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A R 1 1 REDEFINING LIFESTYLE

KODA Ltd 2011 Annual Report

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Page 1: KODA Ltd 2011 Annual Report

KOD

A LTD

AN

NU

AL REPO

RT 2011

Koda Ltd(198001299R)

28 Defu Lane 4Singapore 539424

T +65 6282 9882F +65 6287 7328

E [email protected]

www.kodaonline.com

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REDEFINING LIFESTYLE

(65) 6578 6522

Designed and produced by

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REDEFINING LIFESTYLE

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REDEFINING LIFESTYLE

OUR VISION

TO BE A REPUTABLE, PROFITABLE AND SIGNIFICANT GLOBAL ORIGINAL MANUFACTURER OF FURNITURE.

MISSION STATEMENT

WE MUST BE THE MOST EFFECTIVE VALUE-FOR-MONEY MANUFACTURER. WE MUST REMAIN DESIGN-RELEVANT. WE MUST INVEST IN RESEARCH & DEVELOPMENT. WE MUST ENSURE THAT OUR PRODUCTS REMAIN AFFORDABLE AND ACCESSIBLE. WE MUST ENSURE WE HAVE THE RIGHT PEOPLE WITH THE RIGHT SKILLS. WE MUST DELIVER TO OUR SHAREHOLDERS VALUE AND INVESTMENT COMFORT.

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FROM OUR HUMBLE BEGINNINGS IN 1972, KODA HAS TURNED INTO A LEADING ORIGINAL DESIGN MANUFACTURER (ODM) AND COULD POSSIBLY BE THE LARGEST DINING ROOM FURNITURE EXPORTER IN SOUTH–EAST ASIA.

Led by a management team with a combined experience of more than 100 years, Koda has made significant investments in Vietnam, Malaysia and China. Koda has been recognised by Forbes Asia under the category of ‘Best Under A Billion Company’ in 2006 and profiled by CSIL Milano in its Top World Furniture Manufacturers Report 2006 as one of the top 200 major furniture manufacturers worldwide.

Luxury defined, Koda distinguishes itself by its aesthetically pleasing design mastery, technically feasible concepts and practically oriented craftsmanship with its patience of not seeing R&D micro-management

ABOUT KODA

a fuss and design trifles a bother – we are just exacting about every single detail of our designs. While exuding design sophistication and elegance, we have also been instilling a sense of responsibility to balance aesthetics with the environment by infusing ‘GREEN’ in the materials we use; in the process we engage; and in the products we develop.

Koda’s designs are intensive and our product range is extensive – whether in occasional pieces or collection themes – we design and produce furniture for the dining room, living room, bedroom and outdoor/garden furniture.

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VISION & MISSIONABOUT KODABOARD OF DIRECTORSMANAGEMENT PROFILERESULTS AT A GLANCEGLOBAL PRESENCE/CORPORATE STRUCTURECHAIRMAN’S MESSAGEMANAGING DIRECTOR’S STATEMENT

01

02

04 – 05

10

11 – 13

14 – 15

18

19 – 24

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BOARD OFDIRECTORS

01.MR. KOH TENG KWEE (“T.K.”)FOUNDER AND NON-EXECUTIVE CHAIRMAN

T.K., founder of Koda, nurtured the company during its formative years. A visionary with more than 45 years of experience in the furniture industry, T.K. has been providing the group with valuable insight and advising the Group on its growth strategies and design initiatives. He is instrumental in advising us on design trends and the product development process.

T.K. was appointed to the Board in 1980. He is our Non-Executive Chairman. He was a certified craftsman from the City & Guild Advanced Craft Institute (UK) and a Senior Craft Teacher at the Adult Education Board before he founded the company.

T.K. was last re-elected to the Board at the 2010 Annual General Meeting (“AGM”).

02.MR. JAMES KOH JYH GANG (“JAMES”)DEPUTY CHAIRMAN AND MANAGING DIRECTOR

James spearheads the growth strategies for the Group’s operations. With significant experience garnered through the initiation of various industry wide projects in Singapore, Vietnam and China, James has been able to successfully formulate our business expansion strategies, strengthen supply chain management, broach new design concepts and manage our international marketing efforts. In addition, he also contributes his technical knowledge by advising our Research & Development (“R&D”) as well as production teams on product development and process set-up.

James served as the President of the Singapore Furniture Industries Council (“SFIC”) for two terms. In this capacity, he advised the SFIC on matters relating to the development of Singapore’s furniture industry. During his illustrious tenures as President, James initiated several industry wide projects that have experienced tremendous success up till today, most notably the International Furniture Fair Singapore (“IFFS”) and the Singapore Furniture Industry Park in Kunshan, China. He was also appointed the Chairman of IFFS Pte Ltd and the International Furniture Centre Steering Committee, where he has been responsible for growing the IFFS as a world class trade show and positioning Singapore as a premier furniture hub for the global market.

James also spearheaded the 3-year Local Enterprise Association Development program, a multi-agency program that aims to partner industry associations to enhance industry and enterprise competitiveness.

James was appointed to the Board in 1980 and holds a Diploma in Management Studies from the Singapore Institute of Management.

03.MR. ERNIE KOH JYH ENG (“ERNIE”)EXECUTIVE DIRECTOR, SALES & MARKETING

Ernie manages the Group’s Sales and Marketing functions. He has significant experience in international marketing and corporate branding. He is at the helm of the Group’s marketing initiatives, particularly in customer relationship management, client base diversification, trade fairs participation, new product launches and marketing talent recruitment. More specifically, he is in charge of our furniture fairs management, responsible for formulating the Group’s marketing strategies for new market penetration and devising of pricing plans.

Ernie is also instrumental in identifying the latest design trends and dealing with changing consumer preferences. Ernie has been with the Group for more than 19 years. During his tenure, he has rapidly expanded Koda’s market share, reaching out to more than 200 customers across more than 50 countries throughout the globe.

Ernie was appointed to the Board in 2001 and holds a BSc. in Marketing from the University of Oregon (USA) and an MBA in International Marketing from the San Francisco State University (USA). He was last re-elected to the Board at the 2008 AGM.

04.MDM. KOH SHWU LEE (“SHWU LEE”)EXECUTIVE DIRECTOR, FINANCE & ADMINISTRATION

Shwu Lee manages the Group’s Management Information Systems (“MIS”), administration, finance, logistics and human resource functions. She is at the forefront of the Group’s administration and plays an integral part in the daily operations that forms the backbone of the organization. In particular, she is responsible for the Group’s capital investment evaluation, credit control management, cash flow planning, budgetary control and documentary credit review.

02.

01.

03.

04.

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KODA LTD 2011

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Shwu Lee has been with the Group for more than 25 years. She has recently been tasked to oversee our Malaysia operations where she reviews management accounts and reports, analyses variance reports, manages credit risks, initiates internal control procedures, oversees expansion plans and formulates human resource policies.

Shwu Lee was appointed to the Board in 2001 and holds a BA from the National University of Singapore. She was last re-elected to the Board in the 2010 AGM.

05.MR CHRISTOPHER CHONG MENG TAK (“CHRISTOPHER”)INDEPENDENT DIRECTOR

Christopher, is our lead Independent Director, Chairman of the Audit Committee and a member of our Nominating and Remuneration Committee.

He is a partner of ACH Investments Pte Ltd, a corporate advisory firm, and brings to Koda significant corporate governance and financial market experience. Christopher is an Non-Executive Director of other companies listed in Australia, Singapore and Hong Kong. He is also an advisor to several regional families, international funds and private corporations. Christopher, a multi-award winning analyst, was the CEO of HSBC Securities (Singapore) Pte Ltd (formerly known as HSBC James Capel Securities Pte Ltd), Executive Director of Kay Hian Holdings (formerly known as Kay Hian James Capel Ltd) and senior advisor to the NYSE-listed Indonesia Fund.

Christopher holds a BSc. in Economics (1st Class) from the University College of Wales and an MBA from the London Business School. He is a member of the Institute of Chartered Accountants of Scotland, a Master Stockbroker of the Securities, Investment and Derivatives Association of Australia and a Fellow of the Hong Kong Society of Accountants, the Singapore Institute of Directors and the Australian Institute of Directors. Christopher was last re-elected to the Board at the 2009 AGM.

The present and past directorships of Christopher are set out on page 30 of Report on Corporate Governance.

06.MR. CHAN WAH TIONG (“WAH TIONG”)INDEPENDENT DIRECTOR

Wah Tiong is an Independent Director of Koda, Chairman of the Group’s Nominating and Remuneration Committee and member of the Audit Committee. He is the Chief Executive Officer of All Saints Home, a non-profit organisation that provides residential nursing care.

He brings extensive and valuable financial and accounting experience to the Group, having served as an external auditor, Financial Analyst, an Accountant, Finance Director and Financial Controller of several companies (local and multi-national) in manufacturing, trading, construction industries and non-profit sectors.

Wah Tiong was appointed the Group’s Independent Director in 2001. He is also an Independent Director of Hiap Hoe Limited, a property development company listed on the Singapore Exchange. He serves as the Treasurer & Finance Committee Chairman of Care Corner Singapore entities and Advisor of Neighbour Ring Community Services which provide a wide scope of community services.

A Certified Public Accountant with the Institute of Certified Public Accountants of Singapore, Wah Tiong holds a Bachelor of Accountancy and a Graduate Diploma in Social Work from the National University of Singapore. He was last re-elected to the Board at the 2009 AGM.

07.MR. SIM CHENG HUAT (“SIM”)INDEPENDENT DIRECTOR

Sim was appointed as Independent Director of Koda, a member of the Audit Committee and Nominating and Remuneration Committee in 2008. He has extensive experience in international trade, market development and banking, having served as Commercial Secretary in the Singapore Embassy in New York, Alternate Executive Director of Asian Development Bank (Manila, Philippines), Senior Managerial positions at International Enterprise (IE) Singapore, Advisor to Investment & Promotion Board of the Riau Islands Province, and in private enterprises.

Sim holds a Bachelor of Arts degree from the New York University. He was last re-elected to the Board at the 2010 AGM.

05.

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MANAGEMENT PROFILE

01.MR. TEH WING KWAN (“TEH”)GROUP CFO

Teh Wing Kwan, our Group CFO, specializes in corporate finance, financial management and merger & acquisition evaluation. More specifically, he advises and reviews on the Group’s investments opportunities, acquisition plans, operational restructuring, financial reporting compliance, regional tax planning and working capital management. He also manages investor relation.

Teh has had significant experience. He has been a financial professional who advises and reviews corporate finance and financial reporting matters for other companies listed in and prepared to list in Singapore, Australia, Vietnam and Taiwan. He was previously the head of Finance for a Malaysian company and responsible for its Initial Public Offer application to the then Kuala Lumpur Stock Exchange. He also served as a Group Internal Auditor of a conglomerate listed on Bursa Malaysia.

He is appointed Non-Executive, Non-Independent Director of Asian Centre For Liver Diseases & Transplantation Ltd (listed on the ASX); Non-Executive, Independent Director of Creative Master Bermuda Ltd (listed on the SGX) and Non-Executive, Independent Director of China Titanium Ltd (listed on the SGX).

Teh is a Fellow of the Association of Chartered Certified Accountants (United Kingdom), a Certified Public Accountant of the Institute of Certified Public Accountants of Singapore, a Chartered Accountant of Malaysian Institute of Accountants and a Full Member of Singapore Institute of Directors.

02.WONG SE SUN (“SS WONG”)GENERAL MANAGER - MALAYSIA OPERATIONS

Wong Se Sun, our General Manager for Koda Woodcraft Sdn Bhd, is an industrial engineer by profession. He is in charge of our Malaysia Operations and responsible for smooth running of production lines and overseeing various key operational functions, including purchasing, inventories management, factory capacity planning, labor deployment, manufacturing process, quality control and logistic planning. He has significant industrial experience in products re-engineering and new products development. He was a General Manager with a furniture company in Malaysia and he attended various training in industrial engineering when he was an undergraduate in USA.

SS Wong has a Bachelor of Science in Industrial Engineering from the University of Oklahoma, USA, a Diploma in Engineering from the college of Westark, USA and a Diploma in Civil Engineering from Federal Institute of Technology, Malaysia.

03.MR. ERIC ONG KAH MENG (‘ERIC’) GENERAL DIRECTOR OF ROSSANO DESIGN CO., LTD

Eric, one of the founders of Rossano, has more than 20 years’ regional experience in the furniture industry, specializing in the operation and management of furniture retail business in Singapore, Malaysia and Vietnam.

Eric has been in Vietnam since 1992 and has since successfully developed and launched the Rossano brand. Rossano is a multiaward winning brand in Vietnam – notable awards were the prestigious 2006 Golden Dragon Award, recognizing Rossano as one of the best foreign-invested enterprises as granted by Ministry of Industry Vietnam, Ministry of Construction Vietnam and Saigon Marketing Magazines. Eric received a commendation from the Ho Chi Minh Export Processing and Industrial Zone Authority in 2004 for his contribution to the economic development of Ho Chi Minh City. Eric is responsible for factory operations and retail business development of Rossano.

02.

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KODA LTD 2011

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REVENUE

Fell by US$4.3 million – sales to the US/UK/EU fell by US$6.5 million due to sustained weak demand whereas sales to Asia Pacific rose by US$2.2 million due to focused marketing for Japan, Korea and Australia.

GROSS PROFIT

Fell by US$1.3 million – due to lower revenues and a slightly lower margin. Gross margin fell by 0.5 percentage points to 25.3% as a result of lower average selling price and higher direct costs.

SELLING AND DISTRIBUTION COSTS

Fell by US$0.2 million – variable costs fell due to lower revenues and other fixed costs fell due to lower marketing budgets for trade fairs and international marketing trips during this time of uncertainty.

ADMINISTRATIVE EXPENSES

Up by US$0.6 million – due mainly to (1) ‘translation cost’ as a result of the weak US$ against S$ and Ringgit Malaysia (“RM”), which meant more-expensive S$ and RM-denominated operating expenses in US$ term; (2) inflationary adjustment for staff cost; and (3) higher bank charges.

OTHER OPERATING EXPENSES

Increased sharply by US$1.9 million – due mainly to write-off and provisions for obsolete/slow-moving stocks of raw materials and semi-finished components on the back of clients’ delay or cancellation of certain orders given greater market uncertainty.

FINANCE COSTS

Increased by US$0.06 million due to higher bank borrowings despite a lower US$ cost of fund.

INCOME TAX CREDIT

As a result of a reversal of deferred tax liabilities.

PROFIT ATTRIBUTABLE TO OWNERS OF THE COMPANY

We incurred a loss of US$2.9 million as a result of the above-mentioned.

CONSOLIDATED PROFIT AND LOSS STATEMENTSYear ended 30 June

2011US$’000

2010US$’000

change%

Revenue 39,950 44,265 (9.7)

Cost of sales (29,833) (32,864) (9.2)

Gross profit 10,117 11,401 (11.3)

Other operating income 668 606 10.2

Selling and distribution costs (3,973) (4,201) (5.4)

Administrative expenses (7,782) (7,206) 8.0

Other operating expenses (2,219) (329) 574.5

Finance costs (151) (92) 64.1

(Loss) Profit before income tax (3,340) 179 NM

Income tax credit 188 116 62.1

(Loss) Profit for the year (3,152) 295 NM

Profit attributable to:

Owners of the Company (2,935) 271 NM

Non-controlling interests (217) 24 NM

(3,152) 295 NM

RESULTS AT A GLANCE

NM – Not meaningful

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RESULTS AT A GLANCE

ASSETS2011

US$’0002010

US$’000

(restated)

Current assets

Cash and bank balances 3,444 3,410

Trade receivables 2,884 3,460

Other receivables and prepayments 3,754 3,027

Inventories 11,481 12,014

Total current assets 21,563 21,911

Non-current assets

Property, plant and equipment 14,215 14,035

Investment Properties 686 664

Intangible asset 167 354

Available-for-sale investment and other assets 540 857

Goodwill 728 728

Total non-current assets 16,336 16,638

Total assets 37,899 38,549

CONSOLIDATED BALANCE SHEETSAs at June 30

Cash and bank balances

We reserved US$3.4 million cash. We borrowed more for our working capital when the US$ cost of fund was low and we also need to preserve cash for acquisition of Metrolink.

Trade receivables

Fell by US$0.6 million on the back of lower revenues and turnaround times improved due to good credit control.

Other receivables and prepayments

Increased by US$0.7 million due mainly to deposits payment for the proposed acquisition of Metrolink

Inventories

Fell by US$0.5 million – there has been a need to build up raw materials buffer stock and semi-finished components due to shorter delivery lead time which meant higher risks of inventories’ slowing-moving/obsolescence. Raw Materials fell by US$2.1 million due to usage, provisions and write off whereas WIP increased by US$1.6 million due to orders delay and lower capacity utilization. Finished goods remained relatively unchanged.

Intangible Asset

Fell by US$0.2 million due mainly to amortization and impairment of brand value.

Available-for-sale investments and other assets

Fell by US$0.3 million due mainly to a disposal of 19.9% investment in Koda Wood Industries at cost or US$0.5 million, offset by an increase in deferred tax asset of US$0.2 million.

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KODA LTD 2011

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LIABILITIES AND EQUITY2011

US$’0002010

US$’000

(restated)

Current liabilities

Bank overdraft and bills payable 5,915 3,714

Trade payables 2,568 3,614

Other payables and accruals 2,508 2,439

Finance lease obligations: current portion 308 86

Long-term bank loans: current portion 2,343 426

Total current liabilities 13,642 10,279

Non-current liabilities

Finance lease obligations 235 657

Total non-current liabilities 235 657

Capital and reserves

Share capital 4,040 4,040

Capital reserves 2,416 2,408

Currency translation reserve 688 560

Accumulated profits 16,340 19,788

Equity attributable to shareholders 23,484 26,796

Non-controlling interests 538 817

Total equity 24,022 27,613

Total Liabilities and Equity 37,899 38,549

CONSOLIDATED BALANCE SHEETSAs at June 30

Bank overdraft and bills payable

Increased by US$2.2 million – lower US$ cost of fund allowed us to leverage on bank borrowings for working capital and deposit for the proposed acquisition of Metrolink.

Trade payables

Fell by US$1.0 million as a result of us paying our suppliers faster – as part of our supply chain management, particularly, the cost of borrowings for our suppliers in Vietnam has been very high.

Finance lease obligations and long-term bank loans

Increased by US$2.4 million – due mainly to higher bank borrowings and a reclassification of ‘callable’ term loan from long-term liability to that of current portion.

Equity attributable to shareholders

Fell by US$3.3 million due to current year loss and payments of dividends declared for FY2010.

Non-controlling interests

Representing the 30% share of Rossano’s net asset by the minority shareholder – fell by US$0.28 million after accounting for current year results, which was adversely affected by the weak Vietnamese Dong and low orders visibility for its sub-contracting business.

Page 16: KODA Ltd 2011 Annual Report

KODA LTDSINGAPORE

100%KODA WOODCRAFTSDN BHDMALAYSIA

100%JATAT FURNITUREINDUSTRIES SDN BHDMALAYSIA

51%METROLINK INTERNATIONALLIMITEDHONG KONG

100%OUTDOOR LIVING PTE LTDSINGAPORE

100%DEVON LIFESTYLE LIMITEDNEW ZEALAND

100%P.T C&C FURNITUREINDONESIA

100%LOCASA SOFA LTDCHINA

GLOBAL PRESENCECOUNTRIES WE SELL TO:

CORPORATE STRUCTURE

EUROPEBELGIUMCYPRUSDENMARKFINLANDFRANCEGERMANYGREECEIRELANDITALYLATVIAMALTANORWAYPOLANDPORTUGALROMANIARUSSIA FEDERATION SPAINSWEDENSWITZERLANDTURKEYUKRAINEWEST MIDLANDS

PACIFICAUSTRALIANEW ZEALAND

ASIABANGLADESHCAMBODIACHINAHONG KONGINDONESIAJAPANKOREALAOSMONGOLIASINGAPORETAIWANTHAILANDTHE PHILIPPINESVIETNAM

AMERICASCANADAMEXICOPANAMAU.S.A.

SOUTH / LATIN AMERICAVENEZUELA

MIDDLE EASTBAHRAINISRAELSAUDI ARABIAUNITED ARAB EMIRATES

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100%KODA FURNITURE(DONGGUAN) CO., LTDCHINA

100%KODA VIETNAMCO., LTDVIETNAM

100%KODA INTERNATIONALLIMITEDVIETNAM

100%KODA INDOCHINECOMPANY LTDVIETNAM

100%KODA SAIGONCOMPANY LTDVIETNAM

70%RICHIN FURNITUREDÉCOR PTE LTDSINGAPORE

50%ROSSANO DESIGN CO., LTD (’’ROSSANO’’)VIETNAM(Koda Ltd owns 35% of Rossano)

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CHAIRMAN’S MESSAGE

DEAR STAKEHOLDERS,

I cannot tell you how much I am disappointed this year. I have been in the furniture business for almost 40 years and I have gone through many rounds of challenges but this time around, I have not been able to sleep properly.

I worried about many things. I am concerned about the world market condition which we sell to, rising cost issues in the countries where we operate and low capacity usage at the factories which we own. These appear quite worrying. People tend to save more rather than spend more nowadays because there is nothing more important than saving more monies when they worry about losing jobs and falling income. Therefore, our export business in the US/EU business was very much affected but very different from last time, Asians are now richer and our sales to Asia Pacific were higher.

We also suffered from major stocks write-off. Our key customers are from the US/EU and these customers require goods to be shipped faster because they don’t want to hold stocks when their retail demand there is not so strong. They passed stocks holding risk to us and we have no choice but would have to make internal orders

projection in advance. To produce goods in advance, we need to buy materials first. When we bought more materials and produced more components, our business risks become higher. In any case, I told our store people in Vietnam to watch out these old stocks very carefully and I also asked our R&D department, if possible, to come out with relevant designs so that we can use up some of these old components for production.

Not only me, I know you are also disappointed but I can tell you we are not sitting around quietly and doing nothing. We work harder now for Asia Pacific market, we have ‘lower-price-higher-volume’ strategy for the US/EU markets and we are also working closely with Metrolink for their market potential in the PRC.

I am confident that our re-focused efforts can turn the company around.

Thank you very much.

KOH TENG KWEENON-EXECUTIVE CHAIRMAN

KOH TENG KWEENON-EXECUTIVE

CHAIRMAN

“I AM CONFIDENT THAT OURRE-FOCUS EFFORTS CAN TURNTHE COMPANY AROUND“

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PAGEMANAGING DIRECTOR’SSTATEMENT

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DEAR STAKEHOLDERS

There has been little good news about making good monies in this state of flux. Businesses are so on edge about all things in the US and the EU that every little bit of worrying news gets a jerky reaction nowadays. I am certainly not finding excuses for myself given the disappointing sets of results but the sad thing possible for a business is where the overall growth factors have slowed, the overall market conditions have weakened and the overall financial performance has deteriorated.

OVERVIEW

When various statistics worry publicly and people talk openly about the world economy not getting any less chaotic, we know the economy is at risk and apparently, there are no quick fixes. The economy remains at risk as many consumers continue to face critical days and weeks, struggle with weak job markets in the US and investors stay concerned about debts crisis in the EU. When unemployment rates rise, incomes fall, sales drop, capacity then shrinks, inventory risks increase and consequently, investors’ returns fall. This is a tough business cycle to break and which must have been the result of consumers saving more and spending less for obvious reasons.

So, if household consumption makes up a significant portion of our business cycle, the sharp fall in consumption means a very severe impact on the business of furniture boys like us, who have significant market exposure to these major markets. So, we cannot possibly be immune. Given the recent mood of uncertainty again and stalling path of recovery in the US/EU, we would have to kill off the idea of having aggressive marketing plans there and our marketing strategy to focus more on the healthier Asian business environment could make more sense.

Apart from weak furniture demand, our major trade currency was weak. US$ was hard hit against other major Asian currencies and just a few months ago, it tumbled to levels not seen since the worst days of the last financial crisis. The unfavorable movements in US$ against major Asian currencies meant higher recorded costs and expenses for us in US$ terms. The devaluation of Dong triggered an immediate reaction on inflation and rising costs are now seen as a concern in Vietnam. In any case, we did hedge but we all know that there are no perfect forex hedging strategies whatsoever and thus we don’t really buy or sell forward contracts actively and to counter the impact, we would have to manage our value chain much more proactively.

As a result, and very much within our expectation, our FY2011 results came out to be rather weak.

JAMES KOH JYH GANGDEPUTY CHAIRMAN &MANAGING DIRECTOR

Page 22: KODA Ltd 2011 Annual Report

MANAGING DIRECTOR’SSTATEMENT

FINANCIAL PERFORMANCE

Summarized profit and loss accountFor the year ended June 30

US$’000 2011 2010 2009 2008 2007

Revenue 39,950 44,265 37,775 54,944 60,063

Gross profit 10,117 11,401 9,888 16,014 17,411

(Loss) Profit before income tax (3,340) 179 (143) 5,079 7,980

Income tax credit (expense) – current year 188 116 (133) (415) (225)

Net (loss) profit after current year tax expense (3,152) 295 (276) 4,664 7,755

Income tax – prior year – – – (365) –

(Loss) Profit for the year (3,152) 295 (276) 4,299 7,755

Attributable to:

Owners of the Company (2,935) 271 (297) 4,200 7,232

Non-controlling interests 217 24 21 99 523

(3,152) 295 (276) 4,299 7,755

(Loss) Earnings per share (US cents) (2.20) 0.20 (0.22) 3.1 5.4

(Loss) Earnings per share (S cents)* (2.83) 0.28 (0.29) 4.7 8.3

Gross Margin % 25.3 25.8 26.2 29.1 29.0

Net Margin % – 0.6 – 7.6 12.0

NOTE: * EPS (S cents) had been computed based on the average US$:S$ exchange rate

US$’000 2011 % 2010 % change

United Kingdom 5,305 13.3 7,871 17.8 (2,566)

Europe 3,859 9.7 4,393 9.9 (534)

America 16,198 40.5 19,362 43.7 (3,164)

Canada 1,651 4.1 1,963 4.4 (312)

Asia-Pacific 12,060 30.2 9,850 22.3 2,210

Others 877 2.2 826 1.9 51

Total Revenues 39,950 100.0 44,265 100.0 (4,315)

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REVENUES

Our clients from the US and the UK/EU continued to face greater market uncertainty. As a result, the demand for our furniture was weak and we recorded revenues of just below US$40.0 million for FY2011, which fell by US$4.3 million compared to FY2010. Revenues to the US and the UK/EU fell sharply by US$6.5 million during the year but the good news was our broadened marketing efforts in Asia resulted in higher sales derived from Asia (specifically from Japan and Korea) which grew by US$2.2 million. The sales growth in Asia is despite a ‘loss in revenues’ of US$0.4 million which arose from the lower Vietnamese Dong-denominated retail sales in US$ terms following the Dong devaluation. Notably, Asia Pacific has since replaced the UK/EU as our second largest market contributing almost one-third of our Revenues, trailing behind the US, from which we derived 40% of our Revenues.

PROFITS

Gross Profit fell by 11.3% to US$10.1 million because of lower revenues. Despite that, we have dared to test new products and were able to earn reasonably good margins. Whilst gross margin fell by 0.5 percentage points to 25.3%, the fall was acceptable considering that the markets we have been selling to have since become more price-sensitive and the direct materials we purchased have since gone up by 10% – 15% in price. We were indeed stressed by what we need to do in sustaining margin or minimizing the margin fall.

Apart from margin fall, we suffered another headache – the weak US$ and some indecisive clients – which had resulted in us incurring higher administrative expenses (which rose by US$0.6 million) and non-recurring other operating expenses (which rose by US$2.0 million) in spite of some savings on our selling related costs (which fell by US$0.24 million). Administrative expenses rose due partly to unfavorable forex effects whereas other operating expenses rose due indirectly to unpredictable order trends and selling costs fell on lower marketing budgets.

During the year, these things happened:

• the weak US$ is a bit of a pain in the neck and had resulted in us incurring losses on translation and cost of inflation. During the year, US$ weakened against the S$ and Ringgit Malaysia; Chinese RMB revalued against the US$ but Vietnamese Dong devalued against the US$. The devalued Vietnamese Dong, which should have saved us operating expenses in Vietnam, has since caused inflationary adjustments in staff cost. The weak US$ against these major Asian currencies also caused us to record or ‘incur’ higher corporate and administrative expenses in the books;

• the weak market condition caused major order delays from our clients – when our clients had doubts about the market condition, they acted cautiously. They pulled back order commitments, held back decisions to buy and dragged on delivery schedules. Such abrupt changes had led to a significant disruption of our materials planning and inventories management. As a result, worrying that the risk of stock obsolescence could get higher, we made provisions and wrote off about US$2.0 million in materials and semi-finished components which we considered as ‘old’. These ‘old’ stocks were stuck and collecting dust in our stores but we are hoping that these goods can still be used for production by re-designing some of our existing product specifications;

• In anticipation of the continued weak market condition, we limited our marketing budgets. We took smaller exhibition space and made fewer marketing trips. Carriage outwards and other variable costs fell too on the back of lower sales;

• Despite lower US$ cost of funds, finance expense rose. The lower funding rate allowed us to leverage more for working capital and deposit payments for our acquisition of Metrolink.

Consequently,

• administrative expenses increased by US$0.6 million to US$7.8 million with more than half of this increase attributable to ‘cost of currencies translation’ and necessary salary adjustments on inflationary concerns. Excluding the forex effects, our administrative expenses increased at a much more moderate pace (which was due mainly to higher bank charges);

• Other operating expenses rose by US$1.9 million to US$2.2 million due mainly to the stocks write-off when there were significant order delays or cancellation;

• Selling and distribution costs fell by US$0.24 million to US$4.0 million when we cut back marketing-related activities during this time of uncertainty; and

• Finance cost rose by US$0.06 million to US$0.15 million because we borrowed more despite lower cost of funds.

I think we have done just enough in keeping our gross margin healthy but considering all the above factors and despite a reversal of deferred tax liability, regretfully, we recorded a Net Loss of US$2.9 million for FY2011. On the positive note, we managed to generate a small cash inflow before working capital changes of US$0.07 million compared to the current year loss of US$2.9 million which also explained that some US$2.97 million was non-cash related losses.

Page 24: KODA Ltd 2011 Annual Report

MANAGING DIRECTOR’SSTATEMENT

FINANCIAL POSITION

Summarized balance sheetAs at June 30

US$’000 2011 2010 2009 2008 2007

(restated) (restated) (restated)

Property, plant and equipment 14,215 14,035 12,582 12,838 10,764

Investment Properties 686 664* 690* 690* –

Other investments and assets 707 1,211 1,142 1,228 1,121

Goodwill 728 728 728 728 728

Total non-current assets 16,336 16,638 15,142 15,484 12,613

Current assets 21,563 21,911 20,010 22,249 23,189

Current liabilities (13,642) (10,279) (6,960) (7,086) (7,849)

Net current assets (liabilities) 7,921 11,632 13,050 15,163 15,340

Total non-current liabilities (235) (657) (499) (1,452) (2,171)

Non-controlling interests (538) (817) (965) (1,109) (1,120)

Equity attributable to shareholders 23,484 26,796 26,728 28,086 24,662

Net assets value per share (US cents) 17.6 20.7 20.0 21.0 18.4

Net assets value per share (S cents)** 21.6 29.0 29.0 28.6 25.0

NOTE* Comparative figures as at 30 June 2010, 2009 and 2008 have been reclassified from Property, plant and equipment to Investment Properties** Net Asset Value per share as at 30 June 2011 had been computed based on the US$:S$ closing rate

Other key ratiosAs at June 30

2011 2010 2009 2008 2007

Inventory turnover – average (days) 140 133 124 80 70

Trade receivables turnover (days) 19 29 38 28 32

Quick ratio (times)* 0.7 1.0 1.5 1.9 1.9

Current ratio (times)* 1.6 2.2 2.9 3.1 3.0

Gearing (times) 0.37 0.18 0.06 0.08 0.10

Return on equity (%) – 1.0 – 15.0 29.3

NOTE* Non-current portion of ‘callable’ long-term loan had been included as current liabilities in computing the quick ratio and current ratio as at 30 June 2011

Whilst we failed to deliver the asset returns you would have liked during the year, our financial position does not seem to have exhibited unnecessarily worrying symptoms but we know you would have to tolerate a fall in our current year financial position as a result of the fall in our current year earnings. We are certainly aware of the need to instill your confidence on our asset fundamentals by keeping our assets-to-liabilities ratio comfortable, working capital assets stable, gearing position stable and funding structure balanced. Our investments and other long-term assets base, also the healthy ones, remain reasonably strong despite the fact that we have not considered a substantial revaluation surplus which we could possibly record from a revaluation of our properties in Vietnam. The revaluation surplus, if recognized, will increase our net asset base.

ASSETS AND LIABILITIES

Our Assets-to-Liabilities ratio was 2.73 times as at 30 June 2011 meaning that for every dollar of liability, we have US$2.73 worth of assets to support. We consider the ratio comfortable. It should also be noted that the Asset-to-Liabilities ratio would be substantially higher had the properties in Vietnam been revalued and recorded at market value.

We had a total assets investment of US$37.9 million as at 30 June 2011 and the investment did not change much compared with last year’s.

Page 25: KODA Ltd 2011 Annual Report

KODA LTD 2011

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Notably, we made a few key decisions during the year:

• We preserved our cash position at about US$3.4 million considering the need to complete the acquisition of Metrolink. It also made good financial sense to leverage more on the US$ borrowings when its cost of funds was almost at historic lows;

• We adopted conservative credit control processes. As a result, there was an improvement in receivables turnaround times and receivables fell by US$0.6 million to US$3.4 million. As always, the receivables management remained predictably prudent;

• There were significant changes in the portfolios of our US$11.5 million inventories investment. Raw materials fell sharply by US$2.1 million to US$5.1 million due to usage, write-off and provisions (reasons for the significant write-off was explained under the ‘Financial Performance’ section). WIP, on the contrary, rose by US$1.6 million to US$3.7 million due to some orders delay and lower capacity utilization. Finished goods of US$2.7 million have always been backed by firm delivery schedules and thus did not change much;

• We invested US$1.2 million in new warehousing facilities, new equipment, and equipment upgrade but there was a US$1.3 million in depreciation and amortization expenses;

• There was an impairment in intangible assets of US$0.2 million given the market uncertainty we face in deriving economic benefit from the brand name (for outdoor furniture) we own; and

• We disposed off an available-for-sale investment and received US$0.46 million.

Total liabilities increased by US$2.9 million to US$13.9 million. Notably, we also made a few management decisions:

• We continued to support our sub-contractors and suppliers (particularly in Vietnam where the cost of funding for local suppliers were exceptionally high) and our payment budgets increased by US$1.0 million thereby resulting in a fall creditors’ turnaround time. We hope to further strengthen our supply chain management by paying them faster during these difficult times;

• We maintained a healthy level of cash for good reasons (as explained above) and we thus relied more on bank borrowings to fund our operations. Consequently, short-term borrowings (mainly those exchangeable bills) increased by US$2.2 million to US$5.9 million. There were also continual repayments of the current portion of term loans during the year; and

• There was a need for us to reclassify US$1.4 million ‘callable’ term loans from non-current liabilities to that of current portion following the compliance of new financial reporting standards.

SHAREHOLDERS’ EQUITY

Shareholders’ Equity (also means Net Assets) fell by US$3.3 million to US$23.5 million as at 30 June 2011. We incurred a net loss of US$2.9 million and distributed some US$0.5 million back to shareholders (ie dividend declared for FY2010). This shareholders’ fund includes our paid-up capital, profits we earned but not distributed, reserves we created to account for possible market value fluctuation in capital assets value and forex translation for capital asset investments.

For these reasons, Net Asset per share fell to US 17.6 cents (or about S 21.6 cents) as at 30 June 2011 compared to US 20.7 cents (or about S 25.5 cents) as at 30 June 2010. On a separate note, Net Asset per share remains substantially higher than our current price.

CASH FLOWS

Summarized cash flows statementFor the year ended June 30

US$’000 2011 2010 2009 2008 2007

Operating cash flows before movements in working capital 68 1,647 329 6,078 9,056

Net cash (used in) from operating activities (2,200) (872) (420) 3,120 5,752

Net cash used in investing activities (1,545) (1,831) (505) (3,282) (528)

Net cash from (used in) financing activities 3,540 2,798 (692) (570) (1,859)

Net (decrease) increase in cash and cash bank balances (205) 95 (1,617) (732) 3,365

Cash and bank balances at beginning of year 3,410 3,488 5,105 5,837 2,472

Effects of foreign exchange translation* (51) (173) – – –

Cash and bank balances at end of year 3,154 3,410 3,488 5,105 5,837

NOTE* Effects of foreign exchange translation are shown on the face of cash flows statement for FY2010 and FY2011.

Page 26: KODA Ltd 2011 Annual Report

MANAGING DIRECTOR’SSTATEMENT

We recorded an operating cash inflow before working capital changes compared to our current year loss. In other words, we had a small ‘cash profit’ of US$0.07 million despite the fact that we recorded a total operating loss of US$2.9 million. Net cash used in operating activities was US$2.2 million due mainly to working capital investments of US$1.7 million and dividend payment of US$0.5 million. Net cash used in investing activities was US$1.5 million due mainly to deposits for the acquisition of Metrolink, new facilities investments and equipment upgrade of US$1.2 million which was partially funded by US$0.5 million proceeds from disposal of other investments. Net cash from financing activities was US$3.5 million due mainly to net increase in total bank borrowings to finance our working capital, capital investment and the acquisition of Metrolink. Given these, our cash and cash equivalents fell slightly by US$0.2 million to US$3.2 million (after offsetting a bank overdraft balance of US$0.2 million) as at 30 June 2011.

GOING FORWARD

We have differentiated a few economy groups for our strategies review – being one that’s growing strongly, one that’s growing slowly and one that’s running in reverse. The “growing-strongly” is obviously supported by good jobs market and easy access to credit. The “growing-slowly” has seen threats of losing jobs and difficulties in getting credit. The “running in reverse” group has obviously suffered from job losses and significant credit downgrade.

Obviously, opportunities abound for ‘good economy’ groups whereas risks arise from ‘not-so-good economy’ groups. In an evident manner, we cannot afford to ignore our neighbouring economies while cutting market exposure on the more developed ones. As such, revenue contribution from Asia is expected to increase with our opening of first trading office in Japan and maiden revenue contributions from the PRC-based Metrolink’s operations in FY2012.

Whilst we are scratching our head for more definitive plans to instill business confidence, a few things have occurred.

• We have intensified our marketing efforts to focus on Asia and the results have so far been encouraging. The Asia Pacific segment – mainly Japan, Korea and Australia – has since become our second largest market after the US;

• We have acquired a majority stake in the PRC-based Metrolink Group to expand our value chain. Metrolink owns various in-house brands for its premium-priced classical furniture designs and manages significant distribution channels in the PRC via its established franchising models. The franchisees pay cash for supplies from Metrolink and cash revenues from the PRC will further increase our group sales to Asia;

• We need to grow our sales volume much faster in order to make up for lost sales value in the US/EU. In doing so, we have reduced design customization for some clients in the US/EU and offered them more affordable designers’ range in batches. The planned reduction in design customization will result in lower unit selling price but is also likely to result in lower unit production costs. Then, our factories efficiency will improve and we will gain higher economies of scale; and

• We need to further strengthen and broaden our sourcing base. Rising prices in Vietnam and the PRC, as a result of inflation, remain a threat to cost competitiveness and require us to buy beyond this region. The acquisition of Metrolink will allow us to possibly expand our sourcing contacts in Indonesia, complement with what we are getting now in Vietnam and the PRC and to stay competitive. These re-sourcing plans have since been initiated, albeit very slowly, but has progressed firmly.

But some could argue that the number one thing to do now is to do nothing as new business courage requires one to spend. Spending means taking more risks and taking risks now could be very frightening when the business environment has itself become dramatically riskier. We somehow agree but we do differentiate spending that builds value and spending that does not. Spending that adds value is an investment whereas spending that does not is an expense. In any case, we will continue to preserve the old good conservative approach in evaluating various investment opportunities and planning our expense budgets.

Having said that, we do have a small budget to propose a S 0.1 cent dividend payment. I know it could be insignificantly small but it is just a token gesture of appreciation and it works out to be some 0.8% yield on average.

Literally, we are looking at ‘the past is past’ and working on various responsible ways to improve our performance targets. We know we must act responsibly in protecting our shareholders, bankers, employees and associates; and I can assure you that we will. We will continue to update you on the progress of our business plans in due course.

I look forward to seeing you in the upcoming AGM.

Many Thanks.

JAMES KOH JYH GANGDEPUTY CHAIRMAN &MANAGING DIRECTOR

11_Koda_mng dir statement.indd 2411_Koda_mng dir statement.indd 24 10/7/2011 3:12:56 AM10/7/2011 3:12:56 AM

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REPORT ON CORPORATE GOVERNANCEREPORT OF THE DIRECTORSSTATEMENT OF DIRECTORSINDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF KODA LTDSTATEMENT OF FINANCIAL POSITIONCONSOLIDATED STATEMENT OFCOMPREHENSIVE INCOME STATEMENTS OF CHANGES IN EQUITYCONSOLIDATED STATEMENT OF CASH FLOWSNOTES TO FINANCIAL STATEMENTSFREEHOLD LAND, LEASEHOLD LAND & BUILDINGSSTATISTICS OF SHAREHOLDINGSNOTICE OF ANNUAL GENERAL MEETINGPROXY FORM

26 – 38

39 – 41

42

43 – 44

45 – 46

47

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49 – 50

51 – 95

96

97 – 98

99 – 101

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Page 28: KODA Ltd 2011 Annual Report

REPORT ON CORPORATE GOVERNANCE

The Board of Directors and Management are committed to setting in place corporate governance practices to protect shareholders’ interest and enhance long term shareholder value by complying with the principles and guidelines of the Singapore Code of Corporate Governance 2005 (the “Code”) issued by the Ministry of Finance.

This report outlines the Company’s corporate governance practices with specific reference made to the Code. The Board is pleased to confirm that the Company has generally complied with the Code, save for deviation with reference to Guideline 3.1 (Chairman and CEO should not be connected persons) which is explained in this report.

1. THE BOARD’S CONDUCT OF ITS AFFAIRS

The Board must meet at least four times a year. Generally the Board meets more than 4 times a year. Additional meetings are held at such other times as and when required to review and adjust the medium and longer term strategic plans and to address any specific significant matters that may arise. The attendance of the Directors at Board meetings and Board committees, as well as the frequency of such meetings is disclosed in this Report.

The principal functions of the Board are:

a. enhancing the long term value of the Company for shareholders;

b. charting the corporate strategy and direction of the Group, including but not limited to approval of broad policies, strategies and financial objectives of the Group;

c. supervision and monitoring of the Group’s management;

d. together with the help of the Audit Committee, overseeing the processes for evaluating the adequacy of internal controls, management controls, risk management, financial reporting and compliance;

e. the approval of annual budgets, proposals for acquisitions, investments and disposals;

f. the approval of nominations to the Board and appointment of key personnel; and

g. the review of corporate governance practices.

An Executive Committee was formed to supervise the management of the business and affairs of the Company and reduces the administrative time, inconvenience and expenses associated with the convening of Board Meetings and circulation of Board resolutions, without compromising our corporate objectives and adversely affecting the day to day operations of the Company. The Executive Committee comprises Mr Koh Teng Kwee, Mr James Koh Jyh Gang, Mr Koh Jyh Eng and Mdm Koh Shwu Lee and Mr Teh Wing Kwan.

Matters which require the Board’s approval include the following:

i. the review of the annual budget and the performance of the Group;

ii. review of key activities and business strategies;

iii. approval of the corporate strategy and direction of the Group;

iv. approval of transactions involving a conflict of interest for a substantial shareholder or a director or interested person transactions;

v. material acquisitions and disposals;

vi. acceptances of bank facilities;

vii corporate or financial restructuring and share issuances;

viii. declaration of dividends and other returns to shareholders; and

ix. appointment of new directors.

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KODA LTD 2011

No new director was appointed by the Group during the financial year ended 30 June 2011. However if an new director had been appointed, the newly-appointed director will be given a formal letter setting out his duties and obligations upon his appointment and he will undergo an orientation program to be familiar with the Group’s businesses and governance practices. The Directors are informed of developments relevant to the Group, including changes in laws, regulations and risks that may impact the Group and are invited to tour the Group’s facilities in Vietnam and China. To keep pace with regulatory changes, the directors are also informed of updates and sponsored seminars conducted by external professionals, including any changes in legislation and financial reporting standards, government policies and regulations and guidelines from SGX-ST that affect the Group and/or the directors in discharging their duties.

Non-executive Directors are encouraged to purchase shares in the Company and to hold them till they leave the Board.

2. BOARD’S COMPOSITION AND BALANCE

The Board comprises seven directors, three of whom are non-executive independent directors. The independent non-executive directors make up more than one-third of the Board and provide an independent element on the Board. The independent non-executive directors provide independent judgment on the corporate affairs of the Group as well as diverse and objective perspectives to enable balanced and well-considered decisions to be made. The Nominating Committee determines, on an annual basis, the independence of each independent non-executive director based on the guidelines provided in the Code as one who has no relationship with any of the substantial shareholders of the Company, the Company, its related companies or its officers that could interfere, or be reasonably perceived to interfere, with the exercise of the director’s independent business judgment in the conduct of the Company’s affairs. The Board and the Nominating and Remuneration Committee is of the view that there is no individual or small group of individuals dominating the Board’s decision making process and the Board’s current size is appropriate for facilitating effective decision making.

The non-executive independent directors are encouraged to communicate amongst themselves and with the Company’s auditors and senior management. The non-executive independent directors meet with themselves, the auditors and the legal advisors of the Group without the presence of the executive directors and management.

The Nominating Committee believes that the Board has a good balance of directors who have extensive business, financial, accounting, marketing and manufacturing management experience. Profiles of the Directors are set out on pages 4 and 5 of this Annual Report.

3. CHAIRMAN AND MANAGING DIRECTOR

Mr Koh Teng Kwee, the founder of the Group, is it non-executive Chairman. Mr James Koh Jyh Gang, his son, is the Deputy Chairman and Managing Director. Mr Koh Teng Kwee’s experience and knowledge of the industry is very valuable to the Group. Mr James Koh Jyn Gang’s able management which has helped build the Group into an international organization is exceptionally important to the Group.

The Code encourages the non-connected persons to assume the Chair and Managing Director positions. The separation of the roles of Chairman of the Board and Managing Director is to ensure that the working of the Board and the executive responsibility of the Group’s business are kept distinct, increasing the accountability and capacity of the Board for independent decision making. Given that both Mr Koh Teng Kwee and Mr James Koh Jyn Gang’s services are invaluable to the Group, the principle of accountability and capacity for independent decision making has been made by:

Clearly defining and focusing the role of the Chairman and which are, the Chairman shall:

a. in consultation with the Managing Director, schedule meetings that enable the Board to perform its duties responsibly while not interfering with the flow of the Group’s operations;

b. prepare the meeting agenda in consultation with the Managing Director thereby ensuring the Managing Director covers all aspects of the business the Chairman believes is important;

Page 30: KODA Ltd 2011 Annual Report

REPORT ON CORPORATE GOVERNANCE

c. in consultation with the Managing Director, exercise control over quality, quantity and timeliness of the flow of information between Management and the Board; and

d. assist in ensuring compliance with the Group’s guidelines on corporate governance.

Appointing Mr Christopher Chong Meng Tak as the Lead Independent Director. As the Lead Independent Director, Mr Chong meets with management regularly including separate, frank and detailed meetings with the Chief Financial Officer. As the Lead Independent Director, Mr Chong is the contact person for Shareholders in situations where the Shareholders have concerns or issues which communication with our Chairman or Managing Director is inappropriate or where such communication has failed to resolve the concerns or issues raised.

The Board conducts regular scheduled meetings and ad-hoc Board meetings are convened when warranted by circumstances relating to matters that are material to the Group. The Board meets at least four times a year. Telephonic attendance and video conferencing at Board meetings are allowed under the Company’s articles of association. The number of meetings held and the attendance of each director at every Board and Board Committees meetings during the financial year ended 30 June 2011 are as follows:

Name Board Audit Committee

Nominating & Remuneration

Committee Executive Committee

No. ofmeetings

held

No. of meetings attended

No. of meetings

held

No. of meetings attended

No. of meetings

held

No. of meetings attended

No. of meetings

held

No. of meetings attended

Koh Teng Kwee 5 4 NA NA NA NA 6 1

James Koh Jyh Gang 5 5 NA NA NA NA 6 6

Koh Jyh Eng 5 5 NA NA NA NA 6 6

Koh Shwu Lee 5 5 NA NA NA NA 6 6

Christopher Chong Meng Tak 5 5 4 4 1 1 NA NA

Chan Wah Tiong 5 5 4 4 1 1 NA NA

Sim Cheng Huat 5 5 4 4 1 1 NA NA

Besides the formal Board meetings, the directors also speak on specific subjects. During the year, the directors consulted each other several times with respect to the acquisition of MetroLink International Limited and other business plans.

4. BOARD MEMBERSHIP

The Nominating and Remuneration Committee comprises three members, all of whom are independent. The Nominating and Remuneration Committee is chaired by Mr Chan Wah Tiong and has as its members, Mr Christopher Chong Meng Tak and Mr Sim Cheng Huat.

The Nominating and Remuneration Committee meets when necessary to discuss issues of Board appointments or matters relating to remuneration.

The functions of the Nominating and Remuneration Committee include the following:

a. assisting the Board to enhance the long term value of the Company for shareholders;

b. recommendations to the Board on all Board appointments or re-appointments;

c. assessment of the effectiveness of the Board as a whole and the contributions of each director to the effectiveness of the Board;

d. determination of the independence of the members of the Board;

e. recommendations to the Board of a framework of remuneration for the Board and key executives, which covers all aspects of remuneration, including but not limited to director’s fees, salaries, allowances, bonuses, options and benefits in kind;

f. determining specific remuneration packages for each executive Director.

Page 31: KODA Ltd 2011 Annual Report

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KODA LTD 2011

For appointment of new directors to the Board, the Nominating and Remuneration Committee would, in consultation with the Board, evaluate and determine the selection criteria with due consideration to the mix of skills, knowledge and experience of the existing Board. The Nominating and Remuneration Committee does so by first evaluating the existing strengthens and capabilities of the Board, assess the likely future needs of the Board, assess whether this need can be fulfilled by the appointment of one person and if not, then to consult the Board with respect to the appointment of two persons, seek likely candidates widely and source resumes for review, undertake background checks on the resumes received, narrow this list of resumes to a short list and then to invite the shortlisted candidates to an interview which may include a briefing of the duties required to ensure that there are no expectations gap. The Nominating and Remuneration Committee will seek candidates widely and beyond persons directly known to the Directors and is empowered to engage professional search firms and also give due consideration to candidates identified by any persons. The Nominating and Remuneration Committee will interview all potential candidates in frank and detailed meetings and make recommendations to the Board for approval.

Pursuant to the Articles of Association of the Company, new Directors must submit themselves for re-election at the next Annual General Meeting (“AGM”). In addition, an election of Directors shall take place each year at the Annual General Meeting, where not less than one-third of the Directors shall retire from office by rotation but are eligible for re-election. Under the Articles of Association of the Company, the Managing Director, Mr James Koh Jyh Gang is not subject to retirement by rotation or be taken into account in determining the number of Directors to retire.

The Nominating and Remuneration Committee in determining whether to recommend a Director for re-appointment will have regard to such Director’s contribution and performance to the Group and whether such Director has been adequately carrying out his or her duties as a Director. The Nominating and Remuneration Committee is in the process of adopting internal guidelines to address the competing time commitments that are faced when Directors serve on multiple boards. However, the Nominating and Remuneration Committee notes that such Directors have been taking independent actions to address the issue. The Nominating and Remuneration Committee is satisfied that adequate time and attention have been given to the affairs of the Company, through attendance at meetings of the Board and Board Committees, including electronic and telephone communications, by all Directors.

The Directors standing for re-election at the forthcoming Annual General Meeting are Mr Christopher Chong Meng Tak, Mr Koh Jyh Eng and Mr Koh Teng Kwee. Mr Christopher Chong Meng Tak and Mr Koh Jyh Eng are retiring pursuant to Article 91 of the Company’s Articles of Association and are eligible for re-election. Mr Koh Teng Kwee, being over the age of 70 years is seeking re-election in accordance with section 153(6) of the Companies Act, Cap. 50.

The Nominating and Remuneration Committee, after assessing their contributions and performance has recommended Mr Christopher Chong Meng Tak, Mr Koh Jyh Eng and Mr Koh Teng Kwee for re-election at the forthcoming Annual General Meeting.

Every year, the Nominating and Remuneration Committee reviews and affirms the independence of the Company’s Independent Directors. Each Director is required to complete a Director’s Independence Checklist on an annual basis to confirm his independence. The checklist is drawn up based on the guidelines provided in the Code and further requires each Director to assess whether he considers himself independent despite not being involved in any of the relationships identified in the Code. The Nominating and Remuneration Committee then reviews the checklist to determine whether the Director is independent. The Nominating and Remuneration Committee is of the view that all the Independent Directors, namely Mr Christopher Chong Meng Tak, Mr Chan Wah Tiong and Mr Sim Cheng Huat, are independent. The Nominating and Remuneration Committee met once during the last financial year.

Page 32: KODA Ltd 2011 Annual Report

REPORT ON CORPORATE GOVERNANCE

Mr Koh Teng Kwee (non-executive Chairman), Mr James Koh Jyg Gang (Deputy Chairman & Managing Director), Mr Koh Jyh Eng (Executive Director) and Mdm Koh Shwu Lee (Executive Director) do not hold directorships with other public listed companies and also did not hold such directorships in the last 3 years.

The present and past directorships (held in the last 3 years) of the independent non-executive directors with other public listed companies are set out in the following tables:

CHRISTOPHER CHONG MENG TAK

Other directorship with public listed companies

Company Listed on Position Date of appointment

ASL Marine Holdings Ltd SGX Independent Director 3 Jan 2006

GLG Corp Ltd ASX Independent Director 12 Oct 2005

Koda Ltd SGX Independent Director 30 Mar 2001

Koon Holdings Ltd ASX/SGX Independent Director 11 Apr 2003

Lorenzo International Ltd SGX Independent Director 28 Mar 2006

Yingli International Real Estate Ltd (previously known as Showy International Ltd) SGX Independent Director 19 Dec 2007

Xpress Holdings Ltd SGX Independent Director 5 Dec 2001

Imagi International Holdings Ltd HKEX Non-Executive Director 13 Apr 2011

Past directorship with other public listed companies (held in the last 3 years)

Company Listed on Position Date of resignation

SKY China Petroleum Services Ltd SGX Independent Director 27 Apr 2010

Win Fund LUX Independent Director 5 Nov 2010

CHAN WAH TIONG

Other directorship with public listed companies

Company Listed on Position Date of appointment

Hiap Hoe Ltd SGX Independent Director 14 August 1998

Past directorship with other public listed companies (held in the last 3 years)None

SIM CHENG HUAT

Other directorship with public listed companiesNone

Past directorship with other public listed companies (held in the last 3 years)None

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KODA LTD 2011

5. BOARD PERFORMANCE

The Nominating and Remuneration Committee is tasked with the assessment of the Board’s performance.

The performance criteria used by the Nominating and Remuneration Committee includes the evaluation of the size and composition of the Board, the Board’s access to information, Board processes and accountability and the Board’s performance in relation to discharging its principal functions and responsibilities, the Directors’ standards of conduct and such financial targets as the Nominating and Remuneration Committee considers appropriate. In assessing the individual Director’s performance and the effectiveness of the Board, the Nominating and Remuneration Committee takes into consideration the individual Director’s industry knowledge and/or functional expertise, contribution and workload requirements. The Board, however, notes that the financial indicators provide only a snapshot of the Company’s performance, and do not fully reflect on-going risk or measure the sustainable long-term wealth and value creation of the Company.

6. ACCESS TO INFORMATION

Directors are regularly updated by Management on the developments within the Group so that they are equipped to participate fully at Board Meetings. Board papers are prepared for each Board Meeting and include information from Management on the financial, business and corporate issues to enable the Directors to be properly briefed on issues to be raised at Board Meetings.

All Directors have unrestricted access to the Company’s records and information and the independent Directors have access to all levels of key personnel in the Group. At least one of the two joint Company Secretaries is in attendance at Board meetings, Audit Committee meetings and Nominating and Remuneration Committee meetings. All the Directors have separate and independent access to both the joint Company Secretaries. The Company Secretaries are responsible for ensuring that Board procedures are followed and that applicable rules and regulations are complied with.

Should the Directors, whether as a group or individually, in furtherance of their duties require independent professional advice, the Directors may, with the consent of the Chairman only or with the consent of the Audit Committee only, appoint a professional advisor to render advice at the Company’s expense.

7. REMUNERATION MATTERS

The composition of the Nominating and Remuneration Committee and its functions are set out on page 27 of this Report.

No member of the Nominating and Remuneration Committee shall be involved in any deliberation nor decision making in respect of any compensation to be offered or granted to him or in respect of his effectiveness as a Director. The Nominating and Remuneration Committee has access to expert advice inside and outside the Group, if necessary, on matters of executive compensation.

The Company has in place service contracts for each of its executive Directors which sets out the framework of their remuneration. The Nominating and Remunerating Committee will, upon the expiry of such service contracts, recommend to the Board a framework of remuneration for the Board and key executives and determine specific remuneration packages for each executive Director. The Nominating and Remuneration Committee’s recommendations will be made in consultation with the Chairman and submitted for endorsement by the entire Board.

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REPORT ON CORPORATE GOVERNANCE

8. LEVEL AND MIX OF REMUNERATION

The Group’s remuneration policy is to provide compensation packages appropriate to attract, retain and motivate the Directors and key personnel required to run the Group successfully.

The Company is of the view that performance-related elements of remuneration should form a significant proportion of the total remuneration package of executives and should be designed to align their interests with those of shareholders and link rewards to corporate and individual performance. The Company has in place an employee profit sharing scheme pursuant to which executives and management staff (excluding the Directors of the Company) whose job responsibilities have an impact on the performance and profitability of their department or section are eligible. The limitation of profit sharing to a maximum of six months of an eligible employee’s salary as described in the Company’s Prospectus dated 8 January 2002 remains unchanged.

The remuneration of non-executive Directors should be appropriate to the level of contribution, taking into account factors such as effort and time spent and responsibilities of the Directors. Non-executive Directors shall not be over-compensated to the extent that their independence may be compromised. The Board will, if necessary, consult experts on the remuneration of non-executive Directors. The Board will recommend the remuneration of the non-executive Directors for approval at the AGM.

Service contracts entered into by the Company with Directors have a fixed appointment period and are not to be excessively long or with onerous removal clauses. The Nominating and Remuneration Committee considers what compensation the Directors’ contracts of service would entail in the event of early termination and aims to be fair and avoid rewarding poor performance. The Nominating and Remuneration Committee also considers whether Directors should be eligible for benefits under long-term incentive schemes, such as share option schemes. Currently, the Company has in place an employee share option scheme, however to date, no options have been granted pursuant to such employee share option scheme.

Details of remuneration paid to the Directors are set out below:

The Directors receiving remuneration from the Group for the year ended 30 June 2010 and 30 June 2011:

Number of Directors

Remuneration band 2011 2010

S$500,000 and above – –

S$250,000 to S$499,999 1 1

Below S$249,999 6 6

Total 7 7

Disclosure on Remuneration

Salary Bonus FeesAllowances and

other benefits Total

% % % % %

Directors

S$500,000 and above – – – – –

S$250,000 to S$499,999

James Koh Jyh Gang 90 8 – 2 100

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Salary Bonus FeesAllowances and

other benefits Total

% % % % %

Directors

Below S$250,000

Koh Teng Kwee 90 8 – 2 100

Koh Jyh Eng 88 7 – 5 100

Koh Shwu Lee 87 7 – 6 100

Christopher Chong Meng Tak – – 100 – 100

Chan Wah Tiong – – 100 – 100

Sim Cheng Huat – – 100 – 100

Key personnel of the Group

Below S$250,000

Teh Wing Kwan 87 7 – 6 100

Wong Se Sun 87 2 – 11 100

Ong Kah Meng 93 7 – – 100

Chong Chen Yew 92 8 – – 100

The executive directors do not receive directors’ fees. The remuneration for the executive directors and the key executives comprises primarily a basic salary component and a variable component which is the bonuses, based on the performance of the Group as a whole and their individual performance. The service agreements entered into with the executive directors are automatically renewable on a yearly basis unless terminated by either party giving written notice of not less than three months.

The directors’ fees paid to the independent Directors, being Mr Christopher Chong Meng Tak, Mr Chan Wah Tiong and Mr Sim Cheng Huat for FY2011 were S$35,000, S$28,000 and S$18,000 respectively.

The non-executive directors’ fees, are in accordance with their contributions, taking into account factors such as responsibilities, effort and time spent for serving on the Board and Board Committees.

The Company does not have service contracts with non-executive directors. Directors’ fees are recommended by the Board and are subject to the approval of shareholders at the Company’s AGM.

9. ACCOUNTABILITY

The Company recognises that the Board should provide shareholders with a balanced and understandable assessment of the Group’s performance, position and prospects on a regular basis and adopts the practice of communicating major developments in its business and operations to the SGX-ST, its shareholders and its employees. The Company announces its financial results on a quarterly basis via SGXNET.

Management provides the Directors with balanced and understandable management accounts of the Group’s performance prior to Board meetings and as and when necessary. The Directors also have separate and independent access to all levels of key personnel in the Group.

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REPORT ON CORPORATE GOVERNANCE

In line with the requirements of SGX-ST negative assurance confirmations on interim financial results were issued by the Board confirming that to the best of its knowledge, nothing had come to the attention of the Board which would render the Company’s quarterly results to be false or misleading in any material respect.

10. AUDIT COMMITTEE

The Audit Committee comprises three members, all of whom are independent. The Audit Committee is chaired by Mr Christopher Chong Meng Tak and has as its members, Mr Chan Wah Tiong and Mr Sim Cheng Huat.

The Board is of the opinion that the members of the Audit Committee have considerable legal, tax and financial management expertise and also business experience with which to discharge their duties. For example, Mr Christopher Chong Meng Tak has a BSc. Econ (1st Class) from the University College of Wales, an MBA from the London Business School and is a member of the Institute of Chartered Accountants of Scotland, a Fellow of the Australian Securities & Derivatives Industry Association, a Fellow of the Australian Institute of Directors, a member and ex-Honorary Treasurer of the Hong Kong Institute of Investment Analysts and a Fellow of the Hong Kong Society of Accountants; and Mr Chan Wah Tiong is a Certified Public Accountant with the Institute of Certified Public Accountants of Singapore and holds a Bachelor of Accountancy from the National University of Singapore; and Mr Sim Cheng Huat has over forty years of international trade, market development and banking experience. The operations of the Audit Committee are regulated by its terms of reference, which were approved and are subject to periodic review by the Board. The Audit Committee meets at least four times a year.

The duties of the Audit Committee include reviewing with the internal auditor, external auditors and management, the Group’s policies and control procedures, interested person transactions, as well as any financial information presented to shareholders. Specifically, the Audit Committee:

– reviews the scope and results of external audit, the cost effectiveness of the audit, the independence and objectivity of the external auditors and the nature and extent of non-audit services provided by the external auditors;

– reviews the quarterly results announcements before submission to the Board for adoption;

– reviews the financial statements of the Group, accounting principles and policies thereto and management of financial matters before endorsement by the Board;

– reviews the scope and results of the internal audit procedures, the adequacy of the internal control procedures and effectiveness of the internal audit function;

– reviews the audit plans and reports of the internal and external auditors and evaluation of the internal control systems of the Group and management’s responses and actions to correct any deficiencies;

– reviews the co-operation given by the Company’s officers to the internal and external auditors;

– recommends to the Board on the appointment or re-appointment of external auditors and their fees for shareholders’ approval; and

– reviews interested person transactions in accordance with the requirements of the SGX-ST Listing Manual.

The Audit Committee has explicit authority to investigate any matter within the scope of its duties and is authorised to obtain independent professional advice. It has full access to and co-operation of the management and reasonable resources to enable it to discharge its duties properly. It also has full discretion to invite any executive director or executive officer or any other person to attend its meetings. The Audit Committee meets with the external and internal auditors separately, at least once a year, without the presence of management to review any areas of audit concern. Individual members of the Audit Committee also engage the external and internal auditors separately in ad hoc meetings. The external auditors have unrestricted access to the Audit Committee.

The Audit Committee has undertaken a review of all non-audit services provided by the external auditors and has confirmed that such non-audit services would not in the Audit Committee’s opinion, affect the independence of the external auditors.

The Audit Committee has recommended to the Board the nomination of Deloitte & Touche for re-appointment as external auditors of the Company at the forthcoming AGM.

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The Board has put in place whistle-blowing procedures pursuant to which staff of the Company may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters.

Pursuant to such whistle-blowing procedures, employees are free to submit complaints confidentially or anonymously to the chairman of the Audit Committee and in this regard a dedicated email address has been set up which is accessible only by the chairman of the Audit Committee and/or a designated member of the Audit Committee. The procedures for submission of complaints have been explained to all employees of the Group. All complaints are to be treated as confidential and are to be brought to the attention of the Audit Committee. Assessment, investigation and evaluation of complaints are conducted by or at the direction of the Audit Committee and the Audit Committee, if it deems appropriate, may engage at the Company’s expense independent advisors. Following investigation and evaluation of a complaint, the Audit Committee will then decide on recommended disciplinary or remedial action, if any. The action so determined by the Audit Committee to be appropriate shall then be brought to the Board or to the appropriate members of senior management for authorisation or implementation respectively.

11. WHISTLE-BLOWING POLICY

The Company has put in place a whistle-blowing policy and procedures duly endorsed by the Audit Committee, where employees of the Group may, in confidence, raise concerns about possible corporate improprieties in financial reporting or other matters such as suspected fraud, corruption, dishonest practices etc. All reports including unsigned reports, reports weak in details and verbal reports are considered. To ensure independent investigation into such matters and for appropriate follow up action, all whistle-blowing reports are reviewed by the AC and the Board. In the event that the report is about a director, that director shall not be involved in the review and any decisions with respect to that report. The policy aims to encourage the reporting of such matters in good faith, with the confidence that any employees making such reports will be treated fairly and be protected from reprisals. Details of the whistle-blowing policy have been made available to all employees.

12. INTERNAL CONTROL AND RISK MANAGEMENT

The Group has a system of internal controls designed to provide reasonable assurance that assets are safeguarded, proper accounting records are maintained and that financial information used for financial reporting is reliable. The Board recognises that no internal control system could provide absolute assurance against the occurrence of material errors, poor judgment in decision-making, human errors, losses, fraud or other irregularities. The system is designed to manage rather than eliminate the risk of failure to achieve the business objectives.

Internal and external audit reports on any material non-compliance or internal control weaknesses, including financial, operational and compliance controls and recommendations for improvements are submitted to the Audit Committee for review semi-annually. The Audit Committee requires the external auditor to perform the internal audit to IIA standard. The Audit Committee reviews the effectiveness of the actions taken by management based on the recommendations made by the internal and external auditors to the Audit Committee. The Audit Committee is satisfied that there are adequate internal controls within the Group taking into account the nature and size of the Group’s business and operations.

The Board believes that the system of internal controls and risk management maintained by the Company is adequate to safeguard shareholders’ investment and the Company’s assets.

13. KEY OPERATIONAL RISKS

The Board is aware of the operational risks which may adversely affect the Group’s operating results if any of these risk factors and uncertainties develops into actual events. The following is a non-exhaustive list of some of the key operational risks which affect our Group.

Page 38: KODA Ltd 2011 Annual Report

REPORT ON CORPORATE GOVERNANCE

Macro Economic Risk – The Group’s business is sensitive to global economic conditions. The global economic slowdown has resulted in lower consumer confidence and reduced purchasing power with consumers changing their spending pattern to save more for necessities. Furniture purchase is discretionary and has inevitably been affected by the generally weak economic factors and such market uncertainties. In the event of a prolonged economic downturn, demand for our furniture is likely to be affected and this will have an adverse impact on the Group’s operating results.

Design Risk – The Group’s business segments have been design-intensive and its operating results depend heavily on the Group’s ability to continually design products which are market-oriented and production-feasible, failing which the Group’s operating results will be adversely affected.

Change in customers’ ordering pattern – As a result of recent market uncertainties, the Company’s clients have now placed orders in smaller batches and expect goods to be delivered faster; switching part of the stock holding risks to the suppliers. To meet shorter lead time, the Group would have to increase raw materials stocks and produce semi-finished components ahead of confirmed orders in accordance with its internal orders projection, which means investment in inventories would be higher and warehousing facilities would be larger. In the event that the Group’s customers do not order goods in quantities and specifications as projected, the Group may have to make provisions for slow-moving stocks or stock obsolescence and its operating results will be affected by such provisions.

Increasing credit risks – Whilst the Group’s current bad debts risk is currently low and existing receivables turnover period remains manageable, clients expect longer credit terms as a result of changing market conditions in the countries which the Group has been selling to. The extension of credit terms means increasing credit risk which would need to be closely monitored. The increasing credit risk may result in the Group having a need to make provision for doubtful debts and incur additional costs in collecting payments. Any bad debt provisions and write-offs will have a negative impact on the Group’s net operating margins.

Supplies of raw materials – the Group purchases raw materials such as wood, leather, fabrics and finishes for its production. The prices of these raw materials are generally sensitive to the world crude oil prices and any increase in the crude oil prices is likely to increase production costs. The production cycles are also dependent on the ability of the Group’s suppliers to supply raw materials at acceptable terms – such as quantity, quality, prices, specifications and lead time – failing which the Group’s production cycles may be disrupted and its operating results may also be adversely be affected.

Risk of Fire – The extensive use of wood, chemicals, lacquers and solvents increase the risk of fire. Several fires have occurred at the Group’s factories in the past (the risk of fire in those instances was fully insured). Whilst the Group takes every precaution against fire, there is no assurance there will be no major fire occurrence in the future and the occurrence of a major fire will adversely the Group’s operations.

Labor supply – Approximately one-quarter of the Group’s production capacity is located in Malaysia for which the workers are mainly from Bangladesh, Myanmar and Vietnam. The employment of these foreign workers is subject to quota and other immigration rules as imposed by the Malaysian Government. Tightening of and adverse changes made to such rules may result in the Group not being able to source sufficient workers and find suitable replacements its Malaysia operations and the operating results of the Group may be partially affected.

Changes in tax legislation (Vietnam) – There were previously changes made to the tax legislations in Vietnam resulting in additional and retrospective tax liabilities incurred by one of the Company’s subsidiaries in Vietnam (Rossano Design Co., Ltd (‘Rossano’)). Except for Rossano, the Company’s Vietnam-based subsidiaries are currently enjoying concessionary tax rates. However, if the Vietnamese government were to revise these concessionary tax rates upwards or for whatever reasons, withdraw these tax incentives granted to our Vietnam-based subsidiaries, the effective tax rates would be significantly higher and this will adversely affect the Group’s net profit margin.

Port facilities disruption in Vietnam – The Group’s operations in Vietnam incurred incurred ‘Congestion and Terminal’ charges in the past and also experienced an exceptionally long waiting time for port access in Vietnam resulting in the Vietnam operations not being able to receive and deliver goods on time. Should the Vietnam operation encounter such disruptions again in the future, the distribution costs would be higher and the production cycles may be adversely affected.

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Currency risk – Foreign currency exchange effects could be volatile. Some specific and relevant examples during the year were: US$ depreciated against S$ which meant more expensive S$-denominated expenses in US$ term whereas US$ appreciated against the Vietnamese Dong (“Dong”) which meant cheaper Dong-denominated cost but lower Dong-denominated retail sales in US$ term. The Dong devaluation has also triggered inflationary concerns and resulted in higher workers’ wages and other operating costs in Vietnam. We are also exposed to other currencies movements such as US$/Chinese Renminbi and US$/Ringgit Malaysia and any adverse movements in these major currencies against the US$ will affect the Group’s financial performance. The Group will continue to monitor the foreign currency exchange exposure closely and may hedge the exposure by either entering into relevant foreign exchange forward contracts or relying on natural hedge or a combination of both.

14. INTERNAL AUDIT

The Company has appointed Messrs Yang Lee & Associates as the internal auditor to review the Group’s internal control system. The internal auditor will plan its internal audit reviews in consultation with, but independent of the Management. The internal audit plan will be submitted to the Audit Committee for approval prior to the commencement of the internal audit. The Audit Committee will review the activities of the internal auditors on a regular basis, including overseeing and monitoring of the implementation of improvement required on internal control weaknesses identified. The internal auditor adopts the Standards for the Professional Practice of Internal Auditing set by the Institute of Internal Auditors. The internal auditor reports directly to the Audit Committee.

15. COMMUNICATION WITH SHAREHOLDERS AND GREATER SHAREHOLDER PARTICIPATION

The Directors are mindful of their obligation to provide shareholders with timely disclosure of material information that is presented in a fair and objective manner. Shareholders and other investors are provided regularly with:

a. An Annual Report;

b. Quarterly financial results and other financial announcements as required;

c. A powerpoint presentation on the state of the Company (available when the Company holds results briefing after the announcement of its financial statements);

d. Press releases and other announcements on important developments;

e. A website and portal (www.kodaonline.com); and

f. Replies to email queries from shareholders.

On the Company’s website investors will find information about the Company, its products, its directors, contact details and under the Investor Relations link will find all information the Company has released.

In FY2011 the Company released 21 reports and announcements or on average 5 per quarter. Financial results, annual reports, press releases on the performance and major developments in the business and operations of the Group and any other material announcements are released through SGXNET and are available on the Company’s website.

The financial statements as well as the accompanying press release are released onto the SGX-ST website. For first half and full year results announcements, results briefing by management is held for analysts.

The Company also engages external investor relation consultant firm to support the Group in promoting the communication with shareholders and the investment community.

The Company also holds analyst briefing of important events at least twice a year. All shareholders will receive the annual report of the Company and notice of AGM by post and through notices published in the newspapers within the mandatory period. The shareholders can also access information on the Group at the Group’s corporate website at www.kodaonline.com. The website provides, inter alia, all publicly disclosed financial information, corporate announcements, press releases, annual reports and profiles of the Group.

Page 40: KODA Ltd 2011 Annual Report

REPORT ON CORPORATE GOVERNANCE

The Board regards the AGM as an opportunity to communicate directly with shareholders and encourages greater shareholder participation. The Chairman and the other Directors attend the AGM and are available to answer questions from shareholders at the AGMs. External auditors are also present to assist Directors in addressing any relevant queries from shareholders.

In consideration of the dilution impact to shareholders, the Group has voluntarily reduced the limit for non-pro rata shares issue from 20% to 15% of the total number of issued shares in the capital of the Company.

16. CODE ON SECURITIES TRANSACTIONS BY OFFICERS

In compliance with the best practices on dealings in securities set out in the SGX-ST Listing Manual, the Company has adopted its own internal compliance code to provide guidance to its officers with regards to dealing by the Company and its officers in the Company’s securities. Directors and employees of the Company have been advised not to deal in the Company’s shares on short-term considerations or when they are in the possession of unpublished price-sensitive information. In addition, dealings in the Company’s share and during the period commencing one month (in the case of full year announcements) or two weeks (in the case of quarterly result announcements) before any announcement of the Company’s financial statements and ending on the date of announcement of the results is prohibited.

17. INTERESTED PERSON TRANSACTIONS (“IPT”)

The Group has set up a procedure to record and report IPT. All the IPT were concluded on normal commercial terms and the value of each IPT during the financial year ended 30 June 2011 did not exceed $100,000.

There were no material contracts entered into by the Company and its subsidiaries involving the interest of the substantial shareholder or director, which are either subsisting at the end of the financial year or, if not then subsisting, entered into since the end of the previous financial year.

18. MATERIAL CONTRACTS

Since the end of the previous financial year, the Company and its subsidiary companies did not enter into any material contracts involving the interests of any Directors or any controlling shareholders of the Company or their associates and there are no such material contracts still subsisting at the end of the financial year.

19. SGX CHECKLISTS

The Board has accepted and uses the following checklist when required:

• Acquisitions and Realisations Compliance checklist.

• Annual Report Compliance checklist.

• Bonus Issue Compliance checklist.

• Financial Results Review checklist.

• Placement Compliance checklist.

• Rights Issue Compliance checklist.

• Share Split Compliance checklist.

• Share Buyback Compliance checklist.

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REPORT OF THE DIRECTORS

PAGE 39

The directors present their report together with the audited consolidated financial statements of the Group and statement of financial position and statement of changes in equity of the Company for the financial year ended June 30, 2011.

1 DIRECTORS

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

Koh Teng KweeJames Koh Jyh GangKoh Jyh EngKoh Shwu LeeChristopher Chong Meng TakChan Wah TiongSim Cheng Huat

2 ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE BENEFITS BY MEANS OF THE ACQUISITION OF SHARES AND DEBENTURES

Neither at the end of the financial year nor at any time during the financial year did there subsist any arrangement whose object is to enable the directors of the Company to acquire benefits by means of the acquisition of shares or debentures in the Company or any other body corporate.

3 DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES

The directors of the Company holding office at the end of the financial year had no interests in the share capital and debentures of the Company and related corporations as recorded in the register of directors’ shareholdings kept by the Company under Section 164 of the Singapore Companies Act except as follows:

Direct interests Indirect interests

Names of directors and company

in which interests are held

At beginning

of year

At end

of year

At beginning

of year

At end

of year

Koda Ltd

– Ordinary shares

Koh Teng Kwee 15,177,120 19,888,080 9,421,920 –

James Koh Jyh Gang 26,092,592 27,034,784 – –

Koh Jyh Eng 13,185,520 14,127,712 36,000 36,000

Koh Shwu Lee 12,755,520 13,697,712 432,000 432,000

Christopher Chong Meng Tak 144,000 144,000 – –

By virtue of Section 7 of the Singapore Companies Act, Koh Teng Kwee and James Koh Jyh Gang are deemed to have an interest in the Company and in all the related corporations of the Company.

The directors’ interests as at July 21, 2011 were the same as those at the end of the financial year.

Page 42: KODA Ltd 2011 Annual Report

REPORT OF THE DIRECTORS

4 DIRECTORS’ RECEIPT AND ENTITLEMENT TO CONTRACTUAL BENEFITS

Since the beginning of the financial year, no director has received or become entitled to receive a benefit which is required to be disclosed under Section 201(8) of the Singapore Companies Act, by reason of a contract made by the Company or a related corporation with the director or with a firm of which he is a member, or with a company in which he has a substantial financial interest except for salaries, bonuses and other benefits as disclosed in the financial statements.

There were certain transactions (as disclosed in the financial statements) with corporations in which certain directors have an interest.

5 OPTIONS TO TAKE UP UNISSUED SHARES

(a) The Koda Share Option Scheme (“Share Option Scheme”) was approved by the shareholders at the Extraordinary Meeting held on December 6, 2001. The Share Option Scheme is administered by a committee of directors (“Share Option Committee”) comprising Christopher Chong Meng Tak, Chan Wah Tiong and James Koh Jyh Gang.

Under the Share Option Scheme, an option entitles the option holder to subscribe for a specific number of new ordinary shares in the Company comprised in the option at a subscription price per share determined with reference to the market price of the shares at the time of grant of the option. The Share Option Committee may at its discretion, fix that subscription price at a discount of up to 20% off market price. The consideration for the grant of an option is S$1.00. Options granted with the subscription price set at the market price shall only be exercised after the first anniversary but before the fifth anniversary of the date of grant of that option. Options granted with the market price set at a discount to the market price shall only be exercised after the second anniversary but before the fifth anniversary of the date of grant of that option. The shares under option may be exercised in whole or in part on the payment of the relevant subscription price. Options granted will lapse when the option holder ceases to be a full-time employee of the Company or any company of the Group subject to certain exceptions at the discretion of the Company.

There were no options to take up unissued shares of the Company granted pursuant to the Share Option Scheme.

(b) During the financial year, no options to take up unissued shares of the subsidiaries were granted.

6 OPTIONS EXERCISED

During the financial year, there were no shares of the Company or any corporation in the Group issued by virtue of the exercise of an option to take up unissued shares.

7 UNISSUED SHARES UNDER OPTIONS

At the end of the financial year, there were no unissued shares of the Company or any corporation in the Group under option.

8 AUDIT COMMITTEE

The Audit Committee of the Company is chaired by Christopher Chong Meng Tak, an independent director, and includes Chan Wah Tiong, an independent director, Sim Cheng Huat, an independent director and James Koh Jyh Gang, an executive director. The Audit Committee has met thrice since the last Annual General Meeting (“AGM”) and has reviewed the following, where relevant, with the executive directors and external and internal auditors of the Company:

(a) the audit plans and results of the internal auditors’ examination and evaluation of the Group’s systems of internal accounting controls;

(b) the Group’s financial and operating results and accounting policies;

(c) the financial statements of the Company and the consolidated financial statements of the Group before their submission to the directors of the Company and external auditors’ report on those financial statements;

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PAGE 41

(d) the half-yearly and annual announcements as well as the related press releases on the results and financial position of the Company and the Group;

(e) the co-operation and assistance given by the management to the Group’s external and internal auditors; and

(f) the re-appointment of the external auditors of the Group.

The Audit Committee has full access to and has the co-operation of the management and has been given the resources required for it to discharge its function properly. It also has full discretion to invite any director and executive officer to attend its meetings. The external and internal auditors have unrestricted access to the Audit Committee.

The Audit Committee has recommended to the directors the nomination of Deloitte & Touche LLP for re-appointment as external auditors at the forthcoming AGM of the Company.

9 AUDITORS

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

ON BEHALF OF THE DIRECTORS

.................................................James Koh Jyh Gang

................................................Koh Shwu Lee

SingaporeOctober 6, 2011

Page 44: KODA Ltd 2011 Annual Report

STATEMENT OF DIRECTORS

In the opinion of the directors, the consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company as set out on pages 45 to 95 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at June 30, 2011, and of the results, changes in equity, cash flows of the Group and the changes in equity of the Company for the financial year then ended and at the date of this statement there are reasonable grounds to believe that the Company will be able to pay its debts when they fall due.

ON BEHALF OF THE DIRECTORS

.................................................James Koh Jyh Gang

.................................................Koh Shwu Lee

SingaporeOctober 6, 2011

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INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF KODA LTD

PAGE 43

REPORT ON THE FINANCIAL STATEMENTS

We have audited the accompanying financial statements of Koda Ltd (the “Company”) and its subsidiaries (the “Group”) which comprise the statements of financial position of the Group and the Company as at June 30, 2011, and the statement of comprehensive income, statement of changes in equity and statement of cash flows of the Group and the statement of changes in equity of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 45 to 95.

MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act (the “Act”) and Singapore Financial Reporting Standards and for devising and maintaining a system of internal accounting controls sufficient to provide reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets.

AUDITORS’ RESPONSIBILITY

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OPINION

In our opinion, the consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at June 30, 2011 and of the results, changes in equity and cash flows of the Group and changes in equity of the Company for the year ended on that date.

Page 46: KODA Ltd 2011 Annual Report

INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF KODA LTD

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

Deloitte & Touche LLPPublic Accountants andCertified Public Accountants

Patrick Tan Hak PhengPartner(Appointed on October 28, 2010)

SingaporeOctober 6, 2011

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STATEMENTS OF FINANCIAL POSITION

JUNE 30, 2011

PAGE 45

GROUP COMPANY

Note 2011 2010 2009 2011 2010 2009

US$’000 US$’000

(restated)

US$’000

(restated)

US$’000 US$’000

(restated)

US$’000

(restated)

ASSETS

Current assets

Cash and bank balances 6 3,444 3,410 3,488 205 747 643

Trade receivables 7 2,884 3,460 3,964 9,567 5,890 5,081

Other receivables 8 3,754 3,027 3,100 7,811 6,715 6,547

Inventories 9 11,481 12,014 9,458 430 491 1,034

Total current assets 21,563 21,911 20,010 18,013 13,843 13,305

Non-current assets

Investment in subsidiaries 10 – – – 12,335 12,299 11,668

Goodwill 11 728 728 728 – – –

Available-for-sale investments 12 39 496 483 39 496 483

Club memberships 13 211 211 211 192 192 192

Property, plant and equipment 14 14,215 14,035 12,582 828 927 735

Investment properties 15 686 664 690 – – –

Intangible asset 16 167 354 373 – – –

Deferred tax assets 17 290 150 75 3 3 3

Total non-current assets 16,336 16,638 15,142 13,397 13,917 13,081

Total assets 37,899 38,549 35,152 31,410 27,760 26,386

Page 48: KODA Ltd 2011 Annual Report

STATEMENTS OF FINANCIAL POSITION

JUNE 30, 2011

GROUP COMPANY

Note 2011 2010 2009 2011 2010 2009

US$’000 US$’000

(restated)

US$’000

(restated)

US$’000 US$’000

(restated)

US$’000

(restated)

LIABILITIES AND EQUITY

Current liabilities

Bills payables 18 4,825 3,714 406 4,304 2,904 406

Trade payables 19 2,568 3,614 3,446 427 972 4,412

Other payables 20 2,508 2,439 2,126 977 1,208 963

Current portion of obligations

under finance leases 21 308 86 250 68 56 26

Current portion of bank loans

and overdrafts 22 3,433 426 475 3,391 426 475

Income tax payable – – 257 – – 61

Total current liabilities 13,642 10,279 6,960 9,167 5,566 6,343

Non-current liabilities

Obligations under finance leases 21 235 657 499 235 266 52

Capital, reserves and

non-controlling interests

Share capital 23 4,040 4,040 4,040 4,040 4,040 4,040

Capital reserves 24 2,416 2,408 2,395 38 30 17

Currency translation reserve 688 560 298 – – –

Accumulated profits 16,340 19,788 19,995 17,930 17,858 15,934

Equity attributable to owners

of the Company 23,484 26,796 26,728 22,008 21,928 19,991

Non-controlling interests 538 817 965 – – –

Total equity 24,022 27,613 27,693 22,008 21,928 19,991

Total liabilities and equity 37,899 38,549 35,152 31,410 27,760 26,386

See accompanying notes to financial statements.

Page 49: KODA Ltd 2011 Annual Report

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KODA LTD 2011

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

YEAR ENDED JUNE 30, 2011

PAGE 47

Note 2011 2010

US$’000 US$’000

Revenue 25 39,950 44,265

Cost of sales (29,833) (32,864)

Gross profit 10,117 11,401

Other income 26 668 606

Distribution costs (3,973) (4,201)

Administrative expenses (7,782) (7,206)

Other expenses 27 (2,219) (329)

Finance costs 28 (151) (92)

(Loss) Profit before income tax (3,340) 179

Income tax 29 188 116

(Loss) Profit for the year 30 (3,152) 295

Other comprehensive income:

Currency translation differences 66 191

Available-for-sale investments

– fair value gains arising during the year 8 13

Other comprehensive income for the year, net of tax 74 204

Total comprehensive income for the year (3,078) 499

(Loss) Profit attributable to:

Owners of the Company (2,935) 271

Non-controlling interests (217) 24

(3,152) 295

Total comprehensive income attributable to:

Owners of the Company (2,799) 546

Non-controlling interests (279) (47)

(3,078) 499

(Loss) Earnings per share (US cents)

Basic 31 (2.20) 0.20

Diluted 31 (2.20) 0.20

See accompanying notes to financial statements.

Page 50: KODA Ltd 2011 Annual Report

STATEMENTS OF CHANGES IN EQUITY

YEAR ENDED JUNE 30, 2011

Sharecapital

Capitalreserves

Currencytranslation

reserveAccumulated

profits

Attributableto equity

holders ofthe Company

Non-controlling

interests Total

US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

(restated) (restated)

GROUP

Balance at July 1, 2009 4,040 2,395 298 19,995 26,728 965 27,693

Total comprehensive income for the year – 13 262 271 546 (47) 499

Dividends (Note 32) – – – (478) (478) – (478)

Dividend paid to non-controlling shareholders – – – – – (101) (101)

Balance at June 30, 2010 4,040 2,408 560 19,788 26,796 817 27,613

Total comprehensive income for the year – 8 128 (2,935) (2,799) (279) (3,078)

Dividends (Note 32) – – – (513) (513) – (513)

Balance at June 30, 2011 4,040 2,416 688 16,340 23,484 538 24,022

COMPANY

Balance at July 1, 2009 4,040 17 – 15,934 – – 19,991

Total comprehensive income for the year – 13 – 2,402 – – 2,415

Dividends (Note 32) – – – (478) – – (478)

Balance at June 30, 2010 4,040 30 – 17,858 – – 21,928

Total comprehensive income for the year – 8 – 585 – – 593

Dividends (Note 32) – – – (513) – – (513)

Balance at June 30, 2011 4,040 38 – 17,930 – – 22,008

See accompanying notes to financial statements.

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CONSOLIDATED STATEMENT OF CASH FLOWS

YEAR ENDED JUNE 30, 2011

PAGE 49

2011 2010

US$’000 US$’000

OPERATING ACTIVITIES

(Loss) Profit before income tax (3,340) 179

Adjustments for:

Bad debts written off – 75

Inventories written off 1,918 216

Amortisation of intangible asset 23 21

Depreciation of property, plant and equipment 1,288 1,208

Interest income (132) (157)

Interest expense 151 92

(Gain) Loss on disposal of property, plant and equipment – net (7) 13

Impairment of intangible asset 167 –

Operating cash flows before movements in working capital 68 1,647

Trade receivables 561 429

Other receivables 146 73

Inventories (1,257) (2,772)

Trade payables (1,052) 168

Other payables 6 313

Cash used in operations (1,528) (142)

Dividends paid (513) (478)

Dividends paid to non-controlling interests of subsidiaries – (101)

Interest paid (151) (92)

Interest received 132 157

Income tax paid (140) (216)

Net cash used in operating activities (2,200) (872)

INVESTING ACTIVITIES

Proceeds from disposal of property, plant and equipment 7 203

Purchase of property, plant and equipment (Note A) (1,130) (2,034)

Proceeds from disposal of available-for-sale investments 465 –

Deposit for investment [Note 36(a)] (887) –

Net cash used in investing activities (1,545) (1,831)

Page 52: KODA Ltd 2011 Annual Report

CONSOLIDATED STATEMENT OF CASH FLOWS

YEAR ENDED JUNE 30, 2011

See accompanying notes to financial statements.

2011 2010

US$’000 US$’000

FINANCING ACTIVITIES

Increase in bills payables 1,073 3,308

Repayment of bank loans (533) (399)

Proceeds from bank loans 3,250 350

Repayment of finance leases (250) (461)

Net cash from financing activities 3,540 2,798

Net (decrease) increase in cash and cash equivalents (205) 95

Cash and cash equivalents at beginning of year 3,410 3,488

Effects of foreign exchange translation (51) (173)

Cash and cash equivalents at end of year (Note 6) 3,154 3,410

NOTE A: PURCHASE OF PROPERTY, PLANT AND EQUIPMENT

During the financial year, the Group acquired property, plant and equipment with aggregate cost of US$1,180,000 (2010: US$2,489,000) of which US$50,000 (2010: US$455,000) was acquired under hire purchase arrangement. Cash payment of US$1,130,000 (2010: US$2,034,000) was made to purchase the property, plant and equipment.

Page 53: KODA Ltd 2011 Annual Report

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NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2011

PAGE 51

1 GENERAL

The Company (Registration No. 198001299R) is incorporated in Singapore with its principal place of business and registered office at 28 Defu Lane 4, Singapore 539424. The Company is listed on the Mainboard of the Singapore Exchange Securities Trading Limited. The financial statements are expressed in United States dollars.

The principal activities of the Company are those relating to the business of manufacturers and dealers of furniture of all kinds and investment holding.

The principal activities of the subsidiaries are disclosed in Note 10 to the financial statements.

The consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company for the year ended June 30, 2011 were authorised for issue by the Board of Directors on October 6, 2011.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF ACCOUNTING – The financial statements are prepared in accordance with the historical cost convention, except as disclosed in the accounting policies below, and are drawn up in accordance with the provisions of the Singapore Companies Act and Singapore Financial Reporting Standards (“FRS”).

ADOPTION OF NEW AND REVISED STANDARDS – In the current financial year, the Group has adopted all the new and revised FRSs and Interpretations of FRS (“INT FRS”) that are relevant to its operations and effective for annual periods beginning on or after July 1, 2010. The adoption of these new/revised FRSs and INT FRSs does not result in changes to the Group’s and Company’s accounting policies and has no material effect on the amounts reported for the current or prior years.

At the date of authorisation of these financial statements, the following FRS that is relevant to the Group and the Company was issued but not effective:

FRS 24 (Revised) Related Party Disclosures

FRS 24 (Revised) Related Party Disclosures is effective for annual periods beginning on or after January 1, 2011. The revised Standard clarifies the definition of a related party and consequently additional parties may be identified as related to the reporting entity.

In addition, the revised Standard provides partial exemption for government-related entities, in relation to the disclosure of transactions, outstanding balances and commitments. Where such exemptions apply, the reporting entity has to make additional disclosures, including the nature of the government’s relationship with the reporting entity and information on significant transactions or group of transactions involved. In the period of initial adoption, the changes to related party disclosures, if any, will be applied retrospectively with restatement of the comparative information.

Management anticipates that the adoption of the other FRSs, INT FRSs and amendments to FRSs that were issued at the date of authorisation of these financial statements but not effective until future periods will not have a material impact on the financial statements of the Group and of the Company in the period of their initial adoption.

BASIS OF CONSOLIDATION – The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by other members of the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Page 54: KODA Ltd 2011 Annual Report

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2011

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

FRS 24 (Revised) Related Party Disclosures (Continued)

Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. The interest of non-controlling shareholders may be initially measure either at fair value or at the non-controlling interests’ proportionate share of the fair value of the acquiree’s identifiable net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount of which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.

When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted for (i.e. reclassified to profit or loss or transferred directly to retained earnings) in the same manner as would be required if the relevant assets or liabilities were disposed of. The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under FRS 39 Financial Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition of an investment in an associate or jointly controlled entity.

In the Company’s financial statements, investments in subsidiaries are carried at cost less any impairment in net recoverable value that has been recognised in profit or loss.

BUSINESS COMBINATIONS – Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration of each acquisition is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.

Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments (see below). The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with FRS 39 Financial Instruments: Recognition and Measurement, or FRS 37 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or loss being recognised in profit or loss.

Where a business combination is achieved in stages, the Group’s previously held interests in the acquired entity are remeasured to fair value at the acquisition date (i.e. the date the Group attains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of.

The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under the FRS are recognised at their fair value at the acquisition date, except that:

• deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with FRS 12 Income Taxes and FRS 19 Employee Benefits respectively;

• liabilities or equity instruments related to the replacement by the group of an acquiree’s share-based payment awards are measured in accordance with FRS 102 Share-based Payment; and

Page 55: KODA Ltd 2011 Annual Report

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NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2011

PAGE 53

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

FRS 24 (Revised) Related Party Disclosures (Continued)

• assets (or disposal groups) that are classified as held for sale in accordance with FRS 105 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see below), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.

The measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and circumstances that existed as of the acquisition date – and is subject to a maximum of one year from acquisition date.

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

FINANCIAL INSTRUMENTS – Financial assets and financial liabilities are recognised on the Group’s statements of financial position when the Group becomes a party to the contractual provisions of the instrument.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial instrument, or where appropriate, a shorter period. Income and expense is recognised on an effective interest basis for debt instruments.

Financial assets

All financial assets are recognised and de-recognised on a trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value plus transaction costs, except for those financial assets classified as at fair value through profit or loss which are initially measured at fair value.

Other financial assets are classified into the following specified categories: “available-for-sale” financial assets and “loans and receivables”. The classification depends on the nature and purpose of financial assets and is determined at the time of initial recognition.

Available-for-sale financial assets

Certain shares and debt securities held by the Group are classified as being available for sale and are stated at fair value. Fair value is determined in the manner described in Note 4. Gains and losses arising from changes in fair value are recognised in other comprehensive income with the exception of impairment losses, interest calculated using the effective interest method and foreign exchange gains and losses on monetary assets which are recognised directly in profit or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in other comprehensive income and accumulated in revaluation reserve is included in profit or loss. Dividends on available-for-sale equity instruments are recognised in profit or loss when the Group’s right to receive payments is established. The fair value of available-for-sale monetary assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at end of the reporting period. The change in fair value attributable to translation differences that result from a change in amortised cost of the asset is recognised in profit or loss, and other changes are recognised in other comprehensive income.

Page 56: KODA Ltd 2011 Annual Report

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2011

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial assets (Continued)

Available-for-sale financial assets (Continued)

Available-for-sale financial assets are stated at cost, less any impairment in recoverable value, where fair values cannot be reliably measured.

Loans and receivables

Trade and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as “loans and receivables” and are measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest method, except for short-term receivables when the recognition of interest would be immaterial.

Impairment of financial assets

Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the financial asset have been impacted. For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flow, discounted at the original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of receivables where the carrying amount is reduced through the use of an allowance account. When a receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited to the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent the carrying amount of the financial asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

In respect of available-for-sale equity instruments, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any subsequent increase in fair value after an impairment loss, is recognised in other comprehensive income.

Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

Financial liabilities and equity instruments

Classification as debt or equity

Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

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NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2011

PAGE 55

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial liabilities and equity instruments (Continued)

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.

Bank borrowings and bills payables

Interest-bearing bank loans, bank overdrafts and bills payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the Group’s accounting policy for borrowing costs (see below).

Trade and other payables

Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest method, with interest expense recognised on an effective yield basis.

Derecognition of financial liabilities

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

INVENTORIES – Inventories are stated at the lower of cost (weighted average method) and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable value represents the estimated selling price less all estimated costs to completion and costs to be incurred in marketing, selling and distribution.

LEASES – Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The Group as lessor

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which use benefit derived from the leased asset is diminished. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised as an expense over the lease term on the same basis as the lease income.

The Group of lessee

Assets held under finance leases are recognised as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statements of financial position as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to profit or loss unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Group’s general policy on borrowing costs (see below). Contingent rentals are recognised as expenses in the periods in which they are incurred.

Page 58: KODA Ltd 2011 Annual Report

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2011

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The Group of lessee (Continued)

Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

CLUB MEMBERSHIPS – Club memberships are stated at cost less impairment losses recognised when the carrying amount exceeds the estimated recoverable amount.

PROPERTY, PLANT AND EQUIPMENT – Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the statement of financial position at their costs or revalued amounts, being the fair value at the date of revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations are performed with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair values at the end of the reporting period.

Any revaluation increase arising on the revaluation of such land and buildings is recognised in other comprehensive income and accumulated in asset revaluation reserve, except to the extent that it reverses a revaluation decrease for the same asset previously recognised in profit or loss, in which case the increase is credited to profit or loss to the extent of the decrease previously charged. A decrease in carrying amount arising on the revaluation of such land and buildings is charged to profit or loss to the extent that it exceeds the balance, if any, held in the asset revaluation reserve relating to a previous revaluation of that asset.

Properties in the course of construction for production, supply or administrative purposes, or for purposes not yet determined, are carried at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Group’s accounting policy. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.

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

Depreciation is charged so as to write off the cost or valuation of assets, other than freehold land and construction-in-progress over their estimated useful lives, using the straight-line method, on the following bases:

Leasehold land and buildings – over terms of lease of 12/3% to 4%Plant and machinery – 10% to 162/3%Office equipment – 10% to 331/3% Motor vehicles – 10% to 25%

The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, if there is no certainty that the lessee will obtain ownership by the end of the lease term, the asset shall be fully depreciated over the shorter of the lease term and its useful life.

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NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2011

PAGE 57

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amounts of the asset and is recognised in the profit or loss. On the subsequent sale or retirement of a revalued property, the attributable revaluation surplus remaining in the properties revaluation reserve is transferred directly to accumulated profits. No transfer is made from the revaluation reserve to retained earnings except when an asset is derecognised.

INVESTMENT PROPERTY – Investment property, which is property held to earn rentals and/or for capital appreciation, including property under construction for such purposes, is measured initially at its cost, including transaction costs. Subsequent to initial recognition, investment property is measured at fair value. Gains or losses arising from changes in the fair value of investment property are included in profit or loss for the period in which they arise.

GOODWILL – Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the acquisition date). Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest (if any) in the entity over net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.

If, after reassessment, the Group’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.

Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.

On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

INTANGIBLE ASSETS

Intangible assets acquired separately

Intangible assets acquired separately are reported at cost less accumulated amortisation (where they have finite useful lives) and accumulated impairment losses. Intangible assets with finite useful lives are amortised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives are not amortised. Each period, the useful lives of such assets are reviewed to determine whether events and circumstances continue to support an indefinite useful life assessment for the asset. Such assets are tested for impairment in accordance with the policy below.

IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS EXCLUDING GOODWILL – At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

GOVERNMENT GRANTS – Government grant is recognised as income over the periods necessary to match it with the costs for which it is intended to compensate, on a systematic basis. Government subsidy that is receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs is recognised in profit or loss in the period in which it becomes receivable.

PROVISIONS – Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle that obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

REVENUE RECOGNITION – Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.

Sale of goods

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

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

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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Sale of goods (Continued)

• the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

• the amount of revenue can be measured reliably;

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

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

Interest income

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

Rental income

The Group’s policy for recognition of revenue from operating leases is described above.

Dividend income

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

BORROWING COSTS – Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

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

RETIREMENT BENEFIT COSTS – Payments to defined contribution retirement benefit plans are charged as an expense as they fall due. Payments made to state-managed retirement benefit schemes, such as the Singapore Central Provident Fund, are dealt with as payments to defined contribution plans where the Group’s obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan.

EMPLOYEE LEAVE ENTITLEMENT – Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the end of the reporting period.

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

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or tax deductible. The Group’s liability for current tax is calculated using tax rates (and tax laws) that have been enacted or substantively enacted in countries where the Company and its subsidiaries operate by the end of the reporting period.

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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised based on the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items credited or debited outside profit or loss (either in other comprehensive income or directly in equity), in which case the tax is also recognised outside profit or loss (either in other comprehensive income or directly in equity, respectively), or where they arise from the initial accounting for a business combination. In the case of a business combination, the tax effect is taken into account in calculating goodwill or determining the excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over cost.

FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION – The individual financial statements of each Group entity are measured and presented in the currency of the primary economic environment in which the entity operates (its functional currency). The consolidated financial statements of the Group and statement of financial position of the Company are presented in United States dollars, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency are recorded at the rates of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the end of the reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised in other comprehensive income. For such non-monetary items, any exchange component of that gain or loss is also recognised in other comprehensive income.

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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations (including comparatives) are expressed in United States dollars using exchange rates prevailing at the end of the reporting period. Income and expense items (including comparatives) are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in the Group’s translation reserve.

On the disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, loss of joint control over a jointly controlled entity that includes a foreign operation, or loss of significant influence over an associate that includes a foreign operation), all of the accumulated exchange differences in respect of that operation attributable to the Group are reclassified to profit or loss. Any exchange differences that have previously been attributed to non-controlling interests are derecognised, but they are not reclassified to profit or loss.

In the case of a partial disposal (i.e. no loss of control) of a subsidiary that includes a foreign operation, the proportionate share of accumulated exchange differences are re-attributed to non-controlling interests and are not recognised in profit or loss. For all other partial disposals (i.e. of associates or jointly controlled entities not involving a change of accounting basis), the proportionate share of the accumulated exchange differences is reclassified to profit or loss.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities (including monetary items that, in substance, form part of the net investment in foreign entities), and of borrowings and other currency instruments designated as hedges of such investments, are taken to the foreign currency translation reserve.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

CASH AND CASH EQUIVALENTS – Cash and cash equivalents comprise cash on hand, demand deposits and bank overdrafts that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

3 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, which are described in Note 2, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

(i) Critical judgements in applying the Group’s accounting policies

Management did not make any material judgements that have significant effect on the amounts recognised in the financial statements except for those affecting accounting estimates as disclosed in Note 3(ii) to the financial statements.

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3 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (Continued)

(ii) Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

(a) Allowances for doubtful debts

The Group makes allowances for doubtful debts based on an assessment of the recoverability of trade and other receivables where events or changes in circumstances indicate that the balances may not be collectible. The identification of doubtful debts require the use of judgement and estimates. Where the expectation is different from the original estimate, such differences will impact the carrying value of trade and other receivables and doubtful debts expenses in the period in which such estimate have been changed. The carrying amounts of the Group’s trade and other receivables are disclosed in Notes 7 and 8 respectively to the financial statements.

(b) Allowances for inventories

Management determines whether an allowance for stock obsolescence or slow-moving stock or for any shortfall in net realisable value of inventories by reviewing the inventory listing on a periodic basis. The review involves a comparison of the carrying value of the inventory items with the respective net realisable value as well as the forecasted demand for the inventories. Arising from the review, management sets up the necessary allowance for obsolete and slow-moving inventories or for any short fall in the net realisable value of the inventories. The carrying amounts of the Group’s inventories are disclosed in Note 9 to the financial statements.

(c) Impairment of property, plant and equipment

The Group assesses annually whether property, plant and equipment exhibit any indication of impairment. Where such indications exist, the recoverable amounts of property, plant and equipment will be determined based on value-in-use calculations. These calculations require the use of judgement and estimates. The carrying amounts of the Group’s property, plant and equipment are disclosed in Note 14 to the financial statements.

(d) Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value-in-use of the cash-generating units to which goodwill has been allocated. The value-in-use calculation requires management to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. The carrying amount of goodwill is disclosed in Note 11 to the financial statements.

(e) Impairment of investment in subsidiaries

Determining whether investments in subsidiaries are impaired requires an estimation of the value in use of these investments. The value in use calculation requires the Company to estimate the future cash flows expected from these investments and a suitable discount rate in order to calculate present value. The carrying amount of investments in subsidiaries is disclosed in Note 10 to the financial statements.

(f) Amortisation of intangible asset

The Group assesses the useful life of the brand name acquired to be 20 years based on management estimations. The carrying amount of the Group’s intangible asset is disclosed in Note 16 to the financial statements.

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4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT

(a) Categories of financial instruments

The following table sets out the financial instruments as at the end of the reporting period.

GROUP COMPANY

2011 2010 2011 2010

US$’000 US$’000 US$’000 US$’000

FINANCIAL ASSETS

Loan and receivables (including cash and bank balances) 6,798 7,328 16,554 13,234

Available-for-sale financial assets 39 496 39 496

FINANCIAL LIABILITIES

Amortised cost 13,877 10,936 9,402 5,832

(b) Financial risk management policies and objectives

The Group has documented financial risk management policies. These policies set out the Group’s overall business strategies and its risk management philosophy. The Group’s overall financial risk management programme seeks to minimise potential adverse effects of financial performance of the Group. The Board of Directors provides written principles for overall financial risk management and written policies covering specific areas, such as market risk (including foreign exchange risk, interest rate risk, equity price risk), credit risk, liquidity risk, cash flow interest rate risk, use of derivative financial instruments and investing excess cash. Such written policies are reviewed annually by the Board of Directors and periodic reviews are undertaken to ensure that the Group’s policy guidelines are complied with.

The Group does not hold nor issue derivative financial instruments.

There has been no change to the Group’s exposure to these financial risks or the manner in which it manages and measures the risk. Market risk exposures are measured using sensitivity analysis indicated below.

(i) Foreign currency risk management

The Group transacts its business in various foreign currencies including the United States dollar (“USD”), the Chinese Renminbi (“RMB”), the Singapore dollar (“SGD”), the Vietnam Dong (“VND”), the Hong Kong dollar (“HKD”), Euro (“EUR”), the Malaysian Ringgit (“RM”), and the New Zealand dollar (“NZD”) and therefore is exposed to foreign exchange risk. The Group does not enter into any derivative financial investments to hedge this risk.

The Group uses natural hedges that arise from offsetting assets and liabilities that are denominated in foreign currencies.

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JUNE 30, 2011

4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (Continued)

(b) Financial risk management policies and objectives (Continued)

(i) Foreign currency risk management (Continued)

The Company has a number of investments in foreign subsidiaries, whose net assets are exposed to currency translation risk. The Group does not currently designate its foreign currency denominated debt as a hedging instrument for the purpose of hedging the translation of its foreign operations.

At the reporting date, the carrying amounts of monetary assets and monetary liabilities denominated in currencies other than the respective Group entities’ functional currencies are as follows:

RMB SGD VND USD Others

US$’000 US$’000 US$’000 US$’000 US$’000

2011

GROUP

Assets

Cash and bank balances 29 51 791 410 275

Trade receivables – – 216 28 31

Other receivables 125 7 2,127 – –

Total 154 58 3,134 438 306

Liabilities

Trade payables 261 – 687 – 25

Other payables 7 321 509 – 34

Finance leases – 303 210 – 30

Bank overdrafts – 348 – – 42

Total 268 972 1,406 – 131

COMPANY

Assets

Cash and bank balances 29 51 – – 4

Trade receivables – 6 – – 2

Other receivables 146 67 – – 8

Total 175 124 – – 14

Liabilities

Trade payables 751 5 – – –

Other payables 5 276 – – –

Finance leases – 303 – – –

Bank overdrafts – 248 – – –

Total 756 832 – – –

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4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (Continued)

(b) Financial risk management policies and objectives (Continued)

(i) Foreign currency risk management (Continued)

RMB SGD VND USD Others

US$’000 US$’000 US$’000 US$’000 US$’000

2010

GROUP

Assets

Cash and bank balances 77 102 879 339 277

Trade receivables – 4 87 50 1

Other receivables 210 28 1,732 – 10

Total 287 134 2,698 389 288

Liabilities

Trade payables 604 18 1,309 – –

Other payables 14 225 479 – –

Finance leases – 322 421 – –

Total 618 565 2,209 – –

COMPANY

Assets

Cash and bank balances 77 102 – – 28

Trade receivables – 4 – – 1

Other receivables 210 28 – – 10

Total 287 134 – – 39

Liabilities

Trade payables 604 8 – – –

Other payables 14 225 – – –

Finance leases – 322 – – –

Total 618 555 – – –

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4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (Continued)

(b) Financial risk management policies and objectives (Continued)

(i) Foreign currency risk management (Continued)

Foreign currency sensitivity

The following table details the sensitivity to a 10% increase and decrease in the relevant foreign currencies against the functional currency of each Group entity. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates.

A positive number below indicates an increase in profit where functional currency of each Group entity strengthens by 10% against the foreign currency. For a 10% weakening of the functional currency of each Group entity against the foreign currency, there would be an equal and opposite impact on the profit.

RMB Impact SGD Impact VND Impact USD Impact Others Impact

2011 2010 2011 2010 2011 2010 2011 2010 2011 2010

US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

GROUP

Profit or loss (11) (33) (91) (43) 173 49 44 39 18 29

COMPANY

Profit or loss (58) (33) (71) (42) – – – – 1 4

Any change in foreign currency rates does not result in gains or losses recognised directly in equity or other comprehensive income of the Group and the Company.

The Group’s sensitivity to foreign exchange rate changes has increased during the current period mainly due to an increase in monetary assets denominated in Vietnam Dong. The Company’s exposure arose mainly due to balances due from/to subsidiaries, finance leases and bank balances which are not denominated in US$.

In management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk as the year end exposure does not reflect the exposure during the year due to seasonal sales/receivables denominated in Vietnam Dong.

(ii) Interest rate risk management

Summary quantitative data of the Group’s interest-bearing financial instruments can be found in section (v) of this Note. The Group’s policy is to maintain cash equivalents and borrowings in both fixed and variable rate instruments.

Interest rate sensitivity

The sensitivity analyses below have been determined based on the exposure to interest rates for financial instruments at the end of the reporting period and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the possible change in interest rates.

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4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (Continued)

(b) Financial risk management policies and objectives (Continued)

(ii) Interest rate risk management (Continued)

Interest rate sensitivity (Continued)

If interest rates had been 50 basis points higher or lower and all other variables were held constant, the Group’s profit for the year ended June 30, 2011 would decrease/increase by US$44,000 (2010: US$24,000, 2009: US$8,000) and Company’s profit for the year ended June 30, 2011 would decrease/increase by US$40,000 (2010: US$24,000, 2009: US$3,000). This is mainly attributable to the Group’s and Company’s exposure to interest rates on its interest-bearing borrowings.

The Group’s and Company’s sensitivity to interest rates has increased during the current period mainly due to an increase in variable rate debt instruments.

(iii) Equity price risk management

The Group and Company are exposed to equity risks arising from equity investments classified as available-for-sale. Available-for-sale equity investments are held for strategic rather than trading purposes. The Group and Company do not actively trade available-for-sale investments.

Further details of these equity investments can be found in Note 12 to the financial statements.

Equity price sensitivity

The sensitivity analysis below have been determined based on the exposure to equity price risks at the reporting date.

In respect of available-for-sale equity investments, if the closing market prices on the last market day of the financial year had been 10% higher/lower while all other variables were held constant:

• the Group’s net profit for the year ended June 30, 2011 would have been unaffected as the equity investments are classified as available-for-sale; and

• the Group’s asset revaluation reserves would increase/decrease by US$4,000 (2010: US$3,000).

The Group’s sensitivity to equity prices has changed from the prior year due to changes in market price.

(iv) Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by the counterparty limits that are reviewed and approved by management annually.

Trade receivables consist of various customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable and, where appropriate, letter of credit will be obtained on the trade receivables.

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4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (Continued)

(b) Financial risk management policies and objectives (Continued)

(iv) Credit risk management (Continued)

The Group does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristic except as described below.

The Group defines counterparties as having similar characteristics if they are related entities. Concentration of credit risk did not exceed 5% of gross monetary assets at any time during the year except as described below:

GROUP AND COMPANY

2011 2010

US$’000 US$’000

With top 5 customers (2010: 5 customers):

Trade receivables 2,036 1,715

The carrying amount of financial assets recorded in the financial statements, grossed up for any allowances for impairment losses, represents the Group’s and the Company’s maximum exposure to credit risk without taking account of the value of any collateral obtained for trade receivables as follow:

GROUP COMPANY

2011 2010 2011 2010

US$’000 US$’000 US$’000 US$’000

Carrying amount (Note 7) 2,884 3,460 9,567 5,890

Less: Amount covered by letters of credits from

customers (419) (784) (419) (784)

Less: Credit insurance (1,411) (1,599) (1,411) (1,599)

Maximum exposure to credit risk 1,054 1,077 7,737 3,507

(v) Liquidity risk management

In the management of the liquidity risk, the Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. Short-term funding is obtained from overdraft facilities and short-term bank loans. Any temporary shortfall of funds of the Company or its subsidiaries would be managed by obtaining short-term financing within the Group.

Liquidity and interest risk analysis

Non-derivative financial assets

The following table details the expected maturity for non-derivative financial assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the Group’s and Company’s liquidity risk management as the Group’s and Company’s liquidity risk is managed on a net asset and liability basis. The tables below have been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets except where the Group and the Company anticipates that the cash flow will occur in a different period. The adjustment column represents the possible future cash flows attributable to the instrument included in the maturity analysis which are not included in the carrying amount of the financial asset on the statement of financial position.

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4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (Continued)

(b) Financial risk management policies and objectives (Continued)

(v) Liquidity risk management (Continued)

Liquidity and interest risk analysis (Continued)

Non-derivative financial assets (Continued)

Weighted

average

effective

interest rate

On demand

or within

1 year Adjustment Total

% US$’000 US$’000 US$’000

GROUP

2011

Non-interest bearing – 5,753 – 5,753

Fixed interest rate instruments 3 1,076 (31) 1,045

Total 6,829 (31) 6,798

2010

Non-interest bearing – 6,213 – 6,213

Fixed interest rate instruments 5 1,171 (56) 1,115

Total 7,384 (56) 7,328

COMPANY

2011

Non-interest bearing – 16,554 – 16,554

2010

Non-interest bearing – 13,234 – 13,234

Non-derivative financial liabilities

The following tables detail the remaining contractual maturity for non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group and Company can be required to pay. The table includes both interest and principal cash flows. The adjustment column represents the possible future cash flows attributable to the instrument included in the maturity analysis which is not included in the carrying amount of the financial liability on the statement of financial position.

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4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (Continued)

(b) Financial risk management policies and objectives (Continued)

(v) Liquidity risk management (Continued)

Liquidity and interest risk analysis (Continued)

Non-derivative financial liabilities (Continued)

Weighted

average

effective

interest rate

On

demand

or within

1 year

Within

2 to

5 years

More

than

5 years Adjustment Total

% US$’000

(restated)

US$’000

(restated)

US$’000 US$’000 US$’000

GROUP

2011

Non-interest bearing – 5,076 – – – 5,076

Finance lease liability (fixed rate) 4.4 436 311 32 (236) 543

Variable interest rate instruments 4.3 7,567 – – (323) 7,244

Fixed interest rate instruments 2.1 1,035 – – (21) 1,014

Total 14,114 311 32 (580) 13,877

2010

Non-interest bearing – 6,053 – – – 6,053

Finance lease liability (fixed rate) 4.3 90 722 51 (120) 743

Variable interest rate instruments 6 3,937 – – (223) 3,714

Fixed interest rate instruments 3.7 448 – – (22) 426

Total 10,528 722 51 (365) 10,936

2009

Non-interest bearing – 5,572 – – – 5,572

Finance lease liability (fixed rate) 6 265 619 – (135) 749

Variable interest rate instruments 6 430 – – (24) 406

Fixed interest rate instruments 5.4 501 – – (26) 475

Total 6,768 619 – (185) 7,202

COMPANY

2011

Non-interest bearing – 1,404 – – – 1,404

Finance lease liability (fixed rate) 4.4 81 236 22 (36) 303

Variable interest rate instruments 4.1 6,971 – – (290) 6,681

Fixed interest rate instruments 2.1 1,035 – – (21) 1,014

Total 9,491 236 22 (347) 9,402

2010

Non-interest bearing – 2,180 – – – 2,180

Finance lease liability (fixed rate) 4.3 58 264 51 (51) 322

Variable interest rate instruments 2.1 2,965 – – (61) 2,904

Fixed interest rate instruments 3.7 448 – – (22) 426

Total 5,651 264 51 (134) 5,832

2009

Non-interest bearing – 5,375 – – – 5,375

Finance lease liability (fixed rate) 2 27 56 – (5) 78

Variable interest rate instruments 2 414 – – (8) 78

Fixed interest rate instruments 5.4 501 – – (26) 475

Total 6,317 56 – (55) 6,334

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PAGE 71

4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (Continued)

(b) Financial risk management policies and objectives (Continued)

(vi) Fair values of financial assets and financial liabilities

The carrying amounts of cash and cash equivalents, trade and other current receivables and payables, bank borrowing, and other liabilities approximate their respective fair values due to the relatively short-term maturity of these financial instruments. The fair values of other classes of financial assets and liabilities are disclosed in the respective notes to financial statements.

The fair values of financial assets and financial liabilities are determined as follows:

• the fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices; and

• the fair value of other financial assets and financial liabilities are determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions and dealer quotes for similar instruments.

The Group classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputs using in making the measurement. The fair value hierarchy has the following levels:

• Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived prices).

• Level 3 – Inputs for the asset and liability that are not based on observable market data (unobservable inputs).

Financial assets measured at fair value at June 30, 2011:

GROUP AND COMPANY

Level 1

US$’000

Available-for-sale-investments – Quoted equity shares (Note 12) 39

(c) Capital risk management policies and objectives

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance and to ensure that all externally imposed capital requirements are complied with.

The capital structure of the Group consists of equity attributable to owners, comprising of share capital, reserves and accumulated profits as presented in the Group’s statement of changes in equity.

The Group reviews its capital structure periodically. It balances its overall capital structure through the payment of dividends and new share issues as well as the issue of new debt or the redemption of existing debt.

The Group’s overall strategy remains unchanged from 2010.

Page 74: KODA Ltd 2011 Annual Report

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2011

5 RELATED PARTY TRANSACTIONS

Related parties are entities with common direct or indirect shareholders and/or directors. Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions.

Some of the Group’s transactions and arrangements are with related parties and the effects of these on the basis determined between the parties are reflected in these financial statements. The balances are unsecured, interest-free and repayable on demand unless stated otherwise.

Significant related party transactions are as follows:

GROUP

2011 2010

US$’000 US$’000

Disposal of investment in Koda Wood to a director of the Company (Note 12) 465 –

Compensation of directors and key management personnel

The remuneration of directors and other members of key management during the year are as follows:

GROUP

2011 2010

US$’000 US$’000

Short-term benefits 1,054 1,085

Post-employment benefits 44 39

The remuneration of directors and key management is determined by the board of directors having regard to the performance of the Group and individuals.

6 CASH AND CASH EQUIVALENTS

GROUP COMPANY

2011 2010 2011 2010

US$’000 US$’000 US$’000 US$’000

Cash at bank 3,402 3,367 177 728

Cash on hand 42 43 28 19

Cash and bank balances 3,444 3,410 205 747

Less: Bank overdrafts (Note 22) (290) – (248) –

Cash and cash equivalents (overdrawn)

in the statement of cash flows 3,154 3,410 (43) 747

Cash at bank includes short-term deposits with an original maturity of three months or less amounting to US$1,045,000 (2010: US$1,115,000) for the Group which bear effective interest at an average rate of 3% (2010: 1% to 5%) per annum.

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PAGE 73

7 TRADE RECEIVABLES

GROUP COMPANY

2011 2010 2011 2010

US$’000 US$’000 US$’000 US$’000

Outside parties 2,884 3,440 2,608 3,028

Subsidiaries (Note 10) – – 6,959 2,842

Related parties (Note 5) – 20 – 20

2,884 3,460 9,567 5,890

The average credit period on sale of goods is 30 days (2010: 30 days). No interest is charged on the trade receivables.

Trade receivables are provided for based on estimated irrecoverable amounts from the sale of goods, determined by reference to past default experience.

Before accepting any new customer, the Group will assess the potential customer’s credit quality and defines credit limits by customer. Limits attributed to customers are reviewed periodically.

In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is disclosed in Note 4(b)(iv) to the financial statements.

Accordingly, management believes that there is no credit provision required based on review in 2011.

The table below is an analysis of trade receivables as at the end of reporting period:

GROUP COMPANY

2011 2010 2011 2010

US$’000 US$’000 US$’000 US$’000

Not past due and not impaired 2,496 3,054 9,360 5,695

Past due but not impaired (i) 388 406 207 195

Total 2,884 3,460 9,567 5,890

(i) Aging of receivables that are past due but not impaired

<6 months 346 393 165 186

6 months to 9 months 38 4 38 1

9 months to 12 months 3 2 3 2

>12 months (ii) 1 7 1 6

388 406 207 195

(ii) Due from long standing customers with no clear indicators of past credit default experience.

Page 76: KODA Ltd 2011 Annual Report

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2011

8 OTHER RECEIVABLES

GROUP COMPANY

2011 2010 2011 2010

US$’000 US$’000 US$’000 US$’000

Subsidiaries (Note 10) – – 6,636 6,536

Related parties (Note 5) 63 23 45 17

Deposits 293 369 20 23

Deposit for investment [Note 36(a)] 887 – 887 –

Prepayments 1,174 1,126 142 118

Value added tax recoverable 1,223 1,443 – –

Others 114 66 81 21

3,754 3,027 7,811 6,715

9 INVENTORIES

GROUP COMPANY

2011 2010 2011 2010

US$’000 US$’000 US$’000 US$’000

Raw materials 5,150 6,855 27 9

Work in progress 3,716 2,130 – –

Finished goods 2,615 3,029 403 482

Total 11,481 12,014 430 491

Inventories of US$1,918,000 (2010: US$216,000) were recognised in the profit or loss in respect of write-downs of inventories to net realisable value due to slow-moving inventories in the weak market conditions.

10 INVESTMENT IN SUBSIDIARIES

COMPANY

2011 2010

US$’000 US$’000

Unquoted equity shares, at cost 12,335 12,299

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PAGE 75

10 INVESTMENT IN SUBSIDIARIES (Continued)

The balances with subsidiaries are unsecured, interest-free and repayable on demand.

Details of the subsidiaries are described below:

Subsidiaries

Proportion of ownership interest and

voting power heldPrincipal activities and country of incorporation/operations

2011 2010

% %

Jatat Furniture Industries Sdn Bhd(1) 100 100 Timber merchants and manufacturers, exporters, wholesalers and retailers of furniture (Malaysia)

Koda International Ltd(1) 100 100 Production of wooden furniture, steel furniture, inlaying of marble on wood and interior decoration (Vietnam)

Koda Vietnam Co., Ltd(1) 100 100 Production of wooden furniture, steel furniture, inlaying of marble on wood and interior decoration (Vietnam)

Koda Woodcraft Sdn Bhd(1) 100 100 Timber merchants and manufacturers, exporters, wholesalers and retailers of furniture (Malaysia)

Rossano Design Co., Ltd(1) 70 70 Fabrication and leather upholstery of furniture (Vietnam)

Devon Lifestyle Co., Ltd(2) 100 100 Wholesale and distribution of furniture (New Zealand)

Koda Furniture Dongguan Co., Ltd(3) 100 100 Manufacturing and export of furniture (China)

Richin Furniture Deor Pte Ltd 70 70 Investment holding (Singapore)

Outdoor Living Pte Ltd 100 100 Investment holding (Singapore)

Koda Indochine Co., Ltd(1) 100 100 Dormant (Vietnam)

Koda Saigon Co., Ltd(1) 100 100 Production of wooden furniture, steel furniture, inlaying of marble on wood and interior decoration (Vietnam)

NOTE ON AUDITORS:

The above subsidiaries are audited by Deloitte & Touche LLP Singapore except for the subsidiaries that are indicated below:

(1) Audited by overseas practices of Deloitte Touche Tohmatsu.

(2) Audited by Gilligan Sheppard Ltd, New Zealand (“GSL”).

(3) Audited by Dongguan City Dong Cheng Certified Public Accountants, China (“DCDC”) .

† The Board of Directors and the Audit Committee of the Company have reviewed the firm profile of GSL and DCDC, and having considered that these are not significant subsidiaries, the Board of Directors and the Audit Committee are satisfied that their appointment would not compromise the standard and effectiveness of the audit of the Group.

The net assets of each subsidiary referred to in (2) and (3) above are less than 20% of the net assets of the Group as at the end of the reporting period.

Page 78: KODA Ltd 2011 Annual Report

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2011

11 GOODWILL

GROUP

2011 2010

US$’000 US$’000

At cost 728 728

The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired.

The recoverable amount of the cash generating unit (CGU), Rossano Design Co., Ltd, is determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the period. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGU. The growth rates are based on industry growth forecasts. Changes in selling prices and direct costs are based on past practices and expectation of future changes in the market.

The Group prepares cash flow forecasts derived from the most recent financial budgets approved by management and extrapolates cash flows for the following three years based on an estimated growth rate of 40% (2010: 30%) in the first year and 15% (2010: 15%) per annum for the next two years after which a zero growth rate assumption was used.

The rate used to discount the forecasted cash flows from the above is 10% (2010: 10%).

12 AVAILABLE-FOR-SALE INVESTMENTS

GROUP AND COMPANY

2011 2010

US$’000 US$’000

Unquoted equity shares, at cost:

Koda Wood Industries Pte Ltd – 465

Quoted equity shares, at fair value 39 31

39 496

Less: Allowance for impairment – –

39 496

In 2010, the unquoted equity shares represented a 19.9% equity interest in Koda Wood Industries Pte Ltd (“Koda Wood”), an entity incorporated in Singapore. A director of the Company held the remaining 80.1% equity interest in Koda Wood. The Company had an option to acquire the remaining 80.1% equity interest from the director. The fair value of the unquoted equity shares in Koda Wood held by the Group could not be reliably measured and accordingly, the investment in these shares was stated at cost, less impairment if any.

During the financial year, the investment in Koda Wood was disposed to the above-mentioned director of the Company for US$465,000.

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PAGE 77

13 CLUB MEMBERSHIPS

GROUP COMPANY

2011 2010 2011 2010

US$’000 US$’000 US$’000 US$’000

Club memberships, at cost 280 280 192 192

Impairment loss (69) (69) – –

211 211 192 192

Movement in impairment loss:

Balance at beginning and end of year 69 69 – –

14 PROPERTY, PLANT AND EQUIPMENT

Freehold

land

Leasehold

land and

buildings

Plant

and

machinery

Office

equipment

Motor

vehicles

Construction-

in-progress Total

US$’000 US$’000

(restated)

US$’000 US$’000 US$’000 US$’000 US$’000

GROUP

Cost or valuation:

At July 1, 2008 1,315 8,350 6,450 1,157 980 1,990 20,242

Currency realignment (91) (228) (222) (40) (8) – (589)

Additions – 189 806 146 24 78 1,243

Transfer – 1,853 119 18 – (1,990) –

Transfer from prepayment – 1,242 – – – – 1,242

Disposals – (1,545) (92) (13) (22) – (1,672)

At July 1, 2009 1,224 9,861 7,061 1,268 974 78 20,466

Currency realignment 100 209 131 (2) (3) (7) 428

Additions – 46 570 125 556 1,192 2,489

Transfer – – 200 – – (200) –

Transfer from prepayment – 43 – – – – 43

Disposals – (4) (183) (42) (309) – (538)

At June 30, 2010 1,324 10,155 7,779 1,349 1,218 1,063 22,888

Currency realignment 100 224 (84) 187 339 (51) 715

Additions – 9 615 78 89 389 1,180

Transfer – 1,213 – – – (1,213) –

Transfer from prepayment – 31 – – – – 31

Disposals – (49) (6) (2) (44) – (101)

At June 30, 2011 1,424 11,583 8,304 1,612 1,602 188 24,713

Page 80: KODA Ltd 2011 Annual Report

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2011

14 PROPERTY, PLANT AND EQUIPMENT (Continued)

Freehold

land

Leasehold

land and

buildings

Plant

and

machinery

Office

equipment

Motor

vehicles

Construction-

in-progress Total

US$’000 US$’000

(restated)

US$’000 US$’000 US$’000 US$’000 US$’000

GROUPComprising:

June 30, 2011:

At cost 499 8,959 8,304 1,612 1,602 188 21,164

At valuation 925 2,624 – – – – 3,549

1,424 11,583 8,304 1,612 1,602 188 24,713

June 30, 2010:

At cost 464 7,666 7,779 1,349 1,218 1,063 19,539

At valuation 860 2,489 – – – – 3,349

1,324 10,155 7,779 1,349 1,218 1,063 22,888

June 30, 2009:

At cost 461 6,855 7,061 1,268 974 78 16,697

At valuation 763 3,006 – – – – 3,769

1,224 9,861 7,061 1,268 974 78 20,466

Accumulated depreciation:

At July 1, 2008 – 2,333 3,987 712 372 – 7,404

Currency realignment – (54) (163) (25) (3) – (245)

Depreciation – 355 443 108 104 – 1,010

Disposals – (191) (78) (6) (10) – (285)

At July 1, 2009 – 2,443 4,189 789 463 – 7,884

Currency realignment – 42 5 21 15 – 83

Depreciation – 382 559 142 125 – 1,208

Disposals – (1) (110) (40) (171) – (322)

At June 30, 2010 – 2,866 4,643 912 432 – 8,853

Currency realignment – 78 295 75 2 – 450

Depreciation – 360 609 143 176 – 1,288

Disposals – (49) – – (44) – (93)

At June 30, 2011 – 3,255 5,547 1,130 566 – 10,498

Carrying amount:

At June 30, 2011 1,424 8,328 2,757 482 1,036 188 14,215

At June 30, 2010 1,324 7,289 3,136 437 786 1,063 14,035

At June 30, 2009 1,224 7,418 2,872 479 511 78 12,582

Freehold land, leasehold land and buildings of certain subsidiaries were revalued by independent valuer not connected to the Group, Jones Lang Wootton, by reference to market evidence of recent transactions for similar properties as at June 30, 2008. The revaluation resulted in an increase in the carrying value, revaluation surplus and deferred tax liabilities of US$249,000, US$191,000 and US$58,000 respectively. The valuation confirms to International Valuation Standards.

Subsequent to the financial year end, the Group obtained an updated valuation of these properties as at June 30, 2011 by the same independent valuer and there were no significant differences in the carrying amounts of these properties from June 30, 2011.

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14 PROPERTY, PLANT AND EQUIPMENT (Continued)

At June 30, 2011, had the freehold land and leasehold land and buildings been carried at cost less accumulated depreciation and accumulated impairment losses, their carrying amounts would have been approximately US$1,312,000 (2010: US$1,260,000, 2009: US$1,291,000).

The Group has buildings and motor vehicles with carrying amounts of US$1,018,000 and US$453,000 respectively (2010: US$1,081,000 and US$465,000, 2009: US$1,391,000 and US$115,000) under finance lease agreements (Note 21).

Leaseholdbuilding

Plant andmachinery

Officeequipment

Motorvehicles Total

US$’000 US$’000 US$’000 US$’000 US$’000

COMPANYCost or valuation: At July 1, 2009 762 1,309 426 686 3,183 Additions 1 4 23 460 488 Disposals (4) (60) (1) (253) (318)

At June 30, 2010 759 1,253 448 893 3,353 Additions 3 29 20 – 52 Disposals – – (2) – (2)

At June 30, 2011 762 1,282 466 893 3,403

Comprising: June 30, 2011: Cost 5 1,282 466 893 2,646 Valuation 757 – – – 757

Total 762 1,282 466 893 3,403

June 30, 2010: Cost 2 1,253 448 893 2,596 Valuation 757 – – – 757

Total 759 1,253 448 893 3,353

Accumulated depreciation: At July 1, 2009 749 1,027 350 322 2,448 Depreciation 10 41 25 56 132 Disposals (1) (1) – (152) (154)

At June 30, 2010 758 1,067 375 226 2,426 Depreciation – 45 24 80 149 Disposals – – – – –

At June 30, 2011 758 1,112 399 306 2,575

Carrying amount: At June 30, 2011 4 170 67 587 828

At June 30, 2010 1 186 73 667 927

The leasehold building of the Company is stated at directors’ valuation as at June 30, 1983 based on the professional valuation made by Messrs Associated Property Consultants Pte Ltd in November 1981. Regular revaluations have not subsequently been performed on the leasehold building as the directors’ valuation was performed prior to January 1, 1984.

At June 30, 2011, had the leasehold building been carried at cost less accumulated depreciation and accumulated impairment losses, the carrying amount would have been US$Nil (2010: US$Nil).

The Company has motor vehicles with carrying amounts of US$413,000 (2010: US$465,000) under finance lease agreements (Note 21).

Page 82: KODA Ltd 2011 Annual Report

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2011

15 INVESTMENT PROPERTIES

GROUP

2011 2010 2009

US$’000 US$’000

(restated)

US$’000

(restated)

At fair value

At beginning of year (restated) 664 690 690

Currency realignment 22 (26) –

At end of year 686 664 690

The fair values of the Group’s investment properties comprising leasehold land and buildings of a subsidiary were revalued by an independent valuer not connected with the Group, Jones Lang Wootton, by reference to market evidence of recent transactions for similar properties as at June 30, 2008. The valuation conforms to International Valuation Standards.

Subsequent to the financial year end, the Group obtained an updated valuation of these properties as at June 30, 2011 by the same independent valuer and there were no significant differences in the carrying amounts of these properties from June 30, 2011.

The property rental income from the Group’s investment properties all of which are leased out under operating leases, amounted to US$64,000 (2010: US$59,000, 2009: US$57,000). No significant direct operating expenses (including repairs and maintenance) were incurred on the rental-generating investment properties.

16 INTANGIBLE ASSET

GROUP

2011 2010

US$’000 US$’000

Cost:

Balance at beginning of year 395 393

Currency realignment 3 2

Balance at end of year 398 395

Accumulated amortisation:

Balance at beginning of year 41 20

Charge to profit or loss 23 21

Balance at end of year 64 41

Impairment:

Charge to profit or loss and balance at end of year 167 –

Carrying amount:

At end of year 167 354

At beginning of year 354 373

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PAGE 81

16 INTANGIBLE ASSET (Continued)

In 2008, the Group acquired the “Devon” brand name from an investee for a purchase consideration of NZ$602,000 (then equivalent to US$461,000). The brand name is amortised over the estimated useful life of 20 years.

During the year, the Group carried out an impairment review of the recoverable amount of the intangible asset due to weak market conditions. The intangible asset is included in the Group’s outdoor and garden furniture segment. The Group estimates the recoverable amount using discounted cash flow projections for 5 years forecasts derived from the most recent financial budget approved by management based on an estimated growth rate of 10% (2010: 30%) in the first two years and 5% (2010: 10%) per annum for the next three years after which a zero growth rate assumption was used. The review resulted in an impairment loss of US$167,000 (Note 27) recognised in profit or loss. The recoverable amount of the intangible asset has been determined on the basis of value in use. The discount rate used in determining value in use was 8% (2010: 8%).

17 DEFERRED TAX ASSETS (LIABILITIES)

GROUP COMPANY

2011 2010 2011 2010

US$’000 US$’000 US$’000 US$’000

Deferred tax assets:

Balance at beginning of year 208 133 3 3

Credit to profit or loss (Note 29) 149 94 – –

Currency realignment (9) (19) – –

Balance at end of year 348 208 3 3

Deferred tax liabilities:

Balance at beginning and end of year (58) (58) – –

Net 290 150 3 3

The balance comprises mainly the tax effect of:

GROUP COMPANY

2011 2010 2011 2010

US$’000 US$’000 US$’000 US$’000

Tax loss carry forwards 348 208 3 3

Revaluation of property (58) (58) – –

Net 290 150 3 3

Page 84: KODA Ltd 2011 Annual Report

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2011

18 BILLS PAYABLES

The bank facilities of the Company with a balance of US$4,304,000 (2010: US$2,904,000) as at the end of reporting period are secured by a negative pledge on the Company’s assets. In 2010, the legal mortgage on the Company’s leasehold building was discharged as the lease will expire in November 2013.

The bank facilities of subsidiaries with a balance of US$521,000 (2010: US$810,000) as at the end of reporting period are secured by a legal mortgage on the subsidiaries’ leasehold land and buildings with carrying amounts of US$2,313,000 (2010: US$2,248,000) and guaranteed by the Company. Management has assessed that the fair value of the financial guarantee provided by the Company is not material and accordingly, has not accounted for the financial guarantee fee in the financial statements.

The above credit facilities bear interest at floating rates ranging from 1% to 6% (2010: 1.20% to 5%) per annum.

19 TRADE PAYABLES

GROUP COMPANY

2011 2010 2011 2010

US$’000 US$’000 US$’000 US$’000

Subsidiaries (Note 10) – – 62 413

Outside parties 2,568 3,614 365 559

2,568 3,614 427 972

The average credit period on purchases of goods is 30 days (2010: 30 days). No interest is charged on the trade payables.

20 OTHER PAYABLES

GROUP COMPANY

2011 2010 2011 2010

US$’000 US$’000 US$’000 US$’000

Accrued expenses 1,361 1,300 284 264

Refundable deposits received 860 1,065 648 913

Others 287 74 45 31

2,508 2,439 977 1,208

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PAGE 83

21 OBLIGATIONS UNDER FINANCE LEASES

GROUP COMPANY

Minimum lease

payments

Present value of

minimum lease

payments

Minimum lease

payments

Present value of

minimum lease

payments

2011 2010 2011 2010 2011 2010 2011 2010

US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

Amounts payable under finance leases:

Within one year 322 128 308 86 81 70 68 56

In the second to fifth years inclusive 266 662 213 617 236 254 214 226

After five years 22 42 22 40 22 42 21 40

610 832 543 743 339 366 303 322

Less: Future finance charges (67) (89) – – (36) (44) – –

Present value of lease obligations 543 743 543 743 303 322 303 322

Less: Amount due for settlement

within 12 months (shown under

current liabilities) (308) (86) (68) (56)

Amount due for settlement after

12 months 235 657 235 266

It is the Group’s policy to lease certain of its buildings and motor vehicles under finance leases. The average lease term is 7 to 10 years (2010: 7 to 10 years). For the year ended June 30, 2011, the average effective borrowing rate was 4% to 5% (2010: 4% to 5%) per annum for the Group and the Company. Interest rates are fixed at the contract date, and thus expose the Group to fair value interest rate risk. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

The Group’s and Company’s obligations under finance leases are secured by the lessors’ charge over the leased assets. The fair value of the Group’s and Company’s obligations approximates their carrying amount.

22 BANK LOANS AND OVERDRAFTS

GROUP COMPANY

2011 2010 2009 2011 2010 2009

US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

Bank overdrafts 290 – – 248 – –

Bank loans 3,143 426 475 3,143 426 475

3,433 426 475 3,391 426 475

Bank overdrafts are repayable on demand. Bank overdrafts of US$42,000 are secured by a floating charge over a subsidiary’s undertaking. The average effective interest rate on bank overdrafts is approximately 1% to 2% per annum.

Page 86: KODA Ltd 2011 Annual Report

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2011

22 BANK LOANS AND OVERDRAFTS (Continued)

The Group and the Company has the following principal bank loans:

(a) a loan of US$1,011,000 repayable over 36 monthly instalments of US$36,000 each, commencing November 2010 and will continue until October 2013. The loan is unsecured and bears interest at 1% per annum above the Singapore Inter-Bank Offer Rate. The effective interest rate for the year was 1.3% per annum.

(b) a loan of US$1,332,000 (2010: US$331,000; 2009: US$Nil). The loan is repayable over 36 monthly instalments of US$42,000 each, commencing April 2010 and will continue until May 2013. The loan is unsecured and comprises US$1,118,000 which bears interest at 1.25% per annum above the Singapore Inter-Bank Offer Rate and the effective interest rate for the year was 1.6% per annum, and US$214,000 (2010: US$331,000; 2009: US$Nil) which bears fixed interest of 3.7% (2010: 3.7%; 2009: Nil%) per annum.

(c) a loan of US$Nil (2010: US$95,000; 2009: US$475,000). The loan is repayable over 60 monthly instalments of US$31,667 each, commencing September 2005. The bank loan as at end of reporting period is secured by a negative pledge on the Company’s assets. The legal mortgage on the Company’s leasehold building was discharged in the previous financial year as the lease will expire in November 2013. In 2010, the loan bears interest at 5.4% (2009: 5.4%) per annum for the first 3 years and 1.5% per annum above the Singapore Inter-Bank Offer Rate for subsequent years. In 2010, the effective interest rate was 5.4% (2009: 5.4%) per annum. The loan was repaid during the year.

(d) a loan of US$800,000 repayable over 3 instalments of US$150,000, US$150,000 and US$500,000 by November 2011. The loan is unsecured and bears fixed interest at 1.6% per annum.

Subsequent to the outcome of an International Financial Reporting Standards Interpretations Committee discussion in November 2010 regarding the classification of callable term loans, the Group has clarified the terms of certain loan facilities with its banks and considered that it would be more appropriate that these loans be classified as “current”. Accordingly, the Group has also restated the classification of its borrowings for the prior periods.

23 SHARE CAPITAL

GROUP AND COMPANY

2011 2010 2011 2010

Number of ordinary shares US$’000 US$’000

Issued and paid up:

At beginning of year and at end of year 133,690,000 133,690,000 4,040 4,040

Fully paid ordinary shares, which have no par value, carry one vote per share and carry a right to dividends as and when declared by the Company.

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PAGE 85

24 CAPITAL RESERVES

Propertyrevaluation

reserve

Investmentsrevaluation

reserveOther

reserve Total

US$’000

(restated)

US$’000 US$’000 US$’000

GROUP

Balance at July 1, 2009 451 (41) 1,985 2,395

Gain on available-for-sale investments – 13 – 13

Balance at June 30, 2010 451 (28) 1,985 2,408

Gain on available-for-sale investments – 8 – 8

Balance at June 30, 2011 451 (20) 1,985 2,416

As disclosed in Note 37 to the financial statements, certain leasehold land and buildings meet the definition of investment property under FRS 40 Investment Property and accordingly, the property revaluation reserve relating to the leasehold land and buildings previously accounted for under FRS 16 Property, Plant and Equipment of US$202,000 were transferred to accumulated profits.

Propertyrevaluation

reserve

Investmentsrevaluation

reserveOther

reserve Total

US$’000

(restated)

US$’000 US$’000 US$’000

COMPANY

Balance at July 1, 2009 58 (41) – 17

Gain on available-for-sale investments – 13 – 13

Balance at June 30, 2010 58 (28) – 30

Gain on available-for-sale investments – 8 – 8

Balance at June 30, 2011 58 (20) – 38

The property revaluation reserve arises on the revaluation of land and buildings.

The investments revaluation reserve arises on the revaluation of available-for-sale financial assets.

Other reserve represents the capitalisation of accumulated profits of a subsidiary.

25 REVENUE

This represents the invoiced value of goods sold.

Page 88: KODA Ltd 2011 Annual Report

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2011

26 OTHER INCOME

GROUP

2011 2010

US$’000 US$’000

Rental income 205 180

Interest income on bank balances 132 157

Exchange gain 305 182

Gain on disposal of property, plant and equipment 7 –

Others 19 87

668 606

27 OTHER EXPENSES

GROUP

2011 2010

US$’000 US$’000

Bad debt written off – related party – 75

Allowance for inventories 1,918 216

Impairment of intangible asset (Note 16) 167 –

Loss on disposal of property, plant and equipment – 13

Others 134 25

2,219 329

28 FINANCE COSTS

GROUP

2011 2010

US$’000 US$’000

Interest expense on:

Bank loans 44 34

Finance leases 41 49

Bills payable 66 9

151 92

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PAGE 87

29 INCOME TAX

GROUP

2011 2010

US$’000 US$’000

Current tax:

Singapore – –

Foreign 26 53

Deferred tax (149) (94)

Overprovision of current tax in prior years (65) (75)

Income tax (188) (116)

Domestic income tax is calculated at 17% (2010: 17%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions except as disclosed below.

Koda International Ltd is incorporated in Vietnam and assessable income generated from the investment made by the Company pursuant to the subsidiary’s investment licence dated May 29, 2002 is subject to a corporate income tax rate of 10%. The subsidiary is entitled to corporate income tax exemption for four years from the first profit-making year and a reduction of 50% for the following four years. This is the subsidiary’s last year of the tax exemption period. Assessable income generated from the additional investment made pursuant to the subsidiary’s investment licence dated January 18, 2005 is subject to a corporate income tax rate of 10% for the first fifteen years and 28% thereafter. The subsidiary is also entitled to a one year tax exemption from the date the additional investment was put into operation and a 50% tax reduction for the following four years.

Koda Vietnam Co., Ltd is incorporated in Vietnam and is subjected to a corporate income tax rate of 10% on its assessable income. The income tax for the current financial year is calculated using a rate of 10% which had been enacted by the end of the reporting period.

Koda Saigon Co., Ltd is incorporated in Vietnam and is subjected to a corporate income tax rate of 15% on its assessable income for the first twelve years from the commencement of its commercial operations and 25% of the years thereafter. The subsidiary is entitled to a corporate income tax exemption for the first three years from the first profit-making year and a reduction of 50% for the following seven years. The income is exempted from income tax for the current financial year as this is the second profit-making year.

Koda Indochine Co., Ltd is incorporated in Vietnam and is subjected to a corporate income tax rate of 15% on its assessable income for the first twelve years from the commencement of its commercial operations and 25% for the years thereafter. The subsidiary is entitled to a corporate income tax exemption for the first three years from the first profit-making year and a reduction of 50% for the following seven years. There is no income tax for the current financial year as the subsidiary is still in its pre-operating stage and has no assessable income.

Rossano Design Co., Ltd is incorporated in Vietnam and assessable income generated from this subsidiary is subject to corporate income tax at the rate of 15%.

Page 90: KODA Ltd 2011 Annual Report

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2011

29 INCOME TAX (Continued)

The total charge (credit) for the year can be reconciled to the accounting profit as follows:

GROUP

2011 2010

US$’000 US$’000

(Loss) Profit before income tax (3,340) 179

Tax (benefit) expense at the domestic tax rate of 17% (2010: 17%) (568) 30

Tax effect of expenses that are not deductible in determining taxable profit 97 196

Effect of concessionary tax rate – (158)

Effect of deferred tax assets not recognised 262 4

Double tax deduction (1) (11)

Effect of different tax rates of subsidiaries operating in other jurisdictions 87 (102)

Overprovision of current tax in prior years (65) (75)

Total income tax credit (188) (116)

The Company and Group have tax loss carryforwards of approximately US$3.3 million (2010: US$1.7 million). The deferred tax benefits of approximately US$561,000 (2010: US$289,000) arising from these tax loss carryforwards have not been recognised due to the unpredictability of future profit streams.

30 (LOSS) PROFIT FOR THE YEAR

GROUP

2011 2010

US$’000 US$’000

Directors’ remuneration:

Directors of the Company 683 625

Directors of the subsidiaries 193 252

Fees to directors of the Company 65 58

Employee benefits expense (including directors’ remuneration) 10,774 10,439

Costs of defined contribution plans included in employee benefits expense 746 531

Audit fees paid to:

Auditors of the Company 63 52

Auditors of the subsidiaries 75 63

Non-audit fees paid to:

Auditors of the Company 4 4

Cost of inventories recognised as expense 19,774 23,054

Government subsidy – job credits – (58)

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JUNE 30, 2011

PAGE 89

31 (LOSS) EARNINGS PER SHARE

Basic (loss) earnings per ordinary share is calculated on the Group’s loss after income tax attributable to the owners of the Company of US$2,935,000 (profit for 2010: US$271,000) divided by 133,690,000 (2010: 133,690,000) ordinary shares in issue during the financial year.

There is no dilution as no share options were granted or outstanding during the financial year.

32 DIVIDENDS

GROUP AND COMPANY

2011 2010

US$’000 US$’000

Final dividend of 0.5 (2010: 0.5) Singapore cents per share in respect of previous financial year 513 478

Subsequent to the end of the financial year, the directors of the Company recommended that a final dividend be paid at US$0.081 cents (equivalent to 0.1 Singapore cents) per ordinary share in respect of the current financial year. The proposed dividends amounting to US$108,000 are not accrued as a liability for the current financial year in accordance with FRS 10 Events After the end of the reporting period.

33 SEGMENT INFORMATION

Business segments

The Group determines its operating segments based on internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess their performance.

The Group is organised into business units based on their products on which information is prepared and reportable to the Group’s chief operating decision maker for the purposes of resources allocation and assessment of performance.

The Group is principally engaged in four reportable segments, namely “chairs and tables”, “outdoor and garden furniture”, “bedroom furniture” and “occasional and other furniture”.

Page 92: KODA Ltd 2011 Annual Report

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2011

33 SEGMENT INFORMATION (Continued)

Business segments (Continued)

Information regarding the Group’s reporting segments is presented below.

(i) Segment revenue and results

The following is an analysis of the Group’s revenue and results by reportable segment:

Segment revenue Segment profit/(loss)

Year ended

June 30, 2011

Year ended

June 30, 2010

Year ended

June 30, 2011

Year ended

June 30, 2010

US$’000 US$’000 US$’000 US$’000

Chairs and tables 29,263 33,225 (3,249) 70

Outdoor and garden furniture 1,606 1,578 66 (164)

Bedroom furniture 1,332 1,227 (55) (19)

Occasional and other furniture 7,749 8,235 (318) 107

Total 39,950 44,265 (3,556) (6)

Finance costs (151) (92)

Other income 668 606

Other expenses (301) (329)

(Loss) Profit before tax (3,340) 179

Income tax 188 116

Consolidated (loss) profit for the year (3,152) 295

Non-controlling interests 217 (24)

(Loss) Profit attributable to owners holders of

the Company (2,935) 271

Revenue reported above represents revenue generated from external customers. There were no inter-segment sales in the year.

The accounting policies of the reportable segments are the same as the Group’s accounting policies described in Note 2. Segment profit/loss represents the profit/loss of each segment without allocation of finance costs, other operating income, other expenses, and income tax. This is the measure reported to the chief decision maker for the purposes of resource allocation and assessment of segment performance.

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PAGE 91

33 SEGMENT INFORMATION (Continued)

Business segments (Continued)

(ii) Segment assets and liabilities

Year ended

June 30, 2011

Year ended

June 30, 2010

US$’000 US$’000

Segment assets

Chairs and tables 23,413 24,074

Outdoor and garden furniture 1,285 1,143

Bedroom furniture 1,066 891

Occasional and other furniture 6,200 5,967

Total segment assets 31,964 32,075

Unallocated 5,935 6,474

Consolidated assets 37,899 38,549

Segment liabilities

Chairs and tables 3,718 4,543

Outdoor and garden furniture 204 216

Bedroom furniture 169 168

Occasional and other furniture 985 1,126

Total segment liabilities 5,076 6,053

Unallocated 8,801 4,883

Consolidated liabilities 13,877 10,936

For the purchase of monitoring segment performance and allocating resources between segments, the chief operating decision maker monitors the tangible, intangible and financial assets attributable to each segment.

All assets are allocated to reportable segments other than “other financial assets and tax assets”. Assets used jointly by reportable segments are allocated on the basis of the revenues earned by individual reportable segments.

Page 94: KODA Ltd 2011 Annual Report

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2011

33 SEGMENT INFORMATION (Continued)

Business segments (Continued)

(iii) Other segment information

Depreciation and amortisation Additions to non-current assets

Year ended

June 30, 2011

Year ended

June 30, 2010

Year ended

June 30, 2011

Year ended

June 30, 2010

US$’000 US$’000 US$’000 US$’000

Chairs and tables 960 907 864 1,868

Outdoor and garden furniture 53 64 47 89

Rattan furniture 44 33 39 69

Bedroom furniture 254 225 230 463

Occasional and other furniture 1,311 1,229 1,180 2,489

In addition to the depreciation and amortisation reported above, impairment loss of US$167,000 (2010: Nil) in respect of intangible asset and allowance for inventories of US$1,918,000 (2010: US$216,000) were attributable to the “Outdoor and garden furniture” and “Chairs and tables” segments respectively.

(iv) Geographical information

The Group’s revenue from external customers and information about its segment assets (non-current assets including only property, plant and equipment and intangible asset) by geographical location are detailed below:

Revenue from external customers Non-current assets

Year ended

June 30, 2011

Year ended

June 30, 2010

Year ended

June 30, 2011

Year ended

June 30, 2010

US$’000 US$’000 US$’000 US$’000

United States of America 16,198 19,181 – –

United Kingdom 9,164 7,871 – –

Vietnam 3,097 3,786 8,356 8,408

Canada 1,651 1,963 – –

New Zealand 344 1,751 208 396

Australia 2,899 1,664 – –

Spain 1,485 1,131 – –

Korea 1,314 1,122 – –

Others 3,798 5,796 5,818 5,585

39,950 44,265 14,382 14,389

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NOTES TO FINANCIAL STATEMENTS

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PAGE 93

33 SEGMENT INFORMATION (Continued)

Business segments (Continued)

(v) Information about major customers

Included in revenues arising from sales of chairs and table of US$29,263,000 (2010: US$33,225,000), (see Note 33 (i) above) are revenues of approximately US$9,001,000 (2010: US$5,444,000) which arose from sales to Group’s largest customer.

34 CONTINGENT LIABILITIES

GROUP

2011 2010

US$’000 US$’000

Bank guarantees (unsecured) 245 213

35 OPERATING LEASE ARRANGEMENTS

The Group as lessee

GROUP COMPANY

2011 2010 2011 2010

US$’000 US$’000 US$’000 US$’000

Minimum lease payments under operating leases

recognised as an expense in the year 1,343 1,236 138 110

At the end of the reporting period, the commitments in respect of non-cancellable operating leases for the rental of office premises were as follows:

GROUP COMPANY

2011 2010 2011 2010

US$’000 US$’000 US$’000 US$’000

Future minimum lease payments payable:

Within one year 1,369 1,101 132 122

In the second to fifth year inclusive 3,608 3,281 186 296

After five years 1,050 1,560 – –

Total 6,027 5,942 318 418

Operating lease payments represent the Group’s obligations in relation to rental payable for average contractual periods of 5 to 48 years and rentals are fixed for the duration of the contractual periods.

Page 96: KODA Ltd 2011 Annual Report

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2011

35 OPERATING LEASE ARRANGEMENTS (Continued)

The Group as lessor

GROUP COMPANY

2011 2010 2011 2010

US$’000 US$’000 US$’000 US$’000

Rental income under operating lease 205 180 141 121

At the end of the reporting period, the Group has contracted with tenants for the following future minimum lease receivables.

GROUP COMPANY

2011 2010 2011 2010

US$’000 US$’000 US$’000 US$’000

Future minimum lease payments receivable:

Within one year 204 175 145 121

In second to fifth year inclusive 144 149 15 149

348 324 160 270

36 EVENTS AFTER THE REPORTING PERIOD

(a) On July 7, 2011, the Company announced that it had successfully completed the acquisition of a 51% equity interest in Metrolink International Ltd and its subsidiaries (the “Metrolink Group”) for a total purchase consideration of US$2.6 million comprising cash consideration of US$2.2 million (of which US$887,000 was paid as at June 30, 2011) and issuance of 2,823,800 ordinary shares (the “Consideration Shares”) in the share capital of the Company at a price of S$0.185 per Consideration Share, fully paid, subject to adjustments to the fair value of assets acquired and liabilities assumed on acquisition date. Following the acquisition, the number of issued and paid-up shares in the capital of the Company increased to 136,513,800 ordinary shares.

The Metrolink Group is based in the People’s Republic of China and is engaged in the manufacture and distribution of European and classical-styled sofa and other living room furniture and sells its products internationally to the United States of America, the United Kingdom and other European countries and the Middle East. The Metrolink Group has distribution and franchising network in the People’s Republic of China.

Disclosures required by the revised FRS 103 Business Combinations have not been made as the acquisition occurred close to the end of the reporting period and management is in the midst of appointing an independent and qualified professional valuer to determine the fair value of the identifiable assets, liabilities and contingent liabilities at the acquisition date.

(b) On August 2, 2011, the Company incorporated a wholly-owned subsidiary, Commúne Lifestyle Pte Ltd (“Commúne”) in Singapore. Commúne has an initial paid-up capital of S$100,000 and will be principally engaged in the retail of furniture locally.

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NOTES TO FINANCIAL STATEMENTS

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PAGE 95

37 RECLASSIFICATIONS AND COMPARATIVES

Certain reclassifications have been made to the prior year’s financial statements to enhance comparability with the current year’s financial statements as (i) certain leasehold land and buildings meet the definition of investment property in accordance with FRS 40 Investment Property and (ii) bank borrowings were reclassified to current as disclosed in Note 22 to the financial statements.

As a result, certain line items have been amended in the statement of financial position and the related notes to the financial statements. Comparative figures have been adjusted to conform to the current year’s presentation.

The effects of prior year’s adjustments on the 2010 and 2009 comparative figures are summarised as follows:

Statement of financial position

As previously

reported

Prior year’s

adjustments As restated

US$’000 US$’000 US$’000

GROUP

June 30, 2010

Property, plant and equipment 14,699 (664) 14,035

Investment properties – 664 664

Capital reserves 2,206 202 2,408

Accumulated profits 19,990 (202) 19,788

June 30, 2009

Property, plant and equipment 13,272 (690) 12,582

Investment properties – 690 690

Capital reserves 2,193 202 2,395

Accumulated profits 20,197 (202) 19,995

GROUP AND COMPANY

June 30, 2010

Bank loans and overdrafts (Current) 212 214 426

Bank loan (Non-current) 214 (214) –

June 30, 2009

Bank loans and overdrafts (Current) 380 95 475

Bank loans (Non-current) 95 (95) –

Page 98: KODA Ltd 2011 Annual Report

FREEHOLD LAND, LEASEHOLD LAND & BUILDINGS

AS AT JUNE 30, 2011

Location Size Regular Payments Expiry Lessor

Head Office & Warehouse(1) 28 Defu Lane 4 Singapore 539424

49,731 sfAnnual lease payment of

S$180,362 pa (subject to 7.6% annual increase)

2013 Housing & Development Board

Malaysia Site(2) PTD 42786 & 42787Mukim Senai-Kulai Johor, Malaysia

394,784 sf na Freehold na

Vietnam Factory(3) No. 8, Road No. 1 Tan Tao Industrial Park Binh Tan District Ho Chi Minh City Vietnam

36,300 sf nil 2047

ITACO – The Corporation for Investment Construction

Business Exploration TAN TAO Concentrate Industrial Park

Vietnam Factory(3) Lot No. 10, Street No. 1 Tan Tao Industrial Park Binh Tan DistrictHo Chi Minh City Vietnam

38,750 sf nil 2047

ITACO – The Corporation for Investment Construction

Business Exploration TAN TAO Concentrate Industrial Park

Vietnam Factory(3) No. 1, Road No. 1A Tan Tao Industrial Park Binh Tan District Ho Chi Minh CityVietnam

118,400 sfAnnual lease payment of

US$224,715 payable for 10 years from Oct 2002 to Oct 2012

2047Tan Tao Services Utilization –

Office and Warehousing Trade Co., Ltd. (TASERCO)

Vietnam Land Lot A1, A4 & A5 Thuan Dao Industrial Zone Ben Luc District Long An Province Vietnam

544,573 sf na 2053Development Investment

Joint Venture Company of Ben Luc Industrial Park

Investment Property(4) No. 18 Jalan Perindustrian Senai Industrial EstateJohor, Darul Takzim, Malaysia

87,120 sf na 2045Perbadanan Kemajuan Ekonomi Negeri Johor

1. The leasehold property located in Singapore as stated in the Company’s books is based on a professional valuation made in November 1981. For information purposes, a second professional valuation of this property was carried out by Knight Frank Pte Ltd in June 2001 which valued the property at $1.6 million. The Company, however, continues to record this leasehold property at its existing book carrying value based on the November 1981 professional valuation on the ground of prudence as the leasehold property has a remaining lease period of about 2 years as at 30 June 2011.

2. Based on professional valuation made by Messrs Jones Lang Wootton in 2011, this property was valued at RM10.0 million.

3. These properties were acquired under finance lease.

4. Based on professional valuation made by Messrs Jones Lang Wootton in 2011, this property was valued at RM2.3 million.

na not applicable

RM Ringgit Malaysia

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STATISTICS OFSHAREHOLDINGS

AS AT 16 SEPTEMBER, 2011

PAGE 97

DISTRIBUTION OF SHAREHOLDINGS

Size of Shareholdings No. of Shareholders % No. of Shares %

1 – 999 415 34.76 106,688 0.08

1,000 – 10,000 415 34.76 1,933,222 1.42

10,001 – 1,000,000 347 29.06 29,001,190 21.24

1,000,001 and above 17 1.42 105,472,297 77.26

Total 1,194 100.00 136,513,397 100.00

TWENTY LARGEST SHAREHOLDERS

No. Name No. of Shares %

1 JAMES KOH JYH GANG 27,463,053 20.12

2 KOH TENG KWEE 15,177,121 11.12

3 KOH JYH ENG 14,555,981 10.66

4 KOH SHWU LEE 13,697,712 10.03

5 KOH SHWU LING 5,777,050 4.23

6 DB NOMINEES (S) PTE LTD 5,374,000 3.94

7 TAN KIA HONG 4,524,000 3.31

8 DBS NOMINEES PTE LTD 3,281,350 2.40

9 KOH SHUH JEN 2,671,152 1.96

10 PHILLIP SECURITIES PTE LTD 2,591,200 1.90

11 CITIBANK NOMINEES SINGAPORE PTE LTD 2,443,600 1.79

12 CHAN KOK KWONG 1,694,280 1.24

13 KIM ENG SECURITIES PTE. LTD. 1,503,278 1.10

14 WEE HIAN KOK 1,272,000 0.93

15 POH IK TNG 1,200,000 0.88

16 LIM SOOK KIM 1,129,520 0.83

17 LALCHAND JETHANAND DARYANANI 1,117,000 0.82

18 CIMB SECURITIES (SINGAPORE) PTE LTD 961,000 0.70

19 TEH WING KWAN 899,640 0.66

20 THAM KWOK CHOY 830,000 0.61

No. of Shares 108,162,937 79.23

Page 100: KODA Ltd 2011 Annual Report

STATISTICS OFSHAREHOLDINGS

AS AT 16 SEPTEMBER, 2011

SUBSTANTIAL SHAREHOLDERS(as recorded in the Register of Substantial Shareholders as at 15 September 2011)

Number of Shares each fully paid

Name of Substantial Shareholder Direct Interest % Indirect Interest %

James Koh Jyh Gang 27,463,053 20.12 – –

Koh Teng Kwee 15,177,121 11.12 – –

Koh Jyh Eng(1) 14,555,981 10.66 36,000 0.03

Koh Shwu Lee(2) 13,697,712 10.03 432,000 0.32

NOTES:

(1) Mr Koh Jyh Eng’s indirect interest comprises 36,000 shares held by his wife, Mdm Wong Sau Wai.

(2) Mdm Koh Shwu Lee’s indirect interest comprises 432,000 shares held by her husband, Mr Kavin Seow Soo Yeow.

PERCENTAGE OF SHAREHOLDING HELD IN THE HANDS OF PUBLIC

As at 16 September 2011, the percentage of shareholding in the Company held in the hands of public is approximately 39.35%. At least 10% of the Company’s equity securities are held by the public at all times and the Company is in compliance with Rule 723 of the SGX-ST Listing Manual.

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NOTICE OFANNUAL GENERAL MEETING

PAGE 99

NOTICE IS HEREBY GIVEN that the Annual General Meeting of the Company will be held at The Pines, 30 Stevens Road Singapore 257840 on Friday, 28 October 2011 at 10.00 a.m. for the following purposes:

AS ORDINARY BUSINESS

1. To receive and adopt the Audited Accounts for the financial year ended 30 June 2011 together with the Reports of the Directors and the Auditors of the Company.

(Resolution 1)

2. To declare a final dividend of S$0.001 per ordinary share in respect of the financial year ended 30 June 2011. (Resolution 2)

3. To re-elect as a Director, Mr Christopher Chong Meng Tak who is retiring under Article 91 of the Company’s Articles of Association.

(Resolution 3)

Mr Christopher Chong Meng Tak will, upon re-election as a Director of the Company, remain the Chairman of the Audit Committee and a member of the Nominating and Remuneration Committee and will be considered independent of management.

4. To re-elect as a Director, Mr Koh Jyh Eng who is retiring under Article 91 of the Company’s Articles of Association. (Resolution 4)

5. To consider and, if thought fit, pass the following resolution: (Resolution 5)

“That Mr Koh Teng Kwee, who is above 70 years of age and whose office as Director shall be vacant at the conclusion of this Annual General Meeting in accordance with section 153(2) of the Companies Act, Cap 50 be and is hereby re-appointed as a Director of the Company to hold office until the next Annual General Meeting.”

6. To approve Directors’ fees of S$81,000 for the financial year ended 30 June 2011. (Resolution 6)

7. To re-appoint Messrs Deloitte & Touche LLP as the Company’s Auditors and to authorise the Directors to fix their remuneration.

(Resolution 7)

8. To transact any other business that may be transacted at an Annual General Meeting.

AS SPECIAL BUSINESS

9. To consider and, if thought fit, to pass the following resolution as an Ordinary Resolution, with or without modifications:

“That pursuant to Section 161 of the Companies Act, Cap. 50 and the listing rules of the Singapore Exchange Securities Trading Limited, authority be and is hereby given to the Directors to allot and issue:

(i) shares in the capital of the Company (whether by way of bonus, rights or otherwise); or

(ii) convertible securities; or

(iii) additional convertible securities arising from adjustments made to the number of convertible securities previously issued in the event of rights, bonus or capitalisation issues; or

(iv) shares arising from the conversion of convertible securities in (ii) and (iii) above,

at any time and upon such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fit provided that the aggregate number of shares and convertible securities to be issued pursuant to this Resolution does not exceed fifty per cent (50%) of the total number of issued shares excluding treasury shares at the date of this Resolution, of which the aggregate number of shares and convertible securities to be issued other than on a pro-rata basis to shareholders of the Company does not exceed twenty per cent (20%) of the total number of issued shares excluding treasury shares as at the date of this Resolution, and, unless revoked or varied by the Company in general meeting, such authority shall continue in force until the conclusion of the next Annual General Meeting or

Page 102: KODA Ltd 2011 Annual Report

NOTICE OFANNUAL GENERAL MEETING

the expiration of the period within which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier. For the purpose of determining the aggregate number of shares that may be issued pursuant to this Resolution, the percentage of the total number of issued shares excluding treasury shares is based on the total number of issued shares excluding treasury shares at the date of this Resolution after adjusting for new shares arising from the conversion of exercise of any convertible securities or employee stock options in issue as at the date of this Resolution and any subsequent consolidation or subdivision of the Company’s shares.” [See Explanatory Note (I)] (Resolution 8)

10. To consider and, if thought fit, pass the following ordinary resolution with or without any modifications:

“That the Board of Directors of the Company be and is hereby authorised to offer and grant awards (“Awards”) in accordance with the provisions of the Performance Share Plan (the “Performance Share Plan”) and pursuant to Section 161 of the Companies Act, Cap. 50, to allot and issue from time to time such number of shares in the capital of the Company as may be required to be issued pursuant to the vesting of Awards under the Performance Share Plan provided always that the total number of new shares to be issued pursuant to the Awards granted under the Performance Share Plan, when added to the number of new shares issued and issuable in respect of:

(i) all Awards granted under the Performance Share Plan; and

(ii) all options granted under the Scheme.

shall not exceed fifteen per cent (15%) of the issued share capital of the Company from time to time.” [See Explanatory Note (II)] (Resolution 9)

NOTICE OF BOOKS CLOSURE DATE AND PAYMENT DATE FOR FINAL DIVIDEND

Notice is hereby given that the Transfer Books and the Register of Members of the Company will be closed at 5.00 p.m. on 14 November 2011 (the “Books Closure Date”) for the purpose of determining the entitlement of Shareholders to the final dividend of S$0.001 per ordinary shares in respect of the financial year ended 30 June 2011 (the “Final Dividend”).

Shareholders whose shares are deposited with the Central Depository (Pte) Limited (“CDP”), whose securities account with CDP are credited with Shares as at 5.00 p.m. on the Books Closure Date will be entitled to the Final Dividend on the basis of the number of shares standing to the credit of their securities accounts with CDP as at 5.00 p.m. on such date.

Duly completed registrable transfers in respect of shares in the Company received up to the close of business at 5.00 p.m. on 14 November 2011 by the Company’s Share Registrar, Boardroom Corporate & Advisory Services Pte. Ltd. at 50 Raffles Place #32-01 Singapore Land Tower Singapore 048623, will be registered to determine shareholders’ entitlements to the Final Dividend.

The Final Dividend, if approved by members at the Annual General Meeting to be held on 28 October 2011, will be paid on or about 28 November 2011.

By Order of the Board

ONG BENG HONG/TAN SWEE GEKSECRETARIES

12 October 2011

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NOTICE OFANNUAL GENERAL MEETING

PAGE 101

EXPLANATORY NOTE:

I. The Ordinary Resolution proposed in item 9 above, if passed, will empower the Directors from the passing of the above Meeting until the date of the next Annual General Meeting, to allot and issue shares and convertible securities in the Company up to an amount not exceeding, in total, 50% of the issued shares in the capital of the Company at the time of passing of this resolution, of which up to 20% may be issued other than on a pro-rata basis to shareholders.

II. The Ordinary Resolution proposed under item 10 above, if passed, will authorise the Directors to offer and grant award of shares in accordance with the provisions of the Share Performance Plan and pursuant to Section 161 of the Companies Act, Cap. 50 to allot and issue shares under the Share Performance Plan. The Share Performance Plan was approved by the shareholders of the Company in general meeting on 28 October 2008. Please refer to the Circular dated 10 October 2008 for further details.

NOTES:

(1) A member entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy or proxies (not more than two) to attend and vote on his/her behalf. A proxy need not be a member of the Company.

(2) The instrument appointing a proxy or proxies must be under the hand of the appointor or of his/her attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under the hand of an officer or attorney duly authorised.

(3) The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 28 Defu Lane 4, Singapore 539424 at least 48 hours before the time fixed for the Meeting.

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Page 105: KODA Ltd 2011 Annual Report

KODA LTD(Company Registration No. 198001299R)

(Incorporated in the Republic of Singapore)

I/We (Name)

of (Address)

being a member/members of Koda Ltd (the “Company”) hereby appoint

Name AddressNRIC/

Passport Number

Proportion of my/our Shareholding (%)

No. of shares %

and/or (delete as appropriate)

Name AddressNRIC/

Passport Number

Proportion of my/our Shareholding (%)

No. of shares %

as my/our proxy/proxies to vote for me/us on my/our behalf at the Annual General Meeting of the Company, to be held at The Pines, 30 Stevens Road, Singapore 257840 on 28 October 2011 at 10.00 a.m., and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the Resolutions to be proposed at the Meeting as indicated hereunder. If no specific direction as to voting is given, the proxy/proxies will vote or abstain from voting at his/their discretion, as he/they will on any other matter arising at the Meeting.

No. Resolutions Relating To: For Against

Ordinary Business

1. Adoption of Reports and Accounts

2. Declaration of final dividend

3. Re-appointment of Mr Christopher Chong Meng Tak

4. Re-appointment of Mr Koh Jyh Eng

5. Re-appointment of Mr Koh Teng Kwee

6. Approval of Directors’ Fees

7. Re-appointment of Auditors

Special Business

8 Authority to allot and issue new shares

9. Authority to allot and issue new shares pursuant to the Company’s Share Performance Plan

(Please indicate with a cross [X] in the space provided whether you wish your vote to be cast for or against the Resolutions as set out in the Notice of the Meeting.)

Dated this day of 2011Total number of Shares held

Signature of Shareholder(s) or Common Seal

Important: Please read notes overleaf

PROXY FORM

SAR1107013_Koda Ltd AR ().indb 103SAR1107013_Koda Ltd AR ().indb 103 10/7/2011 2:29:43 AM10/7/2011 2:29:43 AM

Page 106: KODA Ltd 2011 Annual Report

NOTES:

1. Please insert the total number of shares held by you. If you have Shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Cap. 50), you should insert that number of Shares. If you have Shares registered in your name in the Register of Members, you should insert that number of Shares. If you have Shares registered in your name in the Depository Register and Shares registered in your name in the Register of Members, you should insert the aggregate number of Shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the Shares held by you.

2. A member entitled to attend and vote at the Meeting is entitled to appoint one or two proxies to attend and vote in his stead.

3. Where a member appoints more than one proxy, the appointments shall be invalid unless he specifies the proportion of his shareholding (expressed as a percentage of the whole) to be represented by each proxy.

4. A proxy need not be a member of the Company.

5. The instrument appointing a proxy or proxies must be deposited at the Company’s registered office at 28 Defu Lane 4, Singapore 539424, not less than 48 hours before the time set for the Meeting.

6. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its common seal or under the hand of its attorney or a duly authorised officer.

7. Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter of power of attorney or a duly certified copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy; failing which the instrument may be treated as invalid.

8. The Company shall be entitled to reject a Proxy Form which is incomplete, improperly completed, illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified on the Proxy Form. In addition, in the case of shares entered in the Depository Register, the Company may reject a Proxy Form if the member, being the appointor, is not shown to have Shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.

Page 107: KODA Ltd 2011 Annual Report

BOARD OF DIRECTORS

KOH TENG KWEENon-Executive Chairman

JAMES KOH JYH GANGDeputy Chairman/Managing Director

ERNIE KOH JYH ENGExecutive Director, Sales & Marketing

KOH SHWU LEEExecutive Director, Finance & Administration

CHRISTOPHER CHONG MENG TAKIndependent Director

CHAN WAH TIONGIndependent Director

SIM CHENG HUATIndependent Director

COMPANY SECRETARIES

ONG BENG HONGTAN SWEE GEK

REGISTERED OFFICE & PRINCIPAL PLACE OF WORK

28 Defu Lane 4Singapore 539424

SHARE REGISTRAR

BOARDROOM CORPORATE & ADVISORY SERVICES PTE. LTD50 Raffles Place#32-01 Singapore Land TowerSingapore 048623

AUDITORS

DELOITTE & TOUCHECertified Public Accountants6 Shenton Way #32-00DBS Building Tower TwoSingapore 068809

AUDIT PARTNER

PATRICK TAN HAK PHENGDate of Appointment28 October 2010

PRINCIPAL BANKERS

UNITED OVERSEAS BANK LIMITED80 Raffles PlaceUOB Plaza 1Singapore 048624

HONGKONG AND SHANGHAIBANKING CORPORATION21 Collyer Quay#08-01 HSBC BuildingSingapore 049320

MALAYAN BANKING BERHADLevel 8, Office Tower, Johor Bahru City SquareNo.108 Jalan Wong Ah Fook80000 Johor Bahru, Johor Darul TakzimMalaysia

CORPORATE INFORMATION

Contact key management at:

James Koh Jyh GangDeputy Chairman / Managing [email protected]

Ernie Koh Jyh EngExecutive Director, Sales & [email protected]

Koh Shwu LeeExecutive Director, Finance & [email protected]

Teh Wing KwanChief Financial [email protected]

00_Koda_corporate infor.indd 0200_Koda_corporate infor.indd 02 10/12/2011 4:28:16 PM10/12/2011 4:28:16 PM

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KOD

A LTD

AN

NU

AL REPO

RT 2011

Koda Ltd(198001299R)

28 Defu Lane 4Singapore 539424

T +65 6282 9882F +65 6287 7328

E [email protected]

www.kodaonline.com

A R1 1

REDEFINING LIFESTYLE

(65) 6578 6522

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