SIN GHEE HUAT CORPORATION LTD. Forging Ahead Meeting ...singheehuat.com.sg/wp-content/uploads/2015/03/SGH_Annual_Report_2011.pdf · SIN GHEE HUAT CORPORATION LTD. ANNUAL REPORT 2011

Annual Report 2011

Sin Ghee Huat Corporation Ltd.32 Penhas Road #01-01Singapore 208191Telephone: +65 6398 1118Facsimile: +65 6398 1119Email: [email protected]: www.singheehuat.com.sg

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SIN GHEE HUAT CORPORATION LTD.

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Meeting Industry NeedsForging Ahead

Contents

01 Corporate Profi le

02 Board of Directors

04 Executive Offi cers

05 Chairman’s Statement

07 CEO’s Statement

09 Operating and Financial Review

13 Financial Highlights

15 Our Business

20 Financial Contents

21 Corporate Governance Statement

30 Financial Information

65 Statistics of Shareholdings

67 Notice of Annual General Meeting

Proxy Form

Corporate Information

CORPORATE INFORMATION

BOARD OF DIRECTORS

Goh Chee Wee

Non-Executive Chairman and Independent Director

Lim Lian Soon

Chief Executive Offi cer

Kua Chee Seng

Executive Director

Kua Chee Meng

Executive Director

Kua Eng Wah

Executive Director

Kua Eng Watt

Executive Director

Kua Chee Hong

Non-Executive Director

Kua Peng Chuan

Alternate Director to Kua Chee Hong

Hoon Tai Meng

Non-Executive and Independent Director

Tan Lye Heng Paul

Non-Executive and Independent Director

AUDIT COMMITTEE

Tan Lye Heng Paul (Chairman)

Hoon Tai Meng

Goh Chee Wee

NOMINATING COMMITTEE

Hoon Tai Meng (Chairman)

Tan Lye Heng Paul

Goh Chee Wee

REMUNERATION COMMITTEE

Goh Chee Wee (Chairman)

Hoon Tai Meng

Tan Lye Heng Paul

COMPANY SECRETARIES

Joanna Lim Lan Sim

Lotus Isabella Lim Mei Hua

REGISTERED OFFICE

32 Penhas Road #01-01

Singapore 208191

Tel: 6398 1118

Fax: 6398 1119

Email: [email protected]

Website: www.singheehuat.com.sg

SHARE REGISTRAR AND SHARE TRANSFER OFFICE

Tricor Barbinder Share Registration Services

(A division of Tricor Singapore Pte. Ltd.)

8 Cross Street

#11-00 PWC Building

Singapore 048424

AUDITORS

KPMG LLP

16 Raffl es Quay #22-00

Hong Leong Building

Singapore 048581

Audit Partner: Lee Jee Cheng Philip

(Appointed since fi nancial year 2011)

INTERNAL AUDITORS

Nexia TS Risk Advisory Pte. Ltd.

Certifi ed Public Accountants

100 Beach Road

#30-00 Shaw Tower

Singapore 189702

PRINCIPAL BANKERS

Oversea-Chinese Banking Corporation Limited

65 Chulia Street

#26-00 OCBC Centre

Singapore 049513

United Overseas Bank Limited

80 Raffl es Place

UOB Plaza

Singapore 048624

BNP Paribas

10 Collyer Quay

#34-01 Ocean Financial Centre

Singapore 049315

Australia and New Zealand Banking Group Limited

1 Raffl es Place

#13-00 One Raffl es Place

Singapore 048616

Bank of China

Suzhou Industrial Park Sub-Branch

8 Su Hua Road

Suzhou

People’s Republic of China 215021

Designed and produced by

(65) 6578 6522


ANNUAL REPORT 20111

Corporate Profi le

A major “one-top” distributor of

stainless steel products

Sin Ghee Huat Corporation Ltd is a public company listed

on the mainboard of Singapore Exchange Securities Trading

Limited. We have a track record of more than 20 years in the

sales and distribution of stainless steel products and have

grown to be a major stockist and “one-stop” distributor of

304/304L and 316/316L grades of austenitic stainless steel

products. These include pipes, fittings, plates, bars, tubes

and flanges which we source from reputable suppliers in

China, Europe, Japan, South Korea and Taiwan. We have

expanded our product range to include duplex stainless

steel products.

Our main warehouse facilities in Singapore are located at

62 Tuas Basin Link Singapore 638776 and 32 Gul Crescent

Singapore 629537. Our warehouse facility in China is located

at Suzhou Industrial Park, PRC.

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ANNUAL REPORT 20112

Board of Directors

1. Mr Goh Chee Wee 2. Mr Lim Lian Soon 3. Mr Kua Chee Seng

4. Mr Kua Eng Wah 5. Mr Kua Eng Watt 6. Mr Kua Chee Meng

7. Mr Kua Chee Hong 8. Mr Hoon Tai Meng 9. Mr Tan Lye Heng Paul

10. Mr Kua Peng Chuan

Mr Goh Chee Wee, 65, was appointed an Independent

Director and Non-Executive Chairman of the Company on

28 October 2009. He was formerly a Member of Parliament

and Minister of State for Trade & Industry, Labour &

Communications. Chee Wee is currently the Chairman

and Director of a number of NTUC Co-operatives and SLF

subsidiary companies and also a director of a number of

public listed companies.

Lim Lian Soon, 56, our Chief Executive Officer was

appointed an Executive Director and Chief Executive Officer

of the Company on 2 October 2009. He is responsible for

corporate strategic direction and the general management

of our business and operations. He started his career as an

auditor and subsequently worked in various industries in

internal audit, tax and accounting of which 7 years was

in the Oil and Gas Service industry. He was a Practising

Certified Public Accountant for 15 years prior to joining

us. Lian Soon is a Fellow of the Association of Chartered

Certified Accountants, United Kingdom, a Fellow Certified

Public Accountant, Singapore and a Fellow Certified Public

Accountant, Australia.

Kua Chee Seng, 61, our Business Development Director, was

appointed Director of the Company on 11 July 1979. He is

responsible for development of new business opportunities.

Since the establishment of our Company in 1977, he had

been involved in various aspects of our operations. In

particular, he was responsible for the re-development of

our office at Penhas Road as well as spearheading the

computerisation of our accounting system. Prior to 1977,

Chee Seng had worked in the Kua family business, which

was involved in the supply of general hardware items in

Singapore. Chee Seng obtained a Bachelor of Commerce

degree from Nanyang University.

Kua Eng Wah, 63, our Sales Director, was appointed

Director of the Company on 7 March 1977. He oversees

our sales function. Since the establishment of our Company

in 1977, he had been involved in various aspects of our

operations. Over time, he became responsible for our

sales function. Prior to 1977, Eng Wah had worked in the

Kua family business, which was involved in the supply of

general hardware items in Singapore. He completed his

Secondary 4 education at Chinese High School. Eng Wah is a

committee member of the Singapore Metal and Machinery

Association.

1 2

89

4

3

56 710

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ANNUAL REPORT 20113

Kua Eng Watt, 61, our Purchasing Director, was appointed

Director of the Company on 11 July 1979. He oversees

our purchasing function, including formulating our

purchasing policies and inventory management. Since

the establishment of our Company in 1977, he had been

involved in various aspects of our operations. Over time,

he became responsible for our purchasing function. Prior

to 1977, Eng Watt had worked in the Kua family business,

which was involved in the supply of general hardware items

in Singapore. He completed his Secondary 4 education at

Chinese High School.

Kua Chee Meng, 63, our Administration Director, was

appointed Director of the Company on 7 March 1977. He

oversees our administration function, including human

resources and information systems. Since the establishment

of our Company in 1977, he had been involved in various

aspects of our operations. Over time, he became responsible

for our finance function and was our Finance Director

until November 2006, when he was re-designated as our

Administration Director. Prior to 1977, he had worked

in the Kua family business, which was involved in the

supply of general hardware items in Singapore. Chee

Meng completed his Secondary 4 education at Thomson

Government Secondary School.

Kua Chee Hong, 65, our Non-Executive Director, was

appointed Director of the Company on 11 July 1979. Since

the establishment of our Company in 1977, he had been

involved in various aspects of our operations. Prior to 1977,

Chee Hong had worked in the Kua family business, which

was involved in the supply of general hardware items in

Singapore. He retired in September 2006 and remains as

a Non-Executive Director on our Board. He completed his

Secondary 4 education at Chinese High School.

Hoon Tai Meng, 59, was appointed an Independent

Director of the Company on 1 March 2007. He is currently

an Executive Director of Chip Eng Seng Corporation Ltd

and formerly a partner with M/s KhattarWong. Besides

having around 15 years of experience in legal practice, he

also has approximately 20 years of experience in financial

planning and management, audit and tax functions. He has

a Bachelor of Commerce degree in accountancy from the

Nanyang University and a LLB (Honours) from the University

of London. Tai Meng is a Fellow of the Chartered Institute

of Management Accountants (United Kingdom), a Fellow of

the Association of Chartered Certified Accountants (United

Kingdom), a Fellow Certified Public Accountant (Singapore)

and a Barrister-at-Law (Middle Temple, United Kingdom).

He is an Independent Director of Chinese Global Investors

Group Ltd, Thai Village Holdings Ltd and Yangtze China

Investment Limited. In addition, he is also a Non-Executive

Non Independent Director of Intraco Limited.

Tan Lye Heng Paul, 45, was appointed an Independent

Director of the Company on 1 March 2007. He is a practising

public accountant and the Managing Director of Tan Teo &

Partners PAC. He has over 18 years of auditing experience

working as an auditor in public accounting firms and a

2-year stint as the internal auditor of a large Singapore

public listed company before starting his own public

accounting practice. He is an accredited Quality Assessor

of Internal Audit Activity. Paul holds a Masters Degree

in Business Administration (MBA) from the University

of Birmingham, United Kingdom. He is a Fellow of the

Association of Chartered Certified Accountants, United

Kingdom. He is also an Independent Director of Second

Chance Properties Ltd, China Sunsine Chemicals Holdings

Ltd and Serial System Ltd, the shares of which are traded

on the Singapore Exchange.

Kua Peng Chuan, 28, was appointed an Alternate Director

to Kua Chee Hong in December 2009. He is our Senior

Manager, Sales and Marketing and concurrently Head of

Market Development. He manages sales operations and

market development. He joined the Company as Sales

Executive in October 2004 after completing his National

Service. He holds a diploma in Chemical Engineering from

Temasek Polytechnic.

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ANNUAL REPORT 20114

Executive Offi cers

Chia Hua Meng, 60, is our Chief Financial Officer. He is

responsible for our financial management, risk management

and investor relations. Hua Meng has more than 20 years

of experience in financial management, accounting and

general administration. Prior to joining us on 3 February

2010, he was Financial Controller and Secretary of another

company listed on Singapore Exchange. He is a Fellow of

the Association of Chartered Certified Accountants, United

Kingdom and a non-practising member of the Institute of

Certified Public Accountants of Singapore.

Kua Eng Bee, 59, is our Senior Manager for Sales and

Marketing. He is responsible for the sale of our products

in Singapore. He has been involved in sales and marketing

since joining us in 1980. Prior to joining us, Eng Bee was

with Sembawang Shipyard and Sembawang Engineering,

working on-board ships and taking on a variety of

responsibilities relevant to the fabrication of oil and gas

offshore structures. Eng Bee completed his GCE ‘O’ levels

at Upper Thomson Secondary School.

Kua Chee Kok, 50, is our Senior Manager for Warehouse.

He is responsible for the management of our warehouse

operations. Prior to the establishment of our Company in

1977, Chee Kok had worked in the Kua family business,

which was involved in the supply of general hardware

items in Singapore. He did his secondary education at

Thomson Secondary School. He was appointed to head our

warehouse operations in 2000.

Kua Ghim Siong, 33, is our Senior Manager, Purchasing &

Logistics/China operations. He is responsible for purchasing,

QC and logistics functions. He joined the Company as a

Sales Executive in April 2004 after graduation, and assumed

the role of Assistant Purchasing Manager in October 2006.

He holds a Bachelor of Commerce from the University of

Western Australia.

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ANNUAL REPORT 20115

Chairman’s Statement

Dear shareholders,

On behalf of the Board of Directors of Sin

Ghee Huat Corporation Ltd., I am pleased

to inform our valued shareholders that

the Group has achieved better results

in tandem with improved market

conditions. We have closed our financial

year ended 30 June 2011 (FY2011) with

a higher net profit of $5.3 million and

a higher revenue of $52.7 million. The

net profit and revenue achieved were

43% and 9% respectively higher than

the previous year ended 30 June 2010

(FY2010).

Group earnings increased to 2.4 cents

per share compared with the previous

year’s 1.7 cents per share. Net asset value

was 39.2 cents per share compared with

38.9 cents per share in FY2010.

The “trading & others” sector led revenue

growth with a 26% increase, attaining $23.9 million in

FY2011 versus $19.0 million in FY2010. The “machining &

processing” sector, which encompasses the process industry

and machine fabrication industry, contributed $12.1 million

in revenue, equating to a 23% increase over the $9.8 million

in the preceding year. However, revenue from the marine &

shipbuilding sector and the building & construction sector

declined.

The Group’s market mix in terms of geographical segment

has remained largely unchanged. The local market in

Singapore contributed 72% to the Group’s revenue. Exports

to Malaysia, Indonesia and other ASEAN countries netted

$12.8 million in revenue, representing 24% of the Group’s

revenue. We are grateful to our valued customers who have

given us their continued support for many years.

Our China subsidiary, SG Metals (Suzhou) Ltd, set up in

Suzhou in The People’s Republic of China at the beginning

of the financial year, commenced business operations during

the first quarter of the year. This first overseas investment

presents a new and exciting opportunity for the Group as

we venture beyond our familiar homeland. This paves the

way as we extend our reach cautiously but optimistically for

a slice of the vast potential market in the PRC.

The Board recognises that the business climate in the years

ahead will no longer be the same as it used to be in the last

decade or so. Whilst the Singapore and regional economies

have rebounded from the 2008 global recession, there are

apparent signs that another global economic slowdown

could be brewing on the horizon. The uncertainties cast

by the debt crises in the United States and the Eurozone

have posed challenges of varying degrees across the global

economies. Amid this backdrop, the Group will stay vigilant

as before and take the economic challenges in its stride.

We also recognise that to continue thriving in a fast

changing globalised economy, maintaining status quo

may no longer be the best option going forward. On the

other hand, we must constantly be responsive to the

external environments, and be adaptable to be able to stay

competitive and relevant.

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ANNUAL REPORT 20116

In this respect, the Group undertakes ongoing reviews

of its business strategies. We keep an open mind on

suitable opportunities that may arise, be it to augment

the sustainability and growth of our core business, or to

enhance the shareholder value in other viable businesses

in the longer term perspectives.

DIVIDENDS

The Board is pleased to recommend the payment of a Final

dividend of 1.2 cents per share plus a Special dividend of

0.8 cents per share in respect of the financial year ended 30

June 2011. The dividends totalling $4,440,000, if approved

at the forthcoming Annual General Meeting (AGM), will be

paid on 15 November 2011.

DIVIDEND POLICY

For good corporate governance and to provide better clarity

to shareholders, the Company would state its intended

dividend policy. With effect from this financial year 2011, the

Company intends to distribute approximately 50% of its net

profits after tax as dividends, subject to factors such as our

cash balance, projected capital expenditure requirements,

investment plans and financial performance.

APPRECIATION

Mr Kua Chee Hong, Non-Executive Director of the Company,

will not be seeking re-election as a Director of the Company

at the forthcoming AGM. Mr Kua Chee Hong has been a

Director of the Company since 11 July 1979. He relinquished

his executive role in September 2006 but remained on the

board as a Non-Executive Director. We thank Mr Kua Chee

Hong for his contributions and support all these years and

wish him well.

On behalf of the Board, I thank all our valued customers and

business associates for their ongoing support. I also express

my appreciation to my fellow Board members for their

guidance, and to all staff and management of the Group for

their hard work, dedication and commitment.

Goh Chee WeeChairman

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ANNUAL REPORT 20117

CEO’s Statement

Dear Shareholders

We started the financial year 2011 on a good note and with

confidence after posting a pre-tax profit of $4.5 million

in FY2010 compared with $1.6 million in the crisis year,

FY2009. But at the half year mark of FY2011, our pre-tax

profit was only $1.8 million for the 6 months ended 31

December 2010.

Nickel price (which is the main determinant of stainless steel

prices) on the London Metal Exchange was US$19,400 per

tonne at the end of June 2010 but climbed to US$24,900 at

the end of December 2010. It was not a case of steady price

increases throughout the period. There were times when

it jumped by over US$1,000 in four working days, only to

plunge by US$1,000 in a single day.

End-users and distributors had a difficult time deciding

whether to destock or restock, depending on their reading

of the market. It was anybody’s guess on causes for the

price volatility – whether it was due to the weakening US

dollar, speculators, fundamentals, or a combination.

In the second half of FY2011 ended 30 June 2011, demand

for stainless steel improved and prices increased, both

stainless steel basis prices as well as alloy surcharges. Nickel

price hit a high of US$28,800 at the end of February 2011

but was down to US$23,100 at the end of June 2011.

Because of the nickel price volatility, European mills are now

paying more attention to improving their manufacturing

facilities for the ferritic (non-nickel) grades of stainless steel.

Likewise, end-users are also turning towards non-nickel

stainless steel or low- nickel duplex stainless steel. Indeed,

it was reported that a leading international household

products retailer plans to almost eliminate nickel bearing

steel from its bathroom and kitchen products by August

2012. Nickel accounts for at least half the cost of 300-series

stainless steel (austenitic).

Nickel production is forecast to outstrip demand in the

first half of FY2012 and therefore it is likely prices will be

lower, on average. The perception of forthcoming lower

alloy surcharges leads to a reluctance by customers to place

significant orders in advance of requirements.

The outlook for the global economy is full of uncertainties

due to the unresolved US debt crisis and the problems

in the Eurozone. We have to be mindful of the potential

negative impacts on our results for FY2012.

Performance

Amidst the volatile price fluctuations which makes

forecasting of price direction and demand level difficult,

the Group maintained a prudent inventory and purchasing

policy. Our inventory at the end of FY2010 was $28.3

million, whilst at the end of FY2011 it was 9% higher at

$30.9 million. In terms of average inventory turnover days,

it declined from 302 days to 274 days.

The pre-tax profit improved from FY2010’s $4.5 million to

$6.3 million in FY2011. Average gross margins on almost all

our products improved. Sales revenue increased by 9% on

the back of an increase in sales volume (tonnes) of 13%.

Our margins could have been better if not for more and

keener competition faced during the year. The competition

is not going to ease up and hence improving on our margins

and growing our volume will be a challenge. As mentioned

in my Statement last year, we have to grow our revenue

from new geographical locations and activities.

Business Review

Towards the end of the current financial year, our subsidiary

SG Metals Pte Ltd commenced business activities. It

imported its first batch of products from China.

We ventured into Suzhou, the People’s Republic of China

during the year. Our “wholly foreign owned enterprise”,

SG Metals (Suzhou) Ltd, which had been in operation for

about 9 months as of the end of the current financial year,

operated out of a leased warehouse in the Suzhou Industrial

Park. As expected, it was not without start-up teething

problems. It posted a loss of $237,000 during the financial

year. We aim to break even soon as we “settle down” and

hopefully grow the business there.

In the new financial year, marketing our China products

and new products like duplex stainless steel locally are our

key challenges.

Looking Ahead

We take pride in our portfolio of long-standing customers.

Whilst attempting to look for opportunities outside our

traditional areas of focus, we cannot slip up on our core

competencies. The comprehensive range of products that

we are able to offer is key to our business.

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ANNUAL REPORT 20118

CEO’s Statement

The need to remain competitive is obvious and market

prices are beyond our control. As such we have to look

internally and drive operational cost efficiencies. Efforts

to widen the range of stainless steel products stocked and

their marketing is ongoing. Sourcing for suppliers who are

able to provide the right products at the right price and

commitment to a long term relationship is crucial in our

business.

We will have to stay focused on the Singapore market which

contributes to more than half of our total revenue whilst

continuing with efforts to grow our business in China which

looks promising.

The search for potential businesses that could extend

our core competencies or provide diversification and are

earnings accretive is ongoing. None has materialised so far

as we are cautious and mindful that the various risks have

to be manageable.

Attracting talent and talent retention is important to

the Group both in maintaining and growing the current

business as well as the attempt to diversify.

Appreciation

In closing, I wish to express my sincere thanks to every member of our staff and management. Our people are the foundation upon which the Group’s success depends and I am grateful to them for their continued commitment with loyalty and passion.

Last but not least, to our customers, business partners and shareholders, my sincere thanks for your continued

confidence and support.

Lim Lian SoonChief Executive Officer

OUR SUZHOU OPERATIONS

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ANNUAL REPORT 20119

Operating and Financial Review

The Singapore economy surged ahead with a robust recovery

following the dose of economic stimulus package meted

out by the government in January 2009. The economies in

neighbouring countries also recovered. For us at Sin Ghee

Huat Group of Companies, it was progressive improvement

from quarter to quarter during the year ended 30 June 2011

(FY2011). The results were encouraging. We achieved a

higher revenue and higher profit for the year.

Group revenue totalling $52.7 million was 9% higher

compared with $48.4 million posted in FY2010. Net profit

was $5.3 million, up from $3.7 million recorded in FY2010.

NEW SUBSIDIARIES

SG Metals (Suzhou) Ltd, incorporated in Suzhou, PRC on

6 July 2010 as a wholly-owned subsidiary, commenced

business activities in the first quarter of the year. As we

go through the learning curve operating in a foreign

jurisdiction at this initial stage of our first overseas venture,

we would take one step at a time cautiously, spacing

out our investments in the subsidiary in small quantum

progressively as the needs arise.

Our Singapore subsidiary, SG Metals Pte Ltd, also

commenced business operations towards the later part

of FY2011. Through this subsidiary, the Group would

increase the range of products to meet the needs of our

customers.

DEMAND FOR STAINLESS STEEL PRODUCTS

Demand for stainless steel products was generally on the

rise, noticeably in the second half of FY2011. Total sales

volume rose 13% compared with FY2010. The overall average

selling price, which decreased in FY2010, continued to

decline during FY2011, albeit proportionately less year-on-

year. The average cost price also declined. This contributed

to improved gross profit as well as profit margins.

The price of nickel, which generally has a direct influence

on the price of stainless steel products, fluctuated quite

significantly as in the previous years. From approximately

US$19,400 per tonne at the end of June 2010, it rose to

about US$23,400 and US$24,900 at the end of September

2010 and December 2010 respectively. It climbed further

to S$26,100 towards the end of March 2011 before sliding

to US$23,100 per tonne at the end of June 2011. Whilst

movements in nickel price in principle signal the direction

of the prices of stainless steel products, their significance

could from time to time be blurred by speculation in the

commodity.

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ANNUAL REPORT 201110


MEPS Steel News dated 31 May 2011 said, “… Nickel value

have been on a downward trend since March and, like

most commodities, dropped sharply at the beginning of

May. This was due to speculation on the commodity and

had little to do with the fundamentals of either nickel or

stainless steel.”

BUSINESS AND GEOGRAPHICAL SEGMENTS

The bulk of the revenue increases in FY2011 came from

the “trading and others” sector and the “machining and

processing” sector. Revenue in the “trading and others”

sector grew 26% to $23.9 million from FY2010’s $19.0

million. The machining and processing sector generated

$12.1 million, up from the preceding year’s $9.8 million,

representing an increase of 23%. This sector encompasses

the process industries, such as food processing, pulp and

paper, as well as machine fabrication industry. Revenue

from the “marine and shipbuilding” sector and the other

sectors declined.

The Group has essentially one business or operating

segment, which is the trading and sales of stainless steel

products. The business segment as presented provides

additional information in terms of the industries in which our

customers generally operate. Customers categorised in the

“trading and others’ sector may re-sell the products, which

they purchased from us, to end-users in any industry.

The local market in Singapore constituted 72% (FY2010:

71%) of the Group’s total revenue. Revenue generated from

the ASEAN countries, principally Malaysia and Indonesia,

was 24% (FY2010: 21%). Many of our customers are long-

time customers. Their continued support and patronage

has enabled us to maintain a stable mix of customer base

in these traditional markets.

OTHER OPERATING INCOME

Other operating income was $210,000 compared with

$336,000 for FY2010. A breakdown is given below:

FY2011

$’000

FY2010

$’000

Interest income on bank and short-

term bank deposits142 89

Gain on disposal of property, plant and

equipment53 49

Reversal of allowance for doubtful

debts – trade– 56

Sundry income 15 142

Total 210 336




Sundry income in FY2010 comprised mainly grants received

under the jobs credit scheme, which ceased in the early

part of FY2011.

OTHER OPERATING EXPENSES

Other operating expenses for FY2011 mainly comprised

foreign exchange loss of $160,000 and allowance for

doubtful debts of $19,000. Other operating expenses for

FY2010 comprised foreign exchange loss of $6,000.

RECLASSIFICATION OF ACCOUNTS

Allowances for inventory write-down and damaged/

obsolete inventories as well as any reversals thereof, which

were previously included in “other operating income” or

“other operating expenses”, have been reclassified as cost

of sales. Any movements of such allowances or reversals in

a period would henceforth be reflected in the cost of sales

and gross profit on a net basis.

DISTRIBUTION AND ADMINISTRATIVE EXPENSES

Distribution costs in FY2011 were higher at $4.0 million

(FY2010: $3.2 million) generally in line with higher sales.

Increased manpower costs were also incurred to support

sales and marketing efforts. Administrative expenses

were marginally higher (3%) than in FY2010. Part of the

distribution costs and administrative expenses were

attributed to the new operations in Suzhou, PRC, which

commenced business activities during the year.

FINANCE COSTS

The Group did not incur any finance costs during FY2011.

Finance costs for FY2010 was only $4,000, which related to

the first quarter of the preceding year.

PROFIT BEFORE AND AFTER INCOME TAX

Profit before income tax increased to $6.3 million (FY2010:

$4.5 million). Net profit increased to $5.3 million from $3.7

million of FY2010. The increase in profit before and after

income tax was largely attributed to higher sales revenue

and higher gross profit.

CASH FLOWS AND FINANCIAL POSITION

Cash generated from operations in FY2011 was $2.7 million

compared with $9.7 million in FY2010. The disparity was

mainly attributed to working capital changes relative to the

level of business activities in the respective years.





Demand for stainless steel products were still low in FY2010

following the 2008 global economic crisis. This was reflected

in the decrease in revenue from $54.4 million in FY2009 to

$48.4 million in FY2010 as shown below:

FY2009

$’000

FY2010

$’000

FY2011

$’000

Sales revenue 54,383 48,375 52,700

Inventories at end of

financial year34,644 28,322 30,880

Trade receivables at end of

financial year11,231 13,074 15,055

As inventories were drawn down in the course of sales

and less replenishment made, their closing balances were

reduced from $34.6 million as of 30 June 2009 to $28.3

million as of 30 June 2010. As market conditions improved

subsequently with revenue attaining $52.7 million in

FY2011, inventory replenishment increased, resulting in

the increase in inventory levels.

Trade receivables increased from $13.1 million as of 30

June 2010 to $15.1 million as of 30 June 2011. The increase

was mainly because sales revenue in the second half of

FY2011 (especially the fourth quarter) was relatively higher

than that posted in the corresponding period of FY2010.

Revenue in the fourth quarter of FY2011 was higher at $15.0

million compared with $13.6 million in the fourth quarter

of FY2010 as shown below:

RevenueQ1

$’000

Q2

$’000

Q3

$’000

Q4

$’000

Year

$’000

FY2011 12,109 12,113 13,504 14,974 52,700

FY2010 11,012 12,159 11,627 13,577 48,375

These collectively resulted in a more significant variance

in terms of changes in working capital and cash flows from

operations.

The Group invested a total of $1.4 million (FY2010: $770,000)

in capital expenditure during the year. This encompassed

the facility set-up at Suzhou, completion of warehouse

extension at 32 Gul Circle Singapore as well as replacements

of certain plant, machinery and equipment.

We maintained a healthy balance sheet, with cash and cash

equivalents standing at $36.4 million as at 30 June 2011

(30 June 2010: $39.8 million).




Financial Highlights

(1) before interest and tax

(2) average basis

(3) ending balance basis, trade

FY2007 FY2008 FY2009 FY2010 FY2011

Income statement ($’000)

Sales revenue 93,636 92,554 54,385 48,375 52,700

Profit before tax 22,220 17,007 1,608 4,450 6,305

Profit after tax 17,940 13,722 1,497 3,734 5,326

Balance sheet and cash flow ($’000)

Inventories 44,779 47,484 34,644 28,322 30,880

Cash and cash equivalents 22,897 28,221 33,672 39,805 36,356

Current assets 91,598 97,655 79,730 81,373 82,854

Total assets 100,026 105,513 87,605 89,816 91,788

Current liabilities 21,273 18,507 3,253 3,551 4,687

Total liabilities 21,325 18,551 3,253 3,551 4,687

Total equity 78,701 86,962 84,352 86,265 87,101

Cash flows from operations(1) 9,591 11,713 21,883 9,731 2,721

Financial Statistics

Gross profit margin (%) 33.9% 27.6% 14.6% 21.3% 25.2%

Net profit margin (%) 19.2% 14.8% 2.8% 7.7% 10.1%

Return on assets (%)(2) 21.0% 13.4% 1.6% 4.2% 5.9%

Return on equity (%)(2) 28.3% 16.6% 1.7% 4.4% 6.1%

Earnings per share (cents) 12.00 6.18 0.67 1.68 2.40

Net tangible assets per share (cents) 35.45 39.17 38.00 38.86 39.23

Dividends declared per share (cents) 3.00 1.85 1.00 2.00 2.00

Current ratio (times) 4.3 5.3 24.5 22.9 17.7

Inventory turnover (days)(2) 225 251 323 302 274

Receivables turnover (days)(3) 93 85 75 99 104

Payables turnover (days)(3) 39 19 19 22 24

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Financial Highlights

Sales revenue (S$’000) Profi t after tax (S$’000)

100

80

60

40

20

0

FY2007

93,636

FY2008

92,554

FY2009

54,385

FY2010

48,375

FY2011

52,700

20

15

10

5

0

FY2007

17,940

FY2008

13,722

FY2009

1,497

FY2010

3,734

FY2011

5,326

Earnings per share (cents) Net tangible assets per share (cents)

12

10

8

6

4

2

0

FY2007

12.00

FY2008

6.18

FY2009

0.67

FY2010

1.68

FY2011

2.40

40

35

30

25

20

15

10

5

0

FY2007

35.45

FY2008

39.17

FY2009

38.00

FY2010

38.86

FY2011

39.23

Dividends declared per share (cents) Inventories (S$’000)

3.0

2.5

2.0

1.5

1.0

0.5

0

FY2007

3.00

FY2008

1.85

FY2009

1.00

FY2010

2.00

FY2011

2.00

50

40

30

20

10

0

FY2007

44,779

FY2008

47,484

FY2009

34,644

FY2010

28,322

FY2011

30,880

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Our Products End Products

ROUND BARS

STUD BOLTSCourtesy of Seng Heng Engineering P/L

ANCHOR BOLTSCourtesy of Seng Heng Engineering P/L

HEX BOLTSCourtesy of Seng Heng Engineering P/L

NUTSCourtesy of Seng Heng Engineering P/L

HEX BARS

ROUND BARS

HEX BARS

FLAT BARS U-CLAMPSCourtesy of Seng Heng Engineering P/L

Our Business

SAR1107007 • Sin Ghee Huat AR11 • 20/09/2011 16:33 • 08_SGH_Our_Business.indd SAR1107007 • Sin Ghee Huat AR11 • 20/09/2011 16:33 • 08_SGH_Our_Business.indd



Our Products

A Multitude of

Our Products

End Products

LARGE ROUND BARS

PROPELLER SHAFTCourtesy of Mencast Holdings Ltd

RUDDER STOCKCourtesy of Mencast Holdings Ltd

PRESSURE VESSELCourtesy of Profab

PLATES

SKIDCourtesy of Profab

FLANGES FITTINGS PIPES



SPIRAL FREEZER SUPER FLOW

Our Business

Courtesy of Marel Singapore Pte Ltd




32 GUL CRESCENT

SUZHOU INDUSTRIAL PARK

62 TUAS BASIN LINK

Our Warehouses




Our Operations

Cutting Process for Hollow Bars




Checking


SIN GHEE HUAT CORPORATION LTD


SINSINSIN GHGHH GHEEEE EEE HUAHUAHUAT CT CCT CORPORPORPORPORAORAOORATIOTIOTIOTION LN LN LTDTDTD


Financial Contents

21 Corporate Governance Statement

30 Director’s Report

33 Statement by Directors

34 Independent Auditors’ Report

35 Statement of Financial Position

36 Consolidated Income Statement

37 Consolidated Statement of Comprehensive

Income

38 Consolidated Statement of Changes in Equity

39 Consolidated Statement of Cash Flow

40 Notes to the Financial Statements

65 Statistics of Shareholdings

67 Notice of Annual General Meeting

Proxy Form

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Corporate Governance Statement

The Board of Directors (the “Board” or the “Directors”) of Sin Ghee Huat Corporation Ltd. (the “Company”) recognises

the importance of sound corporate governance in protecting the interests of its shareholders as well as strengthening

investors’ confidence in its management and financial reporting. The Company, together with its subsidiaries (the “Group”),

is committed to maintaining a high standard of corporate governance, and adheres to the principles and guidelines set

out in the Code of Corporate Governance 2005 (the “Code”) through self-regulatory corporate practices.

BOARD MATTERS

Principle 1: Board’s Conduct of its Affairs

The primary role of the Board is to:

(a) provide leadership, set strategic goals and ensure that the necessary resources are in place for the Group to meet

its objectives;

(b) establish a framework of controls which enables risks to be assessed and managed;

(c) review the performance of management; and

(d) ensure that obligations to shareholders and others are understood and met.

The day-to-day management of the affairs of the Group is delegated by the Board to the Senior Management team headed

by the Chief Executive Officer effective 25 August 2010 when the Executive Committee was dissolved.

The Board conducts regular scheduled meetings and where circumstances require, ad-hoc meetings are arranged. Board

meetings are conducted in Singapore and attendance by the Directors has been regular. The attendances of the Directors

at meetings of the Board and Board committees as well as the number of such meetings during the financial year ended

30 June 2011 are set out below:

Board

Audit

Committee

Nominating

Committee

Remuneration

Committee

Name of Director

No. of

meetings Attendance

No. of

meetings Attendance

No. of

meetings Attendance

No. of

meetings Attendance

Goh Chee Wee(1) 4 4 4 4 1 1 1 1

Lim Lian Soon 4 4 NA NA NA NA NA NA

Kua Chee Seng(1) 4 4 NA NA 1 1 NA NA

Kua Chee Meng 4 4 NA NA NA NA NA NA

Kua Eng Wah 4 4 NA NA NA NA NA NA

Kua Eng Watt 4 4 NA NA NA NA NA NA

Hoon Tai Meng 4 4 4 4 1 1 1 1

Tan Lye Heng Paul 4 4 4 4 1 1 1 1

Kua Chee Hong 4 4 NA NA NA NA NA NA

Kua Peng Chuan(2) 4 4 NA NA NA NA NA NA

(1) Goh Chee Wee was appointed a member of the Nominating Committee on 26 August 2010 in place of Kua Chee Seng.

(2) Kua Peng Chuan is Alternate Director to Kua Chee Hong.

NA: Not Applicable

To assist the Board in the execution of its duties, the Board has delegated specific functions to the Audit Committee,

Nominating Committee and Remuneration Committee. Each of these committees is governed by its respective Charter

and is provided with sufficient resources to discharge its duties.

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The Board has identified areas for which it has direct responsibility for decision-making. Major investment and funding

decisions are approved by the Board. Corporate matters which are specifically reserved for Board approval are:

• financial results announcements;

• annual reports and financial statements;

• convening of shareholders’ meetings;

• material acquisitions and disposal of assets;

• shares issuances, dividends and other returns to shareholders; and

• corporate or financial restructuring.

All Directors are updated regularly on changes in the policies of the Group. Newly appointed Directors are briefed on

the business activities of the Group. The Directors also participate in discussions and seminars as necessary to keep

themselves updated on the latest developments concerning the Group and to keep abreast of the latest relevant regulatory

changes.

Principle 2: Board Composition and Balance

The Board comprises five Executive Directors, one Non-Executive Director and three Independent Directors as at the date

of this report. Key information regarding the Directors can be found under the “Board of Directors” section of this Annual

Report. The independence of each Director is reviewed annually by the Nominating Committee (“NC”).

The NC is of the view that the Board, with Independent Directors comprising at least one-third of the Board, has an

independent element ensuring objectivity in the exercise of judgement on corporate affairs independently from the

management. The NC is also of the view that no individual or small group of individuals dominates the Board’s decision-

making process.

The Board is of the view that its current size, consisting of nine Directors, is appropriate, taking into account the nature

and scope of the operations of the Group.

The Board considers that its composition of executive and non-executive Directors presents a balanced mix of knowledge,

business network and extensive business and commercial experience. This balance is important in ensuring that the

strategies proposed by management are fully discussed and examined, taking into account the long-term interests of

the Group.

Principle 3: Role of Chairman and Chief Executive Officer

The roles of the Chairman and Chief Executive Officer are separate and their responsibilities are clearly defined to ensure

a balance of power and authority within the Group.

The Chairman of the Board is Mr Goh Chee Wee. As Chairman of the Board, Mr Goh Chee Wee leads the Board to ensure

its effectiveness on all aspects of its role, including ensuring effective communication with shareholders and facilitating

the participation and contribution of Non-Executive Directors.

The Chief Executive Officer (“CEO”) of the Company is Mr Lim Lian Soon. As CEO of the Company, Mr Lim Lian Soon leads

the management team and has full executive responsibilities for the business and operational decisions of the Group.





Principle 4: Board Membership

The NC comprises Messrs Hoon Tai Meng, Tan Lye Heng Paul and Goh Chee Wee, all of whom are independent. Mr Hoon

Tai Meng, an Independent Director, is the Chairman of the NC. Mr Hoon is not associated with any substantial shareholder

of the Company, thus complying with the requirement in Guideline 4.1 of the Code.

The responsibilities of the NC are:

(i) re-nomination of the Directors having regard to their contribution and performance;

(ii) determining annually whether or not a Director is independent; and

(iii) deciding on whether or not a Director is able to and has been adequately carrying out his duties as a Director.

The NC decides how the performance of the Board is to be evaluated and proposes objective performance criteria, subject

to the approval of the Board.

In the process of nominating and assessing new candidates for Directors, the NC assesses the candidates based on

their background, qualification, work experience and integrity. In the case of candidates for Independent Directors, the

NC will also consider the independence of such candidates. The NC reports the results of such assessments and makes

recommendations to the Board.

In accordance with Article 107 of the Company’s Articles of Association, all Directors (except for the Chief Executive Officer

of the Company, which is equivalent to the position of Managing Director) shall retire from office once at least three years

by rotation and all newly appointed directors will have to retire at the next Annual General Meeting (the “AGM”) following

their appointments. The retiring directors are eligible to offer themselves for re-election.

Mr Kua Chee Hong, who is due to retire by rotation at the forthcoming AGM, has expressed his desire not to seek for

re-election.

The NC has nominated the other retiring directors, Messrs Kua Eng Watt and Tan Lye Heng Paul, for re-election at the

forthcoming AGM. In considering the nomination, the NC took into account the contribution of the directors with reference

to their attendance and participation at Board meetings (and Board committee meetings where applicable) as well as

proficiency with which they have discharged their responsibilities.

Principle 5: Board Performance

A formal assessment process is in place to assess the effectiveness of the Board as a whole and the contribution by each

Director to the effectiveness of the Board.

The evaluation of the Board is conducted annually and an individual assessment of each Director is also undertaken

annually.

The NC uses its best efforts to ensure that Directors appointed to the Board possess the relevant background, experience

and knowledge to enable balanced and well-considered decisions to be made.





Principle 6: Access to Information

In order to ensure that the Board is able to fulfill its responsibilities, the management is required to provide adequate

and timely information to the Board on affairs and issues that require the Board’s decision.

The Board, in fulfilling its responsibilities, will, as a group or individually, when deemed fit, direct the Company to appoint

professional advisers to render professional advice. The costs associated with such professional services will be borne by

the Company.

The Board has separate and independent access to the senior management of the Company and the Company Secretary

at all times.

The Company Secretary attends all Board meetings and is responsible for ensuring that Board procedures are followed

and that applicable rules and regulations are complied with.

REMUNERATION MATTERS

Principle 7: Procedures for Developing Remuneration Policies

Principle 8: Level and Mix of Remuneration

Principle 9: Disclosure on Remuneration

The Remuneration Committee (“RC”) oversees executive remuneration and development in the Company with the goal

of building a capable and committed management team.

The RC comprises Messrs Goh Chee Wee, Hoon Tai Meng and Tan Lye Heng Paul, all of whom are Independent and Non-

Executive Directors. Mr Goh Chee Wee is the Chairman of the RC.

The RC will recommend to the Board a framework of remuneration for the Directors and Chief Financial Officer, and

determine specific remuneration packages for each Executive Director and Chief Financial Officer. The recommendations

of the RC should be submitted for endorsement by the Board. All aspects of remuneration, including but not limited to

the Directors’ and Chief Financial Officer’s salaries, allowances, bonuses, options and benefits-in-kind are covered by the

RC.

The RC will also review the remuneration of senior management and employees related to the Directors.

The RC has access to expert professional advice on human resource matters whenever there is a need to consult externally.

In its deliberations, the RC will take into consideration industry practices and norms in compensation in addition to the

relative performance of the Group to the industry and the performance of the individuals. No individual will be involved

in deciding his own remuneration.

The Executive Directors have entered into service agreements with the Company. The service agreements cover the

terms of employment, specifically salary and other benefits. The remuneration of each of the Non-Executive Directors is

determined by his contribution to the Company, taking into account factors such as effort and time committed to the

Company as well as his responsibilities on the Board. The Board will recommend the remuneration of the Non-Executive

Directors for approval at the AGM.

The service agreements of the Executive Directors include terms for termination under appropriate notice not exceeding

6 months.





REMUNERATION OF DIRECTORS

Details of the remuneration of the Directors for the financial year ended 30 June 2011 are set out below:

Name of Director Fixed Component Variable Component Directors’ Fee Total

$250,000 to $499,999

Lim Lian Soon(1) 91% 9% – 100%

Below $250,000

Kua Chee Meng 90% 10% – 100%

Kua Chee Seng 90% 10% – 100%

Kua Eng Wah 89% 11% – 100%

Kua Eng Watt 90% 10% – 100%

Kua Chee Hong – – 100% 100%

Goh Chee Wee – – 100% 100%

Hoon Tai Meng – – 100% 100%

Tan Lye Heng Paul – – 100% 100%

(1) The Company had provided Lim Lian Soon with a car.

During the financial year, no share options were granted to any of the Directors.

Remuneration of Executive Officers

Details of remuneration of the top five executives (who are not Directors) of the Company for the financial year ended

30 June 2011 are set out below:

Name of Executive Officer Designation

Fixed

Component

Variable

Component Total

Below $250,000

Chia Hua Meng Chief Financial Officer 90% 10% 100%

Kua Chee Kok(1) Senior Manager (Warehouse) 96% 4% 100%

Kua Eng Bee(2) Senior Manager (Sales and Marketing) 96% 4% 100%

Kua Peng Chuan(3) Senior Manager, Sales & Marketing/

Head of Market Development

92% 8% 100%

Kua Ghim Siong(4) Senior Manager, Purchasing & Logistics/

China Operations

92% 8% 100%

(1) Kua Chee Kok is a sibling of Kua Chee Seng and Kua Chee Meng.

(2) Kua Eng Bee is a sibling of Kua Eng Wah and Kua Eng Watt.

(3) Kua Peng Chuan is the son of (and alternate director to) Kua Chee Hong.

(4) Kua Ghim Siong is the son of Kua Eng Wah.

Apart from the above, the Company does not have any employees whose remuneration exceeded $150,000 for the financial

year ended 30 June 2011 and who are immediate family members of the Directors or Substantial Shareholders.





ACCOUNTABILITY AND AUDIT

Principle 10: Accountability

The Board believes that it should promote best practices in order to build an excellent business for the shareholders as

it is accountable to shareholders for the performance of the Company.

The Board is mindful of its obligations to provide timely and full disclosure of material information in compliance with

statutory reporting requirements. Price sensitive information is first publicly released after the review by the Board, either

before the Company meets with any group of investors or analysts or simultaneously with such meetings. Financial results

and annual reports will be announced or issued within legally prescribed periods.

The Board is provided with management accounts of the Group on a quarterly basis.

Principle 11: Audit Committee

The Audit Committee (“AC”) comprises three Independent and Non-Executive Directors, Messrs Tan Lye Heng Paul, Hoon

Tai Meng and Goh Chee Wee, all of whom have the appropriate accounting experience or related financial management

expertise. Mr Tan Lye Heng Paul is the Chairman of the AC.

The AC holds periodic meetings to perform the following functions:

(a) review with the external auditors the audit plan, their evaluation of the system of internal controls, audit report,

management letter and management’s response;

(b) review the financial statements before submission to the Board for approval, focusing in particular, on changes

in accounting policies and practices, major risk areas, significant adjustments resulting from the audit, the going

concern statement, compliance with financial reporting standards as well as compliance with the statutory/

regulatory requirements of the Singapore Exchange Securities Trading Limited, Companies Act of Singapore and

such other regulation under the laws of Singapore;

(c) review the internal control and procedures and ensure co-ordination between the external auditors and the

management, review the assistance given by the management to the auditors, and discuss problems and concerns,

if any, arising from the interim and final audits, and any matters which the auditors may wish to discuss (in the

absence of the management where necessary);

(d) review and discuss with the external auditors any suspected fraud or irregularity, or suspected infringement of any

relevant laws, rules or regulations, which has or is likely to have a material impact on the Group’s operating results

or financial position and the management’s response;

(e) consider the appointment or re-appointment of the external auditors and matters relating to resignation or dismissal

of the auditors;

(f) review transactions falling within the scope of Chapter 9 and Chapter 10 of the Listing Manual of the Singapore

Exchange Securities Trading Limited;

(g) review any potential conflict of interests;

(h) review and approve any procedures for entering into hedging transactions;

(i) undertake such other reviews and projects as may be requested by the Board and report to the Board its findings

from time to time on matters arising and requiring the attention of the AC; and

(j) generally to undertake such other functions and duties as may be required by statute or the SGX-ST Listing Manual,

and by such amendments made thereto from time to time.





In addition, the AC has the power to conduct or authorise investigations into any matters within the AC Charter. It also

has full access to and the co-operation of management. The Gruop has in place a whistle-blowing policy which provides

an arena for staff to raise, in confidence, concerns about possible irregularities for investigations.

The AC will meet with the external and internal auditors, in the absence of management, at least once a year. Where the

external auditor also supplies a substantial volume of non-audit services, the AC will conduct a review to satisfy that the

nature and extent of such services have not prejudiced the independence and objectivity of the external auditors. The AC

will constantly bear in mind the need to maintain a balance between the independence and objectivity of the external

auditors and the work carried out by the external auditors based on value-for-money considerations. The external auditors

have unrestricted access to the AC.

There was no non-audit fee paid to the auditors of the Company for the financial year ended 30 June 2011.

The AC has recommended to the Board the nomination of Messrs KPMG LLP, for re-appointment as external auditors of

the Company at the forthcoming AGM.

Principle 12: Internal Controls

Although the Board acknowledges that it is responsible for the overall internal control framework, it also recognises

that no cost effective internal control system will preclude all errors and irregularities. A system is designed to manage

rather than eliminate the risk of failure to achieve business objectives, and can provide only reasonable and not absolute

assurance against material misstatement or loss. The AC, on behalf of the Board, has reviewed the effectiveness of the

internal control system put in place by the management and is satisfied that there are adequate internal controls in the

Group.

Principle 13: Internal Audit

The Company has outsourced the internal audit function to an external professional firm to perform the review and test

of controls of its processes. The internal auditors report directly to the Chairman of the AC.

The AC reviews and approves the internal audit plans and reviews the scope and results of the internal audit performed

by the internal auditors. Scheduled internal audits are carried out by the internal auditors based on the audit plan

presented to and approved by the AC on a half yearly basis or as appropriate. The internal auditors report to the AC on

areas for improvement and subsequently follow up to determine the extent of their recommendations that have been

implemented.

Based on the internal auditors’ report for the financial year ended 30 June 2011, the Company’s system of internal controls

was generally adequate and appeared to be working satisfactorily. A number of internal control weaknesses were identified

during the financial year, all of which have been, or are being, addressed.

COMMUNICATION WITH SHAREHOLDERS

Principle 14: Communication with Shareholders

Principle 15: Greater Shareholder Participation

The Board recognises the importance of regular and timely communication with the shareholders.





The Company does not practise selective disclosure. In line with continuous obligations of the Company pursuant to

the Listing Manual of the Singapore Exchange Securities Trading Limited and the Companies Act of Singapore, it is the

Board’s policy that all shareholders should be equally informed, on a timely basis, of all major developments that will or

expect to have an impact on the Company.

Shareholders are encouraged to attend the AGM to stay informed of the goals of the Company and strategies and to

ensure a high level of accountability by the management. Notice of AGM is despatched to shareholders, together with

explanatory notes or a circular on items of special business (if necessary), at least 14 days before the meeting. The Board

welcomes questions from shareholders who have an opportunity to raise issues either informally or formally before or at

the AGM. The Chairmen of the respective AC, NC and RC are normally available at the meeting to answer those questions

relating to the work of the respective committees. The external auditors are also present to assist the Board with enquiries

relating to the audit.

DEALINGS IN SECURITIES

The Company has issued a guideline on share dealings to all Directors and employees setting out the code of conduct

on transactions in the Company’s shares by these persons, the implications of insider trading and general guidance on

the prohibition against such dealings.

The Company issues a notification to all officers and employees of the Group informing them that they should not deal

in the securities of the Company during the period commencing two weeks before the announcement of the Company’s

financial statements for each of the first three quarters of its financial year, or one month before the full financial year, as

the case may be, and ending on the date of the announcement of the relevant results. To the best of our knowledge, no

officer of the Company has dealt in the Company’s securities on short-term considerations.

OTHER INFORMATION

Interested Persons Transactions

The Company has established procedures to ensure that all transactions with interested persons are reported to the AC

and that they are transacted on an arm’s length basis, on normal commercial terms and will not be prejudicial to the

interests of its minority shareholders.

During the financial year, there were no material transactions entered into with interested persons.

Material Contracts

There were no material contracts of the Company involving the interests of the Directors or Substantial Shareholders

during the financial year.

Risk Management

Management regularly reviews the Group’s business and operational activities to identify areas of significant business

risks as well as appropriate measures to control and mitigate these risks within the Group’s policies and strategies. The

significant risk management policies are as disclosed in the audited financial statements.





Hedging Policy

In respect of currency hedging, the risk management policy of the Company is to consider hedging for foreign currency

transactions based on the total foreign exchange exposure at the end of each month. Hedging transactions will be

limited by the size of the foreign exchange exposure at the end of the month. In addition, the cash flows of the hedging

transactions should match the expected cash flows of the underlying foreign currency transactions.

Use of Proceeds from Initial Public Offering

51,900,000 new ordinary shares were issued on 6 June 2007 at $0.33 each in the capital of the Company pursuant to the

initial public offering of its shares on the Singapore Exchange Securities Trading Limited (“IPO”).

On 30 June 2009, $7 million from the issue of new ordinary shares in connection with the IPO, which was identified to

partially finance the redevelopment of the existing warehousing facilities at 32 Gul Crescent or acquire new warehousing

facilities, was re-deployed as general working capital instead, as the Company had decided not to develop the existing,

or acquire new, warehousing facilities.

As at 30 June 2011, the proceeds from the issue of new ordinary shares pursuant to the initial public offering had been

used or re-deployed as follows:

$’000

Gross proceeds from initial public offering 17,127

Initial public offering expenses (1,617)

Net proceeds from initial public offering 15,510

Applied as working capital (5,136)

Balance as at 30 June 2010 10,374

Re-deployed as working capital (10,374)

Balance as at 30 June 2011 Nil




Directors’ Report

We are pleased to submit this annual report to the members of the Company together with the audited financial

statements for the financial year ended 30 June 2011.

Directors

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

Goh Chee Wee

Lim Lian Soon

Kua Chee Meng

Kua Chee Seng

Kua Eng Wah

Kua Eng Watt

Kua Chee Hong

Hoon Tai Meng

Tan Lye Heng Paul

Kua Peng Chuan (Alternate Director to Kua Chee Hong)

Directors’ interests

According to the register kept by the Company for the purposes of Section 164 of the Singapore Companies Act, Chapter

50 (the Act), particulars of interests of directors who held office at the end of the financial year (including those held

by their spouses and infant children) in shares, debentures, warrants and share options in the Company and in related

corporations are as follows:

Holdings in the name of

the director

Holdings in which the director is

deemed to have an interest

At beginning of

financial year

At end of

financial year

At beginning of

financial year

At end of

financial year

The Company

Ordinary shares

Lim Lian Soon 43,000 43,000 – –

Kua Chee Meng 92,333 92,333 92,333 92,333

Kua Chee Seng 115,238 115,238 165,238 165,238

Kua Eng Watt 285,000 285,000 56,700,000 56,700,000

Kua Chee Hong 14,250,000 14,250,000 3,150,000 3,150,000

Hoon Tai Meng 40,000 40,000 – –

Tan Lye Heng Paul 40,000 40,000 – –

Kua Peng Chuan 11,027,000 11,100,000 – –

There were no changes in the above-mentioned interests between the end of the financial year and 21 July 2011.

Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares,

debentures, warrants or share options of the Company, or of related corporations, either at the beginning of the year, or

date of appointment if later, or at the end of the financial year.

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Directors’ Report

Neither at the end of, nor at any time during the financial year, was the Company a party to any arrangement whose objects

are, or one of whose objects is, to enable the directors of the Company to acquire benefits by means of the acquisition

of shares in or debentures of the Company or any other body corporate.

Except for salaries, bonuses and fees and those benefits that are disclosed in notes 14 and 18 to the financial statements,

since the end of the last financial year, no director has received or become entitled to receive, a benefit by reason of a

contract made by the Company or a related corporation with the director, or with a firm of which he is a member, or with

a company in which he has a substantial financial interest.

Share options

During the financial year, there were:

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

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

As at the end of the financial year, there were no unissued shares of the Company under option.

Audit Committee

The Audit Committee comprises three independent and non-executive directors. The members of the Audit Committee

at the date of this report are:

Tan Lye Heng Paul (Chairman)

Hoon Tai Meng

Goh Chee Wee

The Audit Committee performs the functions specified in Section 201B of the Act, the SGX Listing Manual and the Code

of Corporate Governance.

The Audit Committee has held four meetings since the last directors’ report. In performing its functions, the Audit

Committee met with the Company’s external and internal auditors to discuss the scope of their work, the results of their

examination and evaluation of the Company’s internal accounting control system.

The Audit Committee also reviewed the following:

(1) assistance provided by the Company’s officers to the internal and external auditors;

(2) quarterly financial information and annual financial statements of the Company and its subsidiaries prior to their

submission to the directors of the Company for adoption; and

(3) interested person transactions (as defined in Chapter 9 of the SGX Listing Manual).




Directors’ Report

The Audit Committee has full access to management and is given the resources required for it to discharge its functions. It

has full authority and the discretion to invite any director or executive officer to attend its meetings. The Audit Committee

also recommends the appointment of the external auditors and reviews the level of audit and non-audit fees.

The Audit Committee is satisfied with the independence and objectivity of the external auditors and has recommended

to the Board of Directors that the auditors, KPMG LLP, be nominated for re-appointment as auditors at the forthcoming

Annual General Meeting of the Company.

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

On behalf of the Board of Directors

Goh Chee Wee

Director

Lim Lian Soon

Director

9 September 2011




Statement by Directors

In our opinion:

(a) the financial statements set out on pages 35 to 64 are drawn up so as to give a true and fair view of the state of

affairs of the Group and of the Company as at 30 June 2011, and the results, changes in equity and cash flows of the

Group for the year ended on that date in accordance with the provisions of the Singapore Companies Act, Chapter

50 and Singapore Financial Reporting Standards; and

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

debts as and when they fall due.

The Board of Directors has, on the date of this statement, authorised these financial statements for issue.

On behalf of the Board of Directors

Goh Chee Wee

Director

Lim Lian Soon

Director

9 September 2011

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Independent Auditors’ ReportMembers of the Company

Sin Ghee Huat Corporation Ltd.

Report on the financial statements

We have audited the accompanying financial statements of Sin Ghee Huat Corporation Ltd. (the Company) and its subsidiaries (the Group), which comprise the statement of financial position of the Group and the Company as at 30 June 2011, the income statement, statement of comprehensive income, statement of changes in equity and statement of cash flow of the Group for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 35 to 64.

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, Chapter 50 (the Act) and Singapore Financial Reporting Standards and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and statements of financial position 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 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 of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards to give a true and fair view of the state of affairs of the Group and of the Company as at 30 June 2011 and the results, changes in equity and cash flows of the Group for the year ended on that date.

Report on other legal and regulatory requirements

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

KPMG LLPPublic Accountants andCertified Public Accountants

Singapore9 September 2011

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Statement of Financial Position As at 30 June 2011

Group Company

Note 2011 2010 2011 2010

$’000 $’000 $’000 $’000

Non-current assets

Property, plant and equipment 3 8,770 8,168 8,568 8,168

Investment in subsidiaries 4 – – 5,000 1,000

Deferred tax assets 5 164 275 164 275

8,934 8,443 13,732 9,443

Current assets

Inventories 6 30,880 28,322 29,887 28,322

Trade and other receivables 7 15,618 13,246 15,217 13,269

Cash and cash equivalents 8 36,356 39,805 32,923 38,786

82,854 81,373 78,027 80,377

Total assets 91,788 89,816 91,759 89,820

Equity attributable to equity holders of the

Company

Share capital 9 45,750 45,750 45,750 45,750

Reserves 1,810 1,860 1,860 1,860

Retained earnings 39,541 38,655 39,788 38,659

Total equity 87,101 86,265 87,398 86,269

Current liabilities

Trade and other payables 10 3,747 2,888 3,421 2,888

Current tax liabilities 940 663 940 663

Total liabilities 4,687 3,551 4,361 3,551

Total equity and liabilities 91,788 89,816 91,759 89,820

The accompanying notes form an integral part of these financial statements.

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Consolidated Income Statement Year ended 30 June 2011


Note 2011 2010

$’000 $’000

Revenue 11 52,700 48,375

Cost of sales (39,403) (38,063)

Gross profit 13,297 10,312

Other operating income 12 210 336

Distribution costs (3,985) (3,237)

Administrative expenses (3,036) (2,951)

Other operating expenses (181) (6)

Finance costs 13 – (4)

Profit before tax 14 6,305 4,450

Income tax expense 15 (979) (716)

Profit for the year (attributable to equity holders of the Company) 5,326 3,734

Earnings per share 16

Basic (cents) 2.40 1.68

Diluted (cents) 2.40 1.68

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Consolidated Statement of Comprehensive Income Year ended 30 June 2011


2011 2010

$’000 $’000

Profit for the year 5,326 3,734

Other comprehensive income:

Foreign currency translation differences arising from consolidation (50) –

Revaluation of property, plant and equipment – 399

Total comprehensive income for the year 5,276 4,133

Attributable to:

Equity holders of the Company 5,276 4,133

Total comprehensive income for the year 5,276 4,133

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Consolidated Statement of Changes in Equity Year ended 30 June 2011


Share

capital

Revaluation

reserve

Currency

translation

reserve

Retained

earnings

Total

attributable to

equity holders

of the

Company

Group $’000 $’000 $’000 $’000 $’000

At 1 June 2009 45,750 1,461 – 37,141 84,352

Profit for the year – – – 3,734 3,734

Other comprehensive income

Revaluation of property, plant and equipment – 399 – – 399

Total comprehensive income for the year – 399 – 3,734 4,133

Transactions with owners of the Company,

recognised directly in equity

Dividends paid to owners of the Company – – – (2,220) (2,220)

Total transactions with owners of the Company – – – (2,220) (2,220)

At 30 June 2010 45,750 1,860 – 38,655 86,265

Profit for the year – – – 5,326 5,326

Other comprehensive income

Foreign currency translation difference – – (50) – (50)

Total comprehensive income for the year – – (50) 5,326 5,276

Transactions with owners of the Company,

recognised directly in equity

Dividends paid to owners of the Company – – – (4,440) (4,440)

Total transactions with owners of the Company – – – (4,440) (4,440)

At 30 June 2011 45,750 1,860 (50) 39,541 87,101

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Consolidated Statement of Cash FlowYear ended 30 June 2011


2011 2010

$’000 $’000

Operating activities

Profit for the year 5,326 3,734

Adjustments for:

Depreciation of property, plant and equipment 682 548

Gain on disposal of property, plant and equipment (53) (49)

Interest expense – 4

Interest income (142) (89)

Income tax expense 979 716

Operating cash flows before working capital changes 6,792 4,864

Trade and other receivables (2,372) (1,832)

Trade and other payables 859 377

Inventories (2,558) 6,322

Cash generated from operations 2,721 9,731

Interest received 142 89

Interest paid – (4)

Income tax paid (591) (742)

Net cash generated from operating activities 2,272 9,074

Cash flows from investing activities

Proceeds from disposal of property, plant and equipment 131 49

Purchase of property, plant and equipment (1,362) (770)

Net cash used in investing activities (1,231) (721)

Cash flows from financing activities

Dividends paid (4,440) (2,220)

Net cash used in financing activities (4,440) (2,220)

Net (decrease)/increase in cash and cash equivalents (3,399) 6,133

Cash and cash equivalents at beginning of year 39,805 33,672

Effect of exchange rates fluctuations (50) –

Cash and cash equivalents at end of year 36,356 39,805

Cash and cash equivalents comprise:

Cash and bank balances 26,356 39,805

Short-term bank deposits 10,000 –

36,356 39,805

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Notes to the Financial StatementsYear ended 30 June 2011

These notes form an integral part of the financial statements.

The financial statements were authorised for issue by the Board of Directors on 9 September 2011.

1 DOMICILE AND ACTIVITIES

Sin Ghee Huat Corporation Ltd. (the “Company”) is incorporated in the Republic of Singapore and has its registered

office at 32 Penhas Road #01-01, Singapore 208191.

The principal activities of the Company relate to stockholding and sale of stainless steel products and investment

holding. The principal activities of the subsidiaries are disclosed in note 4 to the financial statements.

The consolidated financial statements relate to the Company and its subsidiaries (together referred to as the

“Group”).

2 BASIS OF PREPARATION

2.1 Basis of preparation

The financial statements are prepared in accordance with Singapore Financial Reporting Standards (FRS).

The financial statements are presented in Singapore dollars which is the Company’s functional currency. All financial

information presented in Singapore dollars has been rounded to the nearest thousand, unless otherwise stated.

The financial statements have been prepared on the historical cost basis.

The preparation of financial statements in conformity with FRS requires management to make judgements, estimates

and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities,

income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are

recognised in the period in which the estimates are revised and in any future periods affected.

In the application of the Group’s accounting policies, management is of the opinion that there is no instance of

application of critical judgement which is expected to have a significant effect on the amounts recognised in the

financial statements.

The accounting policies set out below have been applied consistently by the Group to all periods presented in

these financial statements.

2.2 Changes in accounting policies

Overview

In the current financial year, the Group has adopted all the new and revised FRSs and Interpretations of FRSs (“INT

FRSs”) that are relevant to its operations and effective for annual periods beginning on 1 July 2010. The adoption of

these new and revised FRSs and INT FRSs does not result in substantial changes to the Group’s accounting policies

and has no material effect on the amounts reported for the current or prior years.

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2 BASIS OF PREPARATION (Continued)

2.3 Consolidation

Business combinations

Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date

on which control is transferred to the Group. Control is the power to govern the financial and operating policies

of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration

potential voting rights that are currently exercisable.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships.

Such amounts are generally recognised in profit or loss.

Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the

Group incurs in connection with a business combination are expensed as incurred.

Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent

consideration is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise,

subsequent changes to the fair value of the contingent consideration are recognised in profit or loss.

Subsidiaries

Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the

consolidated financial statements from the date that control commences until the date that control ceases.

The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted

by the Group. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling

interests even if doing so causes the non-controlling interests to have a deficit balance.

Transactions eliminated on consolidation

Intragroup balances and any significant unrealised gains and losses or income and expenses arising from intragroup

transactions are eliminated in preparing the consolidated financial statements.

Accounting for subsidiaries by the Company

Investments in subsidiaries, associates and jointly-controlled entities are stated in the Company’s statement of

financial position at cost less accumulated impairment losses.

2.4 Foreign currencies

Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the

exchange rate at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies

at the reporting date are retranslated to the functional currency at the exchange rate at the reporting date. Non-

monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated

to the functional currency at the exchange rate at the date on which the fair value was determined.






2.4 Foreign currencies (Continued)

Foreign currency transactions (Continued)

Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising

on the retranslation of monetary items that in substance form part of the Group’s net investment in a foreign

operation.

Foreign operations

The assets and liabilities of foreign operations are translated to Singapore dollars at exchange rates prevailing at

the reporting date. The income and expenses of foreign operations are translated to Singapore dollars at exchange

rates prevailing at the dates of the transactions. Goodwill and fair value adjustments arising on the acquisition

of a foreign operation on or after 1 January 2005 are treated as assets and liabilities of the foreign operation and

translated at the closing rate. Foreign currency differences are recognised in other comprehensive income, and

presented in the foreign currency translation reserve in equity. When a foreign operation is disposed of, in part or

in full, the relevant amount in the foreign exchange translation reserve is recognised in the consolidated income

statement as part of the gain or loss on sale.

2.5 Property, plant and equipment

Measurement

Property, plant and equipment are initially recognised at cost. Freehold premises are subsequently carried at

the revalued amount less accumulated depreciation and any accumulated impairment losses. All other items of

property, plant and equipment are subsequently carried at cost less accumulated depreciation and any accumulated

impairment losses.

Freehold premises are revalued at least every 5 years to ensure that their carrying amounts do not differ materially

from their fair values as at the end of the reporting period. When an asset is revalued, any accumulated depreciation

at the date of revaluation is eliminated against the gross carrying amount of the asset. The net amount is then

restated to the revalued amount of the asset.

Increases in carrying amounts arising from revaluation including currency translation differences are recognised

in the asset revaluation reserve, unless they offset previous decreases in the carrying amounts of the same asset,

in which case, they are recognised in profit or loss. Decreases in carrying amounts that offset previous increases of

the same asset are recognised against the asset revaluation reserve. All other decreases in carrying amounts are

recognised in the profit or loss.

Components of cost

The cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost

that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of

operating in the manner intended by management. The projected cost of dismantlement, removal or restoration

is recognised as part of the cost of property, plant and equipment if such obligation is incurred either when the

item is acquired or as a consequence of using the asset during a particular year for purposes other than to produce

inventories during that year.






2.5 Property, plant and equipment (Continued)

Depreciation

The residual values, estimated useful lives and depreciation method of property, plant and equipment are reviewed,

and adjusted as appropriate, at the end of each reporting period. The effects of any revision are recognised in profit

or loss when the changes arise.

Fully depreciated plant and equipment which are still in use are retained in the financial statements.

Depreciation on property, plant and equipment is calculated using the straight-line method to allocate those

depreciable amounts over their estimated useful lives as follows:

Freehold premises 50 years

Leasehold properties 18 to 23 years

Furniture, fixture and fittings 5 and 10 years

Motor vehicles 5 years

Plant and machinery 5 years

Office equipment 2 to 10 years

Subsequent expenditure

The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount

of the item if it is probable that the future economic benefits embodied within the component will flow to the

Group, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised. The

cost of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

Disposal

The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the

proceeds from disposal with the carrying amount of property, plant and equipment, and is recognised net within

other income/other expense in profit or loss. When revalued assets are sold, any related amount included in the

revaluation reserve is transferred to retained earnings.

2.6 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average

method. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated

selling expenses.






2.7 Financial instruments (Continued)

(i) Non-derivative financial assets

The Group initially recognises loans and receivables and deposits on the date that they are originated. All

other financial assets (including assets designated at fair value through profit or loss) are recognised initially

on the trade date at which the Group becomes a party to the contractual provisions of the instrument.

The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire,

or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which

substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in

transferred financial assets that is created or retained by the Group is recognised as a separate asset or

liability.

Financial assets and liabilities are offset and the net amount presented in the balance sheet when, and only

when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to

realise the asset and settle the liability simultaneously.

The Group has the following non-derivative financial assets: loans and receivables.

Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an

active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective

interest method, less any impairment losses. Loans and receivables comprise trade and other receivables.

Cash and cash equivalents comprise cash balances and bank deposits.

(ii) Non-derivative financial liabilities

Financial liabilities (including liabilities designated at fair value through profit or loss) are recognised initially

on the trade date at which the Group becomes a party to the contractual provisions of the instrument.

The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or

expire.

Financial assets and liabilities are offset and the net amount presented in the balance sheet when, and only

when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to

realise the asset and settle the liability simultaneously.

The Group has the following non-derivative financial liabilities: trade and other payables.

Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs.

Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective

interest method.






2.7 Financial instruments (Continued)

(iii) Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares

and share options are recognised as a deduction from equity, net of any tax effects.

2.8 Impairment

(i) Financial assets (including receivables)

A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine

whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence

indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had

a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

Objective evidence that financial assets are impaired can include default or delinquency by a debtor,

restructuring of an amount due to the Group on terms that the Group would not consider otherwise,

indications that a debtor or issuer will enter bankruptcy and the disappearance of an active market for a

security.

The Group considers evidence of impairment for receivables at both a specific asset and collective level. All

individually significant receivables are assessed for specific impairment. All individually significant receivables

found not to be specifically impaired are then collectively assessed for any impairment that has been incurred

but not yet identified. Receivables that are not individually significant are collectively assessed for impairment

by grouping together receivables with similar risk characteristics.

In assessing collective impairment, the Group uses historical trends of the probability of default, timing of

recoveries and the amount of loss incurred, adjusted for management’s judgement as to whether current

economic and credit conditions are such that the actual losses are likely to be greater or less than suggested

by historical trends.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference

between its carrying amount and the present value of the estimated future cash flows discounted at the

asset’s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance

account against receivables. Interest on the impaired assets continues to be recognised through the

unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease,

the decrease in impairment loss is reversed through profit or loss.

(ii) Non-financial assets

The carrying amounts of the Group’s non-financial assets are reviewed at each reporting date to determine

whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable

amount is estimated.






2.8 Impairment (Continued)

(ii) Non-financial assets (Continued)

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value

less costs to sell. 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. For the purpose of impairment testing, assets that cannot be tested individually

are grouped together into the smallest group of assets that generates cash inflows from continuing use that

are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit,

or CGU”).

An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated

recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in

respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and

then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis.

An impairment loss in respect of assets recognised in prior periods is assessed at each reporting date for any

indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been

a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only

to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been

determined, net of depreciation, if no impairment loss had been recognised.

2.9 Provision

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation

that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle

the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows

at a pre-tax rate that reflects current market assessments of the time value of money and where appropriate, the

risk specific to the liability.

A provision for warranties is recognised when the underlying products or services are sold. The provision is based

on historical warranty data and a weighting of all possible outcomes against their associated probabilities.

2.10 Revenue recognition

Sale of goods

Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of

returns and allowances, goods and services taxes or other sales taxes, trade discounts and volume rebates. Revenue

is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery

of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and

there is no continuing management involvement with the goods, and the amount of revenue can be measured

reliably.






2.10 Revenue recognition (Continued)

Interest income

Interest income from bank deposits is accrued on a time-apportioned basis using the effective interest method.

2.11 Finance income and expenses

Finance income comprises interest income on funds invested that is recognised in profit or loss. Interest income

is recognised as it accrues, using the effective interest method.

Finance expenses comprise interest expense on borrowings which are recognised in profit or loss using the effective

interest method. Borrowing costs that are not directly attributable to the acquisition, construction or production

of a qualifying asset are recognised in profit or loss using the effective interest-method.

2.12 Income tax expense

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or

loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other

comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates

enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous

years.

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities

for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the

following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business

combination and that affects neither accounting nor taxable profit or loss to the extent that it is probable that they

will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied

to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted

by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset

current tax liabilities and assets, and they relate to income taxes levied by the same tax authority.

A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the

extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred

tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the

related tax benefit will be realised.

2.13 Government grants

Government grants are recognised when the right to receive payment is established.

Grants in recognition of specific expenses are taken to income in the same year as the relevant expenses. Grants

designated to depreciable property, plant and equipment are offset against the costs of the corresponding property,

plant and equipment and the net amounts are depreciated on a straight-line basis over the respective useful lives

of the property, plant and equipment.






2.13 Government grants (Continued)

Jobs Credit Scheme

Cash grants received from the government in relation to the Jobs Credit Scheme are recognised as income upon

receipt.

2.14 Employee’s benefits

Defined contribution plans

Obligations for contributions to defined contribution pension plans are recognised as an expense in profit or loss

as incurred.

Employee leave entitlement

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

estimated liability for leave as a result of services rendered by employees up to the end of the reporting period.

Short-term benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related

service is provided.

A provision is recognised for the amount expected to be paid under short-term cash bonus if the Group has a

present legal or constructive obligation to pay this amount as a result of past service provided by the employee

and the obligation can be estimated reliably.

2.15 Key management compensation

Key management personnel of the Group are those persons having authority and responsibility for planning,

directing and controlling the activities of the Group. The Board of Directors and the senior management team of

the Group are considered as key management personnel of the Group.

2.16 Segment reporting

Segment information is presented based on the information reviewed by chief operating decision makers (“CODM”)

for performance assessment and resource allocation.

The Group operates primarily in Singapore and trades in stainless steel products which mainly comprise bars, plates,

pipes and fittings. Accordingly, the Group is regarded as having one reporting segment.

2.17 Operating lease

Lease of office equipment and warehouse where substantially all risks and rewards incidental to ownership are

retained by the lessors are classified as operating leases. Payments made under operating leases (net of any

incentives received from the lessors) are recognised in profit or loss on a straight-line basis over the period of the

lease.






2.17 Operating lease (Continued)

The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the

lease term on a straight-line basis.

When an operating lease is terminated before the lease period has expired, any payments required to be made to

the lessor by way of penalty is recognised as an expense in the period in which termination takes place.

2.18 Intra-group financial guarantee

Financial guarantee contracts are accounted for as insurance contracts. A provision is recognised based on the

Group’s estimate of the ultimate cost of settling all claims incurred but unpaid at each reporting date. The provision

is assessed by reviewing individual claims and tested for adequacy by comparing the amount recognised and the

amount that would be required to settle the guarantee contract.

3 PROPERTY, PLANT AND EQUIPMENT

Freehold

premises

Leasehold

properties

Furniture,

fixtures and

fittings

Office

equipment

Motor

vehicles

Plant and

machinery Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000

Group

Cost

As at 1 July 2009 4,650 4,474 795 497 796 487 11,699

Revaluation adjustment 50 – – – – 50

Additions – – 529 35 37 169 770

Disposals – – (12) (79) – (154) (245)

As at 30 June 2010 4,700 4,474 1,312 453 833 502 12,274

Reclassifications – 1,151 (1,151) – – – –

Additions – 10 764 60 309 219 1,362

Disposals – – (7) (4) (246) (75) (332)

As at 30 June 2011 4,700 5,635 918 509 896 646 13,304

Accumulated depreciation

As at 1 July 2009 238 1,916 569 410 590 429 4,152

Additions 111 236 50 43 72 36 548

Revaluation adjustment (349) – – – – – (349)

Disposals – – (12) (79) – (154) (245)

As at 30 June 2010 – 2,152 607 374 662 311 4,106

Additions 119 267 88 39 91 78 682

Disposals – – (7) (2) (170) (75) (254)

As at 30 June 2011 119 2,419 688 411 583 314 4,534

Carrying amount

As at 1 July 2009 4,412 2,558 226 87 206 58 7,547

As at 30 June 2010 4,700 2,322 705 79 171 191 8,168

As at 30 June 2011 4,581 3,216 230 98 313 332 8,770





3 PROPERTY, PLANT AND EQUIPMENT (Continued)

Freehold

premises

Leasehold

properties

Furniture,

fixtures and

fittings

Office

equipment

Motor

vehicles

Plant and

machinery Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000

Company

Cost

As at 1 July 2009 4,650 4,474 795 497 796 487 11,699

Revaluation adjustment 50 – – – – – 50

Additions – – 529 35 37 169 770

Disposals – – (12) (79) – (154) (245)

As at 30 June 2010 4,700 4,474 1,312 453 833 502 12,274

Reclassifications – 1,151 (1,151) – – – –

Additions – 10 626 49 273 142 1,100

Disposals – – (7) (4) (246) (75) (332)

As at 30 June 2011 4,700 5,635 780 498 860 569 13,042

Accumulated depreciation

As at 1 July 2009 238 1,916 569 410 590 429 4,152

Additions 111 236 50 43 72 36 548

Revaluation adjustment (349) – – – – – (349)

Disposals – – (12) (79) – (154) (245)

As at 30 June 2010 – 2,152 607 374 662 311 4,106

Additions 119 267 50 35 86 65 622

Disposals – – (7) (2) (170) (75) (254)

As at 30 June 2011 119 2,419 650 407 578 301 4,474

Carrying amount

As at 1 July 2009 4,412 2,558 226 87 206 58 7,547

As at 30 June 2010 4,700 2,322 705 79 171 191 8,168

As at 30 June 2011 4,581 3,216 130 91 282 268 8,568

The Company’s freehold premises at 32 Penhas Road, Singapore were last revalued by an independent professional

valuer on 30 June 2010 based on the property’s open market value using the Comparative Method of Valuation

at 30 June 2010.

If this asset had been carried at cost less accumulated depreciation, the carrying amount as at the end of the

financial year would have been as follows:

Group and Company

2011 2010

$’000 $’000

Freehold premises 3,398 3,487





4 INVESTMENT IN SUBSIDIARIES

Company

2011 2010

$’000 $’000

Equity investments at cost 5,000 1,000

Details of the subsidiaries are as follows:

Name of subsidiary Principal activities

Country of

incorporation

and place of

business

Effective equity

held by the Group

2011 2010

Held by the Company

SG Metals Pte. Ltd(1) Stockholding and sales of stainless steel

products

Singapore 100% 100%

Held by a Subsidiary

SG Metals (Suzhou) Ltd(2) Stockholding and sales of stainless steel

products

People’s Republic

of China

100% –

(1) Audited by KPMG LLP Singapore

(2) Audited by Suzhou Tianping C.P.A. Co. Ltd., Certified Public Accountants, PRC.

SG Metals (Suzhou) Ltd was incorporated on 6 July 2010 as a wholly-owned subsidiary of the Company through

SG Metals Pte Ltd.

5 DEFERRED TAX

Movements in deferred tax assets and liabilities (prior to offsetting of balances) during the year are as follows:

At 1 July

2009

Recognised

in income

statement

(Note 15)

At 30 June

2010

Recognised

in income

statement

(Note 15)

At 30 June

2011

Group and Company $’000 $’000 $’000 $’000 $’000

Deferred tax liabilities

Property, plant and equipment (47) (5) (52) (24) (76)

Deferred tax assets

Inventories 375 (48) 327 (124) 203

Provisions – – – 37 37

328 (53) 275 (111) 164

Deferred tax liabilities and assets are offset when there is a legally enforceable right to set off current tax assets

against current tax liabilities and when the deferred taxes relate to the same taxation authority. The amounts

determined after appropriate offsetting are included in the balance sheet as follows:





5 DEFERRED TAX (Continued)

Group and Company

2011 2010

$’000 $’000

Deferred tax assets 240 327

Deferred tax liabilities (76) (52)

Net deferred tax assets 164 275

6 INVENTORIES

Group Company

2011 2010 2011 2010

$’000 $’000 $’000 $’000

Supplies 28,551 26,527 27,558 26,527

Goods-in-transit 2,329 1,795 2,329 1,795

30,880 28,322 29,887 28,322

In 2011, the write-down of inventories to net realisable value amounted to $444,000 (2010: $982,000) for the

Group and the Company. The reversal of write-downs by the Group and the Company during the year amounted

to $1,172,000 (2010: $1,680,000), mainly due to inventories being sold above the carrying amounts during the year

and/or having a higher net realisable value.

7 TRADE AND OTHER RECEIVABLES

Group Company

2011 2010 2011 2010

$’000 $’000 $’000 $’000

Trade receivables 15,106 13,106 14,839 13,106

Impairment losses (51) (32) (51) (32)

Net receivables 15,055 13,074 14,788 13,074

Amounts due from subsidiaries

– Trade – – 264 –

– non-trade – – – 66

Sundry deposits 114 56 13 13

Other receivables 135 – 25 –

Loans and receivables 15,304 13,130 15,090 13,153

Prepayments 314 116 127 116

15,618 13,246 15,217 13,269





7 TRADE AND OTHER RECEIVABLES (Continued)

Amounts due from subsidiaries

Outstanding balances with subsidiaries are unsecured. There is no allowance for doubtful debts arising from the

outstanding balances.

The Group’s primary exposure to credit risk arises through its trade receivables. The Group’s historical experience

in the collection of accounts receivable falls within the recorded allowances. Due to these factors, management

believes that no additional credit risk beyond the amounts provided for collection losses is inherent in the Group’s

trade receivables.

The ageing of trade and other receivables at the reporting date is:

Gross

Impairment

losses Gross

Impairment

losses

2011 2011 2010 2010

$’000 $’000 $’000 $’000

Group

Not past due 10,485 – 9,411 –

Past due 0-30 days 3,221 – 1,988 –

Past due 31-120 days 1,404 – 1,602 –

Past due 121-365 days 240 (46) 121 –

More than one year 5 (5) 40 (32)

15,355 (51) 13,162 (32)

Company

Not past due 10,180 – 9,434 –

Past due 0-30 days 3,193 – 1,988 –

Past due 31-120 days 1,523 – 1,602 –

Past due 121-365 days 240 (46) 121 –

More than one year 5 (5) 40 (32)

15,141 (51) 13,185 (32)

The receivables that are impaired are not secured by any collateral.

The change in impairment loss in respect of trade receivables during the year is as follows:

Group and Company

2011 2010

$’000 $’000

Balance at 1 July 32 108

Impairment loss recognised 46 23

Utilised (27) (79)

Written off during the year – (20)

Balance at 30 June 51 32





8 CASH AND CASH EQUIVALENTS

Group Company

2011 2010 2011 2010

$’000 $’000 $’000 $’000

Cash and bank balance 26,356 39,805 22,923 38,786

Short-term bank deposits 10,000 – 10,000 –

36,356 39,805 32,923 38,786

The effective interest rates of short-term bank deposits and cash at bank accounts as at 30 June 2011 ranged from

0.1% to 0.8% (2010: from 0.1% to 0.4%) per annum.

9 SHARE CAPITAL

Group and Company

2011 2010

Number of

shares Amount

Number of

shares Amount

‘000 $’000 ‘000 $’000

Issued and fully paid ordinary shares 222,000 45,750 222,000 45,750

The holders of ordinary shares are entitled to receive dividends as declared by the Company from time to time and

are entitled to one vote per share at general meetings of the Company. All shares rank equally with regard to the

Company’s residual assets.

10 TRADE AND OTHER PAYABLES

Group Company

2011 2010 2011 2010

$’000 $’000 $’000 $’000

Trade payables 2,790 1,878 2,480 1,878

Accrued expenses 858 733 836 733

Other payables 99 277 90 277

Amount due to subsidiaries (non-trade) – – 15 –

3,747 2,888 3,421 2,888

Outstanding balances with subsidiaries are unsecured.

11 REVENUE

Revenue represents the invoiced value of goods sold less returns.





12 OTHER OPERATING INCOME

Group

2011 2010

$’000 $’000

Interest income on bank and short-term bank deposits 142 89

Gain on disposal of property, plant and equipment 53 49

Reversal of allowance for doubtful debts – trade – 56

Sundry income 15 142

210 336

Grants related to Jobs Credit Scheme (“Job Credit”) are included in sundry income.

13 FINANCE COSTS

Group

2011 2010

$’000 $’000

Interest on bills payable – 4

– 4

14 PROFIT BEFORE TAX

This is determined after crediting/(charging) the following:

Group

2011 2010

$’000 $’000

Depreciation of property, plant and equipment (682) (548)

Gain on disposal of property, plant and equipment 53 49

Foreign exchange loss (160) (6)

Interest income on bank and short-term bank deposits 142 89

Interest expense on borrowings – (4)

Directors’ fees (161) (144)

Directors’ remuneration (1,098) (1,114)

Operating lease expenses in respect of leasehold premises (322) (168)

Operating lease expenses in respect of office equipment (41) (41)

(Allowance)/Reversal for doubtful debts – trade (19) 56





15 INCOME TAX EXPENSE

Group

2011 2010

$’000 $’000

Current tax expense

Current year 940 663

Over provision in prior years (72) –

868 663

Deferred tax expense

Movements in temporary differences 111 53

Income tax expense 979 716

Reconciliation of effective tax rate

Profit before tax 6,305 4,450

Income tax using Singapore tax rate of 17% (2010: 17%) 1,072 757

Effect on different tax rates in foreign jurisdictions (19) –

Tax effect on non-allowance items 79 21

Tax effect on non-taxable items (33) (32)

Tax savings on partial exempt income (26) (26)

Tax incentives (43) –

Deferred tax not recognised 59 –

Over-provision in prior years (72) –

Others (38) (4)

979 716

16 EARNINGS PER SHARE

Basic and diluted earnings per share are calculated by dividing the net profit attributable to equity holders of the

Company by the weighted average number of ordinary shares outstanding during the year.

Group

2011 2010

Net profit attributable to equity holders of the Company ($’000) 5,326 3,734

Weighted average number of ordinary shares in issue (‘000) 222,000 222,000

Basic and diluted earnings per share (cents) 2.40 1.68

17 EMPLOYEE COMPENSATION

Group

2011 2010

$’000 $’000

Salaries, bonuses and other costs 4,012 3,678

Central Provident Fund and other defined contributions 369 283

4,381 3,961





18 RELATED PARTIES

For the purposes of these financial statements, parties are considered to be related to the Group if the Group has

the ability, directly or indirectly, to control the party or exercise significant influence over the party in making

financial and operating decisions, or vice versa, or where the Group and the party are subject to common control

or common significant influence. Related parties may be individuals or other entities.

Other than as disclosed elsewhere in the financial statements, there were the following transactions with related

parties:

(a) Immediate family members of the directors or substantial shareholders

Group and Company

2011 2010

$’000 $’000

Short-term employee benefits 729 631

(b) Key management personnel

Group and Company

2011 2010

$’000 $’000

Short-term employee benefits 1,681 1,856

19 OPERATING LEASE LIABILITIES

The Group’s and the Company’s non-cancellable operating lease rentals are payable as follows:

Group Company

2011 2010 2011 2010

$’000 $’000 $’000 $’000

Payables:

Within one year 377 224 236 224

After one year but not more than five years 966 779 802 779

After five years 982 900 982 900

2,325 1,903 2,020 1,903

These lease commitments relate to warehouse premises and office equipment. The terms of the operating lease

commitments range from 1 year to 10 years.





20 CAPITAL COMMITMENTS

Group Company

2011 2010 2011 2010

$’000 $’000 $’000 $’000

Contracted but not provided for:

Renovation – 343 – 343

– 343 – 343

21 DIVIDENDS

Group and Company

2011 2010

$’000 $’000

Final dividend (one-tier tax exempt) paid in respect of prior years 4,440 2,220

During the year ended 30 June 2011, the Group declared and paid a Final one-tier tax exempt dividend of 1.00

cent per ordinary share and a Special one-tier tax exempt dividend of 1.00 cent per ordinary share in respect of

the year ended 30 June 2010.

Subsequent to the year ended 30 June 2011, the directors proposed a Final one-tier tax exempt dividend of

1.2 cents per ordinary share and a Special one-tier tax exempt dividend of 0.8 cents per ordinary share in respect

of the year ended 30 June 2011, amounting to $4,440,000 to be paid to the shareholders of the Company on 15

November 2011, subject to shareholders’ approval at the forthcoming Annual General Meeting of the Company.

These dividends have not been provided for in the financial statements.

22 FINANCIAL INSTRUMENTS

Overview

The Group has exposure to the following risks from its use of financial instruments:

• foreign currency risk

• interest rate risk

• credit risk

• liquidity risk

The Group has adopted risk management policies that seek to mitigate these risks in a cost- effective manner.





22 FINANCIAL INSTRUMENTS (Continued)

Foreign exchange risk

Foreign exchange risk arises from a change in foreign currency exchange rate, which is expected to have an adverse

effect on the Group in the current and future reporting period.

The Group is exposed to currency risk on sales and purchases that are denominated in a currency other than

the functional currency of the Group’s entities, primarily the Singapore dollar (“SGD”). The currencies in which

these transactions primarily are denominated are SGD, United States dollar (“USD”), Euro (“EUR”) and Renminbi

(“RMB”).

The risk management policy of the Group is to consider hedging for foreign exchange transactions based on

the total foreign exchange exposure at the end of each month. The Group also holds cash and cash equivalents

denominated in USD for working capital purposes. The Group’s assets and liabilities denominated in a currency

other than the functional currencies of the Group’s entities are as follows:

Group Company

USD RMB EUR USD RMB EUR

$’000 $’000 $’000 $’000 $’000 $’000

2011

Assets

Cash and cash equivalents 674 – 2 269 – 2

Trade and other receivables 1,020 – – 1,284 – –

1,694 – 2 1,553 – 2

Liabilities

Trade payables (1,363) – (261) (1,363) (15) (261)

Net currency exposure 331 – (259) 190 (15) (259)

2010

Assets

Cash and cash equivalents 99 – – 99 – –

Trade and other receivables 1,254 – – 1,254 – –

1,353 – – 1,353 – –

Liabilities

Trade payables (1,140) – (416) (1,140) – (416)

Net currency exposure 213 – (416) 213 – (416)






Sensitivity analysis

A 10% strengthening of the Singapore dollar, as indicated below, against the USD, EUR and RMB at 30 June would

have increased/(decreased) equity and profit by the amounts shown below. This analysis is based on foreign

currency exchange rate variances that the Group and the Company considered to be reasonably possible at the end

of the reporting period. The analysis assumes that all other variables, in particular interest rates, remain constant

and ignores any impact of forecasted sales and purchases. The analysis is performed on the same basis for 2010,

albeit that the reasonably possible foreign exchange rate variances were different, as indicated below:

Group Company

Profit/(Loss) Equity Profit/(Loss) Equity

$’000 $’000 $’000 $’000

30 June 2011

USD (33) – (19) –

EUR 26 – 26 –

RMB – – 1 –

30 June 2010

USD (21) – (21) –

EUR 42 – 42 –

A weakening of the Singapore dollar against the above currencies at 30 June would have had the equal but

opposite effect to the above currencies to the amounts shown above, on the basis that all other variables remain

constant.

Interest rate risk

Interest rate risk is the risk that changes in market interest rates will have an adverse financial effect on the Group’s

financial conditions and/or results. The Group’s exposure to changes in market interest rates relates primarily to

its placement in fixed deposits.

The risk management policy of the Group is to obtain quotations of interest rates for comparison and to select the

most favourable interest rates based on the terms and conditions available.

As at 30 June 2011, based on information provided internally, the exposure of the Group and the Company to

interest rate risk is as follows:

Group Company

2011 2010 2011 2010

$’000 $’000 $’000 $’000

Variable rates less than 12 months

Assets

Cash and cash equivalents 23,974 34,166 20,618 34,166

Fixed rates less than 12 months

Assets

Cash and cash equivalents 10,000 – 10,000 –

Total 33,974 34,166 30,618 34,166






As at 30 June 2011, ceteris paribus, an increase/(decrease) in interest rate of 10 basis points on bank and cash

balances would have resulted in an increase/(decrease) in interest income of $33,974 (2010: $34,166) per annum

for the Group, and $30,618 (2010: $34,166) per annum for the Company.

Credit risk

Credit risk is the risk that companies and other parties will be unable to meet their obligations to the Group resulting

in financial loss to the Group. The Group’s exposure to credit risk arises mainly from trade receivables, primarily

from Singapore.

The objective of the Group is to seek continual revenue growth while minimising losses incurred due to increased

credit risk exposure. The Group manages such risks by dealing with a diversity of creditworthy customers to mitigate

any significant concentration of credit risk. Its credit policy includes the evaluation of the credit-worthiness of

existing and new customers and the monitoring of credit excesses and overdue accounts.

As at 30 June 2011, the maximum exposure to credit risk in the event that counterparties fail to perform their

obligations in relation to each class of financial assets is the carrying amount of these assets in the statements

of financial position. There is no other class of financial assets that is past due and/or impaired except for trade

receivables. The trade receivables of the Group and the Company comprising the top five debtors represent 5%, 5%,

4%, 3% and 3% (2010: 4%, 4%, 4%, 3% and 3%) of trade receivables respectively. The trade receivables of the Group

and the Company that are past due and impaired amounting to $51,000 (2010: $32,000) had been provided for. The

trade receivables of the Group and the Company that are neither past due nor impaired relate substantially to credit-

worthy customers amounting to $10,236,000 and $10,142,000 (2010: $9,355,000 and $9,355,000) respectively.

For financial assets such as cash and cash equivalents, the Group minimises credit risk by dealing exclusively with

reputable financial institutions.

Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its

financial liabilities that are settled by delivering cash or another financial asset.

The Group maintains sufficient cash and cash equivalents to fulfil the Group’s financial obligations as and when it

falls due. As part of its liquidity risk management, the Group aims to maintain sufficient cash for working capital

purposes.

The Group has sufficient cash and cash equivalents and adequate credit facilities to ensure necessary liquidity. As

at 30 June 2011, the financial liabilities maturing within 6 months are as follows:

Group Company

2011 2010 2011 2010

$’000 $’000 $’000 $’000

Trade payables 2,790 1,878 2,480 1,878

Other payables 957 1,010 941 1,010






As at 30 June 2011, there are no financial liabilities maturing after 6 months.

Estimation of fair value

The carrying amounts of financial assets and liabilities with a maturity of less than one year are assumed to

approximate their fair values because of the short period to maturity.

Capital management

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and

to sustain future development of the business. Capital consists of share capital and retained earnings of the Group.

The Board of Directors monitors the return of capital as well as the level of dividends to ordinary shareholders.

23 SEGMENT INFORMATION

Segment information is presented based on the information reviewed by chief operating decision maker (“CODM”)

for performance assessment and resource allocation.

The CODM assesses the Group’s financial performance using performance indicators which include revenue, capital

expenditure and cash flow of the Group.

The Group has essentially one business or operating segment, which is the trading and sales of stainless steel

products where the risks and returns of the products are substantially similar.

These products comprise mainly bars, plates, pipes and fittings which are stainless steel materials of varying grades

and specifications. The following shows the respective industries to which the Group sells its products.

Marine and

shipbuilding

Oil, gas and

petrochemical

Building and

construction

Machining

and

processing

Trading

and others Total

Group $’000 $’000 $’000 $’000 $’000 $’000

2011

Revenue 8,041 5,621 3,056 12,081 23,901 52,700

Segment results 1,968 1,311 741 3,112 6,165 13,297

Unallocated costs (7,202)

6,095

Other operating income 210

Profit before income tax 6,305

Income tax expense (979)

Net profit for the year 5,326





23 SEGMENT INFORMATION (Continued)

Marine and

shipbuilding

Oil, gas and

petrochemical

Building and

construction

Machining

and

processing

Trading

and others Total

Group $’000 $’000 $’000 $’000 $’000 $’000

Assets

Trade receivables 2,408 2,225 841 4,040 5,541 15,055

Others – unallocated 76,733

91,788

Liabilities – unallocated 4,687

Capital expenditure – unallocated 1,362

Depreciation of property, plant and equipment 682

Marine and

ship-building

Oil, gas and

petrochemical

Building and

construction

Machining

and

processing

Trading

and others Total

$’000 $’000 $’000 $’000 $’000 $’000

2010

Revenue 9,931 5,848 3,767 9,821 19,008 48,375

Segment results 1,898 1,289 716 2,425 3,984 10,312

Unallocated costs (6,194)

4,118

Other operating income 336

Finance costs (4)

Profit before income tax 4,450

Income tax expense (716)

Net profit for the year 3,734

Assets

Trade receivables 2,424 1,723 1,254 3,037 4,636 13,074

Others – unallocated 76,742

89,816

Liabilities – unallocated 3,551

Capital expenditure – unallocated 770

Depreciation of property, plant and equipment –unallocated 548





23 SEGMENT INFORMATION (Continued)

Geographical segments

In presenting information on the basis of geographical segments, segment revenue is based on sales to the

respective geographical markets, while segment assets and capital expenditure are based on the geographical

location of the assets.

Revenue by geographical markets:

2011 2010

$’000 $’000

Singapore 37,748 34,473

ASEAN 12,769 9,959

Others* 2,183 3,943

52,700 48,375

Assets and capital expenditure by geographical locations:

Carrying amounts of

segment assets Capital expenditure

2011 2010 2011 2010

Group $’000 $’000 $’000 $’000

Singapore 87,660 86,224 1,108 770

ASEAN 3,671 3,203 – –

Others* 457 389 254 –

91,788 89,816 1,362 770

* Others mainly include Australia, China, Hong Kong and Middle East.

24 COMPARATIVE INFORMATION

Certain reclassifications have been made to the comparatives to enhance comparability with current year’s

presentation on the cost of sales, gross profit and other operating income and expenses.

As previously

stated

2010

Reclassification

2010

Restated

2010

$’000 $’000 $’000

Cost of sales (38,802) (739) (38,063)

Gross profit 9,573 739 10,312

Other operating income 2,094 (1,758) 336

Other operating expenses (1,025) (1,019) (6)

The comparative figures were previously audited by another firm of auditors.

25 NEW ACCOUNTING STANDARDS AND INTERPRETATIONS NOT YET ADOPTED

A number of new standards, amendments to standards and interpretations are effective for annual periods

beginning after 1 July 2010, and have not been applied in preparing these financial statements. None of these are

expected to have a significant effect on the financial statements of the Group.




Statistics of ShareholdingsAs at 12 September 2011

SHARE CAPITAL

Issued and Paid-Up Capital : $45,749,836.98

Total Number of Shares : 222,000,000

Class of shares : Ordinary shares

Voting Rights : One vote per ordinary share

DISTRIBUTION OF SHAREHOLDINGS BY SIZE OF SHAREHOLDINGS

Size of Shareholdings

Number of

Shareholders %

Number of

Shares %

1 to 999 1 0.08 500 0.00

1,000 to 10,000 638 47.61 4,229,000 1.91

10,001 to 1,000,000 683 50.97 43,429,333 19.56

1,000,001 and above 18 1.34 174,341,167 78.53

Total 1,340 100 222,000,000 100

TWENTY LARGEST SHAREHOLDERS AS AT 12 SEPTEMBER 2011

NAME OF SHAREHOLDER NO. OF SHARES % OF SHARES

1 2GS INVESTMENT PTE LTD 56,700,000 25.54

2 KUA GEOK LAY HOLDING PTE LTD 52,635,000 23.71

3 KUA CHEE HONG 14,250,000 6.42

4 KUA PENG CHUAN 11,100,000 5.00

5 KUA PENG KOON 10,240,000 4.61

6 KUA CHEE KENG 4,652,167 2.10

7 NG CHIT TONG PETER 3,935,000 1.77

8 LER BEE CHIN 3,150,000 1.42

9 CITIBANK NOMINEES SINGAPORE PTE LTD 2,674,000 1.20

10 KUA CHOO SUAN 2,426,000 1.09

11 KUA CHOO GEOK 2,370,000 1.07

12 KIM ENG SECURITIES PTE. LTD. 2,293,000 1.03

13 SUNFIELD PTE LTD 2,000,000 0.90

14 UOB KAY HIAN PTE LTD 1,395,000 0.63

15 UNITED OVERSEAS BANK NOMINEES (PRIVATE) LIMITED 1,251,000 0.56

16 PHILLIP SECURITIES PTE LTD 1,155,000 0.52

17 NG SOH LIAN 1,085,000 0.49

18 NG SOH HOON 1,030,000 0.46

19 RAFFLES NOMINEES (PTE) LTD 981,000 0.44

20 HONG LEONG FINANCE NOMINEES PTE LIMITED 944,000 0.43

Total: 176,266,167 79.39

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Statistics of ShareholdingsAs at 12 September 2011

PUBLIC SHAREHOLDINGS

Based on the information available to the Company as at 12 September 2011, approximately 27.4% of the issued ordinary

shares of the Company is held by the public and therefore, Rule 723 of the Listing Manual issued by the Singapore

Exchange Securities Trading Limited has been complied with.

SUBSTANTIAL SHAREHOLDERS AS AT 12 SEPTEMBER 2011

(As recorded in the Register of Substantial Shareholders)

Direct

Interest %

Deemed

Interest %

2GS Investment Pte. Ltd. 56,700,000 25.54 – –

Kua Geok Lay Holding Pte. Ltd. 52,635,000 23.71 – –

Kua Chee Hong (Note 1) 14,250,000 6.42 3,150,000 1.42

Ler Bee Chin (Note 1) 3,150,000 1.42 14,250,000 6.42

Kua Eng Watt (Note 2) 285,000 0.13 56,700,000 25.54

Kua Eng Bee (Note 2) – – 56,700,000 25.54

Kua Peng Chuan 11,100,000 5.00 – –

Notes:

1. Kua Chee Hong and his wife, Ler Bee Chin are deemed interested in the shares held by each other.

2. Kua Eng Watt and Kua Eng Bee, who each owns 33.33% of the shareholding interest in 2GS Investment Pte. Ltd., are interested in the 56,700,000

shares in the Company held by 2GS Investment Pte. Ltd.

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Notice of Annual General Meeting

SIN GHEE HUAT CORPORATION LTD.Company Registration No.: 197700475Z

(Incorporated in the Republic of Singapore)

NOTICE IS HEREBY GIVEN that the Annual General Meeting of Sin Ghee Huat Corporation Ltd. (the “Company”) will be held

at 32 Penhas Road #01-01, Singapore 208191 on Tuesday, 25 October 2011 at 11.00 a.m. for the following purposes:

AS ORDINARY BUSINESS

1. To receive and adopt the Audited Financial Statements of the Company for the financial year ended 30 June 2011

and the reports of the Directors and the Auditors thereon.

Resolution 1

2. To approve the Directors’ fees of up to $162,000 (2011: $162,000) payable quarterly in arrear for the financial year

ending 30 June 2012.

Resolution 2

3. To re-elect the following Directors retiring in accordance with the Company’s Articles of Association:

(a) Mr Kua Eng Watt (retiring under Article 107) Resolution 3

(b) Mr Tan Lye Heng Paul (retiring under Article 107) Resolution 4

Mr Tan Lye Heng Paul will, upon re-election as a Director of the Company, remain the Chairman of the Audit Committee

and will be considered independent for purposes of Rule 704(8) of the Listing Manual of the Singapore Exchange Securities

Trading Limited.

4. To note the retirement of Mr Kua Chee Hong as a Director of the Company who retires in accordance with Article

107 and will not be seeking re-election at the Annual General Meeting.

5. To declare a Final one-tier tax exempt dividend of 1.2 cents per share for the financial year ended 30 June 2011. Resolution 5

6. To declare a Special one-tier tax exempt dividend of 0.80 cents per share for the financial year ended 30 June

2011.

Resolution 6

7. To re-appoint Messrs KPMG LLP as Auditors of the Company and to authorise the Directors to fix their

remuneration.

Resolution 7

AS SPECIAL BUSINESS

To consider and, if thought fit, to pass the following resolutions (with or without amendments) as Ordinary Resolutions:

8. SHARE ISSUE MANDATE

THAT pursuant to the Listing Rules of the Singapore Exchange Securities Trading Limited (“SGX-ST”) and the

Company’s Articles of Association, authority be and is hereby given to the Directors to:

Resolution 8

(a) issue shares in the capital of the Company whether by way of bonus issue, rights issue or otherwise; and/

or

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(b) make or grant offers, agreements or options (collectively “Instruments”) that might or would require shares

to be issued, including but not limited to the creation and issue of (as well as adjustments to) warrants,

debentures or other instruments convertible into shares; and/or

(c) issue additional Instruments convertible into shares arising from adjustments made to the number of

Instruments

at any time and upon such terms and conditions and for such purposes and to such persons as the Directors may,

in their absolute discretion, deem fit; and (notwithstanding the authority conferred by this Resolution may have

ceased to be in force) issue shares in pursuance of any Instruments made or granted by the Directors while this

Resolution was in force, provided that:

(i) the aggregate number of shares and convertible securities to be issued pursuant to this Resolution (including

shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution) does not exceed

50% of the total number of issued shares (excluding treasury shares) of the Company, of which the aggregate

number of shares and convertible securities (including shares to be issued in pursuance of Instruments

made or granted pursuant to this Resolution) to be issued other than on a pro-rata basis to shareholders of

the Company does not exceed 20% of the total number of issued shares (excluding treasury shares) of the

Company, and for the purpose of this Resolution, the issued share capital shall be the issued share capital of

the Company at the time this Resolution is passed, after adjusting for:

(aa) new shares arising from the conversion or exercise of convertible securities;

(bb) new shares arising from exercising share options or vesting of share awards outstanding or subsisting

at the time this Resolution is passed provided the options or awards were granted in compliance with

Part VIII of Chapter 8 of the SGX-ST; and

(cc) any subsequent consolidation or subdivision of shares; and

(ii) such authority shall, unless revoked or varied by the Company at a general meeting, continue to be in force

until the conclusion of the next Annual General Meeting or the date by which the next Annual General

Meeting of the Company is required by law to be held, whichever is the earlier.

9. AUTHORITY TO GRANT OPTIONS AND TO ISSUE SHARES UNDER THE SIN GHEE HUAT SHARE OPTION SCHEME

That authority be and is hereby given to the Directors to offer and grant options from time to time in accordance

with the provisions of the Sin Ghee Huat Share Option Scheme (the “Scheme”), and, pursuant to Section 161 of

the Companies Act, Chapter 50, to allot and issue from time to time such number of shares in the capital of the

Company as may be required to be issued pursuant to the exercise of options granted under the Scheme, provided

that the aggregate number of shares to be issued pursuant to the Scheme shall not exceed 15% of the total number

of issued shares (excluding treasury shares) of the Company from time to time, as determined in accordance with

the provisions of the Scheme.

Resolution 9

10. To transact such other business which may be properly transacted at an annual general meeting of the Company.





NOTICE IS HEREBY GIVEN that the Share Transfer Books and Register of Members of SIN GHEE HUAT CORPORATION LTD.

will be closed on 3 November 2011 for the preparation of dividend warrants.

Duly completed registrable transfers received by the Company’s Share Registrar, Tricor Barbinder Share Registration

Services, 8 Cross Street, #11-00 PWC Building, Singapore 048424 up to 5.00 p.m. on 2 November 2011 will be registered to

determine shareholders’ entitlements to the Final dividend and Special dividend. Shareholders whose Securities Accounts

with The Central Depository (Pte) Limited are credited with shares at 5.00 p.m. on 2 November 2011 will be entitled to

the proposed dividends.

Payment of the dividends, if approved by the shareholders at the Annual General Meeting to be held on 25 October 2011,

will be made on 15 November 2011.

BY ORDER OF THE BOARD

Ms Joanna Lim Lan Sim

Company Secretary

29 September 2011

Singapore

Statement Pursuant to Article 71 of the Company’s Articles of Association

The effects of the resolutions under the heading “As Special Business” in this Notice of the Annual General Meeting

are:

1. Resolution no. 8, if passed, will authorise the Directors from the date of the above Meeting until the next Annual

General Meeting to issue shares and convertible securities in the Company up to an amount not exceeding in

aggregate 50% of the total number of issued shares (excluding treasury shares) of the Company of which the total

number of shares and convertible securities issued other than on a pro-rata basis to existing shareholders shall

not exceed 20% of the total number of issued shares (excluding treasury shares) of the Company. Rule 806(3) of

the Listing Rules of the SGX-ST currently provides that the percentage of issued share capital is based on the share

capital of the Company at the time the mandate is passed after adjusting for:

(a) new shares arising from the conversion or exercise of convertible securities;

(b) new shares arising from exercising share options or vesting of share awards outstanding or subsisting at the

time this Resolution is passed provided the options or awards were granted in compliance with Part VIII of

Chapter 8 of the Listing Rules of the SGX-ST; and

(c) any subsequent consolidation or subdivision of shares.

This authority will, unless revoked or varied at a general meeting, expire at the next Annual General Meeting of

the Company.





2. Resolution no. 9, if passed, will empower the Directors to offer and grant options under the Sin Ghee Huat Share

Option Scheme and to allot and issue shares pursuant to the exercise of such options under the Sin Ghee Huat

Share Option Scheme. The aggregate nominal amount of new shares over which the Company may grant options

on any date, when added to the nominal amount of new shares issued and issuable in respect of (a) all options

granted under the Scheme, and (b) all awards granted under any other share option, share incentive, performance

share or restricted share plan implemented by the Company and for the time being in force, shall not exceed 15%

of the total number of issued shares (excluding treasury shares) of the Company on the day preceding that date.

NOTES:

(1) A shareholder of the Company entitled to attend and vote at a meeting of the Company (“Meeting”) is entitled to appoint a proxy and vote in

his stead.

(2) A proxy need not be a shareholder of the Company.

(3) If the appointer is a corporation, the proxy must be executed under seal or the hand of its duly authorised officer or attorney.

(4) The instrument appointing a proxy must be deposited at the registered office of the Company at 32 Penhas Road #01-01, Singapore 208191

not later than 48 hours before the time appointed for the Meeting.


SIN GHEE HUAT CORPORATION LTD.Company Registration No.: 197700475Z

(Incorporated in the Republic of Singapore)

PROXY FORM

(Please see notes overleaf before completing this Form)

IMPORTANT

1. For investors who have used their CPF monies to buy Sin

Ghee Huat Corporation Ltd.’s shares, this Annual Report 2011

is forwarded to them at the request of their CPF Approved

Nominees and is sent solely FOR INFORMATION ONLY.

2. This Proxy Form is not valid for use by CPF investors and

shall be ineffective for all intents and purposes if used or

purported to be used by them.

3. CPF Investors who wish to vote should contact their CPF

Approved Nominees.

I/We,

of (address)

being a member/members of Sin Ghee Huat Corporation Ltd. (the “Company”), hereby appoint:

Name NRIC/Passport No. Proportion of Shareholdings

No. of Shares %

Address

and/or (delete as appropriate)

Name NRIC/Passport No. Proportion of Shareholdings

No. of Shares %

Address

as my/our proxy/proxies to vote for me/us on my/our behalf and, if necessary, to demand a poll, at the Annual

General Meeting of the Company to be held at 32 Penhas Road #01-01, Singapore 208191 on Tuesday, 25 October

2011 at 11.00 a.m. and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against

the Ordinary Resolutions to be proposed at the Annual General Meeting as indicated with an “X” in the spaces

provided hereunder. If no specified directions as to voting are given, the proxy/proxies will vote or abstain from

voting at his/their discretion. The authority herein includes the right to demand or join in demanding a poll

and to vote on a poll.

Ordinary Resolutions Resolution No. For Against

Adoption of Audited Financial Statements for the financial year ended 30 June 2011

and the Reports of the Directors and the Auditors.

1

Approval of Directors’ Fees for financial year ending 30 June 2012. 2

Re-election of Mr Kua Eng Watt as Director of the Company. 3

Re-election of Mr Tan Lye Heng Paul as Director of the Company 4

Declaration of Final dividend for the financial year ended 30 June 2011. 5

Declaration of Special dividend for the financial year ended 30 June 2011. 6

Re-appointment of KPMG LLP as Auditors of the Company. 7

Approval of Share Issue Mandate. 8

Authority to grant options and to issue shares under the Sin Ghee Huat Share Option

Scheme.

9

Dated this day of 2011

Total number of Shares in: No. of Shares

(a) CDP Register

(b) Register of Members

Signature(s) of Shareholder(s)/Common Seal of Corporate Shareholder

IMPORTANT: Please read notes overleaf

3rd fold here

1st fold here

2nd fold here

Affix

Postage

Stamp

Notes:

1. Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of Shares. If you have Shares registered in your name in the Register of Members, you should insert that number of Shares. If you have Shares entered against your name in the Depository Register and Shares registered in your name in the Register of Members, you should insert the aggregate number of Shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the Shares held by you.

2. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend and vote in his/her stead. A proxy need not be a member of the Company.

3. Where a member appoints two proxies, the appointments shall be invalid unless he/she specifies the proportion of his/her shareholding (expressed as a percentage of the whole) to be represented by each proxy.

4. Completion and return of this instrument appointing a proxy or proxies shall not preclude a member from attending and voting at the Meeting. Any appointment of a proxy or proxies shall be deemed to be revoked if a member attends the Meeting in person, and in such event, the Company reserves the right to refuse to admit any person or persons appointed under the instrument of proxy, to the Meeting.

The Company Secretary

SIN GHEE HUAT CORPORATION LTD.32 Penhas Road

#01-01 Singapore 208191

5. The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 32 Penhas Road #01-01, Singapore 208191 not less than 48 hours before the time appointed 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 seal or under the hand of an officer or attorney duly authorised. Where the instrument appointing a proxy or proxies is executed by an attorney on behalf of the appointor, the letter or power of attorney or a duly certified copy thereof must be lodged with the instrument.

7. A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore.

General:

The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of Shares entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have Shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.

Documents

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