Executive Director of Corporate Brokers International Pte Ltd, a strategic investment search

company focusing on small and medium enterprises, where he is responsible for corporate mediation

regarding merger and acquisition matters, providing financial and management advice, strategic business

planning and strategic investor search advice. He is also the Director of Powersource International Pte Ltd., a

local diesel engine and power generator distributor for the Asia Pacific Region since 2002. In 2003, he was

appointed an Independent Director of Technics Oil & Gas Ltd., a specialist engineering service provider in the

oil and gas exploration industry. In 2006, he was appointed an Executive Director of Perfex International Pte

Ltd, Singapore, a manufacturer and supplier of commercial radiators and heat exchangers.

Between 1973 to 2000, Mr Ong spent 27 years at the Standard Chartered Bank, Singapore, rising from the

post of Officer Trainee to his last position as Senior Manager, Middle Market/SME Segment, Corporate Banking

Division. He holds a Bachelor of Science (Honours) Degree in Mathematics from the University of Singapore.

He completed the General Management Programme conducted by Ashridge Management College, United

Kingdom, as well as the International Centre for Banking and Financial Services Programme at the Manchester

Business School, United Kingdom.

Robbie Ooi Seng Soon Independent Director

ROBBIE OOI SENG SOON is an Independent Director and a member of the Audit Committee. He was a Bank

Executive with ABN-Amro Bank prior to joining Oversea-Chinese Banking Corporation Limited (OCBC). After

spending more than 24 years in the banking industry, he left to join a private company. Mr Ooi is also as an

Independent Director of HG Metal Manufacturing Ltd since February 2002.

BOARD OF DIRECTORS



Tay Kiam Peng

is an Executive Director of subsidiary Nam Huat Tiling & Panelling Co. Pte. Ltd., and is responsible for marketing,

product and customer service, and project management of public sector projects. He also oversees all ceramic

tile products and accessories and their related technical matters. He has been with the Group since 1974

and has extensive experience in the building industry, including product knowledge and installation experience

covering not only ceramic tiles, but also carpets, special vinyl floorings and computer raised floors. He is also

responsible for all technical and architectural shop drawings.

Margaret Tay Hui Hia

is an Executive Director of subsidiary Nam Huat Tiling & Panelling Co. Pte. Ltd., and is responsible for the

marketing, product and customer service, and project management of private sector projects. She joined the

Group in 1989 as a sales executive and was promoted to her current position in 1994. She was instrumental

in developing the marble business of the Group over the past 18 years and she oversees all marble products

and related technical matters. Prior to joining the Group, she worked as a sales executive in another company

in the marble business.

Song Yeong Yeong

joined in 1993 and currently is the Sales Manager responsible for the Sales and Marketing and management

of small and medium sized private sector projects. She holds a Diploma in Business Studies from Ngee Ann

Polytechnic.

Sylvester Lee Kao Chong

Is the Facilities and Works Manager. He joined the Group in 1997 and is responsible for the improvements

and maintenance of all the properties and premises of the Group. He is also responsible for the procurement

and management of machinery and equipment for the project support services of the Group. He is involved in

the development of new tile processing activities and services. He holds a Diploma in Mechanical Engineering

from Ngee Ann Polytechnic.

Christine Goh Hua Shuen

is the Group Financial Controller. She joined the Group in 2005 and is responsible for managing the Finance

Department and overseeing financial and administrative matters of the Group. She is also the Company

Secretary. Prior to joining the Group, she worked as an Assistant Manager in a public accounting firm. She

holds a Bachelor of Accountancy degree from Nanyang Technological University and is a member of the

Institute of Certified Public Accountants of Singapore.

Chan Siang Lim

is the Operations Manager. He joined the Group in 1982 and has managed its warehousing and logistics

operations for the past 25 years. He is responsible for fulfilling daily operations, including imports and product

handling, and personnel and logistics deployment of the warehousing and delivery sections.

Martina Ho Ngiet Mee

is the Purchasing Manager. She joined the Group in 1974 and has more than 30 years of experience in retail

sales and customer service. She was responsible for managing the Retail business segment until 1999. She

conducts in-house training for sales personnel in respect of product knowledge and customer service. She

tracks ceramic tile products from the factories and coordinates their imports in support of the project teams.

KEY MANAGEMENT STAFF


GENERAL INFORMATION

BOARD OF DIRECTORS

Von Lee Yong Miang Executive Chairman

Paul Goh Moh Chye Managing Director

Kenny Lim Oon Cheng Non-Executive Director

Ong Siew Peng Independent Director

Robbie Ooi Seng Soon Independent Director

SECRETARY

Goh Hua Shuen Christine

REGISTERED OFFICE

1 & 3 Tuas Avenue 8,

Jurong Industrial Estate,

Singapore 639217

SHARE REGISTRAR

M & C Services Private Limited

138 Robinson Road,

#17-00 The Corporate Office,

Singapore 068906

AUDITORS

Ernst & YoungEngagement Partner: Eleanor Lee Kim Lin

(Appointed since Financial Year Ended 30 June 2005)

One Raffles Quay,

North Tower, Level 18,

Singapore 048583

Tel: 6535 7777 Fax: 6532 7662

PRINCIPAL BANKERS

Oversea-Chinese Banking Corporation LimitedUnited Overseas Bank Limited

SOLICITORS

Rajah & Tann4 Battery Road #26-01,

Bank of China Building,

Singapore 049908

Tel: 6535 3600 Fax: 6538 8598


CORPORATE GOVERNANCE REPORT

NH Ceramics Ltd (the “Company”) is committed to comply with the requirements of the Code of Corporate Governance (“Code”)

as well as the Singapore Exchange Listing Manual requirements.

BOARD MATTERS

Principle 1: Effective Board to Lead and Control the Company

The Board of Directors is responsible for the Corporate Governance and the Strategy of the Group. The Board also reviews the

fi nancial performance of the Company, the internal controls and external audit reports. The Board meets regularly at least twice a

year and at other times when required. The Company Secretary is always present at such meetings to record the proceedings.

The Board is assisted in its duties by various Board Committees, principally the Audit Committee, Remuneration Committee and

Nominating Committee.

The attendance of the Directors at meetings of the Board and Board Committees held for the period ended 30 September 2007,

as well as the frequency of scheduled meetings, is disclosed below:

Name

Board Audit CommitteeNominating Committee

Remuneration Committee

No. of meetings

held

No. of meetings attended

No. of meetings

held


No. of meetings

held


No. of meetings

held


Von Lee Yong Miang (Appointed 25.04.07) 10 3 – – 1 1 – –

Paul Goh Moh Chye 10 10 3 3 – – – –

Kenny Lim Oon Cheng (Appointed 25.04.07) 10 2 – – – – 1 1

Ong Siew Peng 10 10 3 3 1 1 1 1

Robbie Ooi Seng Soon 10 5 3 3 1 1 1 1

Tay Kiam Peng (Resigned 25.04.07) 10 7 3 2 – – – –

Margaret Tay Hui Hia (Resigned 25.04.07) 10 7 3 2 – – – –

Stephen Tay Chye Heng (Resigned 16.11.06) 10 1 3 1 – – – –

The Board supervises the Management of the business and affairs of the Group. The principal functions of the Board are:

Reviewing the fi nancial results of the Group, internal controls and external audit;

Reviewing and approving executive directors’ remuneration;

Identifying principal risks of the Group’s business, ensuring the implementation of appropriate systems to manage these

risks;

Approving major funding proposals;

Approving and monitoring major investments, divestments, mergers and acquisitions; and

Assuming responsibility for corporate governance.



BOARD COMPOSITION AND GUIDANCE

Principle 2: Strong and Independent Element on the Board

The Board comprises fi ve members, two of whom are independent.

The Board comprises the following members:

Mr Von Lee Yong Miang (Executive Chairman)

Mr Paul Goh Moh Chye (Executive Director)

Mr Kenny Lim Oon Cheng (Non-Executive Director)

Mr Ong Siew Peng (Independent Director)

Mr Robbie Ooi Seng Soon (Independent Director)

The Board provides collectively core competencies such as accounting, fi nance, business and management experience as well as

industry expertise and knowledge necessary to provide direction, oversight and supervision of the Group.

CHAIRMAN AND CHIEF EXECUTIVE DIRECTOR

Principle 3: Clear Division of Responsibility at the Top of the Company

Chairman

The Chairman bears responsibility for the workings of the Board, ensuring the integrity and effectiveness of the governance process

of the Board.

Managing Director

The Managing Director has considerable experience in the building material construction industry and is actively involved in the

Management of the Group. The Board feels that the capitalization of his expertise gained over the years in the industry will be

benefi cial to the Group.

BOARD MEMBERSHIP

Principle 4: Formal and Transparent Process for Appointment of New Director

The role of the Nominating Committee (“NC”) is to make recommendations to the Board on all Board appointments. The NC

is charged with the responsibility of re-nomination having regard to the Director’s contribution and performance, including, if

applicable, as an Independent Director. The NC also considers and determines annually whether or not a Director is independent.

The Board has formed a Nominating Committee comprising the following members, a majority of whom, including the Chairman,

are independent:

Mr Robbie Ooi Seng Soon (Chairman) (Independent Director)

Mr Ong Siew Peng (Independent Director)

Mr Von Lee Yong Miang (Executive Director)

BOARD PERFORMANCE

Principle 5: Formal Assessment of the Effectiveness of the Board and Contribution of Each Director

The NC has established a formal evaluation process to assess the effectiveness of the Board as a whole and contribution by each

Director. The committee considered a number of factors including the quantitative indicators set out in the Code of Corporate

Governance and the qualitative criteria of the effectiveness of the Board in monitoring Management’s performance and its success

in achieving strategic goals set by the Board.

For the current period, the Board is satisfi ed that each individual director has allocated suffi cient time and resources to the affairs of

the Company.



ACCESS TO INFORMATION

Principle 6: Board Members to have Complete, Adequate and Timely Information

To enable the Board to discharge its responsibilities, management provides the executive committee with periodical updates on the

status of the Company’s operations. The Directors have available access to all information of the Company and direct contact with

senior management and the Company Secretary.

The Company Secretary is present at all formal Board meetings to respond to the queries of any Director and to assist in ensuring

that Board procedures as well as applicable rules and regulations are followed.

Where decisions to be taken by the Board require specialised knowledge or expert opinion, the Board has adopted a policy to

seek independent professional advice.

REMUNERATION MATTERS

Principle 7: Formal and Transparent Procedures for Fixing Remuneration Package of Directors

The main role of the RC is to recommend to the Board, in consultation with the Chairman of the Board, a frame work of

remuneration for the Board and key executives, any long term incentive schemes and to determine specifi c remuneration packages

for each Executive Director and Key Executive.

The Board has formed a Remuneration Committee (“RC”) comprising the following members, a majority of whom, including the

Chairman, are independent:

Mr Ong Siew Peng (Chairman) (Independent Director)

Mr Robbie Ooi Seng Soon (Independent Director)

Mr Kenny Lim Oon Cheng (Non-Executive Director)

LEVEL/MIX AND DISCLOSURE OF REMUNERATION

Principle 8: Remuneration of Directors should be adequate but not excessivePrinciple 9: Remuneration Policy, Level and Mix of Remuneration and Procedure for Setting Remuneration

A breakdown showing the level and mix of each individual director’s remuneration payable for the fi nancial period ended 30

September 2007 is as follows:-

Name Salary Fees Bonus Total

(%) (%) (%) (%)

Below S$250,000

Paul Goh Moh Chye 100 NIL NIL 100

Von Lee Yong Miang (Appointed 25.04.07) NIL NIL NIL NIL

Kenny Lim Oon Cheng (Appointed 25.04.07) NIL NIL NIL NIL

Tay Kiam Peng (Resigned 25.04.07) 100 NIL NIL 100

Stephen Tay Chye Heng (Resigned 16.11.06) 100 NIL NIL 100

Margaret Tay Hui Hia (Resigned 25.04.07) 100 NIL NIL 100

Ong Siew Peng NIL 100 NIL 100

Robbie Ooi Seng Soon NIL 100 NIL 100



ACCOUNTABILITY AND AUDIT

Principle 10: Accountability of the Board and Management

Half-yearly and yearly results are released to shareholders through SGXNET in the current fi nancial period. Due to the extension of

the Group’s fi nancial year end, an announcement was made on the results for the 12-month interim period ended 30 June 2007.

The Management provides the Board with reports for planning, decision-making and review of six-monthly and year-end

performances for SGXNET and public announcements. The control of the Management and Operations rests with the functional

heads.

The Directors may take independent professional advice and receive relevant training whenever applicable so as to maintain

continuing standard and vigilance.

The Board members retires by rotation in accordance with the Articles of Association and are eligible to re-election at each Annual

General Meeting (“AGM”).

AUDIT COMMITTEE

Principle 11: Establishment of Audit Committee with Written Terms of Reference

The Audit Committee comprises one executive director and two independent directors, one of whom is also the Chairman of the

Audit Committee. The members of the Audit Committee are:-

Ong Siew Peng (Independent Director, Chairman)

Robbie Ooi Seng Soon (Independent Director)

Paul Goh Moh Chye (Managing Director)

The Audit Committee performs its functions in accordance with Section 201B(5) of the Companies Act, Cap.50 and the

requirements of the Singapore Exchange Securities Trading Limited. In performing those functions, the Audit Committee reviewed

the overall scope of external audits and the assistance given by the Company’s offi cers to the auditor. The Audit Committee met

with the external auditor to discuss the results of their audit and their comments on the systems of internal accounting controls

in the course of their audit. The Audit Committee also reviewed the fi nancial statements of the Company and the consolidated

fi nancial statements of the Group for the fi nancial period ended 30 September 2007, as well as the external auditor’s report

thereon.

The Audit Committee abides by the following specifi c terms of reference:

Reviews with the external auditors the audit plan and their management letters issued arising from the evaluation of the

system of internal controls in the course of the external audit and to monitor management’s response and actions to correct

any noted defi ciencies

Determines that no restrictions are being placed by management upon the work of external auditors

Reviews the fi nancial statements of the Company and the consolidated fi nancial statements as well as the auditor’s report

thereon

Reviews the appropriateness of half-year and full year announcements prior to submission to the Board for adoption and

release

Reviews interested person transactions

Evaluates the independence of external auditors and nominates them for reappointment

Has the authority to investigate any matter within its terms of reference

The Audit Committee has been given full access to and co-operation of the Company’s management and has reasonable

resources to enable it to discharge its function properly. Executive directors and executive offi cers had been attending the Audit

Committee meetings when so invited.

The Audit Committee has reviewed Ernst & Young Taxation Services and is of the opinion that such service does not affect the

independence of the auditors.



INTERNAL CONTROLS

Principle 12: Sound System of Internal Controls

The Board believes that, in the absence of any evidence to the contrary, the system of internal control maintained by the Company’s

management and that was in place throughout the fi nancial period and up to the date of this report provides reasonable, but not

absolute, assurance against material fi nancial misstatements of loss, and include the safeguarding of assets, the maintenance

or proper accounting records, the reliability of fi nancial information, compliance with appropriate legislation, regulation and best

practice, and the identifi cation and containment of business risk. The Board notes that no system of internal control could provide

absolute assurance against the occurrence of material errors, poor judgment in decision-making, human error, fraud or other

irregularities.

RISK MANAGEMENT AND PROCESSES

Information relating to risk management, objective and policies is set out on page 50.

INTERNAL AUDIT

Principle 13: Setting up Independent Internal Audit Function

In view of the cost involved, the Company currently has no separate internal audit function. The Company through its principal

subsidiary’s accounting department reviews the Group’s internal controls, risk management and compliance systems and reports

fi ndings and makes recommendations to the management. However, the Board believes that the existing system of internal control

is adequate.

The current system does not warrant a need for an independent audit department but the Audit Committee had recommended

outsourcing the internal audit function if and when the need arises.

COMMUNICATION WITH SHAREHOLDERS

Principle 14: Regular, Effective and Fair Communication with ShareholdersPrinciple 15: Shareholder Participation at AGM

The Company has adopted half-yearly and yearly reporting since its listing. This is broadcast to the public through SGXNET. All

information on the Company’s new initiatives and announcements are fi rst disseminated via SGXNET.

The Company keeps the public and shareholders informed of its developments through the Company’s website, Chinese media

portal www.zaobao.com.

The Company holds its Annual General Meeting (“AGM”) at its registered offi ce yearly and provides shareholders the opportunity to

clarify issues or share their views regarding the proposed resolutions and the Group’s businesses. The Chairman of the Board, the

Board members and the external auditors are in attendance at the AGM.

SECURITIES TRANSACTIONS

The Company has adopted internal codes to all its offi cers in relation to dealing in the Company’s securities. Its offi cers are not

allowed to deal in the Company’s shares during the period commencing one month before the announcement of the Company’s

half-year and yearly results and ending on the date of the announcement.

INTERESTED PERSON TRANSACTIONS

There were no interested person transactions for the fi nancial period ended 30 September 2007 which fell under the Listing Manual

of Singapore Exchange Securities Trading Limited.


DIRECTORS’ REPORT

The Directors present their report to the members together with the audited consolidated fi nancial statements of NH Ceramics Ltd

(the “Company”) and its subsidiaries (collectively, the “Group”) and the balance sheet and statement of changes in equity of the

Company for the fi nancial period ended 30 September 2007. During the fi nancial period, the Group and the Company changed

its fi nancial year end from 30 June to 30 September. Accordingly, the current fi nancial period covers the period from 1 July 2006

to 30 September 2007.

Directors

The Directors of the Company in offi ce at the date of this report are:

Von Lee Yong Miang (Executive Chairman) (Appointed Director on 25 April 2007 and Chairman on 1 December 2007)

Paul Goh Moh Chye (Managing Director) (Resigned as Chairman on 1 December 2007)

Kenny Lim Oon Cheng (Non-Executive Director) (Appointed on 25 April 2007)

Ong Siew Peng (Independent Director)

Robbie Ooi Seng Soon (Independent Director)

Tay Kiam Peng (Executive Director) (Resigned on 25 April 2007)

Margaret Tay Hui Hia (Executive Director) (Resigned on 25 April 2007)

Stephen Tay Chye Heng (Executive Director) (Resigned on 16 November 2006)

Arrangements to enable Directors to acquire shares and debentures

Neither at the end of nor at any time during the fi nancial period was the Company a party to any arrangement whose object is to

enable the Directors of the Company to acquire benefi ts by means of the acquisition of shares or debentures of the Company or

any other body corporate.

Directors’ interests in shares and debentures

The following Directors who held offi ce at the end of the fi nancial period, had, according to the register of Directors’ shareholdings

required to be kept under Section 164 of the Singapore Companies Act, Cap. 50, an interest in shares of the Company and

related corporations (other than wholly-owned subsidiaries) as stated below:

Name of Directors

Held in name of Directors Deemed interest

At the beginning of the fi nancial

period or date of

appointment

At the end of the fi nancial period

At21 October

2007

At the beginning of the fi nancial

period or date of

appointment

At the end of the fi nancial period

At21 October

2007

The Company

Ordinary shares

Von Lee Yong Miang – – 60,000,000 – – –

Paul Goh Moh Chye 13,481,690 13,481,690 13,481,690 30,326,160 30,326,160 30,326,160

Kenny Lim Oon Cheng – – – – – 88,000,000

Robbie Ooi Seng Soon 30,000 30,000 30,000 – – –

By virtue of Section 7 of the Singapore Companies Act, Cap. 50, Mr Paul Goh Moh Chye is deemed to have interest in shares of

all the wholly-owned subsidiaries of the Company as at the beginning and end of the period but the interest ceased on 19 October

2007. Mr Kenny Lim Oon Cheng is deemed to have interest in shares of all the wholly-owned subsidiaries of the Company with

effect from 19 October 2007 by virtue of Section 7 of the Singapore Companies Act, Cap. 50.

Except as disclosed above, no other Director who held offi ce at the end of the fi nancial period had an interest in shares or

debentures of the Company, or of related corporations, either at the beginning of the fi nancial period, or date of appointment if

later, or at the end of the fi nancial period or on 21 October 2007.


DIRECTORS’ REPORT

Directors’ contractual benefi ts

Since the end of the previous fi nancial year, no Director of the Company has received or become entitled to receive a benefi t (other

than directors’ remuneration and fees as disclosed in the notes to the fi nancial statements) by reason of a contract made by the

Company or a related corporation with the Director, or with a fi rm of which the Director is a member, or with a company in which

the Director has a substantial fi nancial interest.

Audit Committee

The Audit Committee performed the functions specifi ed in the Singapore Companies Act, Cap. 50. The functions performed are

detailed in the Corporate Governance Report.

Auditors

Ernst & Young have expressed their willingness to accept reappointment as auditors.

On behalf of the Board of Directors,

Von Lee Yong Miang

Director

Paul Goh Moh Chye

Director

Singapore

10 January 2008


STATEMENT BY DIRECTORS

We, Von Lee Yong Miang and Paul Goh Moh Chye, being two of the Directors of NH Ceramics Ltd, do hereby state that, in the

opinion of the Directors,

(a) the accompanying balance sheets, consolidated profi t and loss account, statements of changes in equity, and consolidated

cash fl ow statement together with the notes thereto are drawn up so as to give a true and fair view of the state of affairs of

the Group and of the Company as at 30 September 2007 and the results of the business, changes in equity and cash fl ows

of the Group and the changes in equity of the Company for the fi nancial period ended on that date, and

(b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and

when they fall due.

On behalf of the Board of Directors,

Von Lee Yong Miang

Director

Paul Goh Moh Chye

Director

Singapore

10 January 2008


INDEPENDENT AUDITORS’ REPORTTo the Members of NH Ceramics Ltd and its Subsidiaries

We have audited the accompanying fi nancial statements of NH Ceramics Ltd (the “Company”) and its subsidiaries (collectively, the

“Group”) set out on pages 18 to 55, which comprise the balance sheets of the Group and of the Company as at 30 September

2007, the statements of changes in equity of the Group and of the Company, the profi t and loss account and cash fl ow statement

of the Group for the fi nancial period then ended, and a summary of signifi cant accounting policies and other explanatory notes.

Directors’ responsibility for the fi nancial statements

The Company’s Directors are responsible for the preparation and fair presentation of these fi nancial statements in accordance

with the provisions of the Singapore Companies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting Standards. This

responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation

of fi nancial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate

accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ responsibility

Our responsibility is to express an opinion on these fi nancial 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 fi nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements.

The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the

fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant

to the entity’s preparation and fair presentation of the fi nancial 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 entity’s internal control. An audit

also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by

directors, as well as evaluating the overall presentation of the fi nancial statements.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion,

(a) the consolidated fi nancial statements of the Group and the balance sheet and statement of changes in equity of the

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

so as to give a true and fair view of the state of affairs of the Group and of the Company as at 30 September 2007 and the

results, changes in equity and cash fl ows of the Group and the changes in equity of the Company for the fi nancial period

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.

Without qualifying our opinion, we draw attention to Note 2 to the fi nancial statements. The Group has incurred net losses during

the fi nancial period ended 30 September 2007, and as at that date, the Group is in net current liabilities position.

As discussed in Note 2 to the fi nancial statements, the ability of the Group and the Company to continue as a going concern is

dependent on: -

(i) the Group continuing to receive support from fi nancial institutions; and

(ii) the ability of the Group to improve profi tability and cash fl ows.

If the Group and the Company are unable to continue in operational existence for the foreseeable future, the Group and the

Company may be unable to discharge its liabilities in the normal course of business and adjustments may have to be made

to refl ect the situation that assets may need to be realised other than in the normal course of business and at amounts which

could differ signifi cantly from the amounts at which they are currently recorded in the balance sheet. In addition, the Group

and the Company may have to reclassify non-current assets and liabilities as current assets and liabilities respectively. No such

adjustments have been made to these fi nancial statements.

ERNST & YOUNG

Certifi ed Public Accountants

Singapore

10 January 2008


BALANCE SHEETSAs at 30 September 2007

The accompanying accounting policies and explanatory notes form an integral part of the fi nancial statements.

Group Company

Note 30.9.2007 30.6.2006 30.9.2007 30.6.2006

$ $ $ $

Non-current assets

Property, plant and equipment 4 6,917,149 7,487,005 – –

Investments 5 1 30,042 – –

Subsidiaries 6 – – 6,667,000 3,402,000

Amount due from a subsidiary (non-trade) 7 – – 4,997,000 3,500,000

Current assets

Inventories 8 3,024,279 7,285,821 – –

Trade receivables 9 2,242,614 1,997,577 – –

Other receivables 10 214,208 180,020 – –

Prepayments 37,804 35,278 4,193 655

Tax recoverable 11 551 277,857 – 17,422

Amount due from a subsidiary (non-trade) 7 – – – 200,425

Fixed deposits (secured) 29 14,292 14,292 – –

Cash and bank balances 29 24,427 52,723 4,641 4,168

5,558,175 9,843,568 8,834 222,670

Assets classifi ed as held for sale 12 1,318,069 4,404,580 – –

6,876,244 14,248,148 8,834 222,670

Current liabilities

Trade payables 13 947,303 2,770,249 – –

Amount due to a director 14 – 1,749,860 – –

Amount due to a subsidiary (non-trade) 7 – – 283,629 –

Bills payable to banks (secured) 15 3,010,734 3,516,938 – –

Other payables 16 778,021 1,216,503 193,630 126,849

Interest-bearing loans and borrowings (current portion) 17 2,961,555 6,301,391 – –

Bank overdrafts (secured) 18 2,373,324 2,621,198 – –

Lease obligations (current portion) 19 49,291 140,642 – –

Construction contracts work-in-progress 20 – 19,377 – –

Convertible loan 21 4,819,000 – 4,819,000 –

14,939,228 18,336,158 5,296,259 126,849

Net current (liabilities)/assets (8,062,984) (4,088,010) (5,287,425) 95,821

Non-current liabilities

Interest-bearing loans and borrowings (non-current portion) 17 425,102 – – –

Lease obligations (non-current portion) 19 71,253 282,886 – –

(1,642,189) 3,146,151 6,376,575 6,997,821

Equity

Share capital 22 13,192,949 13,192,949 13,192,949 13,192,949

Accumulated losses (15,013,138) (10,046,798) (6,994,374) (6,195,128)

Equity component of convertible loan 21 178,000 – 178,000 –

(1,642,189) 3,146,151 6,376,575 6,997,821


CONSOLIDATED PROFIT AND LOSS ACCOUNTFor the Financial Period Ended 30 September 2007


Group

Note1.7.2006 to 30.9.2007

1.7.2005 to 30.6.2006

$ $

Revenues

Project sales 5,532,858 8,326,857

Retail sales 1,393,970 2,094,567

Interior design and renovation income 955,115 1,589,943

Rental income 22,500 –

7,904,443 12,011,367

Costs and expenses

Changes in inventories of trading goods, excluding allowance for inventory obsolescence 8 (2,024,656) (1,517,295)

Purchases and services consumed 8 (4,275,830) (7,700,705)

(Allowances)/write-back of inventory obsolescence allowance 8 (2,236,886) 484,907

Staff costs 23 (1,984,342) (2,345,351)

Depreciation of property, plant and equipment 4 (858,114) (856,443)

Write-back of impairment losses on property, plant and equipment and assets classifi ed as

held for sale 4, 12 1,114,069 343,390

Other operating expenses 24 (2,883,331) (2,499,430)

Finance costs 25 (1,000,888) (704,333)

(14,149,978) (14,795,260)

Other income 26 1,946,308 151,419

Other expenses 27 (253,349) (65,296)

Loss before taxation (4,552,576) (2,697,770)

Taxation 28 (413,764) –

Net loss for the period/year (4,966,340) (2,697,770)

Basic loss per share (cents) 31 (7.64) (4.15)

Diluted loss per share (cents) 31 (1.95) (4.15)


STATEMENT OF CHANGES IN EQUITYFor the Financial Period Ended 30 September 2007


Sharecapital

Sharepremium

Equity component of

convertible loan

Accumulatedlosses Total

$ $ $ $ $

Group

Balance at 30 June 2005 12,995,565 197,384 – (7,349,028) 5,843,921

Transfer of share premium reserve to share capital

account 197,384 (197,384) – – –

Net loss for the year – – – (2,697,770) (2,697,770)

Balance at 30 June 2006 13,192,949 – – (10,046,798) 3,146,151

Equity component of convertible loan – – 178,000 – 178,000

Net loss for the period – – – (4,966,340) (4,966,340)

Balance at 30 September 2007 13,192,949 – 178,000 (15,013,138) (1,642,189)

Company

Balance at 30 June 2005 12,995,565 197,384 – (6,073,586) 7,119,363

Transfer of share premium reserve to share capital

account 197,384 (197,384) – – –

Net loss for the year – – – (121,542) (121,542)

Balance at 30 June 2006 13,192,949 – – (6,195,128) 6,997,821

Equity component of convertible loan – – 178,000 – 178,000

Net loss for the period – – – (799,246) (799,246)

Balance at 30 September 2007 13,192,949 – 178,000 (6,994,374) 6,376,575


CONSOLIDATED CASH FLOW STATEMENTFor the Financial Period Ended 30 September 2007


Note1.7.2006 to 30.9.2007

1.7.2005 to 30.6.2006

$ $

Cash fl ows from operating activities

Loss before taxation (4,552,576) (2,697,770)

Adjustments for:

Bad trade debts recovered (31,032) (26,474)

Fair value adjustment of quoted investment – 4,409

Investment acquired from conversion of trade debt (3,681) (1,526)

Allowances for uncollectible trade debts 396,079 46,075

Allowances for uncollectible non-trade debts 64,700 –

Amount due to a director written off (1,600,000) –

Depreciation of property, plant and equipment 858,114 856,443

Write-back of impairment losses on property, plant and equipment and assets classifi ed

as held for sale (1,114,069) (343,390)

Interest expenses 975,365 668,526

Interest income (237) –

Dividend income from quoted investments – (279)

Gain on disposal of quoted investments (104,379) –

Gain on disposal of subsidiary (60,615) –

Gain on disposal of property, plant and equipment and assets classifi ed as held for sale (16,162) (48,011)

Property, plant and equipment written off 269,511 –

Allowances/(write-back) of inventory obsolescence allowance 2,236,886 (484,907)

Operating cash fl ows before working capital changes (2,682,096) (2,026,904)

(Increase)/decrease in:

Inventories 2,024,656 1,517,295

Trade receivables (679,813) 1,506,313

Other receivables (113,110) 51,468

Prepayments (2,526) 17,596

Increase/(decrease) in:

Trade payables (1,552,969) 54,556

Other payables (383,163) 357,290

Amount due to a director (149,860) 1,029,500

Construction contracts work-in-progress (19,377) (62,097)

Cash fl ows (used in)/generated from operations (3,558,258) 2,445,017

Interest paid (975,365) (668,526)

Interest received 237 –

Income tax (paid)/refunded (136,458) 29,737

Net cash fl ows (used in)/from operating activities (4,669,844) 1,806,228

Cash fl ows from investing activities

Proceeds from disposal of quoted investments 138,101 –

Proceeds from sale of property, plant and equipment and assets classifi ed as held for sale 3,522,390 426,472

Purchase of property, plant and equipment A (350) (66,656)

Disposal of subsidiary, net of cash disposed 6 (43,797) –

Dividend income from quoted investments – 279

Net cash fl ows from investing activities 3,616,344 360,095


CONSOLIDATED CASH FLOW STATEMENTFor the Financial Period Ended 30 September 2007


Note1.7.2006 to 30.9.2007

1.7.2005 to 30.6.2006

$ $

Cash fl ows from fi nancing activities

(Decrease)/increase in bills payable to banks (506,204) (325,919)

Repayment of interest-bearing loans and borrowings (2,914,734) (1,624,697)

Repayment of lease obligations (302,984) (131,606)

Proceeds from unsecured convertible loan 4,997,000 –

Net cash fl ows from/(used in) fi nancing activities 1,273,078 (2,082,222)

Net increase in cash and cash equivalents 219,578 84,101

Cash and cash equivalents at beginning of period/year (2,568,475) (2,652,576)

Cash and cash equivalents at end of period/year (Note 29) (2,348,897) (2,568,475)

A. Property, plant and equipment

During the fi nancial period, the Group acquired property, plant and equipment with an aggregate cost of $350 (2006:

$427,156) of which $Nil (2006: $360,500) was acquired by means of fi nance leases. Cash payments of $350 (2006:

$66,656) were made to purchase property, plant and equipment.


NOTES TO THE FINANCIAL STATEMENTS30 September 2007

1. Corporate information

The Company is a public company listed on the Singapore Exchange Securities Trading Limited, incorporated and domiciled

in Singapore.

The registered offi ce of the Company is located at 1 & 3 Tuas Avenue 8, Jurong Industrial Estate, Singapore 639217, which

is also its principal place of business.

The principal activity of the Company is that of investment holding. The principal activities of the subsidiaries consist of

acting as a specialist supplier and stockist of ceramic tiles, marble and other fi nishing and building products; processing,

fabrication and precision cutting of building materials, property management, investments and other related business.

During the fi nancial period, the Group and the Company changed the fi nancial year end from 30 June to 30 September.

Accordingly, the current fi nancial period covers the period from 1 July 2006 to 30 September 2007.

There has been no signifi cant change in the nature of these activities during the fi nancial period other than the disposal

of a subsidiary, Living Elements Pte Ltd during the fi nancial period as shown in Note 6 to the fi nancial statements and the

closure of the retail showroom at Bukit Merah.

2. Fundamental accounting concept

The Group incurred a net loss of $4,966,340 (2006: $2,697,770) for the fi nancial period ended 30 September 2007 and as

at that date, the Group’s current liabilities exceeded its current assets by $8,062,984 (2006: $4,088,010) and was in net

capital defi cit position of $1,642,189 (2006 : net capital surplus position of $3,146,151).

On 19 October 2007, convertible loans totalling $6,049,000 (including the $4,819,000 outstanding as at 30 September

2007) were converted to shares upon exercise of conversion rights by the holders of the convertible loans (see Note 21

and 37). The prospects for profi tability in building materials sector are improving. Based on this, the Group is seeking to

improve its profi t performance.

The ability of the Group to continue as a going concern is dependent on: -

(i) the Group continuing to receive support from fi nancial institutions; and

(ii) the ability of the Group to improve profi tability and cash fl ows.

The ability of the Company to continue as a going concern is dependent on the Group’s ability to continue as a going

concern.

If the Group and the Company are unable to continue in operational existence for the foreseeable future, the Group and

the Company may be unable to discharge its liabilities in the normal course of business and adjustments may have to

be made to refl ect the situation that assets may need to be realised other than in the normal course of business and

at amounts which could differ signifi cantly from the amounts at which they are currently recorded in the balance sheet.

In addition, the Group and the Company may have to reclassify non-current assets and liabilities as current assets and

liabilities respectively. No such adjustments have been made to these fi nancial statements.

3. Summary of signifi cant accounting policies

3.1 Basis of preparation

The fi nancial statements have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”).

The fi nancial statements have been prepared on a historical basis except for held for trading fi nancial assets that

have been measured at their fair values.

The fi nancial statements are presented in Singapore dollars (SGD or $) (unless otherwise stated).



3. Summary of signifi cant accounting policies (cont’d)

3.2 Future changes in accounting policies

The Group has not applied the following FRS and Interpretations of Financial Reporting Standards (“INT FRS”) that

have been issued but not yet effective.

Effective date (Annual periods beginning on

or after)

FRS 1 : Amendment to FRS 1 (revised), Presentation of Financial Statements

(Capital Disclosures) 1 January 2007

FRS 23 : Amendment to FRS 23, Borrowing Costs 1 January 2009

FRS 40 : Investment Property 1 January 2007

FRS 107 : Financial Instruments: Disclosures 1 January 2007

FRS 108 : Operating Segments 1 January 2009

INT FRS 110 : Interim Financial Reporting and Impairment 1 November 2006

INT FRS 111 : Group and Treasury Share Transactions 1 March 2007

INT FRS 112 : Service Concession Arrangements 1 January 2008

The Directors expect that the adoption of the above pronouncements will have no material impact to the fi nancial

statements in the period of initial application, except for FRS 107, the amendment to FRS 1 and FRS 108 as

indicated below.

FRS 107, Financial Instruments: Disclosures

FRS 107 introduces new disclosures to improve the information about fi nancial instruments. It requires the

disclosure of qualitative and quantitative information about exposure to risks arising from fi nancial instruments,

including specifi ed minimum disclosures about credit risk, liquidity risk and market risk, including sensitivity analysis

to market risk.

Amendment to FRS 1 (revised), Presentation of Financial Statements (Capital Disclosures)

The amendment to FRS 1 requires the Group to make new disclosures to enable users of the fi nancial statements to

evaluate the Group’s objectives, policies and processes for managing capital.

FRS 108, Operating Segments

FRS 108 requires the Group to disclose segment information based on the information reviewed by the Group’s chief

operating decision maker. The impact of this standard on the other segment disclosures is still to be determined.

The Group will apply FRS 107 and the amendment to FRS 1 from annual periods beginning 1 October 2007 while

FRS 108 from annual periods beginning 1 October 2009.

3.3 Signifi cant accounting estimates and judgments

Estimates, assumptions concerning the future and judgments are made in the preparation of the fi nancial statements.

They affect the application of the Group’s accounting policies, reported amounts of assets, liabilities, income and

expenses, and disclosures made. They are assessed on an on-going basis and are based on experience and

relevant factors, including expectations of future events that are believed to be reasonable under the circumstances.

(a) Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance

sheet date, that have a signifi cant risk of causing a material adjustment to the carrying amounts of assets

and liabilities within the next fi nancial year are discussed below.




3.3 Signifi cant accounting estimates and judgments (cont’d)

(a) Key sources of estimation uncertainty (cont’d)

(i) Impairment of property, plant and equipment

The Group assesses at each reporting date whether there is an indication that property, plant and

equipment may be impaired. Where an indication of impairment exists, recoverable value is assessed

at the higher of the valuation performed by independent valuers and the estimation of the value in use

of the cash generating units. Estimating the value in use requires the Group to make an estimate of

the expected future cash fl ows from the cash-generating units and also to choose a suitable discount

rate in order to calculate the present value of those cash fl ows. The carrying amount of the Group’s

property, plant and equipment at 30 September 2007 was $6,917,149 (2006: $7,487,005).

(ii) Impairment of investments in subsidiaries

The Company assesses at each reporting date whether there is an indication that the investments in

subsidiaries may be impaired. Where an indication of impairment exists, recoverable value is assessed

based on an estimation of the value in use of the subsidiaries. Estimating the value in use requires

the Company to make an estimate of the expected future cash fl ows from the subsidiaries and also

to choose a suitable discount rate in order to calculate the present value of those cash fl ows. The

carrying amount of the Company’s investments in subsidiaries at 30 September 2007 was $6,667,000

(2006: $3,402,000).

(iii) Income taxes

Signifi cant judgement is involved in determining the Group provision for income taxes. There are

certain transactions and computations for which the ultimate tax determination is uncertain during

the ordinary course of business. The Group recognises liabilities for expected tax issues based on

estimates of whether additional taxes will be due. Where the fi nal tax outcome of these matters is

different from the amounts that were initially recognised, such differences will impact the income tax

and deferred tax provisions in the period in which such determination is made. The carrying amount

of the Group’s tax recoverable at 30 September 2007 was $551 (2006: $277,857). The Group’s

unutilised carried forward tax losses at 30 September 2007 was $8,079,000 (2006 : $3,918,000).

(b) Critical judgements made in applying accounting policies

The management is of the view that there is no critical judgement made by management in the process

of applying the Group’s accounting policies that have signifi cant effects on the amounts recognised in the

fi nancial statements.

3.4 Functional and foreign currency

(a) Functional currency

The management has determined the currency of the primary economic environment in which the Company

operates i.e. functional currency, to be SGD. Sales prices and major costs of providing goods and services

including major operating expenses are primarily infl uenced by fl uctuations in SGD.

(b) Foreign currency transactions

Transactions in foreign currencies are measured in the respective functional currencies of the Company

and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates

approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign

currencies are translated at the closing rate of exchange ruling at the balance sheet date. Non-monetary

items that are measured in terms of historical cost in a foreign currency are translated using the exchange

rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign

currency are translated using the exchange rates at the date when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the

balance sheet date are recognised in the profi t and loss account.




3.5 Subsidiaries and principles of consolidation

(a) Subsidiaries

A subsidiary is an entity over which the Group has the power to govern the fi nancial and operating policies

so as to obtain benefi ts from its activities. The Group generally has such power when it directly or indirectly,

holds more than 50% of the issued share capital, or controls more than half of the voting power, or controls

the composition of the board of directors.

In the Company’s separate fi nancial statements, investments in subsidiaries are accounted for at cost less

any impairment losses.

(b) Principles of consolidation

The consolidated fi nancial statements comprise the fi nancial statements of the Company and its subsidiaries

as at the balance sheet date. The fi nancial statements of the subsidiaries are prepared for the same reporting

date as the parent company. Consistent accounting policies are applied for like transactions and events in

similar circumstances.

All intra-group balances, transactions, income and expenses and profi ts and losses resulting from intra-group

transactions that are recognised in assets, are eliminated in full.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains

control, and continue to be consolidated until the date that such control ceases.

Acquisitions of subsidiaries are accounted for using the purchase method. The cost of an acquisition is

measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed

at the date of exchange, plus costs directly attributable to the acquisition. Identifi able assets acquired and

liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values

at the acquisition date, irrespective of the extent of any minority interest.

Any excess of the Group’s interest in the net fair value of the identifi able assets, liabilities and contingent

liabilities over the cost of business combination is recognised in the profi t and loss account on the date of

acquisition.

3.6 Property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. Subsequent to recognition, property, plant

and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. The cost

of an asset comprises its purchase price and any directly attributable costs of bringing the asset to working condition

for its intended use. Expenditure for additions, improvements and renewals are capitalised and expenditures

for maintenance and repairs are charged to the profi t and loss account. When assets are derecognised upon

disposal or when no future economic benefi ts are expected from their use or disposal, their costs and accumulated

depreciation are removed from the fi nancial statements and any gain or loss arising on derecognition of assets is

included in the profi t and loss account in the year the assets are derecognised.

Depreciation of an asset begins when it is available for use and is computed on a straight-line basis over the

estimated useful life of the asset as follows :

Years

Freehold property 50

Leasehold properties 30 – 50

Motor vehicles 10

Plant and machinery 10

Production machinery 10

Computers 3

Furniture and fi ttings 6 – 10

Offi ce equipment 10

Warehouse equipment 10




3.6 Property, plant and equipment (cont’d)

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in

circumstances indicate that the carrying value may not be recoverable.

The residual values, useful life and depreciation method are reviewed at each fi nancial year-end to ensure that the

amount, period and method of depreciation are consistent with previous estimates and the expected pattern of

consumption of the future economic benefi ts embodied in the items of property, plant and equipment.

3.7 Investments

Investment securities are classifi ed as fi nancial assets at fair value through profi t or loss. The accounting policy for

this category of fi nancial assets is stated in Note 3.9.

3.8 Impairment of non-fi nancial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any

such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of

the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and

its value in use and is determined for an individual asset, unless the asset does not generate cash infl ows that

are largely independent of those from other assets or groups of assets. In assessing value in use, the estimated

future cash fl ows are discounted to their present value using a pre-tax discount rate that refl ects current market

assessments of the time value of money and the risks specifi c to the asset. Where the carrying amount of an asset

exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

An assessment is made at each reporting date as to whether there is any indication that previously recognised

impairment losses recognised for an asset may no longer exist or may have decreased. If such indication exists,

the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been

a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was

recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That

increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had

no impairment loss been recognised for the asset in prior years. Reversal of an impairment loss is recognised in the

profi t and loss account.

3.9 Financial assets

Financial assets within the scope of FRS 39 are classifi ed as either fi nancial assets at fair value through profi t or loss,

loans and receivables, held-to-maturity investments, or available-for-sale fi nancial assets, as appropriate. Financial

assets are recognised on the balance sheet when, and only when, the Group becomes a party to the contractual

provisions of the fi nancial instrument.

When fi nancial assets are recognised initially, they are measured at fair value, plus, in the case of fi nancial assets not

at fair value through profi t or loss, directly attributable transaction costs. The Group determines the classifi cation of

its fi nancial assets after initial recognition and, where allowed and appropriate, re-evaluates this designation at each

fi nancial year-end.

All regular way purchases and sales of fi nancial assets are recognised on the trade date i.e. the date that the Group

commits to purchase the asset. Regular way purchases or sales are purchases or sales of fi nancial assets that

require delivery of assets within the period generally established by regulation or convention in the marketplace

concerned.




3.9 Financial assets (cont’d)

(a) Financial assets at fair value through profi t or loss

Financial assets classifi ed as held for trading are included in the category ‘fi nancial assets at fair value

through profi t or loss’. Financial assets are classifi ed as held for trading if they are acquired for the purpose of

selling in the near term. Derivative fi nancial instruments are also classifi ed as held for trading unless they are

designated as effective hedging instruments. Gains or losses on investments held for trading are recognised

in the profi t and loss account.

The Group does not designate any fi nancial assets not held for trading as fi nancial assets at fair value through

profi t and loss.

(b) Held-to-maturity investments

Non-derivative fi nancial assets with fi xed or determinable payments and fi xed maturity are classifi ed as

held-to-maturity when the Group has the positive intention and ability to hold the assets to maturity.

Investments intended to be held for an undefi ned period are not included in this classifi cation. Other long-

term investments that are intended to be held-to-maturity, such as bonds, are subsequently measured at

amortised cost using the effective interest method. This cost is computed as the amount initially recognised

minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of

any difference between the initially recognised amount and the maturity amount and minus any reduction for

impairment or uncollectibility. This calculation includes all fees and points paid or received between parties to

the contract that are an integral part of the effective interest rate, transaction costs and all other premiums

and discounts. For investments carried at amortised cost, gains and losses are recognised in the profi t

and loss account when the investments are derecognised or impaired, as well as through the amortisation

process.

(c) Loans and receivables

Non-derivative fi nancial assets with fi xed or determinable payments that are not quoted in an active market

are classifi ed as loans and receivables. Such assets are carried at amortised cost using the effective interest

method. Gains and losses are recognised in profi t and loss account when the loans and receivables are

derecognised or impaired, as well as through the amortisation process.

(d) Available-for-sale fi nancial assets

Available-for-sale fi nancial assets are those non-derivative fi nancial assets that are designated as available-

for-sale or are not classifi ed in any of the three preceding categories. After initial recognition, available-for sale

fi nancial assets are measured at fair value with gains or losses being recognised in the fair value adjustment

reserve until the investment is derecognised or until the investment is determined to be impaired at which

time the cumulative gain or loss previously reported in equity is included in the profi t and loss account.

The fair value of investments that are actively traded in organised fi nancial markets is determined by reference to the

relevant Exchange’s quoted market bid prices at the close of business on the balance sheet date.

3.10 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost incurred in bringing each product to its

present location and condition is accounted for on a fi rst-in fi rst-out basis.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs necessary

to make the sale.

Allowances for inventory obsolescence are made for deteriorated, damaged and slow-moving inventories.




3.11 Trade and other receivables

Trade and other receivables, including amount due from a subsidiary are classifi ed and accounted for as loans and

receivables under FRS 39. The accounting policy for this category of fi nancial assets is stated in Note 3.9.

An allowance is made for uncollectible amounts when there is objective evidence that the Group will not be able to

collect the debt. Bad debts are written off when identifi ed. Further details on the accounting policy for impairment of

fi nancial assets are stated in Note 3.14.

3.12 Cash and cash equivalents

Cash and cash equivalents comprise cash at bank, fi xed deposits and short term, highly liquid investments that are

readily convertible to known amounts of cash which are subject to an insignifi cant risk of changes in value. These

also include bank overdrafts that form an integral part of the Group’s cash management.

Cash and fi xed deposits carried in the balance sheets are classifi ed and accounted for as loans and receivables

under FRS 39. The accounting policy for this category of fi nancial assets is stated in Note 3.9.

3.13 Construction contracts work-in-progress

Construction contracts work-in-progress comprises costs of incomplete projects incurred plus recognised profi ts

less recognised losses, progress billings and allowances for foreseeable losses. Costs include all direct materials,

labour, sub-contractors’ costs and other directly related expenses.

Provision is made where applicable for any foreseeable losses in the period on incomplete contracts as soon as the

possibility of the loss is ascertained. The stage of completion is determined by reference to the percentage of value

of work done as at balance sheet date.

3.14 Impairment of fi nancial assets

The Group assesses at each balance sheet date whether there is any objective evidence that a fi nancial asset or

group of fi nancial assets is impaired.

(a) Assets carried at amortised cost

If there is objective evidence that an impairment loss on fi nancial assets carried at amortised cost has been

incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the

present value of estimated future cash fl ows discounted at the fi nancial asset’s original effective interest rate

(i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced

through the use of an allowance account. The impairment is recognised in the profi t and loss account.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related

objectively to an event occurring after the impairment was recognised, the previously recognised impairment

loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the

reversal date. The amount of reversal is recognised in the profi t and loss account.

(b) Assets carried at cost

If there is objective evidence (such as signifi cant adverse changes in the business environment where the

issuer operates, probability of insolvency or signifi cant fi nancial diffi culties of the issuer) that an impairment

loss on fi nancial assets carried at cost has been incurred, the amount of the loss is measured as the

difference between the asset’s carrying amount and the present value of estimated future cash fl ows

discounted at the current market rate of return for a similar fi nancial asset. Such impairment losses are not

reversed in subsequent periods.




3.14 Impairment of fi nancial assets (cont’d)

(c) Available-for-sale fi nancial assets

If an available-for-sale fi nancial asset is impaired, an amount comprising the difference between its cost (net

of any principal payment and amortisation) and its current fair value, less any impairment loss previously

recognised in the profi t and loss account, is transferred from equity to the profi t and loss account. Reversals

of impairment losses in respect of equity instruments are not recognised in the profi t and loss account.

Reversals of impairment losses on debt instruments are recognised through the profi t and loss account, if the

increase in fair value of the instrument can be objectively related to an event occurring after the impairment

loss was recognised in the profi t and loss account.

3.15 Trade and other payables

Liabilities for trade and other amounts payable, which are normally settled on 30-120 day terms, and amount owing

to a director are initially recognised at fair value and subsequently measured at amortised cost using the effective

interest method.

Gains and losses are recognised in the profi t and loss account when the liabilities are derecognised as well as

through the amortisation process.

3.16 Interest bearing loans and borrowings

All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable

transaction costs.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using

the effective interest method.

Gains and losses are recognised in the profi t and loss account when the liabilities are derecognised as well as

through the amortisation process.

Borrowing costs are recognised as expenses in the period in which they are incurred.

3.17 Derecognition of fi nancial assets and liabilities

(a) Financial assets

A fi nancial asset (or, where applicable a part of a fi nancial asset or part of a group of similar fi nancial assets)

is derecognised where:

• The contractual rights to receive cash fl ows from the asset have expired;

• The Group retains the contractual rights to receive cash fl ows from the asset, but has assumed

an obligation to pay them in full without material delay to a third party under a ‘pass-through’

arrangement; or

• The Group has transferred its rights to receive cash fl ows from the asset and either (a) has transferred

substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained

substantially all the risks and rewards of the asset, but has transferred control of the asset.

Where the Group has transferred its rights to receive cash fl ows from an asset and has neither transferred

nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset

is recognised to the extent of the Group’s continuing involvement in the asset. Continuing involvement that

takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying

amount of the asset and the maximum amount of consideration that the Group could be required to repay.




3.17 Derecognition of fi nancial assets and liabilities (cont’d)

(a) Financial assets (cont’d)

Where continuing involvement takes the form of a written and/or purchased option on the transferred asset,

the extent of the Group’s continuing involvement is the amount of the transferred asset that the Group may

repurchase, except that in the case of a written put option on an asset measured at fair value, the extent of

the Group’s continuing involvement is limited to the lower of the fair value of the transferred asset and the

option exercise price.

On derecognition of a fi nancial asset in its entirety, the difference between the carrying amount and the sum

of (a) the consideration received (including any new asset obtained less any new liability assumed) and (b)

any cumulative gain or loss that has been recognised directly in equity is recognised in the profi t and loss

account.

(b) Financial liabilities

A fi nancial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

Where an existing fi nancial liability is replaced by another from the same lender on substantially different

terms, or the terms of an existing liability are substantially modifi ed, such an exchange or modifi cation is

treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the

respective carrying amounts is recognised in the profi t and loss account.

3.18 Provisions

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

event, it is probable that an outfl ow of economic resources will be required to settle the obligation and the amount of

the obligation can be estimated reliably. Where the Group expects some or all of a provision to be reimbursed, the

reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense

relating to any provision is presented in the profi t and loss account net of any reimbursement.

Provisions are reviewed at each balance sheet date and adjusted to refl ect the current best estimate. If it is no longer

probable that an outfl ow of economic resources will be required to settle the obligation, the provision is reversed.

3.19 Leases

(a) Finance lease

Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of

the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower,

at the present value of the minimum lease payments. Any initial direct costs are also added to the amount

capitalised. Lease payments are apportioned between the fi nance charges and reduction of the lease liability

so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are

charged to the profi t and loss account. Contingent rents, if any, are charged as expenses in the periods in

which they are incurred.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the

lease term, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease

term.

(b) Operating lease

Leases where the lessor effectively retains substantially all the risks and rewards of ownership of the leased

item are classifi ed as operating leases. Operating lease payments are recognised as an expense in the profi t

and loss account on a straight-line basis over the lease term. The aggregate benefi t of incentives provided by

the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.




3.20 Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefi ts will fl ow to the Group and the

revenue can be reliably measured. The following specifi c recognition criteria must also be met before revenue is

recognised:

(a) Sale of goods

Revenue is recognised upon the transfer of signifi cant risk and rewards of ownership of the goods to the

customer, which generally coincides with delivery and acceptance of the goods sold.

(b) Construction contracts

Revenue from interior design and renovation contracts are recognised using the percentage of completion

method determined by reference to the stage of completion of the contract activity at the end of each

fi nancial year. Where the outcome of the contract can be estimated reliably, revenue and costs are

recognised by reference to the stage of completion of the contract activity at the balance sheet date,

determined after considering the relationship of the value of work performed to-date to total contracted

revenue for the contract. The stage of completion is measured by reference to the proportion that contract

costs incurred for work performed to date bear to the estimated total contract costs.

(c) Rental income

Rental income is recognised on an accrual basis.

(d) Dividends

Dividend income is recognised when the Group’s right to receive payment is established.

3.21 Employee benefi ts

(a) Defi ned contribution plan

As required by law, the Group makes contributions to the Central Provident Fund scheme in Singapore

(“CPF”), a defi ned contribution pension scheme. CPF contributions are recognised as compensation expense

in the same period in which the related service is performed.

(b) Employee leave entitlement

Employee entitlements to annual leave are recognised when they accrue to employees. An accrual is made

for the estimated liability for annual leave as a result of services rendered by employees up to the balance

sheet date.

3.22 Income taxes

(a) Current tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be

recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount

are those that are enacted or substantively enacted by the balance sheet date.

(b) Deferred tax

Deferred income tax is provided using the liability method on temporary differences at the balance sheet date

between the tax bases of assets and liabilities and their carrying amounts for fi nancial reporting purposes.

Deferred income tax assets and liabilities are measured at the tax rates expected to apply to the year when

the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or

substantively enacted at the balance sheet date.




3.22 Income taxes (cont’d)

(b) Deferred tax (cont’d)

Deferred tax liabilities are recognised for all taxable temporary differences, except:

• Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in

a transaction that is not a business combination and, at the time of the transaction, affects neither the

accounting profi t nor taxable profi t or loss; and

• In respect of taxable temporary differences associated with investments in subsidiaries, where the

timing of the reversal of the temporary differences can be controlled and it is probable that the

temporary differences will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused

tax credits and unused tax losses, to the extent that it is probable that taxable profi t will be available against

which the deductible temporary differences, and the carry-forward of unused tax credits and unused tax

losses can be utilised except:

• Where the deferred income tax asset relating to the deductible temporary difference arises from the

initial recognition of an asset or liability in a transaction that is not a business combination and, at the

time of the transaction, affects neither the accounting profi t nor taxable profi t or loss; and

• In respect of deductible temporary differences associated with investments in subsidiaries, deferred

tax assets are recognised only to the extent that it is probable that the temporary differences will

reverse in the foreseeable future and taxable profi t will be available against which the temporary

differences can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to

the extent that it is no longer probable that suffi cient taxable profi t will be available to allow all or part of the

deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each

balance sheet date and are recognised to the extent that it has become probable that future taxable profi t

will allow the deferred tax asset to be recovered.

Income tax relating to items recognised directly in equity is recognised in equity.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current

tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same

taxation authority.

(c) Sales tax

Revenues, expenses and assets are recognised net of the amount of sales tax except:

• Where the sales tax incurred in a purchase of assets or services is not recoverable from the taxation

authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as

part of the expense item as applicable; and

• Receivables and payables that are stated with the amount of sales tax included.

The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of

receivables or payables in the balance sheet.




3.23 Derivative fi nancial instruments

The Group occasionally uses derivative fi nancial instruments such as forward currency contracts to hedge its risks

associated with foreign currency. Such derivative fi nancial instruments are initially recognised at fair value on the date

on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivative fi nancial

instruments are carried as assets when the fair value is positive and as liabilities when the fair value is negative.

Any gains or losses arising from changes in fair value on derivative fi nancial instruments that do not qualify for hedge

accounting are taken to the profi t and loss account for the year.

The fair value of forward currency contracts is calculated by reference to current forward exchange rates for

contracts with similar maturity profi les.

3.24 Assets held for sale

An asset is deemed to be held for sale if its carrying amount will be recovered principally through a sale transaction

rather than through continuing use.

Immediately before the initial classifi cation of the asset as held for sale, the carrying amount of the asset is measured

in accordance with the applicable FRSs. Upon classifi cation as held for sale, non-current assets and disposal groups

are measured at the lower of carrying amount and fair value less costs to sell. Any differences are recognised in the

profi t and loss account.

3.25 Convertible loan

The component of convertible loan that exhibits characteristics of a liability is recognised as a fi nancial liability on the

balance sheet, net of transaction costs. On issuance of the convertible loan, the fair value of the liability component

is determined using a market rate for an equivalent non-convertible debt and this amount is carried as a fi nancial

liability in accordance with the accounting policy set out in Note 3.16.

The residual amount, after deducting the fair value of the liability component, is recognised and included in

shareholders equity, net of transaction costs.

Transaction costs are apportioned between the liability and equity components of the convertible loan based on the

allocation of proceeds to the liability and equity components when the instruments were fi rst recognised.

3.26 Segment reporting

A segment is a distinguishable component of the Group that is engaged in providing services/products, or in

providing such services/products within a particular economic environment, which is subject to risks and rewards

that are different from those of other segments. There is no breakdown by geographical markets as the Group’s

operations and customers are based in Singapore.

Segment information is presented in respect of the Group’s business and is based on the Group’s management and

internal reporting structure.

Inter-segment pricing, if any, is determined on the basis agreed between inter-segments.



4. Property, plant and equipment

Freehold property

Leasehold properties

Motor vehicles

Plant and machinery

Production machinery Computers

Furniture and

fi ttingsOffi ce

equipmentWarehouse equipment Total

$ $ $ $ $ $ $ $ $ $

Group

Cost At 1 July 2005 2,775,600 12,219,629 2,903,381 1,014,260 1,365,651 456,140 1,805,978 299,227 74,451 22,914,317

Additions – – 368,588 – – 36,100 22,468 – – 427,156

Disposals – – (1,407,249) – – (1,638) (312) – – (1,409,199)

Reclassifi cation to assets

classifi ed as held for

sale (2,775,600) (2,552,089) – – – – – – – (5,327,689)

At 30 June 2006 and

1 July 2006 – 9,667,540 1,864,720 1,014,260 1,365,651 490,602 1,828,134 299,227 74,451 16,604,585

Additions – – – – – 350 – – – 350

Disposals/write-off – – (502,335) – (811,024) (370,777) (793,102) (150,677) (47,934) (2,675,849)

Disposal of a subsidiary – – – – – (63,650) (171,707) (45,194) – (280,551)

At 30 September 2007 – 9,667,540 1,362,385 1,014,260 554,627 56,525 863,325 103,356 26,517 13,648,535

Accumulated depreciation and impairment

At 1 July 2005 475,600 4,858,439 1,848,783 979,297 783,443 449,050 892,514 209,460 61,788 10,558,374

Charge for the year – 322,251 197,488 34,148 109,506 22,625 148,693 18,860 2,872 856,443

Disposals – – (1,029,022) – – (1,638) (78) – – (1,030,738)

Write-back of impairment

losses – (343,390) – – – – – – – (343,390)

Reclassifi cation to assets

classifi ed as held for

sale (475,600) (447,509) – – – – – – – (923,109)

At 30 June 2006 and

1 July 2006 – 4,389,791 1,017,249 1,013,445 892,949 470,037 1,041,129 228,320 64,660 9,117,580

Charge for the period – 402,814 171,471 815 112,009 16,169 135,340 16,643 2,853 858,114

(Write-back)/allowance of

impairment losses – (1,346,000) – – 330,000 – – – – (1,016,000)

Disposals/write-off – – (217,191) – (780,647) (370,777) (520,153) (147,988) (47,934) (2,084,690)

Disposal of a subsidiary – – – – – (61,521) (62,295) (19,802) – (143,618)

At 30 September 2007 – 3,446,605 971,529 1,014,260 554,311 53,908 594,021 77,173 19,579 6,731,386

Net carrying value

At 30 June 2006 – 5,277,749 847,471 815 472,702 20,565 787,005 70,907 9,791 7,487,005

At 30 September 2007 – 6,220,935 390,856 – 316 2,617 269,304 26,183 6,938 6,917,149

(a) Motor vehicles with net carrying values of approximately $Nil (2006: $640,000) were acquired under fi nance leases

(Note 19). Properties with net carrying values of approximately $6,220,935 (2006: $5,277,749) (Notes 15, 17 and

18) have been pledged to certain banks for banking facilities granted.



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

(b) Major properties of the Group are as follows:

Description LocationBuilt up area

(square metres) Tenure of lease Net carrying value

30.9.2007 30.6.2006

$ $

Leasehold 1 & 3 Tuas Avenue 8, 8,855 30 years from 6,220,935 5,277,749

properties Jurong Industrial Estate,

Singapore 639217

1 January 1997

(c) The write-back of impairment losses represents the adjustment of certain leasehold properties to recoverable

amounts. The recoverable amounts were determined by reference to latest valuation performed by an independent

valuer, DTZ Debenham Tie Leung (SEA) Pte Ltd, on the properties dated 10 July 2007.

5. Investments

Group

30.9.2007 30.6.2006

$ $

Held for trading investments

Shares (quoted) 1 30,042

The investments are recognised at fair value through profi t or loss whereby the fair value of the investments is determined

by reference to the Exchange’s quoted market bid prices at the close of business on the balance sheet date.

6. Subsidiaries

Company

30.9.2007 30.6.2006

$ $

Unquoted shares, at cost 14,215,563 11,715,563

Impairment loss (7,548,563) (8,313,563)

Carrying amount after impairment loss 6,667,000 3,402,000

For the fi nancial period ended 30 September 2007, an impairment loss of $235,000 (2006: $Nil) was recognised in the

profi t and loss account to adjust the carrying amount of investments in subsidiaries to their estimated recoverable amounts

subsequent to an impairment assessment performed as at 30 September 2007.

The recoverable amount is determined based on a value in use calculation using cash fl ow projections based on fi nancial

budgets approved by management covering a three-year period. The pre-tax discount rate applied to the cash fl ow

projections is 4.44% (2006: 5.4%). The growth rate used to extrapolate the cash fl ows of the subsidiaries beyond the three-

year period is Nil% (2006: Nil%).



6. Subsidiaries (cont’d)

The subsidiaries as at 30 September 2007 are:

Name of company Principal activities

Country of incorporation and place of

businessPercentage of equity

held by the Group Cost of investment

30.9.2007 30.6.2006 30.9.2007 30.6.2006

% % $ $

Held by the Company

* Nam Huat Tiling

& Panelling Co. Pte.

Ltd. (“NHTP”)

Specialist supplier and stockist

of ceramic tiles, marble and

other fi nishing and building

products; processing,

fabrication and precision

cutting of building materials.

Singapore 100 100 13,895,563 10,395,563

* Nam Tat Pte. Ltd.

(“NTPL”)

Specialist supplier and stockist

of economy ranges of ceramic

tiles.

Singapore 100 100 300,000 300,000

Living Elements Pte.

Ltd. (“LEPL”)

Interior design and renovation. Singapore – 100 – 1,000,000

* Nam Hong Properties

Pte. Ltd. (“NHP”)

Property management and

investments and other related

business.

Singapore 100 100 20,000 20,000

14,215,563 11,715,563

* Audited by Ernst & Young Singapore

On 28 December 2006, the Company injected additional capital into NHTP via subscription of 3,500,000 new ordinary

shares of NHTP for a cash consideration of $3,500,000. The cash consideration was satisfi ed via capitalisation of amount

due from NHTP amounting to $3,500,000 (Note 7).

On 14 May 2007, the Company disposed LEPL at a nominal sum of $1. The disposal consideration was fully settled in

cash.

The value of assets and liabilities of LEPL recorded in the consolidated fi nancial statements up to date of disposal, and the

cash fl ow effect of the disposal were:

$

Property, plant and equipment 136,933

Trade receivables 69,729

Other receivables 14,222

Cash and bank balances 43,798

Trade payables (269,977)

Other payables (55,319)

Attributable net liabilities disposed (60,614)

Gain on disposal of subsidiary 60,615

Net cash consideration received 1

Cash and bank balances of the subsidiary disposed (43,798)

Net cash outfl ow on disposal of subsidiary (43,797)



7. Amounts due from/(to) a subsidiary (non-trade)

Company

30.9.2007 30.6.2006

$ $

Current account (283,629) 200,425

Non-current loan 4,997,000 3,500,000

4,713,371 3,700,425

The amounts due from/(to) a subsidiary are unsecured and non-interest bearing. The current account amount is (payable)/

repayable on demand and is to be settled in cash.

The non-current amount of $4,997,000 (2006: $3,500,000) represents a quasi-capital loan. There is no fi xed plan for

settlement of the quasi-capital amount. The non-current amount of $3,500,000 from the previous fi nancial year has been

converted to share capital during the fi nancial period (Note 6).

8. Inventories

Group

30.9.2007 30.6.2006

$ $

Trading inventories 2,968,661 7,110,078

Inventories-in-transit 55,618 175,743

Total inventories at lower of cost and net realisable value 3,024,279 7,285,821

Income statement:

Inventories recognised as expenses in income statement : 5,666,814 8,608,281

Inclusive of the following charge/(credit):

- Inventories written-down 1,040,000 95,000

Allowance/(write-back) of inventory obsolescence allowance 2,236,886 (484,907)

The write-back of inventory obsolescence allowance was made in 2006 when the related inventories were sold above their

carrying amounts.

9. Trade receivables

Group

30.9.2007 30.6.2006

$ $

Trade receivables 2,644,346 2,053,890

Less: Allowance for uncollectible trade debts (401,732) (56,313)

2,242,614 1,997,577

Trade receivables

Trade receivables are non-interest bearing and are generally on 30 days’ term. They are recognised at their original invoice

amounts which represents their fair values on initial recognition.



9. Trade receivables (cont’d)

Allowances for uncollectible trade debts

For the fi nancial period ended 30 September 2007, an allowance for uncollectible trade debts of $396,079 (2006: $46,075)

was recognised in the profi t and loss account subsequent to a debt recovery assessment performed on trade receivables

as at 30 September 2007. For the Group, bad trade debts written off directly to the profi t and loss account amounted to

$32,345 (2006: $21,082) (Note 24).

10. Other receivables

Group Company

30.9.2007 30.6.2006 30.9.2007 30.6.2006

$ $ $ $

Other receivables 183,273 49,107 – –

Deposits 29,435 99,568 – –

Staff loans 1,500 31,345 – –

214,208 180,020 – –

Bad debts written off directly to the profi t and loss account

(Note 24) 64,700 – – –

11. Tax recoverable

Group Company

30.9.2007 30.6.2006 30.9.2007 30.6.2006

$ $ $ $

Tax recoverable 551 277,857 – 17,422

Tax recoverable is subject to agreement with the Income Tax Authorities and compliance with the relevant provisions of the

Singapore Income Tax Act.

12. Assets classifi ed as held for sale

During the previous fi nancial year, one of the Company’s subsidiaries decided to dispose three properties, which were put

up for sale. Two of these were sold during the current fi nancial period. There were offers from interested buyers for the

remaining property but no deal was concluded at the appropriate price.

The major classes of assets classifi ed as held for sale as at 30 September 2007 and 30 June 2006 are as follows :

Group

30.9.2007 30.6.2006

$ $

Assets

Properties 1,318,069 4,404,580

Assets classifi ed as held for sale 1,318,069 4,404,580



12. Assets classifi ed as held for sale (cont’d)

Properties of the Group held for sale are as follows :

Description LocationBuilt up area

(square metres) Tenure of lease Net carrying value

30.9.2007 30.6.2006

$ $

Freehold property 5 Jalan Masjid,

#01-09 Kembangan Court,

Singapore 418924

410 Freehold – 2,300,000

Leasehold properties Block 210,

#01-243 Hougang Street 21,

Singapore 530210

166 90 years from

1 April 1993

– 884,580

3791 Jalan Bukit Merah, #01-10

E-Centre@Redhill,

Singapore 159471

259 99 years from

1 July 1962

1,318,069 1,220,000

1,318,069 4,404,580

These properties have been pledged as security for bank borrowings (see Note 17). The proceeds from the properties

disposed were used fi rstly to repay the related bank borrowings which were secured on those properties.

For the fi nancial period ended 30 September 2007, write-back of impairment loss of $98,069 (2006: allowance for

impairment loss of $229,151) was recognised in the profi t and loss account to adjust the carrying amount of the remaining

property to its fair value less costs to sell. The fair value is determined by reference to the latest valuation performed by a

independent valuer, DTZ Debenham Tie Leung (SEA) Pte Ltd on the property dated 10 July 2007.

Subsequent to the fi nancial period end, the Directors made a decision to rent out the remaining property to generate some

income while waiting for the right offer price for the property.

13. Trade payables

Trade payables are non-interest bearing and are normally settled on 30 to 120 days’ terms.

The following amounts are included in trade payables.

30.9.2007 30.6.2006

$ $

Denominated in :

Euros 524,878 1,192,256

United States Dollar 72,991 92,121

14. Amount due to a director

The amount due to a director was unsecured, non-interest bearing and was repayable on demand. An amount of

$1,600,000 was written off during the fi nancial period and the remaining amount of $149,860 has been fully repaid.



15. Bills payable to banks (secured)

Bills payable to banks comprise the following:

Group

30.9.2007 30.6.2006

$ $

Bills payable A 501,323 927,628

Bills payable B 2,509,411 2,589,310

3,010,734 3,516,938

Details of the bills payable are as follows:

Bills payable A are secured by way of a legal mortgage on leasehold properties of a subsidiary with net carrying values of

approximately $6,220,935 (2006: $5,277,749) (Note 4) and are guaranteed by the Company.

Bills payable B are secured by way of a legal mortgage on a leasehold property of a subsidiary with a net carrying value of

approximately $1,318,069 (2006: $1,220,000) (Note 12) and are guaranteed by the Company and a personal guarantee by

a director of the Company.

The bills payables bear interest ranging from 5.06% to 9.77% (2006: 3.3% to 7.6%) per annum, which is also the effective

interest rates. The bills payables will mature within 1 to 6 months (2006: 1 to 6 months) from the balance sheet date.

16. Other payables

Group Company

30.9.2007 30.6.2006 30.9.2007 30.6.2006

$ $ $ $

Sundry creditors 139,966 51,100 440 –

Accrued operating expenses 638,055 1,165,403 193,190 126,849

778,021 1,216,503 193,630 126,849



17. Interest-bearing loans and borrowings

Group

30.9.2007 30.6.2006

$ $

Secured borrowings

SGD loans

Bank loans A – 533,320

Bank loan B 298,000 478,000

Bank loans C 1,000,000 1,250,000

Bank loans D – 2,092,693

Bank loan E – 1,000,000

Bank loan F – 249,335

Bank loan G 440,000 440,000

Bank loan H 585,102 –

Bank loan I 1,063,555 –

Account receivable fi nancing – 258,043

3,386,657 6,301,391

Classifi ed as:

Current portion - due within 12 months 2,961,555 6,301,391

Non-current portion - due after 12 months 425,102 –

3,386,657 6,301,391

(a) Details of secured bank borrowings are as follows:

Bank loans A were secured by way of a legal mortgage on a subsidiary’s leasehold properties with net carrying

values of approximately $6,220,935 (2006: $5,277,749) (Note 4) and were guaranteed by the Company. The loans

were repayable in 120 instalments over 10 years and interest is payable at 4.5% per annum for the fi rst year, 4.75%

per annum for the second and third years and, thereafter at the bank’s prevailing prime lending rate. The loans were

fully repaid during the period.

Bank loan B is secured by way of a legal mortgage on a subsidiary’s leasehold property with a net carrying value

of approximately $1,318,069 (2006: $1,220,000) (Note 12) and is guaranteed by the Company and a personal

guarantee by a director of the Company. The loan is repayable in 60 instalments over 5 years and interest is payable

at 3% over the bank’s swap rate for tenure of 1 month. The loan will mature by November 2008.

Bank loans C are secured by way of a legal mortgage on a subsidiary’s leasehold properties with net carrying values

of approximately $6,220,935 (2006: $5,277,749) (Note 4) and are guaranteed by the Company. One of the loans

was fully repaid during the period. The remaining loan is repayable on demand. Interest is payable at 2% (2006:

1.5%) per annum over the bank’s cost of funds.

Bank loans D were secured by way of a legal mortgage on a subsidiary’s freehold property and a leasehold

property with net carrying values of $Nil and $Nil (2006: $2,300,000 and $884,580) (Note 12) respectively and were

guaranteed by the Company. The loans were repayable in 120 instalments over 10 years and interest was payable

at 4.25% per annum for the fi rst year, 4.5% per annum for the second year, board rate less 0.75% per annum for

the third year and, thereafter at the bank’s board rates. The loans were fully repaid during the period.

Bank loan E was secured by way of a legal mortgage on a subsidiary’s freehold property and a leasehold property

with net carrying values of approximately $Nil and $Nil (2006: $2,300,000 and $884,580) (Note 12) respectively and

was guaranteed by the Company. Interest was payable at 4.06% per annum. The loan was fully repaid during the

period.



17. Interest-bearing loans and borrowings (cont’d)

(a) Details of secured bank borrowings are as follows (cont’d)

Bank loan F was secured by way of a legal mortgage on a subsidiary’s leasehold properties with net carrying values

of approximately $6,220,935 (2006: $5,277,749) (Note 4) and was guaranteed by the Company and a personal

guarantee by a director of the Company. The loan was repayable in 18 instalments over 18 months and interest

was payable at 2% per annum over the bank’s prevailing prime lending rate calculated on daily basis with monthly

balance. The loan was fully repaid during the period.

Bank loan G is secured by way of a legal mortgage on a subsidiary’s leasehold property with a net carrying value

of approximately $1,318,069 (2006: $1,220,000) and is guaranteed by the Company and a personal guarantee by

a director of the Company. The loan is overdue and interest is payable at 1% per annum over the bank’s prevailing

prime lending rate calculated on daily basis with monthly balance.

Bank loan H is secured by way of a legal mortgage on a subsidiary’s leasehold properties with net carrying values of

approximately $6,220,935 (Note 4) and is guaranteed by the Company. The loan is repayable in 30 equal monthly

principal instalments commencing February 2008. Interest is payable at 1.25% per annum over the bank’s prevailing

prime lending rate calculated on daily basis with monthly balance. The loan will mature by July 2012.

Bank loan I is secured by way of a legal mortgage on a subsidiary’s leasehold properties with net carrying values

of approximately $6,220,935 (Note 4) and is guaranteed by the Company. The loan is repayable in one bullet

repayment in January 2008. Interest is payable at 1.25% per annum over the bank’s prevailing prime lending rate

calculated on daily basis with monthly balance. The loan will mature by January 2008.

Account receivable fi nancing was secured by way of a legal mortgage on a subsidiary’s leasehold properties with

net carrying values of approximately $5,277,749 (Note 4) and was guaranteed by the Company. The amounts were

repayable within 3 months from the date of drawdown and interest rates payable at the bank’s prevailing prime

lending rate calculated on daily basis with monthly balance. The amount was fully repaid during the period.

The above bank borrowings, which are all denominated in Singapore Dollar, bore interest ranging from 4% to 6.25%

(2006: 4% to 7%) per annum during the period, which is also the effective interest rates. Based on the agreed

repayment schedules, these bank borrowings will mature within 4 months to 5 years (2006: 1 month to 7 years)

from the balance sheet date.

(b) Classifi cation of bank borrowings

During the fi nancial period, the Group breached one of its bank covenants for bank loan G (2006: all bank loans)

which has the effect that the bank loans B and G from the same bank (2006: all banks) became payable on

demand. As such, in accordance with FRS 1 (revised), Presentation of Financial Statements, the aggregate non-

current portions of these loans amounting to $154,000 (2006: $4,143,474) were classifi ed as current liabilities.

18. Bank overdrafts (secured)

These balances are secured by:

(i) legal mortgages on freehold and leasehold properties of a subsidiary with net carrying values of approximately $Nil

and $7,539,004 (2006: $2,300,000 and $7,382,329) (Notes 4 and 12) respectively; and

(ii) guarantees by the Company.

The bank overdrafts bear interest at 6% (2006: 6%) per annum, which is also the effective interest rate.



19. Lease obligations

Minimum leasepayments

Net present valueof lease payments

30.9.2007 30.6.2006 30.9.2007 30.6.2006

$ $ $ $

Group

Future payments payable for fi nance leases

Within one year 55,259 158,781 49,291 140,642

Within two to fi ve years 81,408 318,455 71,253 282,886

After fi ve years – – – –

136,667 477,236 120,544 423,528

Finance charges allocated to future periods (16,123) (53,708) – –

120,544 423,528 120,544 423,528

Current portion 49,291 140,642 49,291 140,642

Non-current portion 71,253 282,886 71,253 282,886

120,544 423,528 120,544 423,528

Lease terms range from 7 months to 41 months (2006: 3 months to 56 months). Lease terms do not contain restrictions

concerning dividends, additional debt or further leasing. The effective interest rates implicit in the leases are 5.52% to

8.00% (2006: 5.52% to 8.00%) per annum.

All assets acquired under fi nance leases are secured. The net carrying values of assets acquired under fi nance leases are

disclosed in Note 4.

The fi nance leases do not contain any escalation clauses and do not provide for contingent rents.

20. Construction contracts work-in-progress

Group

30.9.2007 30.6.2006

$ $

Contract costs incurred to date – 185,655

Recognised profi ts less recognised losses to date – 45,636

– 231,291

Progress billings – (250,668)

Amounts due to customers for construction contracts work-in-progress – (19,377)

Gross amount due from customers for contract work – 6,138

Gross amount due to customers for contract work – (25,515)

– (19,377)



21. Convertible loan

The Company had on 25 April 2007 entered into a Convertible Loan Agreement with Merryland Pacifi c Limited, Lee Yong

Miang, Lim Oon Hock, Ong Soon Liang, Chua Beng Huat and Lee Kian Soo (the “Investors”) for a SGD loan amounting to

$4,997,000. The convertible loan is convertible into ordinary shares of the Company at any time between 25 April 2007 and

24 April 2009 at the option of the Investors at $0.0263 per share. If the loan is not converted, it will be repaid on 25 April

2009 at par. Compensation costs of 8% per annum on the loan will be paid at the end of the loan period if the loan is not

converted. As at 30 September 2007, the loan of $4,997,000 has been fully advanced to the Company.

The directors estimate the fair value of the liability component of the convertible loan to be $4,819,000. This fair value has

been calculated by discounting the future cash fl ows at the market rate prevailing as at balance sheet date.

The carrying amount of the liability component of the convertible loan at the balance sheet date is arrived at as follows :

Group and Company

30.9.2007 30.6.2006

$ $

Face value of convertible loan 4,997,000 –

Equity component (178,000) –

Liability component of the convertible loan 4,819,000 –

On 12 June 2007, the Company had entered into a Supplemental Agreement with the Investors to increase the SGD loan of

$4,997,000 stated in the Convertible Loan Agreement to $6,049,000 under the same terms and conditions. The additional

$1,052,000 was received on 11 October 2007, subsequent to period end (Note 37).

On 18 October 2007, the Investors exercised their rights of conversion under the Convertible Loan Agreement pursuant to

the approval by shareholders at the Extraordinary General Meeting held by the Company (Note 37).

22. Share capital

Group and Company

30.9.2007 30.6.2006

No. ofshares $

No. ofshares $

Ordinary shares issued and fully paid :

Balance at 1 July 64,977,825 13,192,949 64,977,825 12,995,565

Transfer of share premium reserve to share capital – – – 197,384

Balance at 30 September 2007 and 30 June 2006 64,977,825 13,192,949 64,977,825 13,192,949

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares

carry one vote per share without restriction.



23. Staff costs

Group

1.7.2006to

30.9.2007

1.7.2005to

30.6.2006

$ $

Directors’ remuneration (337,098) (231,141)

Directors’ fees (55,000) (44,000)

Salaries, wages, bonuses and other costs (1,418,188) (1,833,909)

Central Provident Fund contributions (174,056) (236,301)

(1,984,342) (2,345,351)

The number of Directors of the Company whose emoluments fall within the following remuneration bands are:

1.7.2006to

30.9.2007

1.7.2005to

30.6.2006

$250,000 to $499,999 – –

Below $250,000 6 6

6 6

The other directors did not receive emoluments during the fi nancial period.

24. Other operating expenses

Included in other operating expenses are the following:

Group

1.7.2006to

30.9.2007

1.7.2005to

30.6.2006

$ $

Bad debts written off

- trade (Note 9) (32,345) (21,082)

- non-trade (Note 10) (64,700) –

Allowances for uncollectible trade debts (Note 9) (396,079) (46,075)

Non-audit fees to auditors – (7,300)

Rental expenses (882,165) (1,032,556)

25. Finance costs

Interest expense

- bank overdrafts (195,297) (144,890)

- bank borrowings (476,282) (388,813)

- bills payable to banks (276,758) (119,314)

- lease obligations (27,028) (15,509)

Others

- bank charges (25,523) (35,807)

(1,000,888) (704,333)



26. Other income

Group

1.7.2006to

30.9.2007

1.7.2005to

30.6.2006

$ $

Amount due to a director written off 1,600,000 –

Gain on disposal of quoted investments 104,379 –

Gain on disposal of a subsidiary 60,615 –

Gain on disposal of property, plant and equipment – 48,011

Bad trade debts recovered 31,032 26,474

Exchange gain, net 48,750 –

Rental income 25,092 –

Miscellaneous income 76,440 76,655

Dividend income from quoted investments – 279

1,946,308 151,419

27. Other expenses

Loss on disposal/write off of property, plant and equipment

and assets classifi ed as held for sale (253,349) –

Exchange loss, net – (60,887)

Fair value adjustment of quoted investment – (4,409)

(253,349) (65,296)

28. Taxation

Major components of income tax expense for the fi nancial period/year ended 30 September 2007 and 30 June 2006 are:

Group

1.7.2006to

30.9.2007

1.7.2005to

30.6.2006

$ $

Current income tax

- tax recoverable written off (277,306) –

- underprovision in respect of prior years (136,458) –

(413,764) –

A reconciliation of the statutory tax rate to the Group’s effective tax rate applicable to loss before taxation for the fi nancial

period/year ended 30 September 2007 and 30 June 2006 are as follows:

% %

Statutory tax rate (18.0) (20.0)

Tax effect of expenses not deductible for tax purposes 20.7 5.0

Tax effect of income not subject to taxation (38.1) –

Deferred tax assets not recognised 35.4 15.0

Tax recoverable written off 6.1 –

Underprovision in respect of prior years 3.0 –

Effective tax rate 9.1 –



28. Taxation (cont’d)

The corporate income tax rate applicable to Singapore companies of the Group was reduced to 18% for the year of

assessment 2008 onwards from 20% for year of assessment 2007.

Certain subsidiaries have estimated unutilised tax losses and unabsorbed capital allowances amounting to approximately

$8,079,000 and $751,000 (2006: $3,918,000 and $1,431,000) respectively available for offset against future taxable profi ts,

subject to agreement with the Income Tax Authorities and compliance with the relevant provisions of the Singapore Income

Tax Act. The potential deferred tax asset arising from these unutilised tax losses and unabsorbed capital allowances has

not been recognised in the consolidated fi nancial statements in accordance with the accounting policy in Note 3 to the

fi nancial statements.

Subsequent to fi nancial period end, there is a substantial change in shareholders of the Company arising from the

conversion of the convertible loan to capital of the Company (see Note 37). The subsidiaries will apply to the Income

Tax Authorities to seek a waiver on the application of the shareholding test. Should the Income Tax Authorities reject the

subsidiaries’ applications, the unutilised tax losses amounting to approximately $8,079,000 would no longer be available for

set off against the subsidiaries’ future chargeable income.

29. Cash and bank balances, fi xed deposits

Group

1.7.2006to

30.9.2007

1.7.2005to

30.6.2006

$ $

Cash and bank balances 24,427 52,723

Fixed deposits (secured) 14,292 14,292

38,719 67,015

Cash and cash equivalents

For the purpose of the cash fl ow statement, cash and cash equivalents comprise the following as at 30 September 2007

and 30 June 2006:

Cash and bank balances 24,427 52,723

Fixed deposits (secured) 14,292 14,292

Bank overdrafts (secured) (2,373,324) (2,621,198)

(2,334,605) (2,554,183)

Less: Fixed deposits pledged (14,292) (14,292)

(2,348,897) (2,568,475)

The fi xed deposit of $14,292 (2006: $14,292) is pledged to an insurance company as collateral bond.



30. Related party disclosures

An entity or individual is considered a related party of the Group for the purposes of the fi nancial statements if: i)

it possesses the ability (directly or indirectly) to control or exercise signifi cant infl uence over the operating and fi nancial

decisions of the Group or vice versa, or ii) it is subject to common control or common signifi cant infl uence.

(a) Related party transactions

In addition to the related party information disclosed elsewhere in the fi nancial statements, the following signifi cant

transaction between the Group and related party took place during the fi nancial period at terms agreed between the

parties: -

Write-off of amount due to a director 1,600,000 –

(b) Compensation of key management personnel

Group

1.7.2006to

30.9.2007

1.7.2005to

30.6.2006

$ $

Salaries, wages, bonuses and other costs 746,635 694,433

Central Provident Fund contributions 84,914 82,568

Total compensation paid to key management personnel 831,549 777,001

Comprise amounts paid to :

Directors of the Company 354,202 275,141

Other key management personnel 477,347 501,860

831,549 777,001

31. Loss per share

Basic loss per share amounts are calculated by dividing the Group’s net loss for the fi nancial period attributable to ordinary

equity holders of the Company by the weighted average number of ordinary shares outstanding during the fi nancial period.

Diluted earnings per share amounts are calculated by dividing the Group’s net loss for the fi nancial period attributable to

ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the fi nancial

period plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive

potential ordinary shares into ordinary shares.

The following tables refl ect the profi t and loss account and share data used in the computation of basic and diluted loss per

share for the fi nancial period/year ended 30 September 2007 and 30 June 2006:

Group

30.9.2007 30.6.2006

$ $

Loss for the period/year attributable to ordinary equity holders of the Company

used in computation of basic and diluted loss per share 4,966,340 2,697,770

Weighted average number of ordinary shares for

basic loss per share computation 64,977,825 64,977,825

Dilutive effect of convertible loan (Note 21) 190,000,000 –

Weighted average number of ordinary shares adjusted for the effect of dilution 254,977,825 64,977,825



32. Commitments

(a) Capital commitments

Capital expenditure contracted for as at the balance sheet date but not recognised in the fi nancial statements are as

follows:

Group

30.9.2007 30.6.2006

$ $

Capital commitment in respect of renovation of premise 103,000 –

As at 30 September 2007, a subsidiary had a commitment with certain contractors for the demolishment

works, painting and other renovation works for its premise at 1 Tuas Avenue 8. The supplier quotations totalling

approximately $103,000 were agreed by the subsidiary with the contractors before 30 September 2007. Renovation

works began after period end.

(b) Non-cancellable operating lease commitments

The Group has operating lease agreements for its premises. The non-cancellable operating leases have remaining

lease term of 1.3 to 20 years with terms of renewal but no escalation clauses included in the contracts. The

operating leases do not provide for contingent rents. Lease terms do not contain restrictions on the Group’s

activities concerning dividends, additional debt or further leasing.

Within 1 year 206,000 1,823,000

Between 1 and 5 years 821,000 1,736,000

After 5 years 2,925,000 3,191,000

3,952,000 6,750,000

Rental expense (principally for premises) was $882,165 (2006: $1,032,556) for the fi nancial period ended 30

September 2007.

33. Financial risk management objectives and policies

The main risks arising from the Group’s fi nancial instruments are credit risk, foreign currency risk, interest rate risk and

liquidity risk. The management reviews and agrees policies for managing these risks and they are summarised below:

Credit risk

Credit risk is limited to the risk arising from the inability of a debtor to make payments when due. It is the Group’s policy to

provide credit terms to creditworthy customers. These debts are continually monitored and therefore, the Group does not

expect to incur material credit losses.

The carrying amount of trade and other receivables, cash and cash equivalents and investments represent the Group’s

maximum exposure to credit risk in relation to fi nancial assets. No other fi nancial assets carry a signifi cant exposure to

credit risk.

The Group has no signifi cant concentration of credit risk with any single customer.

Foreign currency risk

The Group has exposure to foreign exchange risk as a result of transactions denominated in foreign currencies, arising

from normal trading. It is the Group’s policy to hedge these risks through forward foreign exchange contracts if material.

The Group generally enters into forward foreign exchange contracts with maturities of less than one year and does not use

forward foreign exchange contracts for trading purposes.

At the balance sheet date, the Group’s foreign currency exposure is insignifi cant.



33. Financial risk management objectives and policies (cont’d)

Interest rate risk

The Group’s interest rate exposure relates primarily to certain bank borrowings and bills payable to banks. The Group’s

policy is to obtain the most favourable interest rates available.

Information relating to the Group interest rate exposure is also disclosed in the notes to the fi nancial statements.

Liquidity risk

In the management of liquidity risk, the Group monitors and maintains a level of cash and bank balances and bank credit

facilities to fi nance the Group’s operations and mitigate the effects of fl uctuations in cash fl ows.

Surplus funds are placed with reputable banks to generate interest income and funding is obtained from bank borrowings, if

necessary.

34. Financial instruments

(a) Fair values

The fair value of a fi nancial instrument is the amount at which the instrument could be exchanged or settled between

knowledgeable and willing parties in an arm’s length transaction, other than in a forced or liquidation sale.

Financial instruments carried at fair value

The Group has carried all investment securities that are classifi ed as fi nancial assets at fair value through profi t or

loss as required by FRS 39.

Financial instruments whose carrying amount approximate fair value

The carrying amounts of cash and fi xed deposits, current trade and other receivables, current trade and other

payables, amount due to a subsidiary, amount due to a director and interest-bearing loans and borrowings,

reasonably approximate their fair values because these are mostly short term in nature or are repriced frequently.

Amount due from a subsidiary

The $4,997,000 (2006: $3,500,000) quasi-capital loan due from a subsidiary has no repayment terms and

is repayable only when the cash fl ows of the borrower permits. Accordingly, the fair value of the loan is not

determinable as the timing of the future cash fl ows arising from the loan cannot be estimated reliably.



34. Financial instruments (cont’d)

(b) Interest rate risk

The following tables sets out the carrying amount, by maturity, of the Group’s and the Company’s fi nancial

instruments that are exposed to interest rate risk:

Within1 year

1-2years

2-3years

3-4years

4-5years

Morethan 5 Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000

2007

Group

Fixed rate

Obligations under fi nance leases (49) (31) (40) − − − (120)

Floating rate

Cash assets 24 − − − − − 24

Bills payable (3,011) − − − − − (3,011)

Bank overdrafts (2,373) − − − − − (2,373)

Bank loans (2,962) (160) (160) (105) − − (3,387)

Company

Floating rate

Cash assets 5 − − − − − 5

2006

Group

Fixed rate

Bank loans (1,000) − − − − − (1,000)

Obligations under fi nance leases (141) (101) (182) − − − (424)

Floating rate

Cash assets 53 − − − − − 53

Bills payable (3,517) − − − − − (3,517)

Bank overdrafts (2,621) − − − − − (2,621)

Bank loans (5,301) − − − − − (5,301)

Company

Floating rate

Cash assets 4 − − − − − 4

Interests on fi nancial instruments subject to fl oating interest rates are contractually repriced frequently. Interests on

fi nancial instruments at fi xed rates are fi xed until the maturity of the instrument. The other fi nancial instruments of the

Group that are not included in the above tables are not subject to interest rate risks.



35. Segment information

Business segments

The Group is organised into four main operating divisions, namely:

– Project segment

– Retail segment

– Interior design & renovation segment

– Rental segment

The project and retail segments relate mainly to supply of ceramic tiles, marble and other fi nishing and building products;

processing, fabrication and precision cutting of building materials for project and retail based customers respectively. The

interior design and renovation segment is mainly engaged in the provision of interior design and renovation services to

homeowners and corporate clients. The rental segment relates mainly to rental of showrooms to related companies.

The interior design and renovation segment was made up of contributions from wholly-owned subsidiary, Living Elements

Pte Ltd. The subsidiary was disposed during the fi nancial period (Note 6).

2007Project

segmentRetail

segment

Interiordesign andrenovationsegment

Rentalsegment

Adjustmentsand

eliminations Group

$ $ $ $ $ $

Revenue

– Sale to external customers 5,532,858 1,393,970 955,115 22,500 – 7,904,443

– Inter-segment sales – 313,651 – 548,350 (862,001) –

5,532,858 1,707,621 955,115 570,850 (862,001) 7,904,443

Profi t/(loss) before unallocated expenses

and taxation 72,887 (4,438,001) 482,372 (151,018) 482,072 (3,551,688)

Unallocated expenses – fi nance costs (1,000,888)

Taxation (413,764)

Net loss for the period (4,966,340)

Assets 8,112,958 12,617,997 – (264,480) (6,673,632) 13,792,843

Unallocated assets 551

Total assets 13,793,394

Liabilities 1,085,980 560,769 – 78,575 – 1,725,324

Unallocated liabilities 13,710,259

Total liabilities 15,435,583

Other segment information

Capital expenditure 175 175 – – – 350

Depreciation of property, plant and

equipment 322,962 550,688 21,171 – (36,707) 858,114

Write-back of impairment losses on

property, plant and equipment and

assets classifi ed as held for sale (334,220) (779,849) – – – (1,114,069)



35. Segment information (cont’d)

2006Project

segmentRetail

segment

Interiordesign andrenovationsegment

Rentalsegment

Adjustmentsand

eliminations Group

$ $ $ $ $ $

Revenue

– Sale to external customers 8,326,857 2,094,567 1,589,943 – – 12,011,367

– Inter-segment sales – 198,435 432,010 670,205 (1,300,650) –

8,326,857 2,293,002 2,021,953 670,205 (1,300,650) 12,011,367

Profi t/(loss) before unallocated expenses

and taxation 1,238,110 (3,043,369) (82,764) (202,817) 97,403 (1,993,437)

Unallocated expenses – fi nance costs (704,333)

Taxation –

Net loss for the year (2,697,770)

Assets 8,959,767* 15,942,937* 122,957 56,767 (3,595,090) 21,487,338

Unallocated assets 277,857

Total assets 21,765,195

Liabilities 3,094,831 1,747,089 665,521 248,548 – 5,755,989

Unallocated liabilities 12,863,055

Total liabilities 18,619,044

Other segment information

Capital expenditure 266,994 125,111 11,051 – 24,000 427,156

Depreciation of property, plant and

equipment 338,991 563,614 27,232 – (73,394) 856,443

Write-back of impairment losses on

property, plant and equipment and

assets classifi ed as held for sale (103,017) (240,373) – – – (343,390)

* These amounts included assets classifi ed as held for sale (Note 12).

There is no breakdown by geographical markets as the Group’s operations and customers are based in Singapore.

36. Contingent liability and corporate guarantees, unsecured

(i) In the previous fi nancial year, a supplier made a claim of approximately US$214,000 (approximately $341,000)

against a subsidiary for supply of tiles. These tiles were rejected as management believed that the tiles supplied

were defective.

During the current fi nancial period, the subsidiary and the supplier signed a settlement agreement and both parties

discontinued their claims. The subsidiary paid the supplier 70% of the claim amount in six instalments beginning 16

January 2007. The amounts were fully settled as at 30 September 2007. The tiles were subsequently disposed.

(ii) As at 30 September 2007, the Company has issued corporate guarantees of approximately $9,850,000 (2006:

$20,572,000) for banking facilities granted to a subsidiary.



37. Subsequent events

(i) On 11 October 2007, pursuant to the Convertible Loan Agreement and Supplemental Agreement dated 25 April

2007 and 12 June 2007 respectively (the “Agreements”), the Investors advanced the remaining $1,052,000 to the

Company.

(ii) Pursuant to the approval by shareholders at the Extraordinary General Meeting held by the Company on 18

October 2007, the Investors had on the same day, exercised their right of conversion under the above Agreements.

Accordingly, on 19 October 2007, the Company allotted and issued 230,000,000 new ordinary shares of the

Company to the Investors, for the conversion of $6,049,000 in loan to shares of the Company.

(iii) Pursuant to the approval by shareholders at the Extraordinary General Meeting held by the Company on 18 October

2007, the Company allotted and issued 10,000,000 new ordinary shares of the Company to Harry Wee Poh Eng as

settlement of the referral fee of $263,000 for the referral services provided.

(iv) Subsequent to fi nancial period end, the Group has entered into rental agreements with independent third parties to

rent out all its leasehold properties on a 3-year basis, with an option for another 3 years with the rates to be revised

according to prevailing market rates.

38. Comparative fi gures

During the fi nancial period, the Company and the Group changed the fi nancial year end from 30 June to 30 September.

The fi nancial statements for 2006 cover the twelve months from 1 July 2005 to 30 June 2006. The fi nancial statements for

2007 cover the fi fteen months from 1 July 2006 to 30 September 2007.

The following consolidated profi t and loss comparative fi gures have been reclassifi ed to conform with current year’s

presentation:

Group

Note As restatedAs previously

stated

$ $

Profi t and loss account

Changes in inventories of trading goods, excluding allowance for

inventory obsolescence (i) 1,517,295 1,032,388

Purchases and services consumed (ii) 7,700,705 8,550,845

Write-back of inventory obsolescence allowance (i) (484,907) –

Other operating expenses (ii) 2,499,430 1,649,290

(i) The comparative fi gures on write-back of inventory obsolescence allowance have been reclassifi ed to a separate

line item on the face of the consolidated profi t and loss account to better refl ect the nature of the expenses in the

consolidated profi t and loss account and to conform with current year’s presentation.

(ii) The comparative fi gures on rental expenses have been reclassifi ed to ‘other operating expenses’ to better refl ect the

nature of the expenses in the consolidated profi t and loss account and to conform with current year’s presentation.

39. Authorisation of fi nancial statements

The fi nancial statements for the year ended 30 September 2007 were authorised for issue in accordance with a Director’s

resolution dated 10 January 2008.


STATISTICS OF SHAREHOLDINGSAs at 17 December 2007

Class of Shares – Ordinary shares

Voting Rights – On a show of hands : 1 vote

On a poll : 1 vote for each ordinary share

Shareholdings Held in Hands of Public

As at 17 December 2007, approximately 17.31% of the issued ordinary shares of the Company is held by the public and therefore,

Rule 723 of the Listing Manual issued by SGX-ST is complied with.

ANALYSIS OF SHAREHOLDINGS

Range of Shareholdings No. of Shareholders % No. of Shares %

1 - 999 1 0.17 50 0.00

1,000 - 10,000 431 73.80 1,066,000 0.35

10,001 - 1,000,000 138 23.63 11,484,855 3.77

1,000,001 and above 14 2.40 292,426,920 95.88

584 100.00 304,977,825 100.00

TOP 20 SHAREHOLDERS

No. Name No. of Shares %

1 Merryland Pacifi c Limited 88,000,000 28.85

2 Lee Yong Miang 60,000,000 19.67

3 Ong Soon Liong 40,000,000 13.12

4 NH Investments Pte Ltd 27,500,000 9.02

5 Lim Oon Hock 20,000,000 6.56

6 Paul Goh Moh Chye 13,432,690 4.40

7 Chua Beng Huat 11,000,000 3.61

8 Lee Kian Soo 11,000,000 3.61

9 Wee Poh Eng 10,110,000 3.31

10 Tan Tien Seng 3,000,000 0.98

11 Martina Ho Ngiet Mee 2,826,160 0.93

12 Tay Kiam Peng 2,528,165 0.83

13 Tay Hui Hia 1,688,905 0.55

14 Ng Eng Seng 1,341,000 0.44

15 Tay Chye Heng Stephen 973,905 0.32

16 OCBC Securities Private Ltd 803,000 0.26

17 Lum Weng Yu 478,000 0.16

18 Goh Hua Shuen Christine 430,000 0.14

19 Chan Siang Lim 303,000 0.10

20 Soh Teck Hian 294,000 0.10

295,708,825 96.96


STATISTICS OF SHAREHOLDINGSAs at 17 December 2007

SUBSTANTIAL SHAREHOLDER

Shareholdings benefi cially held by the substantial shareholder

Other shareholdings in which the substantial shareholder is deemed to have an interest

Substantial Shareholder No. of Shares Percentage No. of Shares Percentage(%) (%)

Merryland Pacifi c Limited 88,000,000 28.85 – –

Lim Oon Cheng – – 88,000,000(1) 28.85

Lee Yong Miang 60,000,000 19.67 – –

Paul Goh Moh Chye 13,481,690 4.42 30,326,160(2) 9.94

Ong Soon Liong 40,000,000 13.12 – –

NH Investments Pte Ltd 27,500,000 9.02 – –

Lim Oon Hock 20,000,000 6.56 – –

(1) Lim Oon Cheng is deemed interested in the shares registered in the name of Merryland Pacifi c Limited by virtue of Section 7 of the Companies Act, Cap. 50.

(2) Paul Goh Moh Chye is deemed interested in the shares registered in the name of NH Investments Pte Ltd by virtue of Section 7 of the Companies Act, Cap. 50.

and 2,826,160 shares registered in the name of his wife, Martina Ho Ngiet Mee.


NOTICE OF ANNUAL GENERAL MEETING

NH CERAMICS LTD(Incorporated in the Republic of Singapore)

Company Registration No. 199704544C

NOTICE IS HEREBY GIVEN THAT the Annual General Meeting of the Company will be held at 1 & 3 Tuas Avenue 8 Jurong

Industrial Estate Singapore 639217 on 25 January 2008 at 11.00 a.m. to transact the following business:-

ORDINARY BUSINESS

1. To receive and consider the audited accounts for the period ended 30 September 2007 and the reports of the Directors

and Auditors thereon.

2. To approve Directors’ Fees of S$55,000 for the period ended 30 September 2007. [Year 2006: S$44,000/-].

3. To re-elect Mr Ong Siew Peng retiring by rotation in accordance with Article 94 of the Company’s Articles of Association.

[See Explanatory Note (a)]

4. To re-elect Mr Lim Oon Cheng retiring in accordance with Article 95 of the Company’s Articles of Association.

5. To re-elect Mr Lee Yong Miang retiring in accordance with Article 95 of the Company’s Articles of Association.

6. To re-appoint Ernst & Young as Auditors and to authorise the Directors to fi x their remuneration.

SPECIAL BUSINESS

7. To consider and, if thought fi t, to pass the following resolution with or without amendments as an ordinary resolution:-

7.1 Authority to Issue Shares

“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 of the Company to allot and issue shares in the Company

at any time to such persons and upon such terms and conditions and for such purposes as the Directors may in their

absolute discretion deem fi t, provided that the aggregate number of shares to be issued pursuant to this resolution does

not exceed 50 per cent of the issued shares in the capital of the Company, of which the aggregate number of shares to be

issued other than on a pro-rata basis to shareholders of the Company does not exceed 20 per cent of the issued shares in

the capital of the Company, and for the purpose of this resolution, the percentage of issued shares shall be based on the

number of issued shares in the capital of the Company at the time this resolution is passed (after adjusting for new shares

arising from the conversion or exercise of convertible securities or exercise of share options or vesting of share awards

which are outstanding or subsisting at the time this resolution is passed and any subsequent consolidation or subdivision of

the Company’s shares), 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 of the Company or the date by which the next Annual General

Meeting of the Company is required by law to be held, whichever is the earlier.” [See Explanatory Note (b)]

8. To transact any other business which may properly be transacted at an Annual General Meeting.

BY ORDER OF THE BOARD

GOH HUA SHUEN, CHRISTINE

COMPANY SECRETARY

Singapore

Date: 10 January 2008


NOTICE OF ANNUAL GENERAL MEETING

Proxies:

A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy need not be a member of the Company.

An instrument appointing a proxy must be deposited at the Company’s registered offi ce at 1 & 3 Tuas Avenue 8 Jurong Industrial Estate Singapore 639217 not less than

48 hours before the time appointed for holding the Meeting.

Notes:

(a) Mr Ong Siew Peng, if re-elected, will remain as Chairman of the Audit Committee and will be considered as an independent director.

(b) The ordinary resolution set out in item 7.1 above, if passed, will empower the Directors from the date of the above Meeting until the date of the next Annual

General Meeting, to issue shares in the Company. The number of shares which the Directors may issue under this Resolution would not exceed 50 per cent of

the issued shares in the capital of the Company. For issues of shares other than on a pro-rata basis to all shareholders, the aggregate number of shares to be

issued shall not exceed 20 per cent of the issued shares in the capital of the Company.

NH CERAMICS LTD(Incorporated in the Republic of Singapore)

Company Registration No. 199704544C

PROXY FORM

I/We , NRIC/Passport no.

of

being a member/members of NH Ceramics Ltd hereby appoint

Name AddressNRIC/

Passport No. No. of Shares

and/or (delete as appropriate)

Name AddressNRIC/

Passport No. No. of Shares

as my/our proxy/proxies to attend and to vote for me/us on my/our behalf and, if necessary, to demand a poll at the Annual

General Meeting of the Company to be held at 1 & 3 Tuas Avenue 8 Jurong Industrial Estate Singapore 639217 on 25

January 2008 at 11.00 a.m. and at any adjournment thereof.

(Please indicate with an “X” in the spaces provided whether you wish your vote(s) to be cast for or against the resolutions

as set out in the Notice of Annual General Meeting. In the absence of specifi c directions, the proxy/proxies will vote or

abstain as he/they may think fi t, as he/they will on any other matter arising at the Annual General Meeting.)

No. Resolutions For Against

1 Adoption of reports and accounts

2 Approval of Directors’ Fees

3 Re-election of Mr Ong Siew Peng retiring under Article 94

4 Re-election of Mr Lim Oon Cheng retiring under Article 95

5 Re-election of Mr Lee Yong Miang retiring under Article 95

6 Re-appointment of Ernst & Young as auditors

7.1 Authority to issue shares

Dated this day of 2007

Signature(s) of Member(s) or Common Seal

IMPORTANT

PLEASE READ NOTES OVERLEAF

IMPORTANT

1 For investors who have used their CPF monies to buy shares

of NH Ceramics Ltd, this report is forwarded to them at the

request of their CPF Approved Nominees and is sent solely

FOR INFORMATION ONLY.

2 This Proxy Form is not valid for use by CPF Investors and shall

be ineffective for all intents and purposes if used or proposed to

be used by them.

Total Number of Shares Held

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 defi ned in Section

130A of the Companies Act, Cap. 50), you should insert that number. If you have shares registered in your name in the Register of Members of the

Company, you should insert that number. If you have shares entered against your name in the Depository Register and shares registered in your name

in the Register of Members, you should insert the aggregate number. If no number is inserted, this form of proxy will be deemed to relate to all the

shares held by you.

2 A member entitled to attend and vote at a meeting of the Company is entitled to appoint not more than two proxies to attend and vote on his behalf. A

proxy need not be a member of the Company.

3 The instrument appointing a proxy or proxies must be deposited at the Company’s registered offi ce at 1 & 3 Tuas Avenue 8 Jurong Industrial Estate

Singapore 639217 not less than 48 hours before the time appointed for the meeting.

4 Where a member appoints more than one proxy, he shall specify the number of shares to be represented by each proxy, failing which, the appointment

shall be deemed to be in the alternative.

5 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 under its common seal or under the hand of its attorney or

by an offi cer on behalf of the corporation.

6 Where an instrument appointing a proxy or proxies is signed on behalf of the appointor by an attorney or other authority, the power of attorney or

authority or a notarially certifi ed copy thereof must be lodged with the instrument of proxy, failing which the instrument of proxy may be treated as

invalid.

7 A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fi t to act as its

representative at the meeting, in accordance with Section 179 of the Companies Act, Cap. 50.

8 The Company shall be entitled to reject an instrument of proxy which is incomplete, improperly completed, illegible or where the true intentions of the

appointor are not ascertainable from the instructions of the appointor specifi ed on the instrument of proxy. In addition, in the case of shares entered

in the Depository Register, the Company may reject an instrument of proxy 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 certifi ed by The Central Depository

(Pte) Limited to the Company.

Documents

annual report 2007 - 联合早报网ir.zaobao.com.sg/nhceramics/pages/nhceramics2007ar.pdf · NH CERAMICS LTD annual report 2007 05 b) Project Management of Contracts The bulk of