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NAM LEE PRESSED METAL INDUSTRIES LIMITED

Annual Report 2011

NAM LEE PRESSED METAL INDUSTRIES LIMITED

(Company Registration No. 197500362M)

31 Senoko Drive, Senoko Industrial Estate, Singapore 758216

Telephone: (65) 6257 5388

Facsimile: (65) 6758 8134

Email: [email protected]

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Strengthening

Our Market

Leadership

We offer no compromises on quality

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02 Corporate Profile

04 Chairmans Statement

06 Board of Directors08 Financial Highlights

10 Corporate Information

11 Corporate Governance

21 Report of the Directors

24 Statement by Directors

25 Independent Auditors Report

26 Consolidated Income Statement

27 Consolidated Statement of Comprehensive Income

28 Balance Sheets29 Statements of Changes in Equity

32 Consolidated Statement of Cash Flows33 Notes to the Financial Statements

83 Statistics of Shareholdings

85 Notice of Annual General Meeting

Proxy Form

Contents

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Our Company

Nam Lee Pressed Metal Industries Limited was incorporated on 10 March 1975 by the Yong family, which

has been in the metal fabrication business since the 1950s. The family business was started by theirfather, the late Mr Yong Kwong Fae, who founded Chop Nam Lee, a sole proprietorship, to fabricate

galvanised household products such as buckets and bath tubs.

The Group commenced the design and manufacture of metal products for buildings in 1991 when it

entered the HDB market and is a HDB-approved supplier. Today the Group remains the only worldwide

third-party manufacturer of aluminium frames for container refrigeration units in the world for a major

customer. Over the years, the Group has developed into a one-stop specialist for housing metal products,

aluminium frames for container refrigeration units and a wide range of aluminium and steel products.

Experience, Know-How & Latest Technology

With the many years of experience in the business, its vertically-integrated production structure, well

equipped facilities and skilled staff, Nam Lee Pressed Metal is able to offer the market complete service

from design right through to installation, including the manufacture of tooling, jigs and fixtures, metal

fabrication, surface coatings and treatments, and the installation of the final products. The fabrication

activities are done through the Groups five manufacturing plants which span the region. The plant

in Singapore occupies a land area of 229,457 sq ft; the plants in Johore are under its wholly owned

subsidiaries, NL Metals Sdn Bhd, NL Mechanical Engineering Sdn Bhd and Nam Lee Pressed Metal Sdn

Bhd, located in Tampoi, Senai, Perkan Nenas and Gelang Patah and occupying land areas of 121,014 sqft, 84,537 sq ft, 76,002 sq ft and 185,948 sq ft respectively.

Quality Foremost

Quality is never compromised at Nam Lee Pressed Metal and their efforts have been recognised when

they were awarded the ISO 9002 certificate by the PSB in 1995. Another testament to its quality products

was the HDB Quality Award for Supplier 1999 awarded to it by the HDB. Its philosophy and management

practice of ensuring quality at every stage of production plus the forward-looking management ensures

that Nam Lee Pressed Metal continues to progress and remain a competitive player in the metal building

products and related market sectors.

Corporate Profile

02 Nam Lee Pressed Metal Industries Limited

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INTEGRITY

QUALITYCUSTOMER SATISFACTION

INNOVATION

are the pillars on which the success of

Nam Lee Pressed Metal is built and they sum

up the corporate values embraced by the Board, Management

and Staff of Nam Lee Pressed Metal. I am confident that so long as

we adhere to these core values Nam Lee Pressed Metal will make its mark as

the preferred supplier for metal and aluminium products.

Mr Yong Koon Chin

Chairman

Annual Report 2011

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On behalf of the Board ofDirectors, I am pleased to presentthe results of Nam Lee Pressed

Metal Industries Limited and itssubsidiaries for the financial yearended 30 September 2011 (FY2011).

A REVIEW OF FY2011

The Group del ivered a robustperformance in FY2011 with netprofit attributable to shareholdersincreasing 8% year-on-year toS$10.9 million. Earnings per share

based on the total of 226,760,928ordinary shares issued rose from4.37 Singapore cents as at 30September 2010 to 4.79 Singaporecents as at 30 September 2011.On average, the Group recorded2.1 percentage points improvementin gross profit margin to 18.9%.

The bottomline growth wasachieved on the back of 20.4%

turnover growth to S$167.3 million,led by the recovery in demand forthe Groups aluminium industrialproducts.

The Groups building materialsdivision also performed wellinspite of very competitive industryconditions. Several constructionprojects-in-progress that werecarried forward into FY2011 weresmoothly completed.

Shareholders should note that theGroups anticipated benefits fromthe Singapore governments plansto construct up to 22,000 newpublic housing flats in calendaryear 2011 from 16,000 units in2010, will only start contributingto the Groups financial resultsfrom FY2012. This delayed impactcomes about as the Groupsbuilding products are typicallydelivered and installed during thefinal construction stage of suchhousing projects.

Financial HighlightsGroup turnover increased 20.4%from S$139.0 million for the

financial year ended 30 September2010 (FY2010) to S$167.3million for the financial year ended30 September 2011 (FY2011).The growth was mainly attributedto an increase in the sales volumeof aluminium industrial products.

Gross profit increased 35.3%from S$23.4 million for FY2010to S$31.6 million in FY2011, inline with the increase in turnover.

Gross profit margin increased2.1 percentage points from16.8% for FY2010 to 18.9% forFY2011 mainly due to increasedlabour productivity and efficiency.Distribution costs increased 7.6%from S$2.0 million in FY2010 toS$2.2 million in FY2011 as a resultof an increase in sales activities.

In line with FY2011s higherbusiness volume, Administrative

expenses rose 21.5% from S$10.9million in FY2010 to S$13.2 millionand were mainly attributable to anincrease in salaries and bonusesfor management and administrativestaff.

Other operating costs increasedfrom S$1.6 million in FY2010 toS$2.9 million in FY2011 mainly dueto an increase in foreign exchangeloss from S$0.4 million for FY2010

to S$1.1 million for FY2011.

Other income decreased from $3.6million in FY2010 to $0.2 million inFY2011, as the one-time gain ondisposal of an available-for-salefinancial assets of S$3.3 million inFY2010 did not recur in FY2011.

The Groups effective tax rate forFY2011 was 17.7% compared to17.0% in FY2010.

In view of the above, the Grouprecorded Profit before tax of S$13.3

million in FY2011 compared toS$12.2 million in FY2010, whileProfit net of tax was S$10.9 million

versus S$10.1 million previously.

The Groups ba lance sheetremained strong in FY2011. Totalnet assets increased 6.9% fromS$93.5 million as at 30 September2010 to S$99.9 million as at 30September 2011 while net assetbacking per ordinary shareimproved from 41.0 Singaporecents to 43.8 Singapore cents.

Inventories decreased from S$42.0million as at 30 September 2010 toS$36.6 million in line with the timelycompletion of several constructionprojects.

Trade debtors increased fromS$26.4 million as at 30 September2010 to S$40.4 million as at 30September 2011, mainly due tothe increase in sales volume forthe Groups aluminium industrial

products as well as the effectfrom the restoration of the originalcredit terms of 60 days to a majorcustomer during FY2011.

Of the Trade debtors balance ofS$40.4 million as at 30 September2011, S$7.7 million is the totalsum of contractual performanceretention amounts that projectcustomers are entitled to withholdpayment pending their satisfactory

acceptance of the projects handedover; while 95.1% of the remainingtotal balance of S$32.7 million hassince been duly collected by theGroup.

Trade creditors, other creditors andaccruals increased from S$12.4million as at 30 September 2010 toS$18.7 million as at 30 September2011, in line with the increase incost of sales.

The Groups operating activitiesin FY2011 generated net cash

Message to Shareholders


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flow of S$14.5 million comparedto S$10.5 million in FY2010. Asat 30 September 2011, total

cash and cash equivalents haveincreased from S$15.7 million asat 30 September 2010 to S$24.1million.

OPERATIONAL HIGHLIGHTS

AluminiumThe Groups mainstay productcategories, namely custom-engineered and fabricatedaluminium parts for the industrial

sector and a broad range ofbuilding and infrastructureproducts, continued to generatethe major share of revenue andprofit contribution, i.e., 86.2%of Group turnover and 82.1%of Group profit before tax. Salesincreased by S$34.1 million year-on-year mainly due to the increasein sales volume of aluminiumindustrial products.

Mild SteelTurnover of mild steel productsreduced from S$28.0 millionin FY2010 to S$22.5 million inFY2011 and accounted for 11.1%of Group profit before tax forFY2011. The decrease was in linewith the completion of one of theGroups pre-fabricated bathroomunit projects in FY2010.

Stainless Steel

Turnove r fo r sta in less steelproducts remained constantat S$0.4 million in FY2010 andFY2011, corresponding to projectspecifications for both the privateand public sector building projectsthat the Group undertook duringthe period.

OUTLOOK

Further adverse developmentsin the Eurozone sovereign debtcontagion during the currentOctober to December 2011

quarter (1QFY2012) and themedias constant focus onwidespread population unrest

within the European, UK, MiddleEastern and Russian communitieswill worsen market confidenceamidst a slowdown in globaleconomic growth, including theUS and China.

The Group is thus cautiously bracingfor the adverse uncertainties in itsexternal environments to inevitablyaffect the demand for its aluminiumindustrial products in the short

term.

On the other hand, there are betterprospects going forward for theGroups business of aluminiumbuilding and infrastructureproducts, with Singapore as itsmain market.

The Group expects to ride on theSingapore Governments 2011election commitment of providing

more new public housing flats inthe coming years. The SingaporeGovernment has announced thatthe number of new public housingflats to be built will be increased to25,000 in 2012, up from 22,000in 2011 and 16,000 in 2010.The mass market demand formore affordable public housing isexpected to remain resilient in thecoming years.

While the prevailing marketenvironment for the buildingproducts industry remains verycompetitive and will continue toexert pressure on profit margin,the Groups sound fundamentalsand long-term investments overthe last few years in building acost-effective production hub inthe neighbouring Malaysian stateof Johore within the Nusajayaspecial economic zone, will

underpin the Groups strategy ofselective competitiveness. Barringunforeseen circumstances in

its external environments, theGroup expects to continue to beprofitable.

DIVIDEND

In consideration of the GroupsFY2011 results, the board ofdirectors has recommended atotal dividend of 1.5 cent pershare comprising a final dividendof 1.0 cent per share plus aspecial dividend of 0.5 cent pershare, which are similar to FY2010dividends, for shareholder approval

at the forthcoming Annual GeneralMeeting.

ACKNOWLEDGEMENT

I wish to convey our heartfeltappreciation to our customers,business associates, vendors,shareholders and employees fortheir loyal support and dedicationover the years. The road ahead willbe tough with growing uncertaintiesarising from unprecedenteddevelopments in our geo-political environments that requireinnovative solutions. Nevertheless,with our proven business partnerscontinuing to stand by us as weforge ahead together and reapmutual benefits, the Group isconfident of overcoming newchallenges in FY2012.

Sincerely,

Mr Yong Koon ChinChairman

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MR Yong Kin SenManaging Director (Executive)

Mr Yong is one of the three founders of the Group

and has built up extensive industry experience and

business network in a career that spans over 40 years

in the metal fabrication industry. He is responsible forthe strategic direction, business planning development

and overall management of the Group. He has been a

member of the Board since March 1975.

MR Yong Koon Chin

Chairman

As Chairman of Nam Lee Pressed Meta l Industries

Limited and one of the three founders of the Group, Mr

Yong brings with him more than 40 years of experience

in the metal fabrication industry. He is responsible for

overseeing the manufacturing operations of NL Metals.

He has been a member of the Board since March 1975.

MR Yong Poon MiewDirector (Executive)

He is also a founder of the Group with 40 years of

business experience in the metal fabrication industry.

He is principally responsible for overseeing the

manufacturing operations of NL Mechanical Engineering.

He has been a member of the Board since March 1975.

Board of Directors


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MR C. ChandrasegarDirector (Independent)

Mr Chandrasegar was appointed as an Independent

Director on 1 March 2005 and is the Chairman for

Nomination Committee. Mr Chandrasegar is an

Advocate and Sol ici tor of the Supreme Court of

Singapore, a Solicitor of England and Wales and a LegalPractitioner of New South Wales, Australia. He is a

Notary Public and is a Commisioner of Oaths and is an

author of 2 leading books on Mergers and Acquisitions

in Singapore.

MR Khoo Ho Tong

Director (Independent)

Mr Khoo is a practicing public accountant and a partner

in a certified public accounting firm. He is the Chairman

of the Audit Committee. He is a treasurer of the Asian

Federation of Accountants. He is also a council member

of the Institute of Certified Public Accountants of

Singapore. Mr Khoo has been a member of the Board

since September 1999.

MR Tan Soo KiatDirector (Independent)

Mr Tan Soo Kiat is the Chairman of our Remuneration

Committee and currently a director of Intergate Pte

Ltd, a company engaged in the provision of corporate

advisory services. With extensive experience in the

banking and finance industry, he previously held

senior financial appointments in several public-listed

companies. Currently, he is also a Board member of a

number of public companies listed on the Singapore

Exchange. A Chartered Accountant, he graduated from

University of Otago, New Zealand.

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Turnover($m)

Profit Before Tax($m)

Financial Highlights


180

150

120

90

60

30

0

2007 2008 2009 2010 2011

143.2

161.6

113.1

139.0

167.3

14

12

10

8

6

4

2

0

2007 2008 2009 2010 2011

10.2

8.4

5.9

12.2

13.3

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1,480

867

44

10,930

2011

Profit Before Tax by Activities($000)

2007

1,206

843

497

7,663 2008

903

574

76

6,840 2009

720

189

37

4,938 2010

2,622

3834

9,536

22,554

46329

144,248

Turnover by Activities($000)

2009

9,2832,711146

100,992 2010

28,054

468

385

110,0972008

13,602

5,996

202

141,7852007

6,987

5,849

3,256

127,196

2011

Aluminium Mild Steel Stainless Steel Others

09Annual Report 2011

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Directors

Yong Koon Chin Chairman

Yong Kin Sen Managing DirectorYong Poon Miew

Khoo Ho Tong

Chidambaram Chandrasegar

Tan Soo Kiat

Secretaries

Yong Kin Sen

Susie Low

Registered Office

31 Senoko Drive

Senoko Industrial Estate

Singapore 758216

Auditors

Ernst & Young LLP

Certified Public Accountants

Ho Shyan Yan (since financial year ended

30 September 2009)

Bankers

United Overseas Bank Limited

Standard Chartered Bank

DBS Bank Ltd

Australia and New Zealand Banking Group Limited

(previously known as The Royal Bank of Scotland)

Share RegistrarBoardroom Corporate & Advisory Services Pte Ltd

(formerly known as Lim Associates (Pte) Ltd)

50 Raffles Place

#32-01 Singapore Land Tower

Singapore 048623

Corporate Information


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Corporate Governance

The Board and its management are committed to good standards of corporate governance and in theimplementation of measures and practices recommended by the Code of Corporate Governance 2005 (theCode 2005) adopted by the Singapore Exchange Securities Trading Limited (SGX-ST). For effective corporate

governance, the Company has put in place various self-regulatory and monitoring mechanisms.

Board of Directors (Principles 1, 2 and 10)

The Boards Conduct of Affairs

The Board has overall responsibility for the corporate governance of the Company and supervises the managementof the business and affairs of the Group. The Board sets the Groups strategic directions, reviews and approvesmajor investments and funding decisions, reviews the financial performance of the Group and its system of internalcontrols. The Board works closely with the management and is supported by various subcommittees whosefunctions are described below.

The Directors bring with them considerable experience in the fields of engineering, financial, law and business.They have separate and independent access to the management and the Company Secretary, whose role includesensuring that Board procedures, applicable rules and regulations are complied with.

Newly appointed directors are provided with background information about the Company and the Group and areinvited to visit the Groups operations and facilities to have an understanding of the business operations. Directorsreceive updates from time to time, particularly on relevant laws and regulations, changing commercial risks andbusiness conditions from the Companys relevant professional advisors.

Directors may take independent professional advice and receive training at the Companys expense.

The Executive Directors are responsible for the day-to-day operations and administration of the Company.

Management provides the Board with reports of the Groups performance, financial position and prospects, whichare reviewed by the Board at each Board meeting.

Board Composition and Guidance

The Board of Directors, which comprises six directors, is made up of three Executive Directors and threeIndependent Directors, making up at least one-third of the Board.

The Nominating Committee has reviewed and is satisfied as to the independence of the respective IndependentDirectors.

The Board is of the view that the current board size of six directors is appropriate and effective, taking into accountthe nature and scope of the Groups operations, and that the current Board comprises persons who as a groupprovide core competencies necessary to meet the Group objectives. Also, no single individual or a group dominatesthe Board.

The Board, through the Nominating Committee, examines on an on-going basis the size and the composition of theBoard to evaluate whether the Board is effective in carrying out its duties.

Key information regarding the Directors of the Company is set out in the section Board of Directors on pages 6and 7 of this Annual Report.

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Directors Attendance at Board and Committee Meetings for the period from 1 October 2010 to 30 September2011:

Board Meetings

Audit Committee

Meetings

NominatingCommittee

Meetings

RemunerationCommittee

Meetings

Held Attended Held Attended Held Attended Held Attended

Yong Koon Chin 4 4 N/A N/A N/A N/A N/A N/A

Yong Kin Sen 4 4 N/A N/A 1 1 N/A N/A

Yong Poon Miew 4 4 N/A N/A 1 1 N/A N/A

Khoo Ho Tong 4 4 5 5 1 1 2 2

Chidambaram Chandrasegar 4 4 5 5 1 1 2 2

Tan Soo Kiat 4 4 5 5 1 1 2 2

Chairman and Managing Director (Principle 3)

Mr Yong Koon Chin is the Chairman while Mr Yong Kin Sen is the Managing Director of the Company. Both areexecutive directors and are siblings. The Managing Director has the executive responsibility for the overall directionand day-to-day operation of the Group.

The Chairmans responsibilities include reviewing board papers before they are presented to the Board and ensures

that the board members are provided with complete, adequate and timely information. He also assists in ensuringcompliance with Companys guidelines on corporate governance.

The Chairman ensures that board meetings are held when necessary and sets the board meeting agenda inconsultation with the management and the Company Secretary. Board papers are sent to Board members inadvance in order for the Directors to be adequately prepared for board meetings.

Audit Committee (Principle 11)

The Audit Committee (AC) comprises three members, all of whom are independent:

ChairmanMr Khoo Ho Tong

Members

Mr Tan Soo Kiat

Mr Chidambaram Chandrasegar

The Board is of the opinion that the members of the AC have sufficient expertise and experience to discharge theirduties.

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The AC functions include:

(I) Review with the external and internal auditors, their audit plans, scope, the internal auditors evaluation of

the adequacy of the internal control systems and ensure that co-ordination of audit effort is maximised wherepossible.

(II) Evaluate the steps taken to minimise any significant risks or exposures to the Company and its subsidiaries.

(III) Review the quarterly and annual financial statements including announcements to shareholders and the SGX-ST prior to submission to the Board.

(IV) Recommend to the Board of Directors the nomination of the Companys external auditors.

(V) Review interested person transactions.

(VI) Review the assistance given by the management to the Companys auditors.

(VII) Review arrangements by which staff of the Company may, in confidence, raise concerns about possibleimproprieties in matters of financial reporting or other matters and ensure that arrangements are in place forthe independent investigations of such matters and for appropriate follow up actions.

The Board and the AC are satisfied that the appointments of different auditors for the Groups overseas subsidiariesand associates would not compromise the standard and effectiveness of the Groups audit.

The AC, having reviewed the volume of non-audit services provided to the Company by the external auditors,is satisfied that the nature and extent of such services will not prejudice the independence and objectivity of theexternal auditors.

During the financial year, the AC met the external auditors without the presence of the management.

The AC has recommended to the Board of Directors that the auditors, Ernst & Young LLP, be nominated for re-appointment as auditors at the forthcoming Annual General Meeting of the Company.

The AC has adopted a whistle-blowing policy which provides well defined and accessible channels in the Groupthrough which employees may raise concerns in the event that they may encounter any improper conduct withinthe Group. The AC did not receive any complaint during the financial year.

In October 2008, the Audit Committee Guidance Committee issued the Guidebook for Audit Committees inSingapore. The AC had discussed and noted the best practices as set out in the Guidebook. Where appropriate,the AC will use the best practices as a reference in discharging their duties and responsibilities.

The Company has, to the best of its knowledge, complied with the Code 2005 in relation to the roles andresponsibilities of the AC.

Internal Controls and Internal Audit (Principles 12 & 13)

The Board is responsible for ensuring that the management maintains a system of internal controls to safeguardshareholders investments and the Groups assets. The Board believes that the existing system of internal controlsput in place is adequate in meeting the needs of the Groups operations.

The internal audit function is outsourced to a certified public accounting firm. The internal auditors meet theprofessional standards set out in the Code and they report directly to the AC. The internal auditors periodically

review the adequacy of and compliance with group policies, procedures and internal controls which are designed tomanage risk and safeguard the Groups assets. The internal audit plan is subject to approval by the AC.

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The Groups external auditors, Ernst & Young LLP, also contribute an independent perspective on the internalcontrols systems arising from their audit and report their findings to the AC.

The AC, with the assistance of the internal auditors, is of the opinion that the Company is in compliance with theprinciples and practices as set out by the SGX-ST. There were no significant internal control weaknesses reportedby the auditors and the Board is satisfied that existing controls are adequate.

Nominating Committee (Principles 4 & 5)

The Nominating Committee (NC) comprises five members, a majority of whom, including the Chairman, areindependent. In addition, the NC Chairman is not, and not directly associated with, a substantial shareholder of theCompany.

The composition of the NC is as follows:

Chairman

Mr Chidambaram Chandrasegar Independent Director

Members

Mr Khoo Ho Tong Independent Director

Mr Tan Soo Kiat Independent Director

Mr Yong Poon Miew Executive Director

Mr Yong Kin Sen Executive Director

The NCs functions are as follows:

(I) Review and recommend to the Board the retirement and re-election of directors in accordance with theArticles of Association of the Company. Every director including the Managing Director is subject to re-election once in every three years. Also, all newly appointed directors during the year will hold office until thenext Annual General Meeting and will be eligible for re-election. Such directors are not taken into account indetermining the number of directors who are to retire by rotation.

(II) Review and assess candidates for directorship before making recommendation to Board, taking intoconsideration the skills and experience required and the current composition of the Board.

(III) Determine the independence/non-independence of Directors.

(IV) Evaluate the effectiveness of the Board as a whole and propose objective performance criteria to assesseffectiveness of the Board.

At the forthcoming annual general meeting and in accordance with the Articles of Association of the Company:

Mr Yong Kin Sen, Mr Chidambaram Chandrasegar and Mr Tan Soo Kiat will retire under Article 104 of theCompanys Articles of Association. They have signified their consents to continue in office and offered themselvesfor re-election.

Mr Yong Koon Chin and Mr Khoo Ho Tong have both attained the age of 70 years and will retire in accordance withSection 153(6) of the Companies Act, Cap. 50. They have signified their consents to continue in office and haveoffered themselves for re-appointment.

The NC has recommended their re-elections and re-appointments to the Board.

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B. The Board has decided not to present the annual remuneration report of the Executive Directors forshareholders approval at the Annual General Meeting as their remuneration packages are covered in theirservice contracts.

Non-Executive Directors fees are tabled for shareholders approval at the Annual General Meeting.

C. The following table shows a breakdown (in percentage terms) of the average remuneration of the Directorsand key executives during the year, which falls within broad bands for the year ended 30 September 2011.

Remuneration Bands Salary

Profit

Sharing Bonus

Directors

fees Others

Total

Compensation

% % % % % %

S$500,000 and above

Director

Mr Yong Kin Sen 39 60 1 100

S$250,000 S$499,000

Directors

Mr Yong Koon Chin 48 51 1 100

Mr Yong Poon Miew 48 51 1 100

Below S$250,000

Directors

Mr Khoo Ho Tong 100 100

Mr Chidambaram Chandrasegar 100 100

Mr Tan Soo Kiat 100 100

Key Executives

S$500,000 and above

Mr Lim Hock Leong 39 61 100

Below S$250,000

Mr Lim Ken Guan 78 22 100

Miss Christine Phua 68 32 100

Mr Tan Bee Kin 81 19 100

Mr Michael Lee 83 17 100Mr Bennett Jude Bennit 80 20 100

D. There is no employee who is related to a Director whose remuneration exceeds S$150,000 in the Groupsemployment for the financial year ended 30 September 2011.

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Communication with Shareholders (Principles 14 and 15)

The Company endeavours to maintain timely and effective communication with shareholders through timely and

comprehensive announcements. The Company does not make selective disclosure to only certain groups ofpersons. It has adopted a policy of making all necessary disclosures in public announcements via SGXNET, pressrelease, circulars for Extraordinary General Meetings and annual reports. The annual reports and circulars are sent toall shareholders and the notice of general meetings are advertised in the newspapers and announced via SGXNET.

The Articles of Association allows a member to appoint not more than two proxies to attend and vote in his place atgeneral meetings.

At Annual General Meetings and Extraordinary General Meetings, shareholders are given the opportunity to expresstheir views and to raise their queries to the Board on matters relating to the operations of the Group. The externalauditors are also present at the Annual General Meetings to address shareholders queries about the conduct ofaudit and the preparation and content of the auditors report.

Dealing in Securities

The Company has adopted and implemented the SGX-ST Best Practices Guide with respect to the dealings in thesecurities of the Company by directors and key employees in the Group.

In line with the best practices, the Company issued a quarterly letter to all Directors and employees informing themthat they are not permitted to deal in the Companys shares during the period commencing two weeks before theannouncement of the Companys financial statements for each of the first three quarters of its financial year andone month before the announcement of the Companys full year financial statements , or if they are in possession ofunpublished price-sensitive information of the Company.

The Directors and employees are discouraged from dealing in the Companys securities on short-termconsiderations.

Interested Person Transactions

Name of Interested Person Aggregate value of all interestedperson transactions duringthe financial year (excludingtransactions less than S$100,000and transactions conductedunder shareholders mandate

pursuant to Rule 920)

Aggregate value of all interestedperson transactions conductedunder shareholders mandatepursuant to Rule 920 (excludingtransact ions less thanS$100,000)

Nam Lee Industries Pte LtdS$000

360S$000

NA

Material Contracts

Other than the transactions with Nam Lee Industries Pte Ltd (as disclosed above), there were no material contractsbetween the Company and its subsidiaries involving the interests of the Managing Director, each director and eachcontrolling shareholder.

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Risk Management

(I) Dependence on public housing projects

The Group is engaged in the design, fabrication, supply and installation of a wide range of steel andaluminium products, comprising building products for HDB housing projects and aluminium frames forcontainer refrigeration units. Its metal building products cater to housing projects relating to new HDB flatsand the Groups business is dependent on the demand for new HDB flats.

The Group manages the risk on demand for HDB flats by focusing on HDB upgrading, industrial buildingsand other public projects.

(II) Fluctuation in raw material prices

The Groups key raw materials, namely mild steel, stainless steel and aluminium, are subject to pricefluctuations. Any significant increase in the prices of mild steel, stainless steel and aluminium will adversely

affect the Groups operating results.

The Group manages the risk in fluctuation by buying the raw materials pegged to contracts requirements onlyand constantly sourcing for alternative sources of supply.

(III) Delays in project completion

The Group is exposed to the risk of being liable for liquidated damages, which are pre-determined sumspayable, in the event that it is unable to complete a project within the stipulated period of time due to factorsattributable to the Group.

The Group manages this risk by closely monitoring its projects by its qualified and experienced personnel.

(IV) Dependence on foreign workers

The Group, like many companies in Singapore, is dependent on foreign workers due to the shortage ofSingaporean labour. Therefore, the Group is vulnerable to the shortage of foreign workers and any increase inforeign worker levies, which will result in an increase in the Groups operating costs and adversely affect theGroups operating results.

The Group manages the risk of shortage of foreign workers by relocating labour intensive operations to itsMalaysian plants.

(V) Financial risk management objectives and policies

Please refer to Note 34 of the Notes to Financial Statements.

(VI) Dependence on relationship with a major customer

A major customer accounts for a substantial portion of our revenue. We are therefore dependent, to certainextent, on this major customer, as any cancellation of its sales and purchases would have an impact onour operations. Although we have long-term contract with our major customer, it may alter its presentarrangements with us to our disadvantage, which would in turn have an impact on our operating income,business and financial position and consequently, our operating profits may, to a material extent, be adverselyaffected.

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(VII) We will be affected by competition from competitors and new entrants

The aluminium and steel products industry is competitive and such competition may increase in the near

future due to the entry of new players in our aluminium and steel products business. In the event ourcompetitors are able to provide comparable products at lower prices or respond to changes in marketconditions more swiftly or effectively than we do, our business, results of operations and financial performancewill be adversely affected. There is no assurance that we will be able to compete effectively with our existingand future competitors and adapt quickly to changing market conditions and trends. Any failure by us toremain competitive will adversely affect the demand for our business, our results of operations and financialperformance.

(VIII) Our success depends on our ability to attract and retain key personnel

The Groups success depends to a significant extent upon a number of key employees and seniormanagement. The loss of service of one or more of these key employees, most of whom are not bound byformal long-term employment agreements, could have a material adverse effect on the Group. The Group

believes that its future success will also depend in large part upon its ability to attract and retain highlyskilled managerial personnel. Competition for such personnel is intense. The Group may not be successful inattracting and retaining the personnel it requires.

(IX) Dependence on demand for marine refrigerated containers

The Group is engaged in the production of aluminium frames for container refrigeration units for the shippingindustry. Thus the Groups business is dependent on the international shipping industrys demand for newrefrigerated containers and any significant downturn in the demand for new refrigerated containers will havean adverse impact on the Groups operating results.

Information on Key Executives

Mr Lim Hock Leong (Aged 57)

Mr Lim is the General Manager and is responsible for the management of the daily operations of the Group, whichinclude sales and marketing, investments and corporate finance. Mr Lim has over 24 years of working experiencein the metal engineering and fabrication business since 1988. He joined the Company in 1988 as its FinancialController after accumulating more than nine years of experience in the accounting and finance functions ofthree companies listed in Singapore. He was promoted to General Manager of the Company in 1996. He holds aBachelor in Commerce (Accountancy) degree from the then Nanyang University.

Mr Bennett Jude Bennit (Aged 51)

Mr Bennit is the Project Manager of the Company and is responsible for the Groups site management. Mr Bennitjoined the Company as a senior project engineer in 1992. He was promoted to the current position of ProjectManager in 1998. Prior to joining the Company, Mr Bennit was an R & D Test Engineer of a container manufacturingcompany where he had worked for four years. Mr Bennit holds a Bachelor of Technology degree from the RegionalEngineering College, Warangal, India.

Ms Christine Phua (Aged 56)

Ms Phua is the Material Procurement Manager of the Company. She is responsible for the Groups material planningand procurement and inventory management. Ms Phua joined Nam Lee Industries in 1974 and was promoted tothe position of Material Procurement Manager in 1981. She has since acquired 29 years of experience in this area.

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Mr Lim Ken Guan (Aged 54)

Mr Lim is the Financial Controller of the Company. He is responsible for the accounting, management reporting and

taxation functions of the Group. He joined the Company in 1999. Prior to joining the Company, he has accumulatedmore than 19 years experience in accounting and finance. He is a Chartered Institute of Management Accountantand holds a Master in Business Administration from the University of Birmingham.

Mr Michael Lee (Aged 47)

Mr Lee is the Engineering Manager of the Company and is responsible for the Groups project. Prior to joiningthe Company in 2002, he was the Operations Manager in an engineering company. He has more than 21 yearsof experience in the aluminium industry. Mr Lee holds a Bachelor of Arts (Architectural Studies) from the NationalUniversity of Singapore.

Mr Tan Bee Kin (Aged 51)

Mr Tan joined the Company as the Engineering Manager in 2001. He is responsible for the product design andproject management. Prior to joining the Company, Mr Tan has 19 years of experience in management and designin Automation and Surface Treatment system. Mr Tan holds a Bachelor of Science (Engineering) degree fromUniversity of Aberdeen, UK.

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Report of the Directors

The Directors are pleased to present their report to the members together with the audited consolidated financialstatements of Nam Lee Pressed Metal Industries Limited (the Company) and its subsidiaries (collectively, theGroup) and the balance sheet and statement of changes in equity of the Company for the financial year ended 30

September 2011.

Directors

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

Yong Koon Chin ChairmanYong Kin Sen Managing DirectorYong Poon MiewKhoo Ho TongChidambaram ChandrasegarTan Soo Kiat

Arrangements to enable directors to acquire shares and debentures

Except as described below, neither at the end of nor at any time during the financial year was the Company a partyto any arrangement whose objects are, or one of whose objects is, to enable the Directors of the Company toacquire benefits by means of the acquisition of shares or debentures of the Company or any other body corporate.

Directors interests in shares and debentures

The following Directors who held office at the end of the financial year had, according to the register of Directors

shareholdings required to be kept under Section 164 of the Singapore Companies Act, Cap. 50, an interest inshares and share options of the Company as stated below:-

Held in name of directors Deemed interest

Name of directorAt

1.10.10At

30.9.11At

21.10.11At

1.10.10At

30.9.11At

21.10.11

Ordinary shares of the Company

Yong Kin Sen 839,250 1,139,250 1,139,250 130,299,303 132,419,303 132,419,303

Yong Koon Chin 90,000 90,000 90,000 130,293,303 132,413,303 132,413,303

Yong Poon Miew 358,500 358,500 358,500 130,293,303 132,413,303 132,413,303

Share options of the Company

Khoo Ho Tong 400,000 400,000 400,000

Chidambaram Chandrasegar 200,000 200,000 200,000

Tan Soo Kiat 200,000 200,000 200,000

Messrs Yong Kin Sen, Yong Koon Chin and Yong Poon Miew, by virtue of their interest in more than 20% of theissued share capital of the Company, are deemed to have an interest in the issued share capital of the subsidiariesof the Company at the beginning and end of the financial year and as at 21 October 2011.

Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares,share options, warrants or debentures of the Company, or of related corporations, either at the beginning of the

financial year, or at the end of the financial year.

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Directors contractual benefits

Except as disclosed in the financial statements, since the end of the previous financial year, no Director of the

Company has received or become entitled to receive a benefit by reason of a contract made by the Company or arelated corporation with the Director, or with a firm of which the Director is a member, or with a Company in whichthe Director has a substantial financial interest.

Options

At the Extraordinary General Meeting held on 20 November 2007, shareholders approved the Nam Lee EmployeeShare Option Scheme (the Scheme) for the granting of options for the subscription of shares at a discount toselected employees and non-executive directors. The Scheme is administered by the Remuneration Committee,comprising three directors, Mr Tan Soo Kiat (Chairman), Mr Khoo Ho Tong and Mr Chidambaram Chandrasegar.

In the previous financial year, the Company granted 800,000 options to non-executive directors of the Company

and 7,400,000 options to employees of the Group.

Details of all the options to subscribe for ordinary shares of the Company pursuant to the Scheme as at 30September 2011 are as follows:

Exercisable date Expiry date Exercise price ($) Number of options

22 February 2011 22 February 2016 0.258 800,000

22 February 2011 22 February 2021 0.258 7,400,000

Total 8,200,000

Details of the options to subscribe for ordinary shares of the Company granted to Directors of the Companypursuant to the Scheme are as follows:

Name of director

Optionsgrantedduring

financialyear

Aggregateoptions

granted sincecommencementof plan to end of

financial year

Aggregateoptions

exercised sincecommencementof plan to end of

financial year

Aggregateoptions

outstanding asat end of

financial year

Khoo Ho Tong 400,000 400,000

Chidambaram Chandrasegar 200,000 200,000Tan Soo Kiat 200,000 200,000

Total 800,0001 800,000

1 These options are exercisable between 22 February 2011 and 22 February 2016 at the exercise price of S$0.258 if the vesting conditions

are met.

Since the commencement of the employee share options plan till the end of the financial year:

l No options have been granted to the controlling shareholders of the Company and their associates.

l No participant has received 5% or more of the total options available under the scheme.

l No options that entitle the holder to participate, by virtue of the options, in any share issue of any othercorporation have been granted.

l The options granted under the Scheme were granted without any discount.

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Audit Committee

The audit committee performed the functions specified in section 201B (5) of the Singapore Companies Act, Cap.

50. The functions performed are detailed in the Report on Corporate Governance. The audit committee comprisesthree members, all independent Directors. The members of the audit committee are:

Khoo Ho Tong ChairmanChidambaram Chandrasegar MemberTan Soo Kiat Member

Auditors

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

On behalf of the Board,

Yong Kin SenDirector

Yong Poon MiewDirector

Singapore3 January 2012

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Statement by Directors


We, Yong Kin Sen and Yong Poon Miew, being two of the Directors of Nam Lee Pressed Metal Industries Limited,do hereby state that, in the opinion of the Directors:

(i) the accompanying balance sheets, consolidated income statement, consolidated statement ofcomprehensive income, statements of changes in equity, and consolidated statement of cash flows togetherwith notes thereto are drawn up so as to give a true and fair view of the state of affairs of the Group and ofthe Company as at 30 September 2011 and the results of the business, changes in equity and cash flows ofthe Group and the changes in equity of the Company for the year ended on that date, and

(ii) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay itsdebts as and when they fall due.

On behalf of the Board,

Yong Kin SenDirector

Yong Poon Miew

Director

Singapore3 January 2012

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Independent Auditors Reportto the Members of Nam Lee Pressed Metal Industries Limited

Report on the Consolidated Financial Statements

We have audited the accompanying consolidated financial statements of Nam Lee Pressed Metal Industries Limited(the Company) and its subsidiaries (collectively, the Group) set out on pages 26 to 82 which comprise the

balance sheets of the Group and the Company as at 30 September 2011, the statements of changes in equity ofthe Group and the Company, and the consolidated income statement, consolidated statement of comprehensiveincome and consolidated statement of cash flows of the Group for the year then ended, and a summary ofsignificant accounting policies and other explanatory information.

Managements Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation of consolidated financial statements that give a true and fair viewin accordance with the provisions of the Singapore Companies Act (the Act) and Singapore Financial ReportingStandards, and for devising and maintaining a system of internal accounting controls sufficient to provide areasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; andtransactions are properly authorised and that they are recorded as necessary to permit the preparation of true andfair profit and loss accounts and balance sheets and to maintain accountability of assets.

Auditors Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in theconsolidated financial statements. The procedures selected depend on the auditors judgment, including theassessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation

of the consolidated financial statements that give a true and fair view in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of theentitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of accounting estimates made by management, as well as evaluating the overall presentation of theconsolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion.

Opinion

In our opinion, the consolidated financial statements of the Group and the balance sheet and statement of changesin equity of the Company are properly drawn up in accordance with the provisions of the Act and Singapore

Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of theCompany as at 30 September 2011 and the results, changes in equity and cash flows of the Group and thechanges in equity of the Company 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 thosesubsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with theprovisions of the Act.

Ernst & Young LLP

Public Accountants andCertified Public AccountantsSingapore3 January 2012

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Consolidated Income Statementfor the financial year ended 30 September 2011


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

Note 2011 2010

$000 $000

Revenue 4 167,294 139,004

Cost of sales (135,692) (115,648)

Gross profit 31,602 23,356

Distribution costs (2,177) (2,023)

Administrative costs (13,200) (10,860)

Other operating costs (2,922) (1,570)

Profit from operating activities 5 13,303 8,903

Interest income 8 7

Finance costs 7 (217) (321)

Other income 8 227 3,641

Profit before taxation 13,321 12,230

Taxation 9 (2,358) (2,082)

Profit for the financial year 10,963 10,148

Attributable to:

Equity holders of the Company 10,869 9,913

Non-controlling interests 94 235

10,963 10,148

Earnings per share (in cents)- Basic 10 4.79 4.37- Diluted 10 4.78 4.36

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Consolidated Statement of Comprehensive Incomefor the financial year ended 30 September 2011


2011 2010

$000 $000


Other comprehensive income:

Foreign currency translation (744) 677

Fair value adjustment (592) (467)

Other comprehensive income for the year, net of tax (1,336) 210

Total comprehensive income for the year 9,627 10,358

Attributable to:

Equity holders of the Company 9,526 10,148

Non-controlling interests 101 210

9,627 10,358

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Balance Sheetsas at 30 September 2011



Group Company

Note 2011 2010 2011 2010

$000 $000 $000 $000

Non-current assets

Property, plant and equipment 11 25,729 28,683 4,395 5,546Investments 12 845 1,564 845 1,564Interest in subsidiaries 13 15,396 15,396

26,574 30,247 20,636 22,506

Current assets

Inventories 14 36,582 42,018 10,945 6,987Trade debtors 15 40,418 26,368 34,908 39,091Other debtors and deposits 16 928 524 147 87Prepayments 448 1,381 150 140

Amounts due from subsidiaries (non-trade) 17 14,205 14,166Derivatives 18 126 126Cash and cash equivalents 34 24,125 15,692 15,210 11,929

102,501 86,109 75,565 72,526

Current liabilities

Trade creditors 19 6,841 6,483 2,467 15,183Other creditors and accruals 20 11,862 5,943 10,020 3,784Provision for warranty 21 977 865 59 73Amounts due to subsidiaries (non-trade) 17 8,543 1,111Term loans 22 1,962 1,458 1,751 1,244

Derivatives 18 151 151 Obligations under hire purchase contracts 23 245 422 149 293Provision for taxation 2,751 2,110 1,924 1,323

24,789 17,281 25,064 23,011

Net current assets 77,712 68,828 50,501 49,515

Non-current liabilities

Term loans 22 1,700 2,872 1,168 2,102Obligations under hire purchase contracts 23 398 275 296 140Deferred taxation 24 2,196 2,409 531 863

4,294 5,556 1,995 3,105

99,992 93,519 69,142 68,916

Equity attributable to equity holdersof the Company

Share capital 25 52,944 52,944 52,944 52,944Retained earnings 46,919 36,471 15,308 11,674Capital reserves 26 104 3,084 2,980Foreign currency translation reserve 27 (1,649) (898) Fair value adjustment reserve 28 498 1,090 498 1,090Share option reserve 29 591 344 392 228

99,407 93,035 69,142 68,916Non-controlling interests 585 484

Total equity 99,992 93,519 69,142 68,916

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Statements of Changes in Equityfor the financial year ended 30 September 2011

Attributable to equity holders of the Company

Note

Share

capital

Retained

earnings

Revaluation

reserve

Discount on

acquisitionof a

subsidiary

Foreign

currencytranslation

reserve

Fair valueadjustment

reserve

Shareoption

reserve

Total equity

attributable

to equityholders of

the Company

Non-controlling

interests

Total

equity

$000 $000 $000 $000 $000 $000 $000 $000 $000 $000

(Note 28)

2011

Group

Opening balance at

30 September 2010 52,944 36,471 2,980 104 (898) 1,090 344 93,035 484 93,519

Profit for the financial year 10,869 10,869 94 10,963

Other comprehensive

income:- Foreign currency

translation (751) (751) 7 (744)

- Fair value adjustment (592) (592) (592)

Total comprehensiveincome for the year,net of tax 10,869 (751) (592) 9,526 101 9,627

Contributions by anddistributions to owners:

- Cost of share-basedoptions scheme 6 247 247 247

- Reversal of surplus onrevaluation of buildingson leasehold land upondisposal 11 2,980 (2,980)

- Dividends on ordinaryshares, net of tax 30 (3,401) (3,401) (3,401)

Total contributions by anddistributions to owners (421) (2,980) 247 (3,154) (3,154)

Closing balance at

30 September 2011 52,944 46,919 104 (1,649) 498 591 99,407 585 99,992

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Attributable to equity holders of the Company

Note

Share

capital

Retained

earnings

Revaluation

reserve

Discount on

acquisitionof a

subsidiary

Foreign

currencytranslation

reserve

Fair valueadjustment

reserve

Shareoption

reserve

Total equity

attributable

to equityholders of

the Company

Non-controlling

interests

Total

equity

$000 $000 $000 $000 $000 $000 $000 $000 $000 $000

(Note 28)

2010

Group

Opening balance at

30 September 2009 52,944 28,826 2,980 104 (1,600) 1,557 84,811 274 85,085

Profit for the financial year 9,913 9,913 235 10,148

Other comprehensive

income:- Foreign currency

translation 702 702 (25) 677

- Fair value adjustment (467) (467) (467)

Total comprehensiveincome for the year,net of tax 9,913 702 (467) 10,148 210 10,358

Contributions by anddistributions to owners:

- Cost of share-basedoptions scheme 6 344 344 344

- Dividends on ordinary

shares, net of tax 30 (2,268) (2,268) (2,268)Total contributions by and

distributions to owners (2,268) 344 (1,924) (1,924)

Closing balance at

30 September 2010 52,944 36,471 2,980 104 (898) 1,090 344 93,035 484 93,519

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Note

Share

capital

Retained

earnings

Revaluation

reserve

Fair value

adjustment

reserve

Share

option

reserve

Total

equity

$000 $000 $000 $000 $000 $000(Note 28)

2011

Company

Opening balance at 30 September 2010 52,944 11,674 2,980 1,090 228 68,916



- Fair value adjustment (592) (592)

Total comprehensive income for the year,net of tax 4,055 (592) 3,463

Contributions by and distributions to owners:

- Cost of share-based options scheme 6 164 164

- Reversal of surplus on revaluation of buildingson leasehold land upon disposal 11 2,980 (2,980)

- Dividends on ordinary shares, net of tax 30 (3,401) (3,401)

Total contributions by and distributions to owners (421) (2,980) 164 (3,237)

Closing balance at 30 September 2011 52,944 15,308 498 392 69,142

2010

Company

Opening balance at 30 September 2009 52,944 9,852 2,980 1,557 67,333



- Fair value adjustment (467) (467)

Total comprehensive income for the year,net of tax 4,090 (467) 3,623

Contributions by and distributions to owners:

- Cost of share-based options scheme 6 228 228

- Dividends on ordinary shares, net of tax 30 (2,268) (2,268)

Total contributions by and distributions to owners (2,268) 228 (2,040)

Closing balance at 30 September 2010 52,944 11,674 2,980 1,090 228 68,916


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Consolidated Statement of Cash Flowsfor the financial year ended 30 September 2011



Note 2011 2010

$000 $000

Cash flows from operating activitiesProfit before tax 13,321 12,230Adjustments for:

Depreciation of property, plant and equipment 5 3,860 3,996Property, plant and equipment written off 5 261 (Gain)/loss on disposal of property, plant and equipment, net 5, 8 (54) 8Gain on disposal of investments 8 (8) (428)Realisation of fair value reserve 8 (44) (2,845)Share option expense 5 247 344Write back of allowance for doubtful trade receivables 5 (425)Fair value loss/(gain) on derivatives 277 (126)Interest expense 7 217 321Interest income (8) (7)Dividend income 8 (51) (105)Foreign currency translation adjustment 206 (191)

Operating profit before working capital changes 18,224 12,772

Decrease in inventories 5,436 2,387Increase in debtors (13,521) (4,791)Increase in creditors 6,389 2,219

Cash generated from operations 16,528 12,587

Income tax paid (1,818) (1,754)Interest income 8 7

Interest paid (217) (321)Net cash provided by operating activities 14,501 10,519

Cash flows from investing activities

Purchase of property, plant and equipment (1,989) (2,105)Proceeds from disposal of property, plant and equipment 476 35Proceeds from disposal of investment 67 3,813Dividend income 51 105

Net cash (used in)/generated from investing activities (1,395) 1,848

Cash flows from financing activities

Repayment of finance lease obligations (486) (634)Proceeds from term loan drawdown 3,500 Repayment of term loan drawdown (4,168) (1,605)Dividends paid 30 (3,401) (2,268)

Net cash flows used in financing activities (4,555) (4,507)

Net increase in cash and cash equivalents 8,551 7,860Cash and cash equivalents at 1 October 15,692 7,882Effect of exchange rate changes on cash and cash equivalents (118) (50)

Cash and cash equivalents at 30 September 33 24,125 15,692

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Notes to the Financial Statements30 September 2011

1. Corporate information

Nam Lee Pressed Metal Industries Limited (the Company) is a limited liability company, which is incorporated

and domiciled in Singapore. Its immediate and also ultimate parent company is Nam Lee Holdings Pte Ltd,which is incorporated in Singapore.

The registered office of the Company is located at 31 Senoko Drive, Senoko Industrial Estate, Singapore758216.

The principal activities of the Company include the design, fabrication, supply and installation of steel andaluminium products such as gates, door frames, staircase nosing and hand-railings, laundry racks, letterboxes, sliding windows and sliding doors for flats and houses and the supply of aluminium NT mainframesfor container refrigeration units.

The activities of the subsidiaries are those relating to the manufacture of aluminium NT mainframes,aluminium sliding windows, grilles, gates, drying racks, and other related steel-based and metal products and

manufacturing and distribution of decoration materials.

There have been no significant changes in the nature of these activities during the year.

2. Summary of significant accounting policies

2.1 Basis of preparation

The consolidated financial statements of the Group and the balance sheet and statement of changes inequity of the Company have been prepared in accordance with Singapore Financial Reporting Standards(FRS).

The financial statements have been prepared on the historical cost basis except as disclosed in theaccounting policies below.

The financial statements are presented in Singapore Dollars (SGD or $) and all values in the tables arerounded to the nearest thousand ($000) except otherwise indicated.

2.2 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year except in the currentfinancial year, the Group has adopted all the new and revised standards and Interpretations of FRS (INT FRS)that are effective for annual periods beginning on or after 1 October 2010. The adoption of these standardsand interpretations did not have any effect on the financial performance or position of the Group and theCompany.

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2. Summary of significant accounting policies (contd)

2.3 Standards issued but not yet effective

The Group has not adopted the following standards and interpretations that have been issued but not yeteffective:

Description

Effective for annualperiods beginning

on or after

Revised FRS 24 Related Party Disclosures 1 January 2011

Amendments to INT FRS 114 Prepayments of a Minimum Funding Requirement 1 January 2011

INT FRS 115Agreements for the Construction of Real Estate 1 January 2011

Amendments to FRS 107 Disclosures Transfers of Financial Assets 1 July 2011

Amendments to FRS 101 Severe Hyperinflation and Removal of Fixed Dates forFirst-time Adopters

1 July 2011

Amendments to FRS 12 Deferred Tax: Recovery of Underlying Assets 1 January 2012

Improvements to FRSs 2010

Amendments to FRS 101 First-time Adoption of Financial Reporting Standards 1 January 2011

Amendments to FRS 107 Financial Instruments: Disclosures 1 January 2011

Amendments to FRS 1 Presentation of Financial Statements 1 January 2011

Amendments to FRS 34 Interim Financial Reporting 1 January 2011

Amendments to INT FRS 113 Customer Loyalty Programmes 1 January 2011

Amendments to FRS 1 Presentation of Items of Other Comprehensive Income 1 July 2012

Revised FRS 19 Employee Benefits 1 January 2013

Revised FRS 27 Separate Financial Statements 1 January 2013

Revised FRS 28 Investments in Associates and Joint Ventures 1 January 2013

FRS 110 Consolidated Financial Statements 1 January 2013

FRS 111Joint Arrangements 1 January 2013

FRS 112 Disclosure of Interests in Other Entities 1 January 2013

FRS 113 Fair Value Measurements 1 January 2013

Except for revised FRS 24 and Amendments to FRS 1 the Directors expect that the adoption of thestandards and interpretations above will have no material impact on the financial statements in the period ofinitial application. The nature of the impending changes in accounting policy on adoption of the Amendmentsto FRS 24 and Amendments to FRS 1 are described below:

Revised FRS 24 Related Party Disclosures

The revised FRS 24 clarifies the definition of a related party to simplify the identification of such relationshipsand to eliminate inconsistencies in its application. The revised FRS 24 expands the definition of a relatedparty and would treat two entities as related to each other whenever a person (or a close member of thatpersons family) or a third party has control or joint control over the entity, or has significant influence over theentity.

The revised standard also introduces a partial exemption of disclosure requirements for government-relatedentities. The Group is currently determining the impact of the changes to the definition of a related party hason the disclosure of related party transaction. As this is a disclosure standard, it will have no impact on the

financial position or financial performance of the Group when implemented in 2012.

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2.3 Standards issued but not yet effective (contd)

Amendments to FRS 1 Presentation of Items of Other Comprehensive Income

The Amendments to FRS 1 Presentation of Items of Other Comprehensive Income (OCI) is effective forfinancial periods beginning on or after 1 July 2012.

The Amendments to FRS 1 changes the grouping of items presented in OCI. Items that could be reclassifiedto profit or loss at a future point in time would be presented separately from items which will never bereclassified. As the Amendments only affect the presentations of items that are already recognised in OCI, theGroup does not expect any impact on its financial position or performance upon adoption of this standard.

2.4 Basis of consolidation

Basis of combinations from 1 October 2010

The consolidated financial statements comprise the financial statements of the Company and its subsidiariesas at the end of the reporting period. The financial statements of the subsidiaries used in the preparation ofthe consolidated financial statements are prepared for the same reporting date as the Company. Consistentaccounting policies are applied to like transactions and events in similar circumstances.

All intro-group balances, income and expenses and unrealised gains and losses resulting from intra-grouptransactions and dividends are eliminated in full.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control,and continue to be consolidated until the date that such control ceases.

Business combinations are accounted for by applying the acquisition method. Identifiable assets acquiredand liabilities assumed in a business combination are measured initially at their fair values at the acquisitiondate. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred andthe services are received.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriateclassification and designation in accordance with the contractual terms, economic circumstances andpertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in hostcontracts by the acquiree.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at theacquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to bean asset or liability, will be recognised in accordance with FRS 39 either in profit or loss or as change to othercomprehensive income. If the contingent consideration is classified as equity, it is not be remeasured until it isfinally settled within equity.

In business combinations achieved in stages, previously held equity interests in the acquiree are remeasuredto fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss.

The Group elects for each individual business combination, whether non-controlling interest in the acquiree (ifany) is recognised on the acquisition date at fair value, or at the non-controlling interests proportionate shareof the acquiree identifiable net assets.

Any excess of the sum of the fair value of the consideration transferred in the business combination, the

amount of non-controlling interest in the acquiree (if any), and the fair value of the Groups previously heldequity interest in the acquiree (if any), over the net fair value of the acquirees identifiable assets and liabilitiesis recorded as goodwill. In instances where the latter amount exceeds the former, the excess is recognisedas gain on bargain purchase in profit or loss on the acquisition date.

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2.4 Basis of consolidation (contd)

Basis of combinations prior to 1 October 2010

In comparison to the above mentioned requirements, the following differences applied:

Business combinations are accounted for by applying the purchase method. Transaction costs directlyattributable to the acquisition formed part of the acquisition costs. The non-controlling interest (formerlyknown as minority interest) was measured at the proportionate share of the acquirees identifiable net assets.

Business combinations achieved in stages were accounted for as separate steps. Adjustments to those fairvalues relating to previously held interests are treated as a revaluation and recognised in equity. Any additionalacquired share of interest did not affect previously recognised goodwill.

When the Group acquired a business, embedded derivatives separated from the host contract by theacquiree were not reassessed on acquisition unless the business combination resulted in a change in theterms of the contract that significantly modified the cash flows that otherwise would have been requiredunder the contract.

Contingent consideration was recognised if, and only if, the Group had a present obligation, the economicoutflow was more likely than not and a reliable estimate was determinable. Subsequent adjustments to thecontingent consideration were recognised as part of goodwill.

2.5 Subsidiaries

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

so as to obtain benefits from its activities. The Group generally has such power when it directly or indirectly,holds more than 50% of the issued share capital, or controls more than half of the voting power, or controlsthe composition of the board of directors.

In the Companys separate financial statements, investments in subsidiaries are accounted for at cost lessany impairment losses.

2.6 Transactions with non-controlling interests

Non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to ownersof the Company, and are presented separately in the consolidated statement of comprehensive incomeand within equity in the consolidated balance sheet, separately from equity attributable to owners of theCompany.

Changes in the Company owners ownership interest in a subsidiary that do not result in a loss of controlare accounted for as equity transactions. In such circumstances, the carrying amounts of the controllingand non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary.Any difference between the amount by which the non-controlling interest is adjusted and the fair value of theconsideration paid or received is recognised directly in equity and attributed to owners of the parent.

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2.7 Foreign currency

The Groups consolidated financial statements are presented in Singapore Dollars, which is also theCompanys functional currency. Each entity in the Group determines its own functional currency and itemsincluded in the financial statements of each entity are measured using that functional currency.

(a) Transactions and balances

Transactions in foreign currencies are measured in the respective functional currencies of the Companyand its subsidiaries and are recorded on initial recognition in the functional currencies at exchangerates approximating those ruling at the transaction dates. Monetary assets and liabilities denominatedin foreign currencies are translated at the closing rate of exchange ruling at the end of reporting period.Non-monetary items that are measured in terms of historical cost in a foreign currency are translatedusing the exchange rates as at the dates of the initial transactions. Non-monetary items measured at

fair value in a foreign currency are translated using the exchange rates at the date when the fair valuewas determined.

Exchange differences arising on the settlement of monetary items or on translating monetary itemsat the end of the reporting period are recognised in the profit or loss except for exchange differencesarising on monetary items that form part of the Groups net investment in foreign operations, which arerecognised initially in other comprehensive income and accumulated under foreign currency translationreserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss ofthe Group on disposal of the foreign operation.

(b) Consolidated financial statements

For consolidation purpose, the assets and liabilities of foreign operations are translated into SGD atthe rate of exchange ruling at the end of the reporting period and their profit or loss are translatedat the exchange rates prevailing at the date of the transactions. The exchange differences arising onthe translation are recognised in other comprehensive income. On disposal of a foreign operation, thecomponent of other comprehensive income relating to that particular foreign operation is recognised inprofit or loss.

In the case of a partial disposal without loss of control of a subsidiary that includes a foreign operation,the proportionate share of the cumulative amount of the exchange differences are re-attributed to non-controlling interest and are not recognised in profit or loss. For partial disposals of associates or jointlycontrolled entities that are foreign operations, the proportionate share of the accumulated exchangedifferences is reclassified to profit or loss.

The Group has elected to recycle the accumulated exchange differences in the separate component ofother comprehensive income that arises from the direct method of consolidation, which is the methodthe Group uses to complete its consolidation.

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2.8 Property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. The cost of an item of property,plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefitsassociated with item will flow to the Group and the cost of the item can be measured reliably.

Subsequent to recognition, buildings on leasehold land are measured at fair value less accumulateddepreciation and impairment losses recognised after the date of the revaluation. Valuations are performedwith sufficient regularity to ensure that the carrying amount does not differ materially from their fair value ofthe buildings on leasehold at the end of reporting period. All other categories of assets are stated at cost lessaccumulated depreciation and any accumulated impairment losses. When significant parts of property, plantand equipment are required to be replaced in intervals, the Company recognises such parts as individualassets with specific useful lives and depreciation, respectively. All other repair and maintenance costs arerecognised in profit or loss as incurred.

Any revaluation surplus is recognised in other comprehensive income and accumulated in equity under theasset revaluation reserve, except to the extent that it reverses a revaluation decrease of the same assetpreviously recognised in profit or loss, in which case the increase is recognised in profit or loss. A revaluationdeficit is recognised in profit or loss, except to the extent that it offsets an existing surplus on the same assetcarried in the asset revaluation reserve.

Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amountof the asset and the net amount is restated to the revalued amount of the asset. The revaluation surplusincluded in the asset revaluation reserve in respect of an asset is transferred directly to retained earnings onretirement or disposal of the asset.

Depreciation is calculated on the straight line method to write off the cost or valuation of property, plant andequipment over their estimated useful lives. The estimated useful lives of property, plant and equipment areas follows:

Leasehold land Over the remaining period of lease up to a maximum of 61 years

Buildings on freehold land 50 years

Buildings on leasehold land Lower of 50 years and over the remaining period of lease up to amaximum of 6 years

Leasehold improvements 10 years

Furniture and fittings 10 years

Motor vehicles 5 to 10 years

Office equipment 10 yearsPlant and machinery 5 to 10 years

Tools 10 years

Assets under construction included in plant and machinery are not depreciated as these assets are notavailable for use. Freehold land has an infinite useful life and therefore is not depreciated.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes incircumstances indicate that the carrying value may not be recoverable.

The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjustedprospectively, if appropriate.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefitsare expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in theprofit or loss in the year the asset is derecognised.

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2.9 Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. Ifany such indication exists, or when an annual impairment testing for an asset is required, the Group makesan estimate of the assets recoverable amount.

An assets recoverable amount is the higher of an assets or cash-generating units fair value less costs tosell and its value in use and is determined for an individual asset, unless the asset does not generate cashinflows that are largely independent of those from other assets. Where the carrying amount of an assetor cash-generating unit exceeds its recoverable amount, the asset is considered impaired and is writtendown to its recoverable amount. In assessing value in use, the estimated future cash flows expected tobe generated by the assets are discounted to their present value using a pre-tax discount rate that reflectscurrent market assessments of the time value of money and the risks specific to the asset. In determiningfair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by

valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.

Impairment losses are recognised in the profit or loss in those expense categories consistent with the functionof the impaired asset, except for assets that are previously revalued where the revaluation was taken to othercomprehensive income. In this case the impairment is also recognised in other comprehensive income up tothe amount of any previous revaluation.

An assessment is made at each reporting date as to whether there is any indication that previously recognisedimpairment losses may no longer exist or may have decreased. If such indication exists, the Group estimatesthe assets or cash-generating units recoverable amount. A previously recognised impairment loss is reversedonly if there has been a change in the estimates used to determine the assets recoverable amount since thelast impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its

recoverable amount. That increase cannot exceed the carrying amount that would have been determined, netof depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit orloss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluationincrease.

2.10 Financial assets

Initial recognition and measurement

Financial assets are recognised when, and only when, the Group becomes a party to the contractualprovisions of the financial instrument. The Group determines the classification of its financial assets at initialrecognition.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financialassets not at fair value through profit or loss, directly attributable transaction costs.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

(a) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading and financialassets designated upon initial recognition at fair value through profit or loss. Financial assets areclassified as held for trading if they are acquired for the purpose of selling or repurchasing in the near

term. This category includes derivative financial instruments entered into by the Group that are notdesignated as hedging instruments in hedge relationships as defined by FRS 39. Derivatives, includingseparated embedded derivatives are also classified as held for trading unless they are designated aseffective hedging instruments.

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2.10 Financial assets (contd)

(a) Financial assets at fair value through profit or loss (contd)

The Group has not designated any financial assets upon initial recognition at fair value through profit orloss.

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured atfair value. Any gains or losses arising from changes in fair value of the financial assets are recognisedin profit or loss. Net gains or net losses on financial assets at fair value through profit or loss includeexchange differences, interest and dividend income.

Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fairvalue if their economic characteristics and risks are not closely related to those of the host contracts

and the host contracts are not

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