GBY Grand Banks Yachts Annual Report 2010

7/29/2019 GBY Grand Banks Yachts Annual Report 2010

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GRAND BANKS YACHTS L IMITED 2010 ANNUAL REPORT


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Letter to Shareholders 2

Board o Directors 6

Statement o Corporate Governance 8

Directors Report 14

Statement by Directors 16Independent Auditors Report 17

Statements o Financial Position 18

Consolidated Income Statement 19

Consolidated Statement o Comprehensive Income 19

Consolidated Statement o Changes in Equity 20

Consolidated Cash Flow Statement 21

Notes to The Financial Statements 22

Statistics o Shareholdings 48

Notice O Annual General Meeting 49

Proxy Form

CONTENTS


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As we expected, this past year continued to bring challenging conditions to the

recreational marine industry. While signs o leveling and slow improvement are evident,

the economic downturn persisted and demand or new boat s remained sot. Competitors

relied oten on deep discounting to generate new boat sales, and the overall market or

new boats experienced its lowest level o demand in more than 45 years.

In the ace o these dicult circumstances, Grand Banks Yachts reported annual net

sales o $29.2 million or the scal year ended 30 June 2010, and a net loss o

$7.5 million, or approximately $.08 per share. Although these results refect the kind

o continued decline that plagued our industry the previous two years, Company losses

were mitigated by deliberate management actions to resize our businesses, reduce

operating expenses and preserve cash. These included targeted retrenchments at our

actory in Malaysia, and strategic cuts to our production schedule.

Despite revenue declines, Grand Banks continued to maintain prudent levels o liquidity

at a time when heavy debt loads have been a crippling actor in many ailures throughout

our industry. These cash reserves have helped us orego desperate price-cutting tactics

that can undamentally damage a manuacturers long-term prospects or survival and

prosperity.

Instead, Grand Banks continued to position itsel or success when the market inevitably

improves. Management evaluated every aspect o Company operations to control

costs, while working hard to make new progress on three critical ronts: new product

development, greater manuacturing eciency, and improved distribution strategies. I amhappy to say that we closed the scal year having made strong progress in each area.

NEW PRODUCT DEVELOPMENT

Despite the headwinds, new product development remains a priority or Grand

Banks and a key component o our competitive advantage. Fiscal 2010 was another

particularly strong year, with the introduction o three new models launched in markets

around the world.

LETTER TO SHAREHOLDERS

53 Aleutian RP (hull #001) during her rst photo shoot in Malaysia

Perhaps the most anticipated new model was the 53 Aleutian RP. A distinct model rom

the Companys in-house development team, the 53RP was designed as a new, smaller

Aleutian that would still provide a superior platorm or extended, sel-sucient cruising.

What emerged was an entirely new Aleutian capable o supporting a cruising couple

or amily on long voyages smaller in size but with the powerul presence customers

expect rom the series.

Also in the Aleutian Series o yachts, our rst 72SC delivered in May 2010 joined

her sister RP model as the largest and most luxurious in our feet. It is our rst Aleutian

to eature our staterooms plus crew quarters, as well as updated interior layouts and

styling. Outside, this model is distinguished rom the RP version and its step-down

cockpit by an expansive single-level at deck dining and living area.

In the Eastbay Series, the Company launched its rst 46SX at the Eurasia Boat Show in

Istanbul this past February. This is the second GB model to eature the remarkable Zeus

propulsion system with pod drives and a joystick control. With crew quarters and a

three-cabin layout option, this new Eastbay was designed to take ull advantage o the


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Zeus system and its compact ootprint much like its sister yacht, the 41 Heritage EU, did the

prior year. In act, the 41EU has continued to impress customers and the media, most recently

by earning a Best O the Year award rom MotorBoating magazine.

With the rst 53RP sold almost a year beore delivery, a new 72SC delivering to a European

customer in the coming months, and the rst two US-bound 46SX boats already sold to

excited buyers, we are condent that new model development will continue to drive sales andhelp build a stronger long-term position or Grand Banks relative to our competition.

PRODUCTION IMPROVEMENTS

In FY 2010 the Company made one o its biggest improvements to production eciency in

recent history, continuing our eorts to use this market slowdown to our long-term advantage.

A production eciency expert contracted by Grand Banks in FY 2009, has helped

spearhead much o these improvements since being hired early this year as Vice President o

Manuacturing.

The most signicant modication implemented by the production sta at our Malaysian acility

was a major transition rom a station-built to stage-built production process on all boats under

59 eet. Such a transormation brings numerous and noteworthy benets such as improving

production fow control, upgrading resource and manpower planning, boosting purchasing

and scheduling prociency, and enhancing our ability to deliver a nished yacht o the highest

possible quality.

The overall goal o eciency measures like these and many others is to do more with less

not just during this downturn, but as a matter o course at Grand Banks: we will aim to build

our boats in ewer hours, while improving upon our already renowned level o quality.

MotorBoatingselectsthe 41 Heritage EU intheir Best o the Yearcompetition


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LETTER TO SHAREHOLDERS,CONTINUED

New Dealer Locations in Florida & Alabama (U.S.) or HMY and Galati Yacht Sales

New oces or Grand Banks Australia

DISTRIBUTION STRATEGIES

Recreational marine dealers continue to ace exceptionally tough conditions in todays

economic climate. To bolster the strength o our distribution network and ensure our

buyers enjoy a premium experience at the retail level, Grand Banks took action in key

markets around the world.

The Company signed two major new dealers in Florida and increased our ootprint to 13

locations employing over 200 marine proessionals in our busiest market territory, with

HMY Yacht Sales along that states east coast and Galati Yacht Sales in the west and

in Alabama. Both Galati and HMY bring tremendous expertise, integrity and customer

commitment to their work: Galati Yacht Sales is the largest Five Star Re-Certied dealer

in the marine industry today, and HMY is one o the largest and most comprehensive

yacht sales and service organizations in the world. In addition, the Company signed

Walstrom Marine, a well-established, well-respected dealership in the US Great Lakes

region, to represent Grand Banks in that territory.

We also continued to build on our company-owned store program, which started late

June 2009 with a single location on Australias Gold Coast. Since that time, GB Australia

took ve new boats or both retail orders and stock inventory, and rmly established itsel

among the top marine dealerships in this boater-centric region. The year ended with a

move to a new location at Hope Islands Boardwalk Marina in SE Queensland, with an

expanded oce and sta in one o the Gold Coasts premier ocean ront communities.

Halway around the world, in the US Pacic Northwest, Grand Banks launched a

second company-owned store in a major mar ine market. By the years end Grand Banks

Northwest had attracted the regions top salesmen to its sta, grabbed the attention o

the boating community, secured numerous lucrative brokerage listings and managed

to close a number o used and new boat sales to help quickly drive cash fows through

the operation.


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The 46 Eastbay SX (hull #030) in ront o the Ortaky mosue in Istanbul, Turkey

As much as I would like to tell you that the next year will be dierent that the recreational

marine market will see a major recovery and boatbuilders will once again fourish such

a turnaround does not appear to be imminent. F ragile economies in the U.S. and Europe

(historically the largest marine markets in the world), low consumer condence, high

unemployment, scarcity o commercial and personal lending, and an overabundance odiscounted new and brokerage boats all point to a slow turnaround or our industry.

Nevertheless, Grand Banks enters the new scal year more strongly positioned to take

on the challenges and uncertainties o the marketplace. As we execute against our

strategies, we continue to operate without debt and with a healthy cash balance. Our

plan or the coming year ocuses on improving revenue and reducing operating expenses

urther as we try to gradually increase our rate o production.

Needless to say, FY 2010 was a very challenging time or Grand Banks employees,

but it was without question a year in which they should be extremely proud o our many

accomplishments. Together we have demonstrated the resiliency o our Company andour brand and our ability to deal with some o the most severe challenges ever to

ace this industry. We are condent that the work we have done positions us to capture

greater revenues, prots and market share when the economies improve in the United

States and Europe and to establish more meaningul sales in emerging boating markets

in Asia.

On behal o the entire team at Grand Banks Yachts, thank you or your investment and

your continued support.

Sincerely,

Robert W. Livingston II

President & CEO


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BOARD OF DIRECTORS

Robert William Livingston [American, 70]Non-Executive ChairmanMember o Nominating CommitteeMember o Remuneration CommitteeMember o Strategic Vision Committee

Mr. Livingston is a ounder member and has been on the Board since 8 June 1976. Hewas last re-elected to the Board on 9 October 2009.

He holds a Bachelor o Science (major in Accounting) rom Minnesota State University,USA and he is a Certied Public Accountant.

He joined American Marine Ltd. (legacy company o Grand Banks Yachts Limited) in1972 as its Treasurer. Relocating to Singapore in 1974 to manage the Singapore plant,he was subsequently elected the President o the company ollowing a managementbuyout in 1975. Over the last 30 years, under his leadership, Grand Banks hasdesigned, developed, built and exported over 5,000 high quality classic yachts world-wide.

Robert William Livingston II [American, 41]Executive DirectorPresident/Chie Executive OcerMember o Strategic Vision Committee

Mr. Livingston II was appointed to the Board on 9 July 2004. He was last re-elected tothe Board on 9 October 2009.

He holds a Master o Business Administration rom Duke University, USA. He also holdsa Bachelor o Science in Business Administration rom Georgetown University, USA witha double major in Finance and International Management.

As Chie Executive Ocer, he is responsible or the operation o the entire Group. Priorto joining the Group in 2001, Mr. Livingston spent time with Dean Witter, AmericaOnline, Morgan Stanley, and aQuantive in various investment banking and businessdevelopment positions. He also worked or Grand Banks rom 1993 to 1995. Mr.Livingston is a member o the Young Presidents Organization (YPO) Singaporechapter.

Peter Kevin Poli [American, 48]Executive DirectorChie Financial OcerExecutive Vice President

Mr. Poli was appointed to the Board on 31 March 2008. He was last re-elected to theBoard on 14 July 2008.

He holds an MBA rom Harvard Business School and a BA in Economics and Engineeringrom Brown University.

He is responsible or the Groups nancial, human resources, and IT unctions and

will also lead the evaluation o strategic business opportunities or Grand Banks. Priorto joining the Company in 2004, he spent twelve years in the securities business,the last three o which as the CFO or a Morgan Stanley subsidiary. He also servedas the CFO o specialty retailer FTD, helping to take the company public in 1999.Mr. Poli is a member o the Singapore Institute o Directors (SID) and a graduate oboth the Singapore Association o the Institute o Chartered Secretaries & Administratorsproessional qualication scheme and the Executive Certicate in Directorship programmejointly organized by SMU and SID.


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Michael Grenville Gray[Singaporean, 64]Independent DirectorChairman o Audit CommitteeMember o Nominating Committee

Mr Gray was appointed to the Board on 1 November 2008. He was last re-electedto the Board on 9 October 2009.

He is an independent director and chairman o the Audit Committees o Avi-TechElectronics Limited, JEL Corporation (Holdings) Ltd and Ascendos India Trust, whichare listed in Singapore and a director o the VinaCapital Vietnam Opportunity Fund,which is listed in London, United Kingdom. He is the Senior Advisor to Tricor SingaporePte Ltd, a proessional rm involved in corporate secretarial, accounting services andoutsourcing. Prior to his retirement at the end o 2004, Mr Gray was a partner inPricewaterhouseCoopers, Singapore and beore that Territorial Senior Partner orPricewaterhouseCoopers Indochina (Vietnam, Cambodia and Laos). He has over 30

years experience in proessional practice most o which has been in Southeast Asia.

Mr Gray was admitted as a member to the Institute o Chartered Accountants in Englandand Wales (FCA) in 1976. Apart rom being a FCA, Mr Gray has a Bachelor oScience Degree in Maritime Studies rom the University o Plymouth and a Masters oArts in South East Asian Studies rom the National University o Singapore. He is aFellow o the Chartered Institute o Certied Public Accountants o Singapore, Fellow othe Chartered Institute o Logistics and Transport and a Fellow o the Singapore Instituteo Directors.

Roger Gaimster Langdale [Singaporean, 74]Independent DirectorChairman o Nominating CommitteeMember o Audit CommitteeMember o Remuneration Committee

Mr. Langdale was appointed to the Board on 11 November 2003. He was last re-elected to the Board on 9 October 2009.

He is the proprietor o Langdale Management, providing consulting services in the areaso commercial nancial management and corporate governance. He was ormerly theChie Financial Ocer and Executive Director o The North Borneo Timbers Bhd anda Partner in Peat Marwick Mitchell & Co, legacy rm o KPMG. He is a Fellow o theInstitute o Chartered Accountants in England and Wales and a member o the Institute oCertied Public Accountants o Singapore, the Malaysian Associat ion o Certied PublicAccountants and the Singapore Institute o Directors.

Jerey Stewart Bland [American, 64]Independent DirectorChairman o Strategic Vision CommitteeChairman o Remuneration CommitteeMember o Audit Committee

Dr. Bland was appointed to the Board on 2 March 2007. He was last re-elected to theBoard on 9 October 2009.

He holds a Ph.D. in Chemistry rom the University o Oregon, and a Bachelor o Sciencein Biology rom the University o Caliornia.

He is the Chie Executive Ocer o KinDex Therapeutics Ltd, a medical researchcompany, and the President o MetaProteomics Ltd, a biotechnology entity. He is alsothe Chie Science Ocer o Metagenics, Inc, a leading manuacturer and distributoro medical oods and nutraceutical products owned by Alticor, the multi-billion dollarglobal network-marketing company and a board member o Next Foods, Inc. He is aninternationally recognized leader in the nutritional medicine eld or over 30 years andhas served on numerous private and public Boards o Directors. Dr. Bland has authoredve books on nutritional medicine or the healthcare proessional and our books onnutrition and health or the general public. He is also the principal author o over 100peer-reviewed research papers on nutritional biochemistry. He also holds numeroushonors and patents.

BOARD OF DIRECTORS


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STATEMENT OF CORPORATE GOVERNANCE

The Directors o Grand Banks Yachts Limited (the Company) are committed tomaintaining a high standard o corporate governance within the Company and itssubsidiary companies (the Group). The Company has adopted the pr inciples set out in

the Code o Corporate Governance 2005 (the Code) established by the SingaporeCorporate Governance Committee and the relevant sections o the Listing Manual issuedby the Singapore Exchange Securities Trading Limited (SGX-ST).

This report outlines the Companys main corporate governance practices that arein place. Where there are deviations rom the Code, appropriate explanations areprovided.

BOARD OF DIRECTORS(Code o Corporate Governance Principles 1,2, 3, 4, 6 & 10)

Robert William Livingston (Chairman)Robert William Livingston II

Jerey Stewart BlandMichael Grenville GrayPeter Kevin PoliRoger Gaimster LangdaleThe Board o Directors consists o two executive directors, one non-executive directorand three independent directors. Every Director is expected, in the course o carryingout his duties, to act in good aith and consider at all times, the interests o the Group.The Board oversees the management o the Group and meets regularly throughoutthe year to do so. The Board sets the overall strategy o the Group as well as policiescovering various matters with an emphasis on internal controls, nancial perormanceand risk management procedures. The Board delegates the implementation o businesspolicies and day-to-day operations to the Executive Directors and the management o

the Group.

The Boards three independent directors are respected proessionals drawn rom abroad spectrum o expertise which enables them, in their collective wisdom, to contributeeectively and provide a balance o views at Board meetings. Details o the Directors

academic and proessional qualications and other appointments are set out on pages6 and 7 o this Annual Report.

The role o the Chairman is separate rom that o the Chie Executive Ocer. The ChieExecutive Ocer is the son o the Chairman. There is adequate accountability andtransparency as independent directors make up 50% o the Board. The Board is able toexercise its power objectively and independently rom the management.

The Chairmans responsibilities include promoting high standards o corporategovernance, scheduling meetings that enable the Board to per orm its duties, establishingthe agenda or the Board meetings in consultation with the CEO and ensuring that theBoard reviews and approves the Groups material strategies and policies. The CEOsresponsibilities encompass managing the day-to-day business activities o the Group,developing and executing the Groups strategies, reporting back to the Board on the

perormance o the Group, and providing guidance to the Groups employees.

Matters which specically require the Boards approval or involvement are thoseinvolving material acquisitions and disposals o assets, borrowings, corporate ornancial restructuring, share issuances, dividends and other returns to shareholders,establishment o strategies and objectives, setting the Groups budget and nancialplans, monitoring nancial and management perormance, authorizing executivecompensation, evaluating internal controls and risk management, approving quarterlyand year-end nancial reports and overseeing corporate governance.

The Board held ve scheduled meetings in the nancial year ended 30 June 2010.Ad hoc Board meetings are also held whenever the Boards guidance or approval isrequired, outside o the scheduled Board meetings. The number o Board and Committee

meetings and the record o attendance o each director during the nancial year ended30 June 2010 is set out below:


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Board o DirectorsMeetings

AuditCommittee Meetings

RemunerationCommittee Meetings

NominatingCommittee Meetings

Strategic VisionCommittee Meetings

Name o Director No.held No.attended No.held No.attended No.held No.Attended No.held No.attended No.held No.attended

Robert William Livingston# 5 5 NA NA NA NA 2 2 1 1

Robert William Livingston II 5 5 NA NA NA NA NA NA 1 1

Jerey Stewart Bland* 5 5 4 * 2 2 NA NA 1 1

Michael Grenville Gray 5 5 4 4 NA NA 2 2 NA NA

Peter Kevin Poli 5 5 NA NA NA NA NA NA NA NA

Roger Gaimster Langdale 5 5 4 4 2 2 2 2 NA NA

# A resolution proposing that Mr. Livingston be added to the Remuneration Committee going or ward was tabled and approved at the Board o Di rectors meeting held 25 August 2010.* Dr. Bland was appointed to the Audit Committee on 20 May 2010 and as such did not attend any o the above Audit Committee meetings.NA Not applicable as not a member o the Committee


Dates o Board, Board Committee and annual general meetings are scheduled inadvance in consultation with all o the Directors. A Director who is unable to attenda Board or Committee meeting in person is invited to participate in the meeting viatelephone or video conerence.

The Directors are provided with complete and timely inormation prior to meetings and onan on-going basis to enable them to ulll their duties. Management provided memberso the Board with quarterly management accounts, as well as relevant backgroundinormation relating to the matters that were discussed at the Board meetings. Detailedboard papers are sent out to the Directors beore the scheduled meetings so that Directorsunderstand the issues in advance and may spend more time discussing the topic at themeeting. However, certain sensitive issues are tabled at the meeting and discussed

without any materials being distributed.The Directors have separate and independent access to the Companys seniormanagement and the company secretary. Each member o the Board also has directaccess to the Groups independent proessional advisors as and when necessaryto discharge his responsibility eectively with any costs o doing so covered by theGroup. In addition, the directors, either individually or as a group, may seek separateindependent proessional advice i necessary at the expense o the Company.

The Directors continuously update themselves on new laws, regulations and changingcommercial risks. Every Director is also invited to seek additional training to developurther skills or perorming his duties. The Directors may also, at any time, visit theGroups production acility, sales locations or attend dealer meetings, trade shows andcustomer activities in order to gain a better understanding o the Groups business. Iregulatory changes have a material impact on either the Group or the Directors thenManagement will brie the Directors at the Board meetings.

BOARD MEMBERSHIPIn accordance with the Companys Articles o Association, hal o the Board includingthe Chairman is subject to re-election annually. The directors named below are retiring

and being eligible, oer themselves or re-election at the next annual general meeting.

Board Member Date o appointment Date o last electionJerey Stewart Bland 2 March 2007 5 July 2007Peter Kevin Poli 31 March 2008 14 July 2008Roger Gaimster Langdale 11 November 2003 9 October 2009Robert William Livingston 8 June 1976 9 October 2009


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DIRECTORS INTEREST IN SHARESThe number o shares held, directly and indirectly, in the Company as at 30 June 2010by each director is listed below

Director Number o SharesRobert William Livingston 27,428,180Robert William Livingston II 95,000

Jerey Stewart Bland 1,000Michael Grenville Gray 1,000Peter Kevin Poli 54,000Roger Gaimster Langdale 25,000

BOARD COMMITTEES

The Board has established a Nominating Committee, a Remuneration Committee, aStrategic Vision Committee and an Audit Committee to acilitate the discharge o certain

o its responsibilities.

NOMINATING COMMITTEE(Code o Corporate Governance Principles 4 & 5)

Roger Gaimster Langdale (Chairman)Robert William LivingstonMichael Grenville Gray

The Nominating Committee whose terms o reerence are approved by the Board iscomprised o two independent directors and one non-executive director. It meets at leastonce a year.

The role o the Committee is to make recommendations to the Board on all Boardappointments and on the composition o executive and independent directors o theBoard. It is also charged with the responsibility o re-nominating directors who are retiringby rotation as well as determining annually whether or not a director is independent. Itassesses the eectiveness o the Board as a whole and the contribution o each individualdirector to the eectiveness o the Board. It proposes objective perormance criteria toevaluate the Boards perormance. Such criteria include directors attendance at meetings,

their knowledge o the Company, contribution during discussions and willingness tokeep up to date with developments in business and legislation. It periodically engagesexternal consultants to help in this evaluation process.

The Nominating Committee periodically reviews the existing attributes and competencieso the Board in order to determine the desired expertise or experience required tostrengthen or supplement the Board. This assists the Nominating Committee in identiyingand nominating suitable candidates or appointment to the Board.

When the need or a new Director is identied, the Nominating Committee will makerecommendations to the Board regarding the identication and selection o suitablecandidates based on the desired qualications, skill sets, competencies and experience,which are required to supplement the Boards existing attributes. I need be, theNominating Committee may seek assistance rom external search consultants or theselection o potential candidates. Directors and Management may also put orwardnames o potential candidates, together with their curriculum vitae, or consideration.

The Nominating Committee, ater completing its assessment, would then meet withthe short-listed candidates to assess their suitability, beore submitting the appropriaterecommendations to the Board or approval.

REMUNERATION COMMITTEE(Code o Corporate Governance Principles 7, 8 & 9)

Jerey Stewart Bland (Chairman)Roger Gaimster LangdaleRobert William Livingston

The Remuneration Committee (RC) whose terms o reerence are approved by the Board

is comprised o two independent directors and a non-executive director. It meets at leasttwice a year.

The role o the Committee is to review and make recommendations to the Board on theramework o remuneration packages and policies applicable to the Chie ExecutiveOcer (CEO) and the directors. The RC also reviews the remuneration o seniormanagement.



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In reviewing and determining the remuneration packages o the CEO, the ExecutiveDirectors and the Groups senior executives, the RC considers the executivesresponsibilities, skills, expertise and contribution to the Groups perormance and i the

remuneration packages are competitive and sucient to ensure that the Group is able toattract and retain executive talent. In line with Guideline 8.4 o the Code o CorporateGovernance which encourages Long-term Incentive Schemes, the RC currently administersthe Groups Limited Perormance Incentive Plan which was approved by Shareholdersat the EGM held on 14 July 2008 with the objective o attracting and retaining keyemployees o the Group whose contributions are essential to the long-term growth andprotability o the Group.

The RC regularly utilizes external expert advice and data to assist in the evaluation o itscompensation recommendations. None o the RC members or Directors is involved indeliberations in respect o any remuneration, compensation or any orm o benet to begranted to him or someone related to him.

No Independent and non-Executive Directors have Service Agreements with the Group.

They are paid Directors ees, which are determined by the Board based on the eort,time spent and responsibilities o the Directors. The Directors ees are subject to approvalby the Shareholders at each AGM.

The schedule o annual ees or Independent and non-executive Directors is as ollows:Board member: $17,500Chairman o the Board: additional $11,000Member o the Audit Committee: $8,000Chairman o the Audit Committee: additional $10,000Member o other Committees: $3,000Chairman o other Committees: additional $4,000

The Independent and non-Executive Directors decided to take a 10% reduction in the

schedule o annual Directors ees during the nancial year in line with the 10% cut insalary which Executive Directors instituted or themselves more than one year ago.

The tables below show the remuneration bands o the Directors and the top six seniorexecutives o the Group who are not directors as well as the approximate percentagebreakdown o the remuneration.

Remuneration o Directors

Remuneration Band &

Name o Director

Base/Fixed

Salary (1)Incentive

Plan

Directors

Fees

Benets-in-

kind

Total

$500,000 to $750,000Robert William Livingston II 71% 13% - 16% 100%

$250,000 to $499,000Peter Kevin Poli 83% 7% - 10% 100%

Below $250,000Robert William Livingston - - 100% - 100%

Jerey Stewart Bland - - 100% - 100%Michael Grenville Gray - - 100% - 100%Roger Gaimster Langdale - - 100% - 100%

(1) Inclusive o Central Provident Fund contributions and other Fixed monthly payments.

Remuneration o Top Six Senior Executives (who are not Directors)

Remuneration Band &Name o Key Executive

Base/FixedSalary (1)

IncentivePlan

DirectorsFees

Benets-in-kind

Total

$250,000 to $499,000Neil B McCurdy 92% 8% - - 100%

Below $250,000William Garland Finney (2) 90% - - 10% 100%Wong Yung Pine 92% 8% - - 100%Ler Ching Chua 100% - - - 100%Mohidin Pitchai Rowther 100% - - - 100%Barry Donald Wilson-Smith 88% - - 12% 100%

(1) Inclusive o Central Provident Fund contri butions and other Fixed monthly payments.(2) Mr. Finney joined as a ull time employee on 1 November 2009 and as such his remuneration is or

eight months.



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STRATEGIC VISION COMMITTEE

Jerey Stewart Bland (Chairman)

Robert William LivingstonRobert William Livingston II

The Strategic Vision Committee whose terms o reerence are approved by the Board iscomprised o one non-executive director, one independent director and one executivedirector. It meets at least once a year.

The role o the Committee is to provide the Board with an objective and innovativeview o the uture o the boating industry and a comprehensive understanding o theglobal market opportunities available to the Company. The Committee draws rom theexperience o management in market research, product development, production, qualityassurance, nance and customer service along with its own independent evaluation omarket dynamics, trend analysis, public relations, economic and environmental actorsin carrying out its duties and responsibilities.

AUDIT COMMITTEE(Code o Corporate Governance Principle 11; Listing Manual Rule 1207(6)(b))

Michael Grenville Gray (Chairman)Roger Gaimster Langdale

Jerey Stewart Bland

The Audit Committee comprises three independent directors who are appropriatelyqualied to discharge their responsibilities and unctions under the terms o reerenceapproved by the Board. It meets at least our times a year.

The Committee reviews the eectiveness o the Groups material internal controls includingnancial and operational controls, and risk management. It receives reports rom themanagement, the internal and the external auditors and ollows up on outstandingmatters contained in those reports where appropriate. It reviews the Groups interim andannual announcements and nancial statements beore they are submitted to the Boardor approval. It reviews the Groups compliance with the Listing Manual and Code oCorporate Governance including interested person transactions. It also recommends theappointment o the external auditors and reviews their independence and their ees.

With respect to the Groups audit, the Audit Committee reviews the ollowing: the scopeo the independent auditors audit plan, the cost-eectiveness o the independent audit,the independent auditors reports and the signicant nancial reporting issues and

judgements to assess the integrity o the Groups nancial statements.

The Committee has ull access to and the cooperation o management to enable itto properly discharge its responsibilities. The Audit Committee has ull discretion toinvite any Director or executive ocer to attend its meetings and has access to otheroutside resources to enable it to complete its duties. In perorming its unctions, theAudit Committee also reviews the assistance given by the Groups managers to theindependent auditors. The internal and the external auditors also have unrestrictedaccess to the Audit Committee.

The Committee has reviewed the non-audit services provided by the external auditorsand these services, in its opinion, would not aect the independence o the externalauditors. The Committee recommends their re-appointment.

INTERNAL CONTROL(Code o Corporate Governance Principle 12)

The Board with the assistance o the Audit Committee ensures that the Group maintainsan adequate system o internal controls to saeguard shareholders investments and theGroups assets. The internal controls provide reasonable but not absolute assurance thatthe Group will not be adversely aected by any event that could be reasonably oreseenas it strives to achieve its business objectives. Reviews and tests o the internal controlprocedures and systems are carried out by the internal auditor. The Board is thus satisedwith the adequacy o the Groups internal controls.

INTERNAL AUDIT FUNCTION(Code o Corporate Governance Principle 13)

During the year, Management recommended to the Board that the internal audit unctionbe outsourced to an external organization or a variety o reasons. As a result, the AuditCommittee conducted an exhaustive search process and selected such an independentrm prior to the end o the scal year. The internal audit rm reports to the Chairmano the Audit Committee and has unrestricted, direct access to the Audit Committee. The



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Audit Committee reviews and approves the annual internal audit plan as well as reviewsthe results o the regular audits. The Board is satised with the adequacy o the internalaudit unction and is condent it has an appropriate standing within the Group and is

independent o the activities it audits.

COMMUNICATION WITH SHAREHOLDERS(Code o Corporate Governance Principles 14 & 15)

The Company makes all necessary disclosures to the public via SGXNET. The Companyalso maintains a comprehensive website accessible to the public which describes theCompanys products and independent dealers, among other items, and includes aninvestor relations tab to assist shareholders.

Shareholders o the Company receive the Annual Reports and notices o Annual GeneralMeetings (AGMs) which are also advertised in the newspapers at least 14 days prior tothe AGMs. The Board encourages shareholders participation at the AGMs and periodically

communicates with shareholders through the course o the nancial year. Members o the Boardand chairmen o the Board committees are present to answer queries raised at the meetings.

DEALING IN SECURITIES(Listing Manual Rule 1207(18))

The Company has adopted and complied with the section on dealings in securities inthe Best Practices Guide issued by SGX-ST.

Directors and senior executives o the Group are advised not to deal in the Companysshares on short-term considerations or when they are in possession o unpublishedmaterial price-sensitive inormation. They are also reminded regularly not to deal in theCompanys shares during the period commencing one month beore the announcemento the Groups interim and annual results and ending on the date o announcement othose results. And such reminders include a computer generated email sent to all Director sand Senior executives on a quarterly basis. Directors and Senior executives are requiredto report to the Company secretary whenever they deal in the Companys shares. TheCompany secretary assists the Audit Committee and the Board in monitoring such sharetransactions and making the necessary announcements. Director s and Senior executivesare also reminded to be mindul o the law on insider trading and to ensure that their

dealings in securities do not contravene the laws on insider trading as determined bythe Securities and Futures Act, the Companies Act and other appropriate regulatoryauthorities.

INTERESTED PERSON TRANSACTIONS(Listing Manual Rule 907 & 1207 (16))

There were no interested person transactions during the year.

MATERIAL CONTRACTS(Listing Manual Rule 1207(8))

No material contracts o the Company or its subsidiaries involving the interests o theChie Executive Ocer or any Director or controlling shareholders existed at the end othe nancial year or have been entered into since the end o the previous nancial year.

In addition, no Director or a related company with a Director has received a benet romany contract entered into by the Group since the end o the previous nancial year.

RISK MANAGEMENTWith the help o an external consultant, the Group has designed an enterprise riskmanagement (ERM) ramework to monitor, manage and build awareness within theGroup o the various risks that it is exposed to. The Board also reviews the Groupsbusiness and operational activities to identiy areas o signicant business risk as well asappropriate measures to contro l and mitigate these risks within the Groups policies andbusiness strategies. The Audit Committee has also requested that the new independentexternal rm retained to perorm the Groups internal audit unction also update theGroups Enterprise Risk Assessment Process and create a risk register to be used bythe Audit Committee and the external rm to monitor the manner in which the Groupmanages such risks. The previous risk assessment o the Groups operations is alsobeing updated by the new internal audit rm. The objective o the risk assessmentis to identiy and assess risks which include key nancial, operational, strategic andregulatory risks.

The Audit Committee is regularly updated on the Groups risk management program.



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We are pleased to submit this annual report to the members o the Company togetherwith the audited nancial statements or the nancial year ended 30 June 2010.

DIRECTORS

The directors in oce at the date o this report are as ollows:

Robert William LivingstonRobert William Livingston II

Jerey Stewart BlandPeter Kevin PoliRoger Gaimster LangdaleMichael Grenville Gray

DIRECTORS INTERESTS

According to the register kept by the Company or the purposes o Section 164 o theSingapore Companies Act, Chapter 50 (the Act), particulars o interests o directors whoheld oce at the end o the nancial year (including those held by their spouses andinant children) in shares, debentures, warrants and share options in the Company andin related corporations (other than wholly-owned subsidiaries) are as ollows:

Holdings atbeginning o year

Holdings atend o year

The CompanyOrdinary shares

Robert William Livingston * 27,428,180 27,428,180

Robert William Livingston II 2,000 95,000Jerey Stewart Bland + 1,000 1,000Michael Grenville Gray 1,000 1,000Peter Kevin Poli 1,000 54,000Roger Gaimster Langdale 25,000 25,000Reggie Thein (resigned on 9 October 2009) 4,000

* This includes 26,250,000 (2009: 26,250,000) shares held benecially by Merlion, LP, owhich Robert William Livingston is a director and owns 100% o its voting shares with his wie,Mary Isabella Livingston.

+ The 1,000 shares are held in trust by Robert William Livingston.

DIRECTORS REPORT

By virtue o his substantial interest in the share capital o the Company, Robert WilliamLivingston is also deemed to have interest in the shares held by the Company in itssubsidiaries at the beginning and at the end o the nancial year.

Except as disclosed in this report, no director who held oce at the end o the nancial

year had interests in shares, debentures, warrants or share options o the Company, oro related corporations, either at the beginning o the nancial year, or at the end o thenancial year.

There was no change in any o the above mentioned interests in the Company betweenthe end o the nancial year and 21 July 2010.

Except or shares granted under the Perormance Incentive Plan, neither at the end onor at any time during the nancial year was the Company a party to any arrangementwhose objects are, or one o whose objects is, to enable the directors o the Company toacquire benets by means o the acquisition o shares in or debentures o the Companyor any other body corporate.

Except or short-term employee benets received and as disclosed in the accompanying

nancial statements, since the end o the last nancial year, no director has received orbecome entitled to receive, a benet by reason o a contract made by the Company ora related corporation with the director, or with a rm o which he is a member, or witha company in which he has a substantial nancial interest.

SHARE OPTIONS

During the nancial year, there were

(i) no options granted by the Company to any person to take up unissued shares inthe Company; and

(ii) no shares issued by virtue o any exercise o option to take up unissued shares othe Company.

As at the end o the nancial year, there were no unissued shares o the Company underoption.


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PERFORMANCE INCENTIVE PLAN

Grand Banks Yachts Limiteds Perormance Incentive Plan (the Plan) was approvedand adopted by its members at an Extraordinary General Meeting o the Companyheld on 14 July 2008. The Plan is based on the principle o pay or perormance and

is designed to enable the Company to reward, retain and motivate employees whosecontributions are essential to the well-being and prosperity o the Group and to giverecognition to outstanding employees o the Group who have contributed to the growtho the Group.

The Companys Board o Directors has authorised and appointed its RemunerationCommittee, which is comprised o two independent directors and one non-executivedirector, to administer the Plan. The Plan shall continue in orce, at the discretion othe Remuneration Committee, subject to a maximum o ten years commencing 14 July2008. Any awards made to participants prior to such expiry or termination will continueto remain valid.

Size o the Plan

The total number o new shares which may be allotted and issued to the participantsshall not exceed 12% o the total number o issued shares o the Company.

Participants o the Plan

The ollowing persons shall be eligible to participate in the Plan:

Group employees who have attained the age o 21 years, hold such rank as may bedesignated by the Remuneration Committee and where terms o employment are deemedacceptable to the Remuneration Committee. So ar, the Remuneration Committee haskept participants to a minimum.

Grant o Shares

In accordance with the requirements o the SGX Listing Manual, specic shareholderapproval must be sought to grant awards to one participant in the Plan who is anassociate o a controlling shareholder o the Company. As an associate o a controllingshareholder, the total number o shares which may be allotted and issued to this par ticipantshall not exceed 10% o the total number o shares available under the Plan.

Share awards granted and vested, during the nancial year, and share awardsoutstanding at the end o the nancial year, under the Plan, are as ollows:

Date o grant 1 July 2009

Perormanceshares granted

Perormanceshares vested

30 June2010

000 000 000 000

2 October 2009 535(1) (219) 316

15 October 2009 800(2) 800

1,335 (219) 1,116

(1) These shares have been earned and will vest in two tranches on 2 October 2010 and 2October 2011, subject to the ullment o time-based service condition.

(2) These shares have not been earned. The number o shares that can ultimately be earned willdepend on the achievement o the perormance targets set and ranges rom 0 to 800,000shares. The shares, when earned, will vest on 30 June 2012 subject to the ullment o time-

based service condition and perormance conditions.

AUDIT COMMITTEE

The members o the Audit Committee during the year and at the date o this report areas ollows:

Michael Grenville Gray (Chairman, Independent director)Roger Gaimster Langdale (Independent director)

Jerey Stewart Bland (Independent director) (Appointed on 20 May 2010)

The Audit Committee perorms the unctions specied by section 201B o the CompaniesAct, the SGX Listing Manual and the Code o Corporate Governance.

The Audit Committee held our meetings since the last directors report. In perormingits unctions, the Audit Committee met with the Companys external and internal auditorsto discuss the scope o their work, the results o their examination and evaluation o theCompanys internal accounting control system.

DIRECTORS REPORT


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The Audit Committee also reviewed the ollowing:

assistance provided by theCompanysofficers to theinternal andexternalauditors;

quarterly financial informationandannualfinancialstatementsoftheGroup

and the Company prior to their submission to the directors o the Company oradoption; and interested person transactions (as definedin Chapter9 of theSGXListing

Manual).

The Audit Committee has ull access to the management and is given the resourcesrequired or it to discharge its unctions. It has ull authority and the discretion to inviteany director or executive ocer to attend its meetings. The Audit Committee alsorecommends the appointment o the external auditors and reviews the level o audit andnon-audit ees.

The Audit Committee is satised with the independence and objectivity o the externalauditors and has recommended to the Board o Directors that the auditors, KPMG LLP,be nominated or re-appointment as auditors at the orthcoming Annual General Meeting

o the Company.

AUDITORS

The auditors, KPMG LLP, have indicated their willingness to accept re-appointment.

On behal o the Board o Directors

Robert William LivingstonDirector

Robert William Livingston IIDirector

9 September 2010

In our opinion:

(a) the inancial statements set out on pages 22 to 47 are drawn up so as to give atrue and air view o the state o aairs o the Group and o the Company as at30 June 2010 and the results, changes in equity and cash lows o the Group or

the year ended on that date in accordance with the provisions o the SingaporeCompanies Act, Chapter 50 and Singapore Financial Reporting Standards;and

(b) at the date o this statement, there are reasonable grounds to believe that theCompany will be able to pay its debts as and when they all due.

The Board o Directors has, on the date o this statement, authorised these nancialstatements or issue.

On behal o the Board o Directors

Robert William LivingstonDirector

Robert William Livingston IIDirector

9 September 2010

STATEMENT BY DIRECTORSDIRECTORS REPORT


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Members o the CompanyGrand Banks Yachts Limited

We have audited the accompanying nancial statements o Grand Banks YachtsLimited (the Company) and its subsidiaries (the Group), which comprise the statements

o nancial position o the Group and the Company as at 30 June 2010, the incomestatement, statement o comprehensive income, statement o changes in equity andcash fow statement o the Group or the year then ended, and a summary o signicantaccounting policies and other explanatory notes, as set out on pages 22 to 47.

MANAGEMENTS RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

Management is responsible or the preparation and air presentation o these nancialstatements in accordance with the provisions o the Singapore Companies Act,Chapter 50 (the Act) and Singapore Financial Reporting Standards. This responsibilityincludes:

(a) devising and maintaining a system o internal accounting controls suicient to

provide a reasonable assurance that assets are saeguarded against loss romunauthorised use or disposition; and transactions are properly authorised andthat they are recorded as necessary to permit the preparation o true and airproit and loss accounts and balance sheets and to maintain accountability oassets;

(b) selecting and applying appropriate accounting policies; and

(c) making accounting estimates that are reasonable in the circumstances.

AUDITORS RESPONSIBILITY

Our responsibility is to express an opinion on these nancial statements based on ouraudit. We conducted our audit in accordance with Singapore Standards on Auditing.Those standards require that we comply with ethical requirements and plan and perormthe audit to obtain reasonable assurance whether the nancial statements are ree rommaterial misstatement.

An audit involves perorming procedures to obtain audit evidence about the amountsand disclosures in the nancial statements. The procedures selected depend on theauditors judgement, including the assessment o the risks o material misstatement o thenancial statements, whether due to raud or error. In making those risk assessments, theauditor considers internal control relevant to the entitys preparation and air presentation

o the nancial statements in order to design audit procedures that are appropriate inthe circumstances, but not or the purpose o expressing an opinion on the eectivenesso the entitys internal control. An audit also includes evaluating the appropriatenesso accounting policies used and the reasonableness o accounting estimates made bymanagement, as well as evaluating the overall presentation o the nancial statements.

We believe that the audit evidence we have obtained is sucient and appropriate toprovide a basis or our audit opinion.

OPINION

In our opinion:

(a) the consolidated inancial statements o the Group and the statement o inancialposition o the Company are properly drawn up in accordance with theprovisions o the Act and Singapore Financial Reporting Standards to give a trueand air view o the state o aairs o the Group and o the Company as at 30

June 2010 and the results, changes in equity and cash lows o the Group orthe year ended on that date; and

(b) the accounting and other records required by the Act to be kept by the Companyand by those subsidiaries incorporated in Singapore o which we are the auditorshave been properly kept in accordance with the provisions o the Act.

KPMG LLPPublic Accountants andCertied Public Accountants

Singapore

9 September 2010

INDEPENDENT AUDITORS REPORT


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Group Company Note 2010 2009 2010 2009

$000 $000 $000 $000Non-current assetsProperty, plant and

equipment 3 16,503 18,343 Subsidiaries 4 19,000 19,000Intangible assets 5 224 273

Deerred tax assets 6 2,717 2,139 19,444 20,755 19,000 19,000

Current assets

Inventories 7 22,820 20,154 Trade and other receivables 9 1,067 2,482 124 2Prepayments 10 729 678 1 13Current tax recoverable 1,080 Debt securities held-or-

trading 11 1,111 1,089 817 789Cash and cash equivalents 12 24,754 34,600 7,019 6,681

50,481 60,083 7,961 7,485Asset classied as held-

or-sale 15 95 50,481 60,178 7,961 7,485

Total assets 69,925 80,933 26,961 26,485

STATEMENTS OF FINANCIAL POSITIONAs at 30 June 2010

Group Company Note 2010 2009 2010 2009

$000 $000 $000 $000Current liabilitiesTrade and other payables 13 8,054 12,484 259 304Provision or warranty claims 14 1,648 2,669 Current tax payable 283 370 1 5

9,985 15,523 260 309

Non-current liabilityOther payables 13 424 373

Total liabilities 10,409 15,896 260 309

Capital and reservesShare capital 16 23,681 23,583 23,681 23,583Share-based compensation

reserve 17 101 101 Foreign currency translation

reserve 18 (19,073) (20,876) Accumulated prots 54,807 62,330 2,919 2,593

Total euity 59,516 65,037 26,701 26,176Total euity and liabilities 69,925 80,933 26,961 26,485

The accompanying notes orm an integral part o these nancial statements.


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NoteYear ended30/6/2010

Period rom1/4/2008 to30/6/2009

$000 $000

Revenue 19 29,230 92,598Cost o sales (28,452) (77,514)

Gross prot 778 15,084Selling and marketing expenses (4,725) (7,663)Administrative expenses (4,284) (8,063)Other operating income/(expenses), net 186 (1,067)Corporate restructuring costs, net 20

- retrenchment benets (7,191)- gain on disposal o a manuacturing acility 3,901

(3,290)

Loss rom operations (8,045) (4,999)Other non-operating income/(expense), net 21 67 (2,492)Finance costs (245)

Loss beore taxation 21 (7,978) (7,736)Income tax credit/(expense) 23 455 (11)

Loss or the year/period (7,523) (7,747)

Earnings per share (cents) 24 Restated

- Basic (7.85) (8.09)

- Diluted (7.85) (8.09)

Year ended30/6/2010

Period rom1/4/2008 to30/6/2009

$000 $000

Loss or the year/period (7,523) (7,747)

Other comprehensive income

Translation dierences relating to nancialstatements o oreign subsidiaries 1,803 (2,363)

Other comprehensive income or the year/period, net o income tax 1,803 (2,363)

Total comprehensive income or the year/period (5,720) (10,110)

CONSOLIDATEDINCOME STATEMENT

Year ended 30 June 2010

CONSOLIDATEDSTATEMENT OF

COMPREHENSIVE INCOMEYear ended 30 June 2010



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CONSOLIDATED STATEMENT OF CHANGES IN EQUITYYear ended 30 June 2010


Group Share capital

Share-basedcompensation

reserve

Foreign currencytranslation

reserveAccumulated

prots Total

$000 $000 $000 $000 $000

At 1 April 2008 23,583 (18,513) 71,797 76,867

Total comprehensive income or the period

Loss or the period (7,747) (7,747)


Translation dierences relating to nancial statements o oreign subsidiaries (2,363) (2,363)

Total other comprehensive income (2,363) (2,363)

Total comprehensive income or the period (2,363) (7,747) (10,110)

Transactions with owners, recorded directly in euity

Final dividend paid in respect o 31 March 2008 o 1.8 cents per shareone-tier tax exempt

(1,720) (1,720)

At 30 June 2009 23,583 (20,876) 62,330 65,037

At 1 July 2009 23,583 (20,876) 62,330 65,037

Total comprehensive income or the year

Loss or the year (7,523) (7,523)


Translation dierences relating to nancial statements o oreign subsidiaries 1,803 1,803

Total other comprehensive income 1,803 1,803Total comprehensive income or the year 1,803 (7,523) (5,720)

Transactions with owners, recorded directly in euity

Equity-settled perormance shares 98 101 199

At 30 June 2010 23,681 101 (19,073) 54,807 59,516


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Group

Year ended30/6/2010

Period rom1/4/2008 to30/6/2009

$000 $000

Operating activitiesLoss beore taxation (7,978) (7,736)Adjustments or:-Depreciation o property, plant and equipment 3,962 4,888Amortisation o intangible assets 59 76(Reversal o)/Impairment losses on property, plant and

equipment (7) 282Gain on disposal o property, plant and equipment (62) (3,995)Property, plant and equipment written o 13 98Interest expense 245Interest income (240) (502)

Provision or warranty claims 376 2,626Fair valuation loss on orward contracts 1,066Fair valuation (gain)/loss on debt securities held-or-

trading (22) 12Equity-settled share-based compensation 101

(3,798) (2,940)Changes in working capital:( Increase)/Decrease in inventories (1,760) 5,495Decrease in trade and other receivables 1,508 1,647(Increase)/Decrease in prepayments (35) 427Decrease in trade and other payables (4,553) (5,065)Net cash used in opera tions (8,638) (436)

Net income taxes reunded/(paid) 994 (1,295)Warranty claims paid (1,457) (2,686)Cash fows rom operating activities (9,101) (4,417)

Group

Year ended30/6/2010

Period rom1/4/2008 to30/6/2009

$000 $000

Investing activitiesInterest received 240 502Proceeds rom disposal o property, plant and

equipment 165 6,344Development expenditure (1)Purchase o property, plant and equipment (1,405) (3,770)Cash fows rom investing activities (1,000) 3,075

Financing activitiesDividend paid (1,720)Interest paid (245)

Cash fows rom investing activities (1,965)

Net decrease in cash and cash euivalents (10,101) (3,307)Cash and cash equivalents at beginning o year/period 34,600 38,437Eect o exchange rate changes on balances held in

oreign currency 255 (530)Cash and cash euivalents at end o year/period

(Note 12) 24,754 34,600

CONSOLIDATED CASH FLOW STATEMENTYear ended 30 June 2010


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These notes orm an integral part o the nancial statements.

The nancial statements were authorised or issue by the Board o Directors on 9 September2010.

1 DOMICILE AND ACTIVITIES

Grand Banks Yachts Limited (the Company) is incorporated in the Republic oSingapore and has its registered oce at 541 Orchard Road #18-01 LiatTowers Singapore 238881.

The principal activities o the Company are those o an investment holdingcompany with signicant subsidiaries in the business o manuacturing andselling luxury yachts worldwide. See Note 4 to the nancial statements oradditional inormation on the subsidiaries.

The consolidated nancial statements relate to the Company and its subsidiar ies(reerred to as the Group).

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis o preparation

The nancial statements have been prepared in accordance with SingaporeFinancial Reporting Standards (FRS).

The nancial statements have been prepared on the histo rical cost basis exceptor certain nancial assets and nancial liabilities which are measured at airvalue.

All nancial inormation has been rounded to the nearest thousand, unlessotherwise stated.

The accounting policies used by the Group have been applied consistently to allperiods presented in these nancial statements.

2.2 Signicant accounting judgements and estimates

The preparation o the nancial statements in conormity with FRSs requiresmanagement to make judgements, estimates and assumptions that aect theapplication o accounting policies and the repor ted amounts o assets, liabilities,

income and expenses. Actual results may dier rom these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis.Revisions to accounting estimates are recognised in the period in which theestimates are revised and in any uture periods aected.

In particular, inormation about signicant areas o critical judgements andestimation uncertainty are described in the ollowing notes:

Critical judgements

a) Determination o unctional currency

The Group measures oreign currency transactions in the respective

unctional currencies o the Company and its subsidiaries. In determiningthe unctional currencies o the entities in the Group, judgement isrequired to determine the currency that mainly infuences sales prices orgoods and services and o the country whose competitive orces andregulation mainly determines the sales prices o its goods and services.The unctional currencies o the entities in the Group are determinedmainly based on managements assessment o the economic environmentin which the entities operate, the entitys process o determining salesprices and the currency that mainly infuences labour, materials and othercosts o providing goods or services.

b) Review or indicators o impairment or non-nancial assets

The Group assessed whether there were indicators o impairment orall non-nancial assets except or inventories and deerred tax assets ateach reporting date. In perorming its review, the Group considered thelatest available management budgets, long term economic indicatorsand industry outlooks and sustainability, market competition, underlyingbusiness undamentals and market perception o the corporate brand.The review requires signicant assumptions particularly given theuncertainty regarding the timing o economic recoveries in the regionswhere the Group sells its yachts.

NOTES TO THE FINANCIAL STATEMENTS


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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD)

2.2 Signicant accounting judgements and estimates (Contd)

Key sources o estimation uncertainty

a) Note 2.6 and 3 estimation o useul lives o property, plant andequipment

b) Note 2.9 and 3 estimation o recoverable amounts o non-nancialassets grouped in cash-generating units

c) Note 2.12 and 14 measurement or provision or warranty claims

d) Note 2.14 recognition o revenue using percentage o completionmethod

e) Note 2.15 and 6 recognition o deerred tax assets

) Note 7 measurement o allowance or inventories obsolescence

g) Note 31 measurement o provision or legal claims

2.3 Changes in accounting policy

With eect rom 1 July 2009, the Group adopted the ollowing new or amendedFRS which are relevant to the Groups operations:

FRS 1 (revised 2008) Presentation o Financial StatementsAmendments to FRS 107 Financial Instruments Disclosures

Improving Disclosures about Financial instrumentsFRS 108 Operating Segments

(i) Presentation o nancial statements

The Group applies revised FRS 1 Presentation o Financial Statements (2008),which became eective or annual periods beginning on or ater 1 January2009. As a result, the Group presents in the consolidated statement o changesin equity all owner changes in equity, whereas all non-owner changes in equityare presented in the consolidated statement o comprehensive income.

Comparative inormation has been re-presented so that it also is in conormitywith the revised standard. Since the change in accounting policy only impactspresentation, there is no impact on earnings per share.

(ii) Financial instruments: Disclosures

The Group applies the amendments to FRS 107 Financial Instruments: Disclosures,which became eective or annual periods beginning on or ater 1 January 2009.As a result, the Group discloses:

(a) how the air value o its nancial instruments are measured using thethree-level hierarchy and provides additional disclosures about therelative reliability o the air value measurements; and

(b) the maximum amount o issued nancial guarantees in the earliest timeperiod or which the guarantees could be called upon in the contractualmaturity analysis. Previously, the Group disclosed the maximum amounto issued nancial guarantees in the contractual maturity analysis onlyi the Group assessed that it is probable that the guarantee would be

called upon.

FRS 107 does not require comparati ve inormation to be restated and thereore,the contractual maturity analysis or the comparative period has not beenrepresented. Since the change in accounting policy only impacts presentationand disclosure aspects, there is no impact on earnings per share.

(iii) Determination and presentation o operating segments

From 1 July 2009 the Group determines and presents operating segments basedon the inormation that is provided to the Chie Executive Ocer (CEO) and theChie Financial Ocer (CFO), who are the Groups chie operating decisionmaker (CODM). This change in accounting policy is due to the adoption oFRS 108 Operating Segments. Previously, operating segments were determinedand presented in accordance with FRS 14 Segment Reporting. The newaccounting policy in respect o segment operating disclosures is presented asollows:


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2.3 Changes in accounting policy (Contd)

An operating segment is a component o the Group that engages in business

activities rom which it may earn revenues and incur expenses, including revenuesand expenses that relate to transactions with any o the Groups other components.An operating segments operating results are reviewed regularly by the CODMto make decisions about resources to be allocated to the segment and assess itsperormance, and or which discrete nancial inormation is available.

Segment results that are reported to the CODM include items directly attributableto a segment as well as those that can be allocated on a reasonable basis.

Segment capital expenditure is the total cost incurred during the period to acquireproperty, plant and equipment, and intangible assets other than goodwill.

2.4 Consolidation

Business combination

Business combinations are accounted or under the purchase method. The costo an acquisition is measured at the air value o the assets given, equityinstruments issued and liabilities incurred or assumed at the date o exchange,plus costs directly attributable to the acquisition.

Subsidiaries

Subsidiaries are companies controlled by the Group. Control exists when theGroup has the power, directly or indirectly, to govern the nancial and operatingpolicies o a company so as to obtain benets rom its activities. In assessingcontrol, potential voting rights that are presently exercisable are taken intoaccount. The nancial statements o subsidiaries are included in the consolidatednancial statements rom the date that control commences until the date thatcontrol ceases. The accounting policies o subsidiaries have been changedwhere necessary to align them with the policies adopted by the Group.

Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income or expensesarising rom intra-group transactions, are eliminated in preparing the consolidatednancial statements.

Accounting or subsidiaries, associates and joint ventures by the Company

Investments in subsidiaries are stated in the Companys statement o nancialposition at cost less impairment losses.

2.5 Foreign currencies

Functional and presentation currency

The nancial statements o the Group are presented in Singapore dollars (SGD)which is also the Companys unctional currency. The nancial statements o theCompany and its subsidiaries are measured in respective unctional currenciesdetermined by management based on the judgemental actors discussed in2.2.

Foreign currency transactions

Transactions in oreign currencies are translated to the respective unctionalcurrencies o Group entities at the exchange rate at the date o the transaction.

Monetary assets and liabilities denominated in oreign currencies at the reportingdate are retranslated to the unctional currency at the exchange rate at the reportingdate. Non-monetary assets and liabilities denominated in oreign currencies thatare measured at air value are retranslated to the unctional currency at theexchange rate at the date on which the air value was determined.

Foreign currency dierences arising on retranslation are recognised in prot orloss, except or dierences arising on the retranslation o monetary items that insubstance orm part o the Groups net investment in a oreign operation (seebelow).

Foreign operations

The assets and liabilities o oreign operations are translated to Singaporedollars at exchange rates at the reporting date. The income and expenses ooreign operations are translated to Singapore dollars at exchange rates at thedates o the transactions. Goodwill and air value adjustments arising on theacquisition o a oreign operation on or ater 1 January 2005 are treated asassets and liabilities o the oreign operation and translated at the closing rate.For acquisitions prior to 1 January 2005, the exchange rates at the date oacquisitions were used.



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2.5 Foreign currencies (Contd)

Foreign currency dierences are recognised in other comprehensive income.

When a oreign operation is disposed o, in part or in ull, the relevant amountin the oreign currency translation reserve is transerred to prot or loss as part othe prot or loss on disposal.

When the settlement o a monetary item receivable rom or payable to aoreign operation is neither planned nor likely in the oreseeable uture, oreignexchange gains and losses arising rom such a monetary item are considered toorm part o a net investment in a oreign operation and are recognised in othercomprehensive income, and are presented within equity in the oreign currencytranslation reserve.

2.6 Property, plant and euipment

Property, plant and equipment are stated at cost less accumulated depreciationand impairment losses.

Cost includes expenditure that is directly attributable to the acquisition o theasset. The cost o sel-constructed assets includes the cost o materials and directlabour, any other costs directly attributable to bringing the asset to a workingcondition or its intended use, and the costs o dismantling and removing theitems and restoring the site on which they are located. Purchased sotware thatis integral to the unctionality o the related equipment is capitalised as part othat equipment.

When parts o an item o property, plant and equipment have dierent useullives, they are accounted or as separate items (major components) o property,plant and equipment.

The cost o replacing part o an item o property, plant and equipment isrecognised in the carrying amount o the item i it is probable that the utureeconomic benets embodied within the part will fow to the Group, and its costcan be measured reliably. The costs o the day-to-day servicing o property,plant and equipment are recognised in prot or loss as incurred.

Depreciation is recognised in prot or loss on a straight-line basis over theestimated useul lives o each part o an item o property, plant and equipment.

The estimated useul lives are as ollows:

Buildings on leasehold land - 22 - 28 yearsFreehold residential buildings - 50 yearsLeasehold land - Lease period o 30 years

Plant and machinery - 10 yearsFurniture, xtures and equipment - 3 to 5 yearsToolings and moulds - 4 to 8 yearsMotor vehicles and workboats - 5 to 10 years

Assets under construction are not depreciated. Depreciation commences whenthe assets are ready or use.

Depreciation methods, useul lives and residual values are reviewed, andadjusted as appropriate, at each reporting date.

2.7 Intangible assets

Research and development

Development activities involve a plan or design or the production o new orsubstantially improved products and processes. Development expenditure iscapitalised only i development costs can be measured reliably, the product orprocess is technically and commercially easible, uture economic benets areprobable, and the Group intends to and has sucient resources to completedevelopment and to use or sell the asset. The expenditure capitalised includes thecost o materials, direct labour and overhead costs that are directly attributableto preparing the asset or its intended use. Other development expenditure isrecognised in prot or loss as incurred.

Capitalised development expenditure is stated at cost less accumulatedamortisation and impairment losses. Amortisation is recognised in prot or losson a straight-line basis over the estimated useul lie o approximately 6 years.

Trade marks

Trade marks with nite useul lie are stated at cost less accumulated amor tisationand impairment losses.

Trade marks are amortised in prot or loss on a straight-line basis over theirestimated useul lie o 20 years.



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2.8 Financial instruments

Non-derivative fnancial instruments

Non-derivative nancial instruments comprise investments in debt securities,trade and other receivables, cash and cash equivalents, and trade and otherpayables.

A nancial instrument is recognised i the Group becomes a party to thecontractual provisions o the instrument. Financial assets are derecognised ithe Groups contractual rights to the cash fows rom the nancial assets expireor i the Group transers the nancial asset to another party without retainingcontrol or transers substantially all the risks and rewards o the asset. Financialliabilities are derecognised i the Groups obligations specied in the contractexpire or are discharged or cancelled. Purchases and sales o nancial assetsare accounted or at trade date, that is, the date that the Group commits itsel topurchase or sell the asset.

Non-derivative fnancial assets

Non-derivative nancial instruments that are not at air value through prot orloss are recognised initially at air value plus any directly attributable transactioncosts. Subsequent to initial recognition, non-derivative nancial instruments aremeasured as described below.

Loans and receivables are nancial assets with xed or determinable paymentsthat are not quoted in an active market. Such assets are recognised initially atair value plus any directly attributable transaction costs. Subsequent to initialrecognition, loans and receivables are measured at amortised cost using theeective interest method, less any impairment losses.

Loans and receivables comprise trade and other receivables and amounts duerom related parties.

Cash and cash equivalents comprise cash balances and bank deposits. Forthe purposes o the cash fow statement, cash and cash equivalents excludeshort-term deposits which are pledged to the bank as security and cannot bewithdrawn on demand.

Non-derivative fnancial liabilities

Financial liabilities (including liabilities designated at air value through prot orloss) are recognised initially on the trade date at which the Company becomesa party to the contractual provisions o the instrument.

Financial assets and liabilities are oset and the net amount presented in thestatement o nancial position when, and only when, the Company has a legalright to oset the amounts and intends either to settle on a net basis or to realisethe asset and settle the liability simultaneously.

The Companys non-derivative nancial liabilities are trade and other payables.

Such nancial liabilities are recognised initially at air value plus any directlyattributable transaction costs. Subsequent to initial recognition, these nancialliabilities are measured at amortised cost using the eective interest method.

Derivative fnancial instruments

Derivatives are not used or trading purposes but rather are periodically enteredinto by the Group to hedge its oreign currency exposure. Derivatives arerecognised initially at air value; attributable transaction costs are recognised inprot or loss when incurred. Subsequent to initial recognition, derivatives aremeasured at air value, and changes therein are recognised in prot or loss.

Impairment o fnancial assets

A nancial asset is assessed at each reporting date to determine whether thereis any objective evidence that it is impaired. A nancial asset is considered tobe impaired i objective evidence indicates that one or more events have had anegative eect on the estimated uture cash fows o that asset.

An impairment loss in respect o a nancial asset measured at amortised cost iscalculated as the dierence between its carrying amount, and the present valueo the estimated uture cash fows discounted at the original eective interest rate.An impairment loss in respect o an available-or-sale nancial asset is calculatedby reerence to its current air value.



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2.8 Financial instruments (Contd)

Signicant nancial assets are tested or impairment on an individual basis. The

remaining nancial assets are assessed collectively in groups that share similarcredit risk characteristics.

All impairment losses are recognised in prot or loss.

An impairment loss is reversed i the reversal can be related objectively to anevent occurring ater the impairment loss was recognised in prot or loss.

Held-or-trading

Financial instruments held-or-trading are classied as current assets and arestated at air value, with any resultant gain or loss recognised in prot or loss.

The air value o nancial instruments classied as held-or-trading is determined

as the quoted bid price at the balance sheet date.

2.9 Impairment non-nancial assets

The carrying amounts o the Groups non-nancial assets, other than inventoriesand deerred tax assets, are reviewed at each reporting date to determinewhether there is any indication o impairment. I any such indication exists, theassets recoverable amounts are estimated.

An impairment loss is recognised i the carrying amount o an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit isthe smallest identiable asset group that generates cash fows that are largelyindependent rom other assets and groups. Impairment losses are recognised

in prot or loss unless it reverses a previous revaluation, credited to othercomprehensive income, in which case it is charged to other comprehensiveincome.

The recoverable amount o an asset or cash-generating unit is the greater o itsvalue in use and its air value less costs to sell. In assessing value in use, theestimated uture cash fows are discounted to their present value using a pre-tax

discount rate that refects current market assessments o the time value o moneyand the risks specic to the asset or cash-generating unit.

Impairment losses recognised in prior periods are assessed at each reportingdate or any indications that the loss has decreased or no longer exists. An

impairment loss is reversed i there has been a change in the estimates used todetermine the recoverable amount. An impairment loss is reversed only to theextent that the assets carrying amount does not exceed the carrying amountthat would have been determined, net o depreciation or amortisation, i noimpairment loss had been recognised.

2.10 Inventories

Inventories are measured at the lower o cost and net realisable value. The costo inventories is based on the rst-in rst-out principle, and includes expenditureincurred in acquiring the inventories, production or conversion costs and othercosts incurred in bringing them to their existing location and condition. In the caseo manuactured inventories and work-in-progress, cost includes an appropriateshare o production overheads based on normal operating capacity.

Net realisable value is the estimated selling price in the ordinary course obusiness, less the estimated costs o completion and selling expenses.

2.11 Construction contracts

The accounting policy or contract revenue is set out in Note 2.14. Constructioncontracts are measured at cost plus prot recognised to date less progressbillings and recognised losses. Costs include all expenditure related directlyto the construction o a specic yacht and an allocation o xed and variableoverheads incurred in the contract activities based on normal operating capacity.Construction contracts are presented either as unbilled receivables on contractwork-in-progress or deerred income on contract work-in-progress.

Unbilled receivables on contract work-in-progress represent the gross unbilledamount expected to be collected rom customers or contract work perormedto date. Whereas, deerred income on contract work-in-progress representspayments received rom customers which exceed the income recognised orcontract work perormed to date.



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2.12 Provisions

A provision is recognised i, as a result o a past event, the Group has a present

legal or constructive obligation that can be estimated reliably, and it is probablethat an outfow o economic benets will be required to settle the obligation.Provisions are determined by discounting the expected uture cash fows at apre-tax rate that refects current market assessments o the time value o moneyand the risks specic to the liability.

Provision or warranty claims

A provision or warranty claims is recognised when each boat is sold. Theprovision is based on historical warranty data and a weighting o all possibleoutcomes against their associated probabilities. Claims, when incurred, arecharged against this provision account.

2.13 Employee benets

Defned contribution plans

Obligations or contributions to dened contribution plans are recognised as anexpense in prot or

Documents

GBY Grand Banks Yachts Annual Report 2010