T 2008BUILDING AGLOBAL BRAND TIONAL LIMITED · Scuderia Toro Rosso Formula One Team. INDUSTRIAL...

2 PANDAN ROAD SINGAPORE 609254

TEL: (65) 6264 2155 FAX: (65) 6265 9927 / 6266 5368

EMAIL: [email protected]

WEBSITE: www.yhi.com.sg

Listed on the mainboard of the Singapore ExchangeCompany Registration Number 200007455H

YHI INTERNATIONAL LIMITED

BUILDING A

GLOBAL BRANDANNUAL REPORT 2008

BUILDING A

GLOBAL BRANDListed on the mainboard of the Singapore Exchange

Company Registration Number 200007455H


ANNUAL REPORT 2008

ANNUAL REPORT 2008

Five-Year Financial Highlights 02 // Financial Summary 03 // Corporate Profile 06 //

Group Managing Director's Message 08 // Board of Directors 12 // Corporate Structure 16 //

Our Global Presence 18 // Heads of Subsidiaries & Key Officers 20 //

Manufacturing Milestones 22 // Financial Calendar & Corporate Information 24 //

Review of Operations 28 // Corporate Governance Report 30 // Financial Report 37

CONTENTS

At YHI, our aim is to continously provide our customers with quality products and distinctive customer services so as to build strong customer relationships. We also aim to provide growth and opportunities for our employees and to consistently generate stable returns to our shareholders. We will achieve these goals through our organisation-wide commitment to quality, professional and personnel management, sound business practices and teamwork.

MISSION STATEMENT

REVENUE BY BUSINESS SEGMENTS

(S$ ’million)

Since our listing in 2003, we have been delivering

commendable performance in Revenue and Earnings and

we will continue to target better growth year-on-year.

02

FIVE-YEAR

2004

2004

2005

2005

2006

2006

2007

2007

207.1

84.2

97.8

111.6

152.8

157.92008

2008

237.0

263.6

274.1

300.1

FINANCIAL HIGHLIGHTS

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PAT BY BUSINESS SEGMENTS

(S$ ’million)

GROUP PAT (S$ ’million)

20.3

25.5

26.3

19.4

2004

2005

2006

2007

2008

2004

2004

2005

2005

2006

2006

2007

2007

11.3

9.0

10.8

11.8*

7.1

1.22008

2008

14.7

15.7

19.2

18.2

REVENUE BY GEOGRAPHICAL

MARKETS (S$ ’million)

2004

115.4

2004

133.2

200442.7

2005

123.5

2005

146.1

200565.2

2006

135.5

2006

150.7

2006

89.0

2007

151.3

2007

162.3

2007

113.3

2008

162.1

2008

162.4

2008

133.5

27.5*

Asean

North East Asia

Oceania & Others

GROUP REVENUE (S$ ’million)

291.3

375.2

426.9

458.0

2004

2005

2006

2007

2008

334.8

Distribution

Manufacturing

30%

DIVIDEND PAYOUT RATIO (%)

14%23%

30%

2004

2005

2006

2007

2008

26%

* FY2006 PAT included a one-time gain in negative goodwill effect of S$5.4 million

03

RESULTS OF OPERATIONSActual

FY2008 FY2007 FY2006 FY2005 FY2004S$ ’000 S$ ’000 S$ ’000 S$ ’000 S$ ’000

Sales 457,974 426,887 375,200 334,795 291,325Profit before income tax 26,918 33,789 35,552 32,454 26,275Net profit attributable to equity 19,436 26,256 27,513 25,471 20,347holders of the CompanyEarnings per share (cents) 3.32 4.49 4.71 4.36 3.48

ActualFY2008 FY2007 FY2006 FY2005 FY2004S$ ’000 S$ ’000 S$ ’000 S$ ’000 S$ ’000

Current assets 203,376 210,448 160,675 153,441 130,651

Non-current assets 119,770 121,046 110,997 68,344 58,229 Total assets 323,146 331,494 271,672 221,785 188,880

Current liabilities 130,517 148,811 110,966 84,208 70,659

Non-current liabilities 7,975 9,612 7,943 4,265 10,817

Total liabilities 138,492 158,423 118,909 88,473 81,476

Net assets 184,654 173,071 152,763 133,312 107,404

Capital and reserves attributable to equity holders of the Company 180,378 168,109 148,101 129,902 104,698

Minority interests 4,276 4,962 4,662 3,410 2,706

Total equity 184,654 173,071 152,763 133,312 107,404

Net asset value per share (cents) 30.86 28.76 25.33 22.22 17.91

Explanatory Notes:1 The Group’s earnings per share for FY2004 is restated and adjusted for comparative purposes to reflect the share split and the bonus shares as incurred

in FY2005.2 The Group’s net asset value per share for FY2004 is restated and adjusted for comparative purposes to reflect the share split and the bonus shares as

incurred in FY2005.

FINANCIAL POSITION

BUILDING A GLOBAL BRAND

SUMMARYFINANCIALfor the financial year

ended 31 December

An established brand like YHI has been creating products and

services that interact well with customers worldwide. It is

through creating the right experience that fulfills the promise

of quality to customers that has been the hallmark of our

success over the years.BRAND EXPERIENCEESTABLISHED

Photo courtesy of Redbull Racing Limited

CORPORATE

PROFILE

06

YHI International Limited is a recognised distributor of high-quality automotive and industrial products, and a familiar and trusted name in alloy wheels manufacturing as an Original Design Manufacturer providing integrated services from the design and development to the manufacturing, marketing and distribution of alloy wheels.

Today, YHI’s wide international presence can be seen with subsidiaries and associated companies located in Asean, China, Taiwan, Hong Kong, USA, Japan, Canada, Oceania and Italy. YHI also has 4 alloy wheels manufacturing plants located in Shanghai and Suzhou, China, Taoyuan in Taiwan and Sepang in Malaysia.

With an aim to build YHI into a global brand name where “The World Is Our Market”, we will strengthen and widen the YHI distribution network putting emphasis to promote and develop the market potential of our portfolio of premium and proprietary brands in the global market.

TYRESWe have an extensive range of tyres from passenger cars to commercial and off-the-road vehicles, to cater for different market needs. The key tyre brands we represent are Yokohama, Nankang, Nexen, Pirelli and our own proprietary brand - NEUTON TYRES.

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Listed on the Mainboard of the Singapore Exchange Securities

Trading Limited (SGX-ST) on 3 July 2003, YHI has successfully

diversified its business and carved a niche for itself in the

global automotive arena since its humble beginnings as a

sole proprietorship established in 1948.

07

ALLOY WHEELSOur alloy wheels brand portfolio includes renowned brands like Enkei, OZ, Konig and ADVANTI RACING. Our own proprietary brand, ADVANTI RACING is an Official Partner to Scuderia Toro Rosso Formula One Team.

INDUSTRIAL PRODUCTSOur industrial products portfolio includes both automotive batteries and rechargeable batteries for commercial and industrial use as well as golf and utility buggies from EZGO. Some of the key brands we distribute for rechargeable batteries are Hitachi, Trojan, CSB and Benning. We have also launched NEUTON POWER - our own proprietary brand of industrial and automotive batteries.


GROUP MANAGING

DIRECTOR’S MESSAGE

08

Q. What are your thoughts on the performance of the Group in FY2008?

A. Although we did not achieve double-digit growth in turnover, we still managed to chalk up a 7.3% increase over FY2007 despite the bad economic conditions. If we discount the loss on foreign exchange and other non-recurring items in FY2008, the Group's profit was at about the same level as in FY2007. I am generally happy with our results in the prevailing challenging times.

Q. How did the distribution and manufacturing business segments perform in FY2008?

A. In FY2008, our distribution business segment accounted for approximately 65% and 94% of the Group's turnover and net profit respectively. Our manufacturing business segment accounted for 35% and 6% of the Group's turnover and net profit respectively. Our distribution business segment exceeded our expectations primarily due to better results from ASEAN and Oceania.

Q. What factors assisted in the development of both the business segments?

A. Turnover from our distribution business segment was primarily driven by stronger tyres sales in both ASEAN and Oceania. Our relentless efforts to promote our proprietary brands NEUTON TYRES and ADVANTI

RACING alloy wheels in new geographical markets also helped to boost our distribution segment. Profitability in our manufacturing business segment was affected by high operating costs in the first half of FY2008, as well as loss on foreign exchange due to volatility in major global currencies.

Q. The global business environment is becoming more challenging, so how does the Group maintain its competitive edge?

A. In my view, network is very important. So far we have been very successful in opening new geographical markets and this is our strength. We are able to achieve wider market share through new business opportunities to promote our range of tyres, alloy wheels and batteries. In FY2008, our manufacturing plants have started to embark on various cost reduction measures to remain competitive through better production processes and enhanced technologies.

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Q. YHI celebrated its 60th year in 2008. How does it feel to have come so far?

A. Personally, I am proud that the YHI Group has come a long way since its humble beginnings as a sole proprietorship established in 1948. Today, YHI is a familiar and trusted name in the global arena where "The World Is Our Market".

Q. Developing YHI into a global brand name is an on-going initiative. What are the plans and strategies adopted for this?

A. We will intensify our focus to develop our portfolio of premium and proprietary brands to build the YHI brand name to gain global recognition and reputation. Our proprietary brands of ADVANTI RACING alloy wheels, NEUTON TYRES and NEUTON POWER will continue to be channelled out into our extensive global network. For the manufacturing business segment, we have been actively appointing new distributors in various geographical markets for our alloy wheels brand portfolio which includes renowned brands like Enkei, OZ, Konig and ADVANTI RACING.

Q. In the inaugural Formula One night race in Singapore, how does it feel to be an Official Partner to Scuderia Toro Rosso Formula One Team? What are the benefits of such partnership?

A. I feel very proud as a Singaporean especially when a home-grown Singapore Company has the opportunity to showcase its alloy wheels in a world class racing event. Since we became an Official Partner to Scuderio Toro Rosso Formula One Team, the branding image of both YHI and ADVANTI RACING alloy wheels have been

greatly enhanced. We have received many enquiries and orders from customers all over the world eager to market our ADVANTI RACING alloy wheels.

Q. The net profit for FY2008 was lower than in FY2007, what can the shareholders expect in terms of dividends for FY2008?

A. Since our listing in year 2003, we have been rewarding our shareholders with good dividend payments. Although the business environment is getting more challenging, YHI will continue to reward all supportive shareholders. The proposed dividend payment of approximately S$5.8 million will represent approximately 30% of our net profit after tax. This payout % is similar to FY2007.

In closing, I would like to take this opportunity to thank our Board of Directors for their guidance and to the Management and staff of the Group for their dedication, commitment and contribution to the Group. To our stakeholders - our shareholders, customers, suppliers and business associates - my sincere appreciation for your support and confidence.

I look forward to meeting you at our coming shareholders' meeting.

Yours sincerely,

TAY TIAN HOE RICHARDGROUP MANAGING DIRECTOR


We will intensify our focus to develop our portfolio of premium and proprietary brands to build the YHI brand name to gain global recognition and reputation. Our proprietary brands of ADVANTI RACING alloy wheels, NEUTON TYRES and NEUTON POWER will continue to be channelled out into our extensive global network...

问: 您认为友发集团在2008财政年度的整体表现如

何?

答: 虽然我们的销售收入没有达到双位数增长, 但

是在目前全球经济不景气的情况下仍然取得

7.3%的增长幅度。如果剔除外汇因素和其它一

次性的费用，集团净利事实上保持了2007年的

水平。总体来说，我对集团的表现相当满意。

问: 在2008年，批发和制造部门分别表现如何？

答: 2008年，我们的批发部门表现强劲，其销售收

入占了集团总营业额的65%，净利润占了94%。

制造部门的销售收入和净利润则分别占了

35%和6%。批发部门表现超出预计，主要得益

于我们在亚细安和大洋洲分公司的良好表现。

问: 您认为是什么原因影响着两个部门的表现？

答: 我们在亚细安和大洋洲轮胎销售强劲，带动了

整个批发部门的销售。再加上我们不遗余力地

推销自有品牌 --- NEUTON 轮胎和雅泛迪轮圈，其

在新兴市场的销售也相应提升了批发部门的表

现。制造部门的盈利则受到高成本和外汇大幅

波动的影响。

问: 目前全球经济环境越来越有挑战性，友发集团

怎样保持竞争优势呢？

答: 在我看来，销售网络至关重要。可以说我们在

这方面取得了成功，开拓了许多新的市场，这

是我们的强项。我们成功地进入新兴市场，并

推销全系列的产品，包括轮胎、轮圈和电池。

2008年，我们的工厂开始采取一系列降低成本

的措施，通过改进生产流程和引进新技术，来

提高竞争能力。

董事长献辞

我们将大力推销优质和自有品牌产品，使友发得到世界的承认，成为全球性品牌。我们的自有品牌 — 雅泛迪轮圈、NEUTON 轮胎和NEUTON POWER电池，将继续通过全球的销售网络推向世界......

问: 友发在2008年庆祝了60周年生日。请问您有何

感想？

答: 我个人对友发集团从一家建立于1948年的私营

企业，发展到今天的上市集团公司，感到非常

自豪。友发已成为大众熟知和信任的名字，我

们正本着“世界为我市场”的目标迈进。

问: 友发正致力于发展成一个世界品牌。请问在这

方面友发有哪些计划和策略呢？

答: 我们将大力推销优质和自有品牌产品，使友发得

到世界的承认，成为全球性品牌。我们的自有

品牌—雅泛迪轮圈、NEUTON 轮胎和NEUTON

POWER电池，将继续通过全球的销售网络推向

世界。制造部门方面，我们已经在很多地区

委任了新的分销商，来推销包括Enkei、OZ、

Konig和雅泛迪在内的轮圈。

问: 新加坡成功举办了首次一级方程式夜间大赛。

作为参赛队伍Scuderia Toro Rosso的合作伙

伴，您有何感想？友发从中得到什么益处？

答: 作为新加坡人，我为我们公司可以有机会

在世界水平的大赛上展示产品感到相当自

豪。自从成为Scuderia Toro Rosso的合作伙伴以

来，友发和雅泛迪轮圈的知名度大大提高，并

收到多国客户关于雅泛迪轮圈的询问和订单。

问: 与2007年相比，2008年集团净利下降了。股

东还可以期望得到股息吗？

答: 自2003年上市以来，我们一直以派发股息的形

式来回报股东。虽然经济环境越来越具挑战

性，友发将继续回报支持我们的股东。董事会

提议派发新币5百80万的股息，大约占本年净利

的30%。派发的百分比和去年相当接近。

最后，我借此机会，感谢董事会成员，谢谢你们为

管理层和员工提出的宝贵建议，谢谢你们为友发作

出的贡献。

同时我也要谢谢各位股东、客户、供应商和合作伙

伴，衷心感谢你们对友发的支持和信任。我期待着

在股东大会上与您见面。

郑添和

集团董事长

BOARD OF

DIRECTORS

1 Mr Tay Tian Hoe RichardGroup Managing Director, Aged 58, SingaporeanMr Richard Tay is the Group Managing Director and key founder of our Group. He is a member of our Nominating Committee. Mr Tay has more than 38 years of business experience in the areas of sales and distribution of automotive products. He plays an important role in formulating and setting of overall business strategies and policies for our Group including the development and growth of our Group’s operations. Under his stewardship, Mr Tay has led the development and growth of our alloy wheels manufacturing business. He is a member of the Singapore Institute of Directors. Mr Tay was appointed to the Board on 26 August 2000.

2 Mr Tay Tiang GuanExecutive Director, Aged 57, SingaporeanMr Tay Tiang Guan is the Executive Director of our Group. He has more than 31 years of business experience and has extensive knowledge in the automotive and industrial products industry. Mr Tay is responsible for spearheading our Group’s operations in Asean and overseeing our Group’s business development and operational management of our tyre and industrial product distribution business. He is a member of the Singapore Institute of Directors. Mr Tay was appointed to the Board on 26 August 2000.

3 Mr Yuen Sou WaiExecutive Director & CFO, Aged 55, SingaporeanMr Yuen Sou Wai is our Executive Director and our Group Chief Financial Officer. In addition to his financial portfolio, Mr Yuen is also responsible for our Group’s operations in Oceania, USA and Canada. Mr Yuen has about 35 years of broadbased financial management experience in various large local and multinational companies and prior to joining our Group in 1996, he was the Regional Finance Director (Asia Pacific) with Diversey Corporation, Canada, a group owned by Molson Companies Ltd. Mr Yuen holds a Master in Business Administration Degree from the University of Leicester, United Kingdom. He is a Fellow of the Chartered Institute of Management Accountants (UK), a Fellow Certified Public Accountant, Singapore and a member of the Singapore Institute of Directors. Mr Yuen was appointed to the Board on 22 May 2003.

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4 Mr Henry Tan Song KokIndependent Director, Aged 45, SingaporeanMr Henry Tan was appointed to the Board on 22 May 2003. Mr Tan currently chairs the Audit Committee and is a member of our Remuneration Committee and Nominating Committee. He is the Managing Director of Nexia TS Public Accounting Corporation, the Chairman of Nexia China and also the Asia Pacific Regional Chairman and Board member of Nexia International. He is also a director of Raffles Education Corporation, Chosen Holdings Limited, Pertama Holdings Limited and China New Town Development Co Ltd. Mr Tan graduated with a First Class Honours Degree in Accountancy from the National University of Singapore. He is a fellow of the Institute of Certified Public Accountants of Singapore, member of Institute of Chartered Accountants in Australia, Institute of Internal Auditors, Inc (Singapore Chapter) and Singapore Institute of Directors.

5 Mr Hee Theng FongIndependent Director, Aged 55, SingaporeanMr Hee Theng Fong was appointed to the Board on 22 May 2003. Mr Hee currently chairs the Remuneration Committee and is a member of our Audit Committee. He is currently a partner of KhattarWong and has been practicing as an advocate and solicitor of the Supreme Court of Singapore since 1982. Mr Hee is also a director of several companies including Delong Holdings Ltd, Datapluse Technology Limited, Sinomem Technology Limited and NTUC Fairprice Co-operative Limited. He is actively involved in arbitration cases in the Asia Pacific region and holds several arbitral appointments. He is a Fellow of the Chartered Institute of Arbitrators (UK) and an Arbitrator with the Singapore International Arbitration Centre (SIAC) and China International Economic and Trade Arbitration Commission (CIETAC).

6 Mr Phua Tin HowIndependent Director, Aged 59, SingaporeanMr Phua Tin How was appointed to the Board on 22 May 2003. Mr Phua currently chairs the Nominating Committee and is a member of our Audit Committee and Remuneration Committee. Mr Phua is also a director of several listed companies in Singapore. He holds an MBA from INSEAD, France and a Bachelor of Science (Hons) Degree from the then University of Singapore (now known as National University of Singapore).


BRAND PROMISEDELIVERING

CORPORATE

STRUCTURE

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YHI INTERNATIONAL MARKETING (SHANGHAI) CO LTDSHANGHAI, PRC

YHI CORPORATION (GUANGZHOU) CO LTDGUANGZHOU, PRC

YHI POWER PTY LTD AUSTRALIA

YHI CORPORATION (SINGAPORE) PTE LTDSINGAPORE

YHI (MALAYSIA) SDN BHDMALAYSIA

YHI (HONG KONG) CO LTDHONG KONG

YHI (CHINA) STRATEGY CO LTDHONG KONG

YHI (AUSTRALIA) PTY LTD AUSTRALIA

YHI (NEW ZEALAND) LTDNEW ZEALAND

ADVANTI RACING USA, LLCUSA

YHI (CANADA) INCCANADA

PAN-MAR CORPORATIOND/B/A KONIG (AMERICAN)USA

TTS INTERNATIONAL CO LTDJAPAN

YHI (AMERICA) PTE LTDSINGAPORE

as at 31 December 2008

EVO-TREND CORPORATION (MALAYSIA) SDN BHDMALAYSIA

PT YHI INDONESIAINDONESIA

AUTOTREND (SHANGHAI) CO LTD SHANGHAI, PRC

YHI CORPORATION (THAILAND) CO LTDTHAILAND

YOKOHAMA TIRE SALES (SHANGHAI) CO LTD SHANGHAI, PRC

100%

100%

100%

100%

80%

70%

90%

51%

90%

80%

95%

100%

49%

49%

100%

100%

80%

60%

100%

17BUILDING A GLOBAL BRAND

YHI MANUFACTURING (SINGAPORE) PTE LTD SINGAPORE

YHI INTERNATIONAL(TAIWAN) CO LTDTAIWAN

YHI MANUFACTURING (SHANGHAI) CO LTD SHANGHAI, PRC

YHI ADVANTI MANUFACTURING(SHANGHAI) CO LTD SHANGHAI, PRC

YHI PRECISION MOULDING(SHANGHAI) CO LTDSHANGHAI, PRC

YHI ADVANTI MANUFACTURING (SUZHOU) CO LTD SUZHOU, PRC

YHI MANUFACTURING (MALAYSIA) SDN BHDMALAYSIA

O.Z. S.p.A ITALY

100%

100%

100%

100%

100%

100%

100%

35.51%

OUR GLOBAL

PRESENCE

18

SINGAPOREYHI Corporation (Singapore) Pte LtdYHI Manufacturing (Singapore) Pte LtdYHI (America) Pte LtdNo. 2 Pandan Road Singapore 609254 Tel: (65) 6264 2155Fax: (65) 6265 9927/ 6266 5368Email: [email protected]: www.yhi.com.sg

MALAYSIAYHI (Malaysia) Sdn BhdNo. 15 Jalan U1/23 Seksyen U1HICOM-Glenmarie Industrial Park40150 Shah Alam Selangor Darul Ehsan Malaysia Tel: (60) 3 7804 9880Fax: (60) 3 7804 9878Email: [email protected]: www.yhimalaysia.com

YHI Manufacturing (Malaysia) Sdn BhdPT 29516 Lengkuk Teknologi Techpark @ Enstek 71760 Bandar Enstek Negeri Sembilan MalaysiaTel: (60) 6 782 2288 Fax: (60) 6 782 2233 Email: [email protected]: www.advanti-wheel.com

Evo-Trend Corporation (Malaysia) Sdn BhdLot 32-B1 Jalan 5/32AOff 6 1/2 Miles Jalan KepongKepong Industrial Area52100 Kuala Lumpur MalaysiaTel: (60) 3 6257 1333Fax: (60) 3 6257 7393Email: [email protected]

INDONESIAPT YHI IndonesiaJalan Agung Perkasa X Blok K2No.4 Sunter Agung PodomoroJakarta, Utara IndonesiaTel: (62) 21 6512 667Fax: (62) 21 6512 635Email: [email protected]

THAILANDYHI Corporation (Thailand) Co LtdNo. 1111 Rama 9 Road 2 Suanluang Bangkok 10250 ThailandTel: (66) 2319 6526 / 7 Fax: (66) 2319 7062 Email: [email protected]

HONG KONGYHI (Hong Kong) Co LtdYHI (China) Strategy Co LtdUnit A & B 11F Dynamic Cargo Centre 188 Yeung Uk Road Tsuen Wan New Territories Hong Kong Tel: (852) 2727 1883 Fax: (852) 2727 1301 Email: [email protected] Website: www.yhihongkong.com

TAIWAN YHI International (Taiwan) Co Ltd(32668) No. 28 Lane 813 Gaoshi Road Youth Industrial District Yang-Mei Taoyuan Taiwan ROC Tel: (886) 3 4966 777 Fax: (886) 3 4966 772 Email: [email protected] Website: www.advanti-wheel.com

AUSTRALIAYHI (Australia) Pty LtdUnit 1A/6 Boundary RoadNorthmead NSW 2152 Sydney Australia Tel: (61) 2 9756 6688 Fax: (61) 2 9756 6288 Email: [email protected] Website: www.yhi.com.au

YHI Power Pty Ltd 1044 - 1046 Canley Vale Road Wetherill Park NSW 2164 Sydney AustraliaTel: (61) 2 9729 2288 Fax: (61) 2 9756 4066 Email: [email protected]: www.yhipower.com.au

NEW ZEALANDYHI (New Zealand) Ltd260 Puhinui Road Manukau City Auckland New Zealand Tel: (64) 9 278 1712 Fax: (64) 9 279 4855Email: [email protected] Website: www.yhi.co.nz

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CHINAYHI Manufacturing (Shanghai) Co LtdYHI Advanti Manufacturing (Shanghai) Co LtdYHI International Marketing (Shanghai) Co Ltd No. 611 Shen Fu Road Xinzhuang Industrial Zone Shanghai Zip Code : 201108 PRC Tel: (86) 21 6489 6655 Fax: (86) 21 6489 4455 Email: [email protected] [email protected]: www.advanti-wheel.com

YHI Advanti Manufacturing (Suzhou) Co Ltd No. 138 Hong Xi Road Suzhou New District Suzhou Zip Code : 215151 PRC Tel: (86) 512 6616 2288 Fax: (86) 512 6616 2211 Email: [email protected] Website: www.advanti-wheel.com

YHI Precision Moulding (Shanghai) Co Ltd Factory No. 2 No. 188 Ming Shen Road Song Jiang Industrial Zone Shanghai PRC Tel: (86) 21 5768 5188 Fax: (86) 21 5768 5268 Email: [email protected]

Autotrend (Shanghai) Co Ltd No. 28 1550 Lane Shui Qing RoadMinhang District Shanghai Zip Code : 201100 PRC Tel: (86) 21 6413 8778 Fax: (86) 21 6413 8778 Email: [email protected]

Yokohama Tire Sales (Shanghai) Co Ltd Suite 3583 - 3586 Tower B City Centre 100 Zunyi Road Shanghai Zip Code : 200051 PRC Tel: (86) 21 6237 2727 Fax: (86) 21 6237 2577 Email: [email protected]

YHI Corporation (Guangzhou) Co Ltd Room 2708 - 2709 Yan Qiao BuildingNo. 89 Yanling Road Tianhe District Guangzhou Zip Code : 510507 PRC Tel: (86) 20 8763 1313 Fax: (86) 20 8779 1526 Email: [email protected]: www.yhigz.cn

JAPANTTS International Co Ltd6F Yamada Building1-12-10 Kitahorie Nishi-kuOsaka 550-0014 Japan Tel: (81) 6 4390 0771 Fax: (81) 6 4390 0772 Email: [email protected]

CANADAYHI (Canada) Inc#2-97 Newkirk RoadRichmond Hill ONCanada L4C 3G4Tel: (1) 905 884 9968Fax: (1) 905 884 5938Email: [email protected]: www.yhicanada.com

USAKonig (American) 121 Express Street Plainview NY11803 USA Tel: (1) 516 822 5700 Fax: (1) 516 822 5703 Email: [email protected] Website: www.konigwheels.com

Advanti Racing USA, LLC13941 Norton AvenueUnit D, Chino, CA 91710 USAToll Free: (1) 877 902 9839Direct: (1) 909 902 9839Email: [email protected]: www.advantiwheel.com

ITALY O.Z. S.p.A. Via Monte Bianco 10 35018 San Martino Di Lupari (PD) Italy Tel: (39) 049 942 3001 Fax: (39) 049 946 9176 Email: [email protected]: www.ozracing.com


Photo courtesy of Redbull Racing Limited

YHI AR08FA 3/17/09 6:52 PM Page 19

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C M Y CM MY CY CMY K

Mr Robert TanDeputy General ManagerYHI Corporation (Singapore)Pte Ltd

Mr Alex OngDeputy General ManagerYHI Corporation (Singapore)Pte Ltd

SINGAPORE

Mr Steve LiewGeneral ManagerYHI Corporation (Singapore)Pte Ltd

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SUBSIDIARIES &HEADS OF

KEY OFFICERS

MALAYSIA

Mr Lee Teck HockGeneral ManagerYHI (Malaysia) Sdn Bhd

Mr Alan HsuDeputy General ManagerYHI Manufacturing(Malaysia) Sdn Bhd

Mr Tham Kong MooGeneral ManagerEvo-Trend Corporation(Malaysia) Sdn Bhd

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Mr Lu Chun YaGeneral ManagerAlloy Wheels DivisionChina Operations

Mr Simon HuiGeneral ManagerCommercial DivisionChina Operations

Mr Lin Chen WeiDeputy General ManagerYHI Advanti Manufacturing(Suzhou) Co Ltd

Mr Wu MengSenior ManagerAutotrend (Shanghai)Co Ltd

Mr Liu De SenDeputy General ManagerYHI Precision Moulding(Shanghai) Co Ltd

Mr Wang Zhan WeiSenior ManagerYHI Corporation(Guangzhou) Co Ltd

CHINA

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C M Y CM MY CY CMY K

21

ITALY

TAIWAN

Mr Kevin LeeDeputy General ManagerYHI International (Taiwan)Co Ltd

Mr Claudio BernoniManaging DirectorO.Z. S.p.A

Mr Takashi TatemotoManaging ManagerTTS International Co Ltd

JAPAN


HONG KONG

THAILAND

Mr Pairoj TayManaging DirectorYHI Corporation (Thailand)Co Ltd

Mr Benny KanBranch ManagerYHI (Hong Kong) Co Ltd

Mr Eka SatriaBranch ManagerPT YHI Indonesia

INDONESIA

AUSTRALIA

NEW ZEALAND

Mr Tony SuhanManaging Director YHI (Australia) Pty Ltd

Mr David ChenDirectorYHI Power Pty Ltd

Mr Christopher TalbotManaging DirectorYHI (New Zealand) Ltd

USA

Mr Ricardo S. GuevaraPresident/CEOKonig (American)

CANADA

Mr Derek ZhangGeneral ManagerYHI (Canada) Inc

Mr Kelly AustinManaging DirectorAdvanti Racing USA

Our manufacturing business segment started with one production line in Taiwan in

1996. As at 31 December 2008, we have 15 manufacturing lines in operation. From

innovative product designs to quality products, YHI’s manufacturing business segment

is well positioned to help the Group moves ahead.MANUFACTURING

MILESTONES

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8

1996

2000-2001 2002-2003

2004-2005

1996While distribution has been the corebusiness of YHI, we took a boldinitiative and ventured into alloy wheelsmanufacturing with our first plantlocated in Taoyuan, Taiwan operatingon one production line.

2000-2001We expanded our manufacturing operations through the setting upof our second manufacturing plantin Shanghai, China where its firstproduction line commenced operationsin September 2000. By July 2001, theproduction capacity in our Shanghaiplant expanded with its secondproduction line.

2002-2003The second phase expansion in Shanghai was completed in September 2002. By 2003, we had four production lines in operation raising our productioncapacity further to meet the growingglobal market demand for alloy wheels.

2004-2005To enhance our capability as an integrated Original Design Manufacturer of alloy wheels, we set up YHI Precision Moulding (Shanghai) Co Ltd to manufacture and supply alloy wheels moulds for our manufacturing plants.

On 1 November 2005, Konig(American) became part of the YHIGroup thus further expanding ourgeographical presence into the USA.

By end of 2005, our Shanghai plant was operating at full production capacity with 6 production lines bringing our total production lines to 7 (including Taiwan).

2006-2007In 2006, we commenced productionin both of our 2 new alloy wheelsmanufacturing plants – YHI AdvantiManufacturing (Suzhou) Co Ltdlocated in Suzhou, China and YHIManufacturing (Malaysia) Sdn Bhdlocated at Sepang, Malaysia.

We were appointed by Enkei Corporation to manufacture their “Enkei Tuning” range of alloy wheels under license in all 4 manufacturing plants. We also acquired 35.51% shareholding in O.Z. S.p.A, which is a premier alloy wheels manufacturer in Italy.

YHI Precision Moulding (Shanghai) Co Ltd

23

Our Quality Certificates


2006-2007

2008In Feb 2008, YHI entered into a supply and sponsorship agreement with Formula One team Scuderia Toro Rosso and O.Z. S.p.A. to supply alloy wheels bearing the Group’s proprietary brand ADVANTI RACING.

In July 2008, we commenced the operation of our second production line at our Malaysian plant.

By end of 2008, our total manufacturing capacity was 15 production lines - 12 lines in China, 1 line in Taiwan and 2 lines in Malaysia.

2009 AND THE FUTUREOur manufacturing plants will intensify efforts to embark on various productivity measures to remain competitive through better production processes and enhanced technologies. The introduction of lightweight alloy wheels is an example.In this regard, we have acquired the MAT (Most Advanced Technology) machinery from Enkei Corporation and installed it at our Suzhou manufacturing facilities.

MAT MANUFACTURING

OUR VALUED PROPOSITION - SEAMLESS SUPPLY CHAIN

Design &Development

ManufacturingAdvertising& Promotion

Distribution& Sales

2008

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CALENDARFINANCIAL

14 May 2008Announcement of first quarter unaudited results

11 August 2008Announcement of half year unaudited results

6 November 2008Announcement of third quarter unaudited results

31 December 2008Financial year-end

27 February 2009Announcement of full year unaudited results

30 April 2009Annual General Meeting

25BUILDING A GLOBAL BRAND

BOARD OF DIRECTORS Tay Tian Hoe RichardGroup Managing Director

Tay Tiang GuanExecutive Director

Yuen Sou WaiExecutive Director & CFO

Henry Tan Song KokIndependent Director

Hee Theng FongIndependent Director

Phua Tin HowIndependent Director

AUDIT COMMITTEEHenry Tan Song KokChairman

Hee Theng FongMember

Phua Tin HowMember

REMUNERATION COMMITTEEHee Theng FongChairman

Phua Tin HowMember

Henry Tan Song KokMember

NOMINATING COMMITTEE Phua Tin HowChairman

Tay Tian Hoe RichardMember

Henry Tan Song KokMember

COMPANY SECRETARY Gn Jong Yuh GwendolynLLB Hons

AUDITORPricewaterhouseCoopers LLP8 Cross StreetPWC Building Level 17Singapore 048424

Partner-in-charge :Soh Kok LeongYear of appointment: 2008

SHARE REGISTRARTricor Barbinder Share Registration Services8 Cross StreetPWC Building Level 11Singapore 048424

PRINCIPAL BANKERSDBS Bank Standard Chartered BankMalayan Banking Berhad

REGISTERED OFFICE2 Pandan RoadSingapore 609254Tel: (65) 6264 2155 Fax: (65) 6265 9927/ 6266 5368Email: [email protected]: www.yhi.com.sgCompany Registration No.: 200007455H

INFORMATIONCORPORATE

A powerful brand is never created by chance. It is built upon

a strong foundation of long term strategic groundwork. With

this in place, YHI has the competitive edge to create better

value not only to customers but also to employees, business

partners and shareholders.

DISTRIBUTION BUSINESS

Sales Performance (S$ ’million)

2007

2008

274.1

300.1

PAT Performance (S$ ’million)

2007

2008

19.2

18.2

Sales Performance (S$ ’million)

2007

2008

152.8

157.9

PAT Performance (S$ ’million)

2007

2008

7.1

1.2

28

PERFORMANCE OVERVIEWThe Group’s turnover for FY2008 was S$458.0 million, up S$31.1 million or 7.3% over the previous year. This was attributable to the increase in sales for both the distribution and manufacturing business segments.

The Group’s net profit after tax decreased by S$6.9 million or 26% from S$26.3 million in FY2007 to S$19.4 million in FY2008.

DISTRIBUTION BUSINESSOur distribution business segment, which accounted for approximately 65% of the Group’s total revenue in FY2008, increased by S$26 million or 9.5% from S$274.1 million in FY2007 to S$300.1 million in FY2008. The increase in revenue was mainly due to stronger sales in the Asean and Oceania operations.

Net profit after tax from our distribution business segment, which accounted for approximately 94% of the Group’s overall profit in FY2008 decreased by S$1 million or 5% to S$18.2 million in FY2008 from S$19.2 million in FY2007.

MANUFACTURING BUSINESSOur manufacturing business segment, which accounted for approximately 35% of our Group’s total revenue in FY2008, increased by S$5.1 million or 3% from S$152.8 million in FY2007 to S$157.9 million in FY2008. The increase in revenue

OPERATIONSYHI Group’s FY2008 results were achieved against a backdrop

of challenging business conditions and economic uncertainties.

Despite these challenges, YHI Group managed to achieve a net

profit of S$19.4 million with a turnover of S$458.0 million.

MANUFACTURING BUSINESS

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29

was primarily due to increased output from additional production capacity in Suzhou, China.

Net profit after tax from our manufacturing business segment, which accounted for approximately 6% of the Group’s overall profit in FY2008 decreased from S$7.1 million in FY2007 to S$1.2 million in FY2008.

Our manufacturing business segment was operating in a challenging business environment in FY2008. Our manufacturing profitability was affected by high operating costs in the first half of FY2008 as well as loss on foreign exchange for receivables as a result of unfavourable exchange rates against Renminbi. In addition, there was a decrease of approximately S$2.0 million in the share of profit from O.Z. S.p.A in FY2008 as compared to FY2007.

LOOKING AHEADThe economic outlook in 2009 is expected to be uncertain and the Group will operate in a very challenging environment and our profitability is expected to be under pressure.

For our distribution business segment, Yokohama tyres will continue to be the main focus in ASEAN. In subsidiaries where

Yokohama tyres are not available, we will market other brands of tyres which are mainly sourced from various tyre manufacturers based in Indonesia, Korea and Taiwan.

The main focus for our manufacturing business segment is to improve our competitive edge to stay ahead of competitions. Selling prices are expected to decrease in line with declining raw material and fuel costs. We shall consolidate and strive for continual innovations and improvements to reduce operating costs. We believe that our initiative to acquire MAT machinery from Enkei Corporation will bring good benefits to our manufacturing facilities from the cost perspectives.

We will intensify our focus to develop the market potential of YHI’s portfolio of premium and proprietary brands of tyres, alloy wheels and batteries. We will continue to participate in key international trade exhibitions to leverage on the exposure to international customers and enhance our YHI brand image. Going forward, we will continue to build YHI into a global brand name and push ahead to enhance our global positioning and marketing network. The Group will be vigilant and disciplined in its business decisions and will strive for continual innovations and improvements in our production and distribution systems so as to improve productivity and to reduce operating costs.


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REPORT ON CORPORATE GOVERNANCE

The Board of Directors (the “Board”) of YHI International Limited (the “Company”) recognises the importance of corporate governance in ensuring greater transparency, protecting the interests of its shareholders as well as strengthening investors’ confidence in its management and financial reporting and is committed to maintaining a high standard of corporate governance within the Group. The Board has also established various internal control measures and monitoring mechanisms, where applicable, to ensure that effective corporate governance is practised. The Board is also responsible for the overall corporate governance of the Group.

The Listing Manual of the SGX-ST requires that an issuer who holds its Annual General Meeting (“AGM”) on or after 1 January 2007 (the “effective date”) should describe its corporate governance practices with specific reference to the Code of Corporate Governance 2005 (“Code”) in its annual report.

This statement outlines the main corporate governance practices that were in place throughout the financial year, with specific references made to each of the principles of the Code in the annual report.

A. BOARD MATTERS

Principle 1: Board’s Conduct of its Affairs

The Board comprises three executive Directors and three independent Directors, all having the right competencies and diversity of experience enabling them to effectively contribute to the Group.

The principal functions of the Board are:

1. reviewing and approving key business strategies and financial plans and monitoring the organisational performance;

2. reviewing the adequacy and integrity of the Company’s internal controls, risk management systems and financial reporting and compliance;

3. approving major investments and divestments and funding proposals; and

4. ensuring accurate, adequate and timely reporting to, and communication with shareholders.

The Board has adopted a set of internal controls and guidelines which set out approval limits for investments and divestments, capital expenditure and business contracts at the Board level. The Board holds regular scheduled meetings on a quarterly basis to review the Group’s key activities, business strategies, funding decisions, financial performance and to approve the release of quarterly and annual results of the Group. When circumstances require, ad-hoc meetings are arranged. If and when authority to make decisions is delegated by the Board to a Board Committee, such delegation is disclosed. The Directors are also constantly kept updated on the Group’s development via email correspondence which allows them to participate and to share their views. Board meetings are conducted in Singapore and attendance by Directors are regular either in person or via telephone conference if the Directors are travelling overseas.

The attendance of the Directors at meetings of the Board and Board committees, as well as the frequency of such meetings is disclosed in Table 1 below.

Principle 2: Board Composition and Balance

The Board comprises three executive Directors and three independent non-executive Directors. Key information regarding the Directors is given in the “Corporate Information” section of this annual report. The independence of each Director will be reviewed annually by the Nominating Committee. The Nominating Committee is of the view that the current Board, with independent non-executive Directors making up at least one-third of the Board, has a strong and independent element that is able to exercise objective judgement on corporate affairs independently from the

TABle 1: ATTendAnCe of direCTors AT BoArd And BoArd CommiTTee meeTings

Attendance at meetings in fY2008

BoardAudit

CommitteeRemuneration

CommitteeNominating Committee

NameNumber of meetings

Held : 4Number of meetings



Held : 1Tay Tian Hoe Richard 4 N.A. N.A. 1Tay Tiang Guan 4 N.A. N.A. N.A.Yuen Sou Wai 4 N.A. N.A. N.A.Henry Tan Song Kok 4 4 1 1Hee Theng Fong 4 4 1 N.A.Phua Tin How 4 4 1 1

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management. The Nominating Committee 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 the current board size of six Directors is appropriate, taking into account the nature and scope of the Company’s operations.

The Board considers that its composition of independent non-executive Directors provide an effective Board with a mix of knowledge, business contacts and successful business and commercial experience as well as core competencies including accounting, finance, business and management. This balance is important in ensuring that the strategies proposed by the executive management are fully discussed and examined, taking into account the long term interests of the Group. Non-executive Directors are actively involved in strategic decisions. We also encourage our non-executive Directors to meet without management present to review management’s performance and monitor reports thereof.

All Directors are updated regularly concerning any changes in company policies, risk management and accounting standards. The Company also provides ongoing education on Board processes, governance and best practices. There has been no appointment of new Directors since our listing.

Principle 3: role of Chairman and group managing director

Currently, we do not have a Chairman of the Board. However, a Chairman is usually appointed for our Board meetings and the Chairman exercises control over quality, quantity and timeliness of the flow of information between management and the Board.

Our Group Managing Director is Mr Tay Tian Hoe Richard. He has full executive responsibilities of the overall business directions and operational decisions of our Group. All major decisions made by our Group Managing Director are reviewed by the Audit Committee.

Our Group Managing Director’s performance and appointment to the Board is reviewed annually by the Nominating Committee and his remuneration package is reviewed periodically by the Remuneration Committee.

Principle 4: Board membership

Mr Phua Tin How, an independent non-executive Director, is the Chairman of the Nominating Committee. The Nominating Committee comprises two independent Directors, Messrs Phua Tin How and Henry Tan Song Kok and an executive Director, Mr Tay Tian Hoe Richard.

We believe that Board renewal must be an ongoing process which ensures both good governance and maintains relevance to the changing needs of the Company and business. Our

Articles require at least one-third of our Directors (excluding the Group Managing Director) to retire from office by rotation and submit themselves to re-nomination and re-election by shareholders at every AGM. In other words, no Director stays in office for more than three years without being re-elected by shareholders.

The Nominating Committee recommended to the Board that Messrs Tay Tiang Guan and Henry Tan Song Kok be nominated for re-appointment at the forthcoming Annual General Meeting (“AGM”). In making the recommendation, the Nominating Committee had considered the Directors’ contribution to the Group.

The responsibilities of the Nominating Committee are contained in written terms of reference and are as follows:

a. reviewing and recommending to the Board annually, the Board’s structure, size and composition;

b. identifying and making recommendations to the Board as to which Directors are to retire by rotation and to be put forward for re-election at each AGM of the Company, having regard to the Directors’ contribution and performance, including independent Directors;

c. determining the criteria (in particular, taking into account a Director’s independence and competing time commitments) for identifying candidates and reviewing nominations for the appointment of Directors to the Board; and

d. deciding how the Board’s performance may be evaluated and proposing objective performance criteria for the Board’s approval.

Principle 5: Board Performance

The Nominating Committee will use its best efforts to ensure that Directors appointed to our Board possess the relevant necessary background, experience and knowledge and that each Director brings to the Board an independent and objective perspective to enable balanced and well-considered decisions to be made. A formal review of the Board’s performance will be undertaken collectively by the Board annually and informally by the Nominating Committee with inputs from the other Board members and the Group Managing Director.

We believe that apart from the fiduciary duties (i.e. acting in good faith, with due diligence and care and in the best interests of the Company and its shareholders), the Board’s key responsibilities are to set strategic directions and ensure that the long term objective of enhancing shareholders’ wealth is achieved. For the year under review, the Nominating Committee assessed the effectiveness of the Board as a whole. The Board’s performance was measured by its ability to support the management especially in times of crisis and to steer the Company towards profitable directions and the attainment

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of strategic and long-term objectives set by the Board. Hence, the Nominating Committee adopted a formal policy to evaluate the Board’s performance as a whole.

Principle 6: Access to information

In order to ensure that the Board is able to discharge its responsibilities, the management is required to provide adequate and timely information to the Board on Board affairs and issues that require the Board’s decision as well as ongoing reports relating to the operational and financial performance of the Company.

In order to properly prepare Directors for Board meetings, all Directors are issued a Board report prior to any Board meeting to provide contextual information that enables them to obtain further information, where necessary.

The Board has separate and independent access to the senior management and the Company Secretary at all times. Should Directors, whether as a group or individually, need independent professional advice, the Company Secretary will, upon directions by the Board, appoint a professional advisor selected by the group or the individual to render the advice. The cost of such professional advice will be borne by the Company.

The Company Secretary attends all meetings of the Board and ensures that board procedures are followed and applicable rules and regulations are complied with. The Company Secretary also attends all meetings of the Audit Committee, Nominating Committee and Remuneration Committee. The appointment and removal of the Company Secretary is a matter for the Board as a whole.

Please refer to the “Corporate Information” section of the annual report for the composition of the Company’s Board of Directors and Board committees.

B. REMUNERATION MATTERS

Principle 7: Procedures for developing remuneration PoliciesPrinciple 8: level and mix of remuneration

The function of the Remuneration Committee is to review the remuneration of the executive Directors of the Company and to provide a greater degree of objectivity and transparency in the setting of remuneration.

Mr Hee Theng Fong, an independent Director, is the Chairman of the Remuneration Committee. The Remuneration Committee comprises three independent Directors, Messrs Hee Theng Fong, Henry Tan Song Kok and Phua Tin How.

The responsibilities of the Remuneration Committee are:

a. to recommend to the Board a framework of remuneration for the executive Directors of the Group on all aspects of remuneration such as Directors’ fees, salaries, allowances, bonuses, options and benefits-in-kind; and

b. to determine the specific remuneration packages and terms of employment for each executive Director.

The Remuneration Committee has access to expert professional advice on human resource matters whenever there is a need to consult externally. In its deliberations, the Remuneration Committee takes into consideration industry practices and norms in compensation in addition to the Company’s relative performance and the performance of the individual Directors. No Director will be involved in deciding his own remuneration.

The performance-related elements of remuneration should form a significant proportion of the total remuneration package of the executive Director. Each executive Director has a service contract with a fixed appointment period and the Remuneration Committee reviews in particular termination provisions. The remuneration of each non-executive Director is determined by his contribution to the Company, taking into account factors such as efforts and time spent as well as his responsibilities on the Board. The Board will recommend the remuneration of the non-executive Directors for approval at the AGM.

TABle 2: The BreAkdown of The direCTors’ remunerATion for fY2008

Remuneration BandsBelow

S$500,000

S$500,001to

S$1,000,000Above

S$1,000,000

% ofVariable

Remuneration

% of Fixed

RemunerationTay Tian Hoe Richard - - • 78 % 22 %Tay Tiang Guan - - • 81 % 19 %Yuen Sou Wai - • - 70 % 30 %Henry Tan Song Kok • - - - -Hee Theng Fong • - - - -Phua Tin How • - - - -

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The YHI Share Option Scheme (“Scheme”) was put in place on 22 May 2003. However, we have not granted any share options pursuant to the YHI Share Option Scheme in past financial years.

The Scheme will be administered by a committee comprising the following members:

• Hee Theng Fong (Chairman)• Henry Tan Song Kok• Phua Tin How

Principle 9: disclosure of remuneration

Our executive Directors’ remuneration consists of their salary, allowances, bonuses, and profit sharing awards conditional upon their meeting certain profit before tax targets. Our independent non-executive Directors have remuneration packages which consist of a Directors’ fee component. The Directors’ fees are based on a scale of fees divided into basic retainer fees as a Director and additional fees for serving on Board committees as the chairman of the committee. Directors’ fees for independent non-executive Directors are subject to the approval of shareholders at the AGM.

The report on Directors’ remuneration for financial year 2008 is disclosed in Table 2.

Remuneration of Key Employees

Details of remuneration paid to the executive officers (who are not Directors of the Company) of the Group for the financial year 2008 are set out below:

Name of Key Executive* Below S$250,000

Tan Yong Quan Robert •

Lu Chun Ya •

* Remuneration amounts are inclusive of salary, bonus, allowances and Central Provident Fund contributions. There were no share options granted to employees during the financial year.

Details of employees whose remuneration exceed S$150,000 and are immediate family members of our executive Directors are set out below:

Name of Employee Below S$250,000

Tay Thiam Seng + •

Tay Soek Eng Margaret + •

+ Mr Tay Thiam Seng and Mdm Tay Soek Eng Margaret are related to our executive Directors, Mr Tay Tian Hoe Richard and Mr Tay Tiang Guan.

C. ACCOUNTABILITY AND AUDIT

Principle 10: Accountability

The Board believes that it should promote best practices as a means to build an excellent business for our shareholders as they are accountable to shareholders for the Company’s and the Group’s performance.

The Board is mindful of its obligations to provide timely and fair disclosure of material information in compliance with statutory reporting requirements. Price sensitive information is first publicly released, 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 the mandatory period. The Board will provide reports to regulators when required. The management will provide the Board with monthly management accounts when required.

Principle 11: Audit Committee

Mr Henry Tan Song Kok, an independent Director is the Chairman of the Audit Committee. The Audit Committee comprises three independent Directors, Messrs Henry Tan Song Kok, Hee Theng Fong and Phua Tin How. At least two members of the Audit Committee have the appropriate accounting or related financial management expertise or experience. The Audit Committee has explicit authority and reasonable resources, as well as full access to the Directors and executives.

The Audit Committee holds periodic meetings and reviews primarily the following:(a) the audit plan of our Company’s external auditor;(b) the external auditor’s reports;(c) the co-operation given by our officers to the external

auditor;(d) the scope and results of the internal audit procedures;(e) the financial statements of our Company and our Group

before their submission to our Board;(f) the independence of the external auditor;(g) nomination of external auditor for appointment;(h) our Group’s compliance with such functions and duties as

may be required under the relevant statutes or the Listing Manual of the SGX-ST, and by such amendments made thereto from time to time;

(i) interested persons transactions; and(j) capital expenditure transactions. The Audit Committee meetings are attended by the Group Managing Director, executive Directors and Internal Auditor. The presence of the external auditor has been requested during these meetings. During this financial year, the Audit Committee has also met up with the external auditor and with the Internal Auditor, without any executives of the Group being present.

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Since the financial year 2007, the Audit Committee has implemented whistle blowing arrangements, which allow staff and shareholders of the Company to confidentially report violations of the Group’s Code of Ethics and Business Conduct (see the Company’s Management Manual), complaints and/or questionable accounting, control or auditing practices. The reports can be made on an anonymous basis, but the Company recommends that the informant(s) put their name(s) to the allegations. The Group has a policy of “no-retaliation” against good-faith informants.

The Internal Auditor shall investigate any allegations and reports to the Audit Committee, and depending on various factors, including the seriousness of the matter, may also involve the external auditor, the Independent Inquiry Committee, and/or the police.

Within 14 days of completion of the investigations (which should usually take no longer than 14 days) the informant (if not anonymous) will be informed of the results of the investigations, but any disciplinary action taken will remain confidential. The Group will protect the informant unless the allegations are found to have been false and made maliciously, in which event the informant’s behaviour will be treated as gross misconduct and handled accordingly. The Audit Committee ensures that the investigations conducted are independent and the follow-up action(s) appropriate.

In addition to the above, the Audit Committee shall commission and review the findings of internal investigations into matters where there is any suspected fraud or irregularity, or failure of internal controls or infringement of any Singapore law, rule or regulation which has or is likely to have a material impact on our Group’s operating results and/or financial position. Each member of the Audit Committee shall abstain from voting on any resolutions and making any recommendations and/or participating in any deliberations of the Audit Committee in respect of matters in which he is interested.

The Audit Committee has nominated PricewaterhouseCoopers LLP for re-appointment as auditor of the Company at the forthcoming AGM.

The Audit Committee has conducted an annual review of the volume of non-audit services to satisfy itself that the nature and extent of such services will not prejudice the independence and objectivity of the auditor before confirming their re-nomination.

Principle 12: internal Controls

The Board acknowledges that it is responsible for the overall internal control framework, but recognises that no cost effective internal control system will preclude all errors and irregularities, as 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. During the year, the Audit Committee,

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 Company. The Directors regularly review the effectiveness of all internal controls, including operational controls.

Principle 13: internal Audits

The Audit Committee’s responsibility in overseeing that the Company’s internal controls and risk management systems are adequate will be complemented by the work of the Internal Auditor (“IA”). The IA reports directly to the chairman of the Audit Committee on audit matters. The Audit Committee meets with the IA at least once during the year without the presence of management. The Audit Committee also reviews the IA’s reports on a quarterly basis. The Audit Committee also reviews and approves the annual IA plans and resources to ensure that the IA has the necessary resources to adequately perform its functions.

The IA has adopted the Standards for Professional Practice of Internal Auditing set by The Institute of Internal Auditors. To ensure the adequacy of the internal audit functions, the Audit Committee has reviewed the IA’s activities, the IA’s resources and standing in the Company, on a half yearly basis.

D. COMMUNICATION WITH SHAREHOLDERS

Principle 14: Communication with shareholdersPrinciple 15: greater shareholder Participation

We believe in regular and timely communication with shareholders as part of our organisation development to build systems and procedures that will enable us to operate globally.

We believe that a high level of disclosure on a timely basis is essential to enhance the standard of corporate governance. Hence, the Company does not practise selective disclosure. In line with the provisions of the Listing Manual of the SGX-ST and the Companies Act (Cap 50, Singapore), the Board’s policy is that all shareholders should be equally and timely informed of all major developments that impact the Company or the Group. It is also the Board’s policy that all corporate news, strategies and announcements be promptly disseminated through the SGXNET system, press releases, annual reports, and other various media including our corporate website (http://www.yhi.com.sg).

The Group Managing Director and executive Directors meet up with analysts and investors when our quarterly results are announced through the SGXNET system, to explain our financial performance, Group’s strategy and major developments. However, any information that may be regarded as undisclosed material information about the Group will not be given.

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CORPORATE

GOVERNANCE REPORT

We support the Code’s principle to encourage shareholder participation. Shareholders are encouraged to attend the AGM and to stay informed of the Company’s strategy and goals, to ensure a high level of accountability. Notice of the AGM is despatched to shareholders, together with explanatory notes or a circular on items of special business (if necessary), at least 14 working days before the meeting. Shareholders may vote in person or by proxy. The Board welcomes questions from shareholders who wish to raise issues either informally or formally before or at the AGM. The Chairpersons of the Audit, Remuneration and Nominating Committees, and the external auditors, are normally available at the meeting to answer questions relating to the work of their committees.

E. DEALING IN SECURITIES

The Company has adopted internal codes pursuant to the SGXST Best Practices Guide applicable to all its officers in relation to dealings in the Company’s securities. Its officers are not allowed to deal in the Company’s shares during the period commencing two weeks before the announcement of the Company’s quarterly, half-yearly and one month before the announcement of the Company’s full year results and ending on the date of the announcement of these results.

Directors and executives are also expected to observe insider trading laws at all times even when dealing with securities within permitted trading period(s).

F. BEST PRACTICES GUIDE

The Board confirms that during the financial year ended 31 December 2008, the Company has complied materially with

the Best Practices Guide issued by SGX-ST and that internal controls are adequate for its current operations.

G. MATERIAL CONTRACTS

There were no material contracts entered into by the Company or its subsidiaries for the benefit of the Directors or controlling shareholders during the financial year ended 31 December 2008.

H. INTERESTED PERSONS TRANSACTIONS

The Company has adopted an internal policy in respect of any transaction with interested persons and has set out the procedures for review and approval of the Company’s interested persons transactions.

In order to ensure that the Company complies with Chapter 9 of the Listing Manual of the SGX-ST on interested persons transactions, the Audit Committee meets quarterly to review all interested persons transactions of the Company. However, if the Company enters into an interested persons transaction, the Audit Committee ensures compliance with the relevant rules under Chapter 9.

There were no interested persons transactions conducted under the shareholders’ mandate pursuant to Rule 920 of the Listing Manual of the SGX-ST.

There were no interested persons transactions entered between the Group and interested persons during the financial period from 01 January 2008 to 31 December 2008.

Interested Persons

Aggregate value of all interested persons transactions during the

financial year under review (excluding transactions less than S$100,000

and transactions conducted under Shareholders’ Mandate)

Aggregate value of all interested persons

transactions conducted under shareholders’ Mandate (excluding transactions less

than S$100,000) Total

NA NIL NIL NIL

37

CORPORATE

GOVERNANCE REPORT

FINANCIAL

REPORTDirectors’ Report 38 // Statement by Directors 41 // Independent Auditor’s Report 42 //

Consolidated Income Statement 43 // Balance Sheets 44 // Consolidated Statement of Changes in Equity 45 //

Consolidated Cash Flow Statement 46 // Notes to the Financial Statements 47 // Statistics of Shareholdings 86 //

Notice of Annual General Meeting 88 // Proxy Form

38

The directors present their report to the members together with the audited financial statements of the Group for the financial year ended 31 December 2008 and the balance sheet of the Company at 31 December 2008.

Directors

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

Tay Tian Hoe Richard Tay Tiang Guan Yuen Sou WaiHenry Tan Song KokHee Theng FongPhua Tin How

ArrAngements to enAble Directors to Acquire shAres AnD Debentures

Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object was 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, other than as disclosed under “Share Options” on pages 39 and 40 of this report.

Directors’ interests in shAres AnD Debentures

(a) According to the register of directors’ shareholdings, none of the directors holding office at the end of the financial year had any interest in the shares or debentures of the Company or its related corporations, except as follows:

Holdings registered in Holdings in which a director name of director or norminee is deemed to have an interest

At At At At 31.12.2008 1.1.2008 31.12.2008 1.1.2008 the company (No. of ordinary shares)

Tay Tian Hoe Richard 18,674,000 13,234,000 344,949,628 342,423,628 Tay Tiang Guan 3,800,000 600,000 400,000 400,000 Yuen Sou Wai 240,000 240,000 – – Hee Theng Fong 120,000 120,000 – – Henry Tan Song Kok 40,000 40,000 – – Phua Tin How 110,000 110,000 – – immediate and ultimate holding company - Yhi holdings Pte ltd (No. of ordinary shares) Tay Tian Hoe Richard 422,765 388,967 – – Tay Tiang Guan 170,450 170,450 – –

DIRECTORS’

REPORTFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

39

Directors’ interests in shAres or Debentures (cont’D)

(b) Tay Tian Hoe Richard, who by virtue of his interest of not less than 20% of the issued capital of the Company, is deemed to have an interest in the whole of the share capital of the Company’s wholly-owned subsidiaries and in the shares held by the Company in the following subsidiaries that are not wholly-owned by the Group:

At 31.12.2008 At 1.1.2008 YHI (Australia) Pty Limited - No. of ordinary shares 80,000 80,000

YHI (New Zealand) Limited - No. of ordinary shares 70,000 70,000

Pan-Mar Corporation D/B/A Konig (American) - Common stock US$76,500 US$76,500 TTS International Co., Ltd - No. of ordinary shares 120 120

YHI Power Pty Limited - No. of ordinary shares 6,400 6,400

YHI Corporation (Thailand) Co Ltd - No. of ordinary shares 24,500 24,500

Evo-Trend Corporation (Malaysia) Sdn Bhd - No. of ordinary shares 160,000 160,000 YHI (Canada) Inc. - No. of ordinary shares 180,000 180,000

Advanti Racing USA LLC - Common stock US$45,900 –

PT YHI Indonesia - No. of ordinary shares 304,000 –

(c) The directors’ interest in the ordinary shares of the Company as at 21 January 2009 were the same as those as at 31 December 2008.

Directors’ contrActuAl benefits

Since the end of the previous 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, except as disclosed in the accompanying financial statements and in this report.

shAre oPtions

Yhi share option scheme

The YHI Share Option Scheme (the “Scheme”) for key management personnel and employees of the Group in respect of unissued shares of the Company was approved by the members of the Company at an Extraordinary General Meeting on 22 May 2003. The purpose of the Scheme is to provide an opportunity for executive directors and employees of the Group to participate in the equity of the Company so as to motivate them towards better performance through increased dedication and loyalty. The members of the Remuneration Committee administering the Scheme are Phua Tin How, Hee Theng Fong and Henry Tan Song Kok.

The aggregate number of shares over which options may be granted on any date, when added to the number of shares issued and issuable in respect of all options granted under the Scheme, shall not exceed 15% of the issued shares of the Company on the day preceding that date.

DIRECTORS’


40

shAre oPtions (cont’d)

Yhi share option scheme (cont’d)

The number of shares comprised in any options to be offered to a participant in the Scheme shall be determined at the absolute discretion of the Remuneration Committee, who shall take into account criteria such as the rank, the past performance, years of service, potential for future development and contribution of the participant.

Offers of options made to grantees, if not accepted by the grantees within 30 days will lapse. The Scheme shall continue in operation for a maximum of 10 years commencing on the date which the Scheme is adopted by the Company in general meeting, unless otherwise extended by the members by ordinary resolution in general meeting.

There were no options granted during the financial year to subscribe for unissued shares of the Company or its subsidiaries.

No shares were issued during the year by virtue of the exercise of options to take up unissued shares of the Company or its subsidiaries.

There were no unissued shares of the Company under the option at the end of the financial year.

AuDit committee

The members of the Audit Committee at the end of the financial year were as follows:

Henry Tan Song Kok (Chairman)Hee Theng FongPhua Tin How

All members of the Audit Committee were non-executive directors.

The Audit Committee carried out its functions in accordance with Section 201B(5) of the Singapore Companies Act. In performing those functions, the Committee reviewed:

• The scope and the results of internal audit procedures with the internal auditor;

• The audit plan of the Company’s independent auditor and its report on the weaknesses of internal accounting controls arising from the statutory audit;

• The assistance given by the Company’s management to the independent auditor; and

• The balance sheet of the Company and the consolidated financial statements of the Group for the financial year ended 31 December 2008 before their submission to the Board of Directors, as well as the independent auditor’s report on the balance sheet of the Company and the consolidated financial statements of the Group.

The Audit Committee has recommended to the Board that the independent auditor, PricewaterhouseCoopers LLP, be nominated for re-appointment at the forthcoming Annual General Meeting of the Company.

independent Auditor

The independent auditor, PricewaterhouseCoopers LLP, has expressed its willingness to accept re-appointment.

On behalf of the directors

tAY tiAn hoe richArD Yuen sou WAiDirector Director

10 March 2009

DIRECTORS’


41

In the opinion of the directors,

(a) the balance sheet of the Company and the consolidated financial statements of the Group as set out on pages 43 to 85 are drawn up so as to give a true and fair view of the state of affairs of the Company and of the Group as at 31 December 2008 and of the results of the business, changes in equity and cash flows of the Group for the financial year then ended; and

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

On behalf of the directors

tAY tiAn hoe richArD Yuen sou WAiDirector Director

10 March 2009

STATEMENT

BY DIRECTORSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

42

We have audited the accompanying financial statements of YHI International Limited (the “Company”) and its subsidiaries (the “Group”) set out on pages 43 to 85, which comprise the balance sheets of the Company and of the Group as at 31 December 2008, and the consolidated income statement, the consolidated statement of changes in equity and the consolidated cash flow statement of the Group for the financial year then ended, and a summary of significant accounting policies and other explanatory notes.

mAnAgement’s resPonsibilitY for the finAnciAl stAtements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act (Cap. 50) (the “Act”) and Singapore Financial Reporting Standards. This responsibility includes:

(a) devising and maintaining a system of internal accounting control 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 balance sheets and to maintain accountability of assets;

(b) selecting and applying appropriate accounting policies; and

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

AuDitor’s 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 as to 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 and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by 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,

(a) the balance sheet of the Company and the consolidated financial statements of the Group 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 Company and of the Group as at 31 December 2008 and the results, changes in equity and cash flows of the Group for the financial year ended on that date; and

(b) the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditor, have been properly kept in accordance with the provisions of the Act.

Pricewaterhousecoopers llP

Public Accountants and Certified Public AccountantsSingapore, 10 March 2009

INDEPENDENT

AUDITOR’S REPORT

TO THE MEMBERS OF YHI INTERNATIONAL LIMITED

43

Note 2008 2007 $’000 $’000 Sales 4 457,974 426,887Cost of sales 5 (346,591) (327,954)

Gross profit 111,383 98,933

Other gains - net 4 1,594 1,959

Expenses - Distribution 5 (34,965) (30,693)- Administrative 5 (45,283) (34,042)- Finance 6 (6,333) (4,844)

Share of profit of associated companies 15 522 2,476

Profit before income tax 26,918 33,789 Income tax expense 8 (5,835) (5,950)

total profit 21,083 27,839 Attributable to: Equity holders of the Company 19,436 26,256Minority interests 1,647 1,583

21,083 27,839

earnings per share attributable to the equity holders of the company 9 - Basic 3.32 cents 4.49 cents- Diluted 3.32 cents 4.49 cents

CONSOLIDATED

INCOME STATEMENT

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

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

44

Group Company Note 2008 2007 2008 2007 $’000 $’000 $’000 $’000

Assets

current assets

Cash and cash equivalents 10 20,929 23,360 615 471Trade and other receivables 11 75,262 84,253 38,188 50,164Inventories 12 97,976 92,971 – –Other current assets 13 9,209 9,864 15 39

203,376 210,448 38,818 50,674non-current assets

Financial assets, available-for-sale 14 6,830 6,830 – –Transferable club membership, at cost 131 131 – –Investments in associated companies 15 17,172 16,650 – –Investments in subsidiaries 16 – – 86,194 72,917Property, plant and equipment 17 86,671 88,643 377 351Intangible assets 18 4,099 5,303 – – Deferred income tax assets 8 4,867 3,489 – –

119,770 121,046 86,571 73,268 total assets 323,146 331,494 125,389 123,942

liAbilities

current liabilities

Trade and other payables 19 43,220 59,837 4,404 5,053Current income tax liabilities 8 3,304 3,765 582 843Borrowings 20 83,993 85,209 – –

130,517 148,811 4,986 5,896

non-current liabilities

Borrowings 20 6,778 8,307 – –Deferred income tax liabilities 8 1,197 1,305 – –

7,975 9,612 – –

total liabilities 138,492 158,423 4,986 5,896

net Assets 184,654 173,071 120,403 118,046

equitY

capital and reserves attributable to equity holders of the company

Share capital 22 77,001 77,001 77,001 77,001Other reserves 23 2,388 1,125 – –Retained earnings 24 100,989 89,983 43,402 41,045

180,378 168,109 120,403 118,046minority interests 4,276 4,962 – –

total equity 184,654 173,071 120,403 118,046


BALANCESHEETS

AS AT 31 DECEMBER 2008

45


STATEMENT OF

CHANGES IN EQUITYCONSOLIDATED


Attributable to equity holders of the Company Share Other Retained Minority Total Note capital reserves earnings Total interests equity $’000 $’000 $’000 $’000 $’000 $’000

2008

beginning of financial year 77,001 1,125 89,983 168,109 4,962 173,071

Currency translation differences – 725 – 725 (1,862) (1,137)Net profit – – 19,436 19,436 1,647 21,083

total recognised income/(loss) – 725 19,436 20,161 (215) 19,946Transfer to other reserves 23(b)(i ) – 538 (538) – – –Dividends relating to 2007 paid 25 – – (7,892) (7,892) (471) (8,363)

end of financial year 77,001 2,388 100,989 180,378 4,276 184,654

2007

beginning of financial year 77,001 (290) 71,390 148,101 4,662 152,763

Currency translation differences – 767 – 767 (711) 56Net profit – – 26,256 26,256 1,583 27,839

total recognised income – 767 26,256 27,023 872 27,895Transfer to other reserves 23(b)(i ) – 648 (648) – – –Dividends relating to 2006 paid 25 – – (7,015) (7,015) (572) (7,587)

end of financial year 77,001 1,125 89,983 168,109 4,962 173,071

46

Note 2008 2007 $’000 $’000

cash flows from operating activities

Total profit 21,083 27,839

Adjustments for: - Income tax expense 5,835 5,950- Depreciation of property, plant and equipment 11,725 9,739- Amortisation of intangible assets 63 –- Loss on disposal of subsidiaries 765 –- Gain on disposal of property, plant and equipment (228) (110)- Interest expense 6,333 4,844- Interest income (291) (343)- Share of profit of associated companies (522) (2,476)- Changes in fair values of derivatives – 73- Unrealised translation gains (3,521) (309)

Operating cash flow before working capital changes 41,242 45,207

Changes in working capital, net of effects from disposal of subsidiary: - Inventories (5,024) (25,225)- Trade and other receivables 8,864 (17,626)- Other current assets 655 (3,735)- Trade and other payables (16,583) 6,835

Cash generated from operations 29,154 5,456

Interest received 291 343Income tax paid (7,355) (6,685)

net cash provided by/(used in) operating activities 22,090 (886)

cash flows from investing activities Proceeds from disposal of subsidiaries, net of cash 10 3,118 –Purchase of property, plant and equipment (10,512) (17,197)Proceeds from disposal of property, plant and equipment 1,079 2,098Purchase of financial assets, available-for-sale – (1,815)

net cash used in investing activities (6,315) (16,914)

cash flows from financing activities Proceeds from borrowings 34,771 53,245Repayment of borrowings (37,440) (21,291)Repayment of finance lease liabilities (740) (327)Interest paid (6,372) (4,802)Dividends paid to equity holders of the Company (7,892) (7,015)Dividends paid to minority interests (471) (572)

net cash (used in)/provided by financing activities (18,144) 19,238 net (decrease)/increase in cash and cash equivalents held (2,369) 1,438Cash and cash equivalents at beginning of financial year 19,950 18,568Effects of currency translation on cash and cash equivalents (32) (56)

cash and cash equivalents at end of financial year 10 17,549 19,950


CASH FLOW

STATEMENTCONSOLIDATED


47

These notes form an integral part of and should be read in conjunction with the accompanying financial statements.

1. General information

YHI International Limited (the “Company”) is listed on the Singapore Exchange and incorporated and domiciled in Singapore. The address of its registered office is No. 2 Pandan Road, Singapore 609254.

The principal activity of the Company is that of an investment holding company. The principal activities of its subsidiaries are set out in Note 16 to the financial statements.

2. SiGnificant accountinG policieS

2.1 basis of Preparation

The financial statements have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”). The financial statements have been prepared under the historical cost convention, except as disclosed in the accounting policies below.

The preparation of financial statements in conformity with FRS requires management to exercise its judgement in the process of applying the Group’s accounting policies. It also requires the use of certain critical accounting estimates and assumptions. Areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 3.

There are no new or amended Standards and Interpretations effective in 2008 which are relevant to the Group.

2.2 revenue recognition

Sales comprise the fair value of the consideration received or receivable for the sale of goods in the ordinary course of the Group’s activities. Sales are presented net of value-added tax, rebates and discounts, and after eliminating sales within the Group.

The Group recognises revenue when the amount of revenue and related cost can be reliably measured, when it is probable that the collectibility of the related receivables is reasonably assured and when the specific criteria for each of the Group’s activities are met as follows:

(a) Sale of Goods – Automotive and Industrial Product and Alloy Wheels

Revenue from these sales is recognised when a Group entity has delivered the products to locations specified by its customers and the customers have accepted the products in accordance with the sales contract.

(b) Interest Income

Interest income is recognised using the effective interest method.

(c) Dividend Income

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

2.3 group Accounting

(a) Subsidiaries

Subsidiaries are entities (including special purpose entities) over which the Group has power to govern the financial and operating policies, generally accompanied by a shareholding giving rise to the majority of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the dates of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair value on the date of acquisition, irrespective of the extent of minority interest. Please refer to the paragraph “Intangible assets – Goodwill” for the accounting policy on goodwill on acquisition of subsidiaries.

FINANCIAL STATEMENTSNOTES TO THE


48

2. SiGnificant accountinG policieS (cont’d)

2.3 group Accounting (cont’d)

(a) Subsidiaries (cont’d)

Subsidiaries are consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date on which control ceases.

In preparing the consolidated financial statements, transactions, balances and unrealised gains on transactions between group entitles are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the assets transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Minority interests are that part of the net results of operations and of net assets of a subsidiary attributable to interests which are not owned directly or indirectly by the Group. They are measured at the minorities’ share of the fair value of the subsidiaries’ identifiable assets and liabilities at the date of acquisition by the Group and the minorities’ share of changes in equity since the date of acquisition, except when the minorities’ share of losses in a subsidiary exceeds its interests in the equity of that subsidiary. In such cases, the excess and further losses applicable to the minorities are attributed to the equity holders of the Company, unless the minorities have a binding obligation to, and are able to, make good the losses. When that subsidiary subsequently reports profits, the profits applicable to the minority interests are attributed to the equity holders of the Company until the minorities’ share of losses previously absorbed by the equity holders of the Company are fully recovered.

Please refer to the paragraph “Investments in subsidiaries and associated companies” for the accounting policy on investments in subsidiaries in the separate financial statements of the Company.

(b) Transactions with Minority Interests

The Group applies a policy of treating transactions with minority interests as transactions with parties external to the Group. Disposals to minority interests result in gains and losses for the Group that are recognised in the income statement. Purchases from minority interests result in goodwill, being the difference between any consideration paid and the Group’s incremental share of the carrying value of identifiable net assets of the subsidiary.

(c) Associated Companies

Associated companies are entities over which the Group has significant influence, but not control, generally accompanied by a shareholding giving rise to between and including 20% and 50% of the voting rights. Investments in associated companies are accounted for in the consolidated financial statements using the equity method of accounting less impairment losses.

Investments in associated companies are initially recognised at cost. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition.

In applying the equity method of accounting, the Group’s share of its associated companies’ post-acquisition profits or losses are recognised in the income statement and its share of post-acquisition movements in reserves is recognised in equity directly. These post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associated company equals or exceeds its interest in the associated company, including any other unsecured non-current receivables, the Group does not recognise further losses, unless it has incurred obligations or has made payments on behalf of the associated company.

Unrealised gains on transactions between the Group and its associated companies are eliminated to the extent of the Group’s interest in the associated companies. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associated companies have been changed where necessary to ensure consistency with the accounting policies adopted by the Group.

Dilution gains and losses arising from investments in associated companies are recognised in the income statement.

Please refer to the paragraph “Investments in subsidiaries and associated companies” for the accounting policy on investments in associated companies in the separate financial statements of the Company.



49


2.4 Property, Plant and equipment

(a) Measurement

(i) Property,PlantAndEquipment

Property, plant and equipment are initially recognised at cost and subsequently carried at cost less accumulated depreciation and accumulated impairment losses.

(ii) ComponentofCosts

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.

(b) Depreciation

Freehold land is not depreciated. Depreciation on other items of property, plant and equipment is calculated using the straight-line method to allocate their depreciable amounts over their estimated useful lives as follows:

useful lives

Buildings on freehold land 50 years Leasehold properties 3 to 50 years Office equipment, plant and machinery 2 to 5 years Motor vehicles 3 to 7 years Renovation 5 to 10 years Computers 2 to 5 years Furniture and fittings 2 to 10 years

The residual values, estimated useful lives and depreciation method of property, plant and equipment are reviewed, and adjusted as appropriate, at each balance sheet date. The effects of any revision are included in the income statement when the changes arise.

(c) Subsequent Expenditure

Subsequent expenditure relating to property, plant and equipment that has already been recognised is added to the carrying amount of the asset only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repair and maintenance expenses are recognised in the income statement when incurred.

(d) Disposal

On disposal of an item of property, plant and equipment, the difference between the disposal proceeds and its carrying amount is recognised in the income statement.

2.5 intangible Assets

(a) Goodwill on Acquisitions

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the identifiable assets, liabilities and contingent liabilities of the acquired subsidiaries and associated companies at the date of acquisition.

Goodwill on subsidiaries is recognised separately as intangible assets and carried at cost less accumulated impairment losses.

Goodwill on associated companies is included in the carrying amount of the investments.

Gains and losses on the disposal of subsidiaries and associated companies include the carrying amount of goodwill relating to the entity sold, except for goodwill arising from acquisitions prior to 1 January 2001. Such goodwill was adjusted against retained earnings in the year of acquisition and not recognised in the income statement on disposal.



50


2.5 intangible Assets (cont’d)

(b) Acquired Trademarks

Trademarks acquired are initially recognised at cost and are subsequently carried at cost less accumulated amortisation and accumulated impairment losses. These costs are amortised to the income statement using the straight-line method over 30 years.

The amortisation period and amortisation method of trademarks are reviewed at least at each balance sheet date. The effects of any revision are included in the income statement for the financial year in which the changes arise.

2.6 investments in subsidiaries and Associated companies

Investments in subsidiaries and associated companies are carried at cost less accumulated impairment losses in the Company’s balance sheet. On disposal of investments in subsidiaries, the difference between net disposal proceeds and the carrying amounts of the investments are recognised in the income statement.

2.7 impairment of non-financial Assets

(a) Goodwill

Goodwill is tested for impairment annually and whenever there is indication that the goodwill may be impaired. Goodwill included in the carrying amount of an investment in associated company is tested for impairment as part of the investment, rather than separately.

For the purpose of impairment testing of goodwill, goodwill is allocated to each of the Group’s cash-generating-units (“CGU”) expected to benefit from synergies arising from the business combination.

An impairment loss is recognised when the carrying amount of a CGU, including the goodwill, exceeds the recoverable amount of the CGU. The recoverable amount of a CGU is the higher of the CGU’s fair value less cost to sell and value-in-use.

The total impairment loss of a CGU is allocated first to reduce the carrying amount of goodwill allocated to the CGU and then to the other assets of the CGU pro-rata on the basis of the carrying amount of each asset in the CGU.

An impairment loss on goodwill is recognised in the income statement and is not reversed in a subsequent period.

(b) Intangible Assets

Property, Plant and Equipment

Investments in Subsidiaries and Associated Companies

Intangible assets, property, plant and equipment and investments in subsidiaries and associated companies are tested for impairment whenever there is any objective evidence or indication that these assets may be impaired.

For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, the recoverable amount is determined for the CGU to which the asset belongs.

If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount.

The difference between the carrying amount and recoverable amount is recognised as an impairment loss in the income statement.

An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The carrying amount of this asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of accumulated amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset other than goodwill is recognised in the income statement.



51


2.8 financial Assets

(a) Classification

The Group classifies financial assets in the following categories: loans and receivables, and available-for-sale. The classification depends on the purpose for which the assets were acquired. Management determines the classification of its financial assets at initial recognition.

(i) Loansandreceivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are presented as current assets, except for those maturing later than 12 months after the balance sheet date which are presented as non-current assets. Loans and receivables are presented as “trade and other receivables” and “cash and cash equivalents” on the balance sheet.

(ii) Financialassets,available-for-sale

Financial assets, available-for-sale, are non-derivatives that are either designated in this category or not classified in any of the other categories. They are presented as non-current assets unless management intends to dispose off the assets within 12 months after the balance sheet date.

(b) recognition and Derecognition

Regular way purchases and sales of financial assets are recognised on trade-date – the date on which the Group commits to purchase or sell the asset.

Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. On disposal of a financial asset, the difference between the carrying amount and the sale proceeds is recognised in the income statement. Any amount in the fair value reserve relating to that asset is transferred to the income statement.

(c) initial measurement

Financial assets are initially recognised at fair value plus transaction costs.

(d) subsequent measurement

Financial assets, available-for-sale are subsequently carried at fair value. Loans and receivables are subsequently carried at amortised cost using the effective interest method.

Interest and dividend income on financial assets, available-for-sale are recognised separately in the income statement. Changes in the fair values of available-for-sale debt securities (i.e. monetary items) denominated in foreign currencies are analysed into currency translation differences on the amortised cost of the securities and other changes; the currency translation differences are recognised in the income statement and the other changes are recognised in the fair value reserve. Changes in fair values of available-for-sale equity securities (i.e. non-monetary items) are recognised in the fair value reserve, together with the related currency translation differences.

(e) impairment

The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired and recognises an allowance for impairment when such evidence exists.

(i) Loansandreceivables

Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy, and default or significant delay in payments are objective evidence that these financial assets are impaired.

The carrying amount of these assets is reduced through the use of an impairment allowance account which is calculated as the difference between the carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. When the asset becomes uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are recognised against the same line item in the income statement.



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2.8 financial Assets (cont’d)

(e) Impairment (cont’d)

(i) Loansandreceivables(cont’d)

The allowance for impairment loss account is reduced through the income statement in a subsequent period when the amount of impairment loss decreases and the related decrease can be objectively measured. The carrying amount of the asset previously impaired is increased to the extent that the new carrying amount does not exceed the amortised cost had no impairment been recognised in prior periods.

(ii) Financialassets,available-for-sale

Significant or prolonged declines in the fair value of the security below its cost and the disappearance of an active trading market for the security are objective evidence that the security is impaired.

The cumulative loss that was recognised in the fair value reserve is transferred to the income statement. The cumulative loss is measured as the difference between the acquisition cost (net of any principal repayments and amortisation) and the current fair value, less any impairment loss previously recognised in the income statement on debt securities. The impairment losses recognised in the income statement on equity securities are not reversed through the income statement.

2.9 borrowings

Borrowings are presented as current liabilities unless the Group has an unconditional right to defer settlement for at least 12 months after the balance sheet date.

Borrowings are initially recognised at fair value (net of transaction costs) and are subsequently carried at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

2.10 trade and other Payables

Trade and other payables are initially recognised at fair value, and subsequently carried at amortised cost using the effective interest method.

2.11 fair Value estimation of financial Assets and liabilities

The fair values of financial instruments traded in active markets (such as exchange-traded and over-the-counter securities and derivatives) are based on quoted market prices at the balance sheet date. The quoted market prices used for financial assets are the current bid prices; the appropriate quoted market prices for financial liabilities are the current ask prices.

The fair values of financial instruments that are not traded in an active market are determined by using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date. Where appropriate, quoted market prices or dealer quotes for similar instruments are used. Valuation techniques, such as estimated discounted cash flow analyses, are also used to determine the fair values of the financial instruments. The fair values of currency forwards are determined using actively quoted forward exchange rates.

The fair values of current financial assets and liabilities carried at amortised cost approximate their carrying amounts.

2.12 leases

When the Group is the lessee:

The Group leases certain property, plant and equipment from non-related parties.

(a) Lessee - Finance Leases

Leases where the Group assumes substantially all risks and rewards incidental to ownership of the leased assets are classified as finance leases.



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2.12 leases (cont’d)

(a) Lessee - Finance Leases (cont’d)

The leased assets and the corresponding lease liabilities (net of finance charges) under finance leases are recognised on the balance sheet as property, plant and equipment and borrowings respectively, at the inception of the leases based on the lower of the fair value of the leased assets and the present value of the minimum lease payments.

Each lease payment is apportioned between the finance expense and the reduction of the outstanding lease liability. The finance expense is recognised in the income statement on a basis that reflects a constant periodic rate of interest on the finance lease liability.

(b) Lessee - Operating Leases

Leases of property, plant and equipment 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 the income statement on a straight-line basis over the period of the lease.

2.13 inventories

Inventories are carried at the lower of cost and net realisable value. Cost is determined on a weighted average basis. The cost of finished goods and work-in-progress comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity) but excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

2.14 income taxes

Current income tax for current and prior periods is recognised at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantially enacted by the balance sheet date.

Deferred income tax is recognised for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction.

A deferred income tax liability is recognised on temporary differences arising on investments in subsidiaries and associated companies, except where the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

A deferred income tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilised.

Deferred income tax is measured:

(i) At the tax rates that are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled, based on tax rates and tax laws that have been enacted or substantially enacted by the balance sheet date; and

(ii) Based on the tax consequence that will follow from the manner in which the Group expects, at the balance sheet date, to recover or settle the carrying amounts of its assets and liabilities.

Current and deferred income taxes are recognised as income or expenses in the income statement, except to the extent that the tax arises from a business combination or a transaction which is recognised directly in equity. Deferred tax arising from a business combination is adjusted against goodwill on acquisition.



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2.15 Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

2.16 employee compensation

The Group’s contributions are recognised as employee compensation expense when they are due, unless they can be capitalised as an asset.

(a) Defined Contribution Plans

Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities such as Central Provident Fund on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid.

(b) employee leave entitlement

Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the balance sheet date.

2.17 currency translation

(a) Functional and Presentation Currency

Items included in the financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“functional currency”). The financial statements are presented in Singapore Dollars.

(b) Transactions and Balances

Transactions in a currency other than the functional currency (“foreign currency”) are translated into the functional currency using the exchange rates at the dates of the transactions. Currency translation differences from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the closing rates at the balance sheet date are recognised in the income statement, unless they arise from borrowings in foreign currencies, other currency instruments designated and qualifying as net investment hedges and net investment in foreign operations. Those currency translation differences are recognised in the currency translation reserve in the consolidated financial statements and transferred to the income statement as part of the gain or loss on disposal of the foreign operation.

Non-monetary items measured at fair values in foreign currencies are translated using the exchange rates at the date when the fair values are determined.

(c) Translation of Group Entities’ Financial Statements

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i) Assets and liabilities are translated at the closing exchange rates at the date of that balance sheet;

(ii) Income and expenses are translated at average exchange rates (unless the average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case, income and expenses are translated using the exchange rates at the dates of the transactions); and

(iii) All resulting exchange differences are recognised to the foreign currency translation reserve.

Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after 1 January 2005 are treated as assets and liabilities of the foreign operations and translated at the closing rates at the date of the balance sheet. For acquisitions prior to 1 January 2005, the exchange rates at the dates of acquisition are used.



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2.18 segment reporting

A business segment is a distinguishable component of the Group engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is a distinguishable component of the Group engaged in providing products or services within a particular economic environment that is subject to risks and returns that are different from those of segments operating in other economic environments.

2.19 cash and cash equivalents

For the purpose of presentation in the consolidated cash flow statement, cash and cash equivalents include cash on hand, deposits with financial institutions which are subject to an insignificant risk of change in value, and bank overdrafts. Bank overdrafts are presented as current borrowings on the balance sheet.

2.20 share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are deducted against the share capital account.

2.21 Dividends to company’s shareholders

Dividends to Company’s shareholders are recognised when the dividends are approved for payment.

3. critical accountinG eStimateS, aSSumptionS and judGementS

Estimates, assumptions and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

(a) estimated impairment of goodwill

Goodwill is tested for impairment annually and whenever there is indication that the goodwill may be impaired.

The recoverable amounts of these assets and where applicable, cash-generating units, have been determined based on value-in-use calculations. These calculations require the use of estimates (Note 18).

If the management’s estimated gross margin at 31 December 2008 is lowered by 10 percentage points, there will be no impact on the carrying amounts of goodwill.

If the management’s estimated pre-tax discount rate applied to the discounted cash flows at 31 December 2008 is raised by 1 percentage point, there will be no impact on the carrying amounts of goodwill.

(b) impairment of loans and receivables

Management reviews its loans and receivables for objective evidence of impairment on a monthly basis. Significant financial difficulties of the debtor, the probability that the debtor will enter bankruptcy, and default or significant delay in payments are considered objective evidence that a receivable is impaired. In determining this, management makes judgement as to whether there is observable data indicating that there has been a significant change in the payment ability of the debtor, or whether there have been significant changes with adverse effect in the technological, market, economic or legal environment in which the debtor operates.

Where there is objective evidence of impairment, management makes judgements as to whether an impairment loss should be recorded in the income statement. In determining this, management uses estimates based on historical loss experience for assets with similar credit risk characteristics. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly to reduce any differences between the estimated loss and actual loss experience.



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4. revenue and other GainS - net

Group 2008 2007 $’000 $’000

Sale of goods - Automotive and industrial products 300,119 274,134 - Alloy wheels 157,855 152,753

total sales 457,974 426,887 Other gains – net: - Bad trade debts recovered 769 548 - Changes in fair value of financial assets and liabilities held for trading – (73) - Gain on disposal of property, plant and equipment 228 110 - Interest income 291 343 - Net loss on disposal of subsidiaries (765) – - Other 1,071 1,031

total other gains - net 1,594 1,959

459,568 428,846

5. expenSeS by nature

Group 2008 2007 $’000 $’000

Advertising and promotion 4,884 2,018 Amortisation of intangible assets (Note 18) 63 – Carriage outwards 8,575 7,712 Changes in inventories of raw materials, work-in-progress and finished goods (5,005) (25,225) Commission charges 4,665 3,381 Currency translation losses – net 7,096 1,213 Depreciation of property, plant and equipment (Note 17) 11,725 9,739 Employee compensation (Note 7) 39,199 33,803 Purchases of raw materials, finished goods and consumables 333,643 337,874 Rental on operating leases 3,113 2,921 Research expense 2,493 2,303 Transportation and travelling expense 4,416 3,876 Other expenses 11,972 13,074

Total cost of sales, distribution and administrative expenses 426,839 392,689

6. finance expenSeS

Group 2008 2007 $’000 $’000

Interest expense: - Bank loans 4,413 3,138 - Bank overdrafts 603 561 - Trust receipt loans 1,161 1,017 - Finance leases 156 128

6,333 4,844



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7. employee compenSation

Group 2008 2007 $’000 $’000

Wages and salaries 35,735 31,070 Employer’s contribution to defined contribution plans including Central Provident Fund 3,464 2,733

39,199 33,803

8. income tax

(a) income tax expense

Group 2008 2007 $’000 $’000

Tax expense attributable to profit is made up of:

Current income tax - Singapore 2,093 2,450 - Foreign 6,138 5,187

8,231 7,637 Deferred income tax (1,781) (1,186)

6,450 6,451 Over provision of current income tax in the previous financial years (675) (547) Over provision of deferred income tax assets in the previous financial years 60 46

5,835 5,950

The tax expense on profit differs from the amount that would arise using the Singapore standard rate of income tax as explained below:

Group 2008 2007 $’000 $’000

Profit before income tax 26,918 33,789

Tax calculated at a tax rate of 18% (2007: 18%) 4,845 6,082 Effects of: - Change in Singapore tax rate – (7) - Singapore statutory stepped income exemption (70) (70) - Effects of different tax rates in other countries 1,256 795 - Income not subject to tax (51) (213) - Expenses not deductible for tax purposes 2,136 991 - Exempt income (2,042) (1,146) - Unremitted statutory profits of China subsidiaries 287 – - Other 89 19

Tax charge 6,450 6,451



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8. Incometax(cont’d)

(a) IncomeTaxExpense(cont’d)

The Group’s deferred tax liabilities and assets have been computed based on the corporate tax rate and tax laws prevailing at balance sheet date. On 22 January 2009, the Singapore Minister of Finance announced a reduction in corporate tax rate from 18% to 17% with effect from the year of assessment 2010. The effect of the reduction in the corporate tax rate on the Group’s deferred tax liabilities and assets is not material.

(b) MovementsinCurrentIncomeTaxLiabilities

Group Company 2008 2007 2008 2007 $’000 $’000 $’000 $’000

Beginning of financial year 3,765 3,398 843 1,259 Currency translation differences (662) (38) – – Income tax paid (7,355) (6,685) (534) (439) Tax expense on profit from the current financial year 8,231 7,637 423 545 Over provision in previous financial years (675) (547) (150) (522)

End of financial year 3,304 3,765 582 843

(c) DeferredIncomeTaxes

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current income tax assets against current income tax liabilities and when the deferred income taxes relate to the same fiscal authority. The amounts, determined after appropriate offsetting, are shown on the balance sheets as follows:

Group 2008 2007 $’000 $’000

DeferredIncomeTaxAssets: - To be recovered within one year (425) (290) - To be recovered after one year (4,442) (3,199)

(4,867) (3,489) DeferredIncomeTaxLiabilities: - To be settled within one year 241 578 - To be settled after one year 956 727

1,197 1,305

The movement in the net deferred income tax account is as follows:

Group 2008 2007 $’000 $’000

Beginning of financial year (2,184) (1,078) Effects of change in Singapore tax rate – (7) Currency translation differences 235 41 Credited to income statement (1,781) (1,186) Over provision of deferred tax assets in previous financial years 60 46

End of financial year (3,670) (2,184)



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8. income tax (cont’d) (c) Deferred Income Taxes (cont’d)

The movement in the deferred income tax assets and liabilities (prior to offsetting of balances within the same tax jurisdiction) during the financial year is as follows:

Deferred Income Tax Liabilities

Accelerated tax depreciation $’000

2008 Beginning of financial year 1,305 Currency translation differences 85 Credited to income statement (193)

End of financial year 1,197

2007 Beginning of financial year 1,784 Effect of change in Singapore tax rate (7) Currency translation differences (17) Credited to income statement (474) Under provision in previous financial years 19

End of financial year 1,305

Deferred Income Tax Assets

Provisions Tax losses Other Total $’000 $’000 $’000 $’000

2008 Beginning of financial year (3,140) (196) (153) (3,489) Currency translation differences 151 – (1) 150 (Credited)/charged to income statement (1,489) 196 (295) (1,588) Over provision in previous financial years 60 – – 60

End of financial year (4,418) – (449) (4,867) 2007 Beginning of financial year (2,508) (202) (152) (2,862) Currency translation differences 14 11 33 58 Charged/(credited) to income statement (673) (5) (34) (712) Over provision in previous financial years 27 – – 27

End of financial year (3,140) (196) (153) (3,489)

9. earninGS per Share Basic earnings per share is calculated by dividing the net profit attributable to equity holders of the Company by the

weighted average number of ordinary shares outstanding during the financial year.

Group 2008 2007

Net profit attributable to equity holders of the Company ($’000) 19,436 26,256 Weighted average number of ordinary shares in issue for basic earnings per share (’000) 584,592 584,592 Basic earnings per share 3.32 cents 4.49 cents

Diluted earnings per share is the same as basic earnings per share. There are no dilutive potential ordinary shares as there are no outstanding share options at the beginning and end of the financial year.



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10. caSh and caSh equivalentS

Group Company 2008 2007 2008 2007 $’000 $’000 $’000 $’000

Cash at bank and on hand 19,738 22,356 615 471 Short-term bank deposits 1,191 1,004 – –

20,929 23,360 615 471

For the purposes of presenting the consolidated cash flow statement, the consolidated cash and cash equivalents comprise the following:

Group 2008 2007 $’000 $’000

Cash and bank balances (as above) 20,929 23,360 Less: Bank overdrafts (Note 20) (3,380) (3,410)

Cash and cash equivalents per consolidated cash flow statement 17,549 19,950

Disposal of subsidiaries

On 10 December 2008, the Company disposed of its 100% interest in Eastbourne Metal Coatings Co Ltd for a cash consideration of $3,118,000 and on 30 December 2008, the Company liquidated its wholly-owned subsidiary, YHI (Middle East) FZE for nil consideration.

The aggregate effects of the disposal of subsidiaries on the cashflows of the Group are:

Carrying amount $’000

identifiable Assets and liabilities

Trade and other receivables (127) Inventories (19) Property, plant and equipment (2,629)

Total assets (2,775)

Trade and other payables 33

Identifiable net assets disposed (2,742)

The aggregate cash inflows arising from the disposal of Eastbourne Metal Coatings Co Ltd and YHI (Middle East) FZE were:

Group $’000 Identifiable assets disposed (as above) 2,742 Goodwill (Note 18) 1,141

3,883 Loss on disposal (765)

Cash proceeds from disposal 3,118



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11. trade and other receivableS

Group Company 2008 2007 2008 2007 $’000 $’000 $’000 $’000

Trade receivables - Non-related parties 74,219 86,486 – – - Associated companies 1,894 986 – – 76,113 87,472 – – Less: Allowance for impairment of receivables - Non-related parties (4,274) (5,790) – –

Trade receivables – net 71,839 81,682 – – Due from subsidiaries (non-trade) – – 38,188 50,164 Other receivables 3,423 2,571 – –

75,262 84,253 38,188 50,164

The non-trade amounts due from subsidiaries are unsecured, interest-free and are repayable on demand.

12. inventorieS

Group 2008 2007 $’000 $’000

Materials and supplies 6,996 8,387 Work-in-progress 2,929 4,058 Finished goods 88,051 80,526

97,976 92,971

The cost of inventories recognised as an expense and included in “cost of sales” amounted to $328,638,000 (2007: $312,649,000).

13. other current aSSetS

Group Company 2008 2007 2008 2007 $’000 $’000 $’000 $’000

Prepayments 8,446 9,387 15 35 Deposits 763 477 – 4

9,209 9,864 15 39



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14. financial aSSetS, available-for-Sale

Group 2008 2007 $’000 $’000

Beginning of financial year 6,830 5,015 Additions – 1,815

End of financial year 6,830 6,830

Available-for-sale financial assets are analysed as follows:

Group 2008 2007 $’000 $’000

Unlisted Securities: - Equity securities - China 6,830 6,830

The fair values of unlisted equity securities are based on cashflows discounted at the per annum market interest rates adjusted for risk premiums specific to the securities (2008: 9.08%, 2007: 9.08%).

15. inveStmentS in aSSociated companieS

Group 2008 2007 $’000 $’000

Beginning of financial year 16,650 14,174 Share of profits 522 2,476


The summarised financial information of associated companies is as follows:

Group 2008 2007 $’000 $’000

- Assets 99,900 99,033 - Liabilities 69,629 70,719 - Revenue 228,838 222,171 - Net profits 800 7,065

Details of associated companies are as follows:

Country of business/ Effective Name of companies Principal activities incorporation equity holding 2008 2007 % %

Heldbysubsidiaries: O.Z. S.p.A * Investment holding, Italy 36 36 manufacturer, importer, exporter and distributor of alloy wheels

Yokohama Tire Sales (Shanghai) Co., Ltd ** Distributor of tyres and People’s Republic 49 49 related goods of China

* Audited by Deloitte and Touche, Italy.** Audited by Shanghai Maiyizi CPA Firm, China.



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16. inveStmentS in SubSidiarieS

Company 2008 2007 $’000 $’000

Equityinvestmentatcost Beginning of financial year 72,917 66,226 Additional investments in a subsidiary 13,277 6,691


On 22 May 2008 and 31 December 2008, the Company made additional capital injections into YHI Manufacturing (Singapore) Pte Ltd amounting to $10,901,000 and $2,376,000 respectively.

Details of subsidiaries are as follows:


HeldbytheCompany:

(a) YHI Manufacturing Investment holding, importer, Singapore 100 100 (Singapore) Pte Ltd exporter and distributor of alloy wheels and related goods

(a) YHI Corporation Importer, exporter and distributor Singapore 100 100 (Singapore) Pte Ltd of tyres, alloy wheels and related goods and industrial batteries

(b) YHI (Malaysia) Sdn Bhd Importer and distributor of tyres, Malaysia 100 100 alloy wheels and related goods and industrial batteries

(c) YHI (China) Strategy Investment holding, trading of golf Hong Kong 100 100 Company Limited car accessories and related goods

(c) YHI (Hong Kong) Importer, exporter and distributor of Hong Kong 100 100 Co Limited tyres, alloy wheels and related goods

(d) YHI International Manufacturing, distribution and export Taiwan 100 100 (Taiwan) Co., Ltd. of alloy wheels

(e) YHI (Australia) Pty Limited Importer and distributor of tyres, alloy Australia 80 80 wheels and related goods (f) YHI (New Zealand) Limited Importer and distributor of tyres, alloy New Zealand 70 70 wheels and related goods

Heldbysubsidiaries:

(g) YHI Manufacturing Manufacturing, distribution and People’s Republic 100 100 (Shanghai) Co., Ltd export of alloy wheels of China (g) YHI Advanti Manufacturing Manufacturing, distribution and People’s Republic 100 100 (Shanghai) Co., Ltd export of alloy wheels of China (g) Eastbourne Metal Metal finishing services for People’s Republic – 100 Coatings Co., Ltd aluminium wheels and accessories of China



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16. inveStmentS in SubSidiarieS (cont’d)


Heldbysubsidiaries:

(g) YHI Precision Moulding Manufacturing and supply of People’s Republic 100 100 (Shanghai) Co., Ltd alloy wheels moulds of China

(g) YHI Advanti Manufacturing Manufacturing, distribution and People’s Republic 100 100 (Suzhou) Co Ltd export of alloy wheels of China

(b) YHI Manufacturing Manufacturing, distribution and Malaysia 100 100 (Malaysia) Sdn Bhd export of alloy wheels

(a) YHI (America) Pte Ltd Investment holding Singapore 100 100

(h) Pan-Mar Corporation Importer, exporter and distributor United States 51 51 D/B/A Konig (American) of tyres, alloy wheels and related of America goods

(i) TTS International Co., Ltd Importer, exporter and distributor Japan 60 60 of alloy wheels and related goods

(g) YHI International Marketing (Shanghai) Co., Ltd Distribution of tyres, alloy wheels People’s Republic 100 100 and related goods of China

(e) YHI Power Pty Limited Importer and distributor Australia 64 64 of industrial batteries

(j) YHI Corporation (Thailand) Distribution of tyres, alloy wheels Thailand 49 49 Co Ltd and related goods

(g) Autotrend (Shanghai) Retail of tyres, alloy wheels, People’s Republic 100 100 Co., Ltd industrial batteries and related of China goods

(b) Evo-Trend Corporation Distribution of tyres, alloy wheels Malaysia 80 80 (Malaysia) Sdn Bhd and related goods

(k) YHI (Middle East) FZE Distribution of tyres, alloy wheels United Arab – 100 and related goods Emirates

(l) YHI Corporation Distribution of tyres, alloy wheels People’s Republic 100 100 (Guangzhou) Co Ltd and related goods of China

(m) YHI (Canada) Inc. Importer, exporter and distributor Canada 90 90 of tyres, alloy wheels and related goods (h) Advanti Racing USA LLC Importer, exporter and distributor United States 46 – of tyres, alloy wheels and related of America goods

(n) PT YHI Indonesia Distribution of tyres, alloy wheels Indonesia 95 – and related goods



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16. inveStmentS in SubSidiarieS (cont’d) (a) Audited by PricewaterhouseCoopers LLP, Singapore

(b) Audited by SE Lai Associates, Malaysia *

(c) Audited by Wilson Ho & Co. C.P.A., Hong Kong *

(d) Audited by KPMG, Taiwan *

(e) Audited by Lamb Lowe & Partners, Australia *

(f) Audited by PricewaterhouseCoopers, New Zealand

(g) Audited by Shanghai Da Long Certified Public Accountants Co., Ltd for local statutory purposes. For the purpose of preparing the consolidated financial statements, these financial statements have been audited by PricewaterhouseCoopers, Shanghai

(h) Audited by J.P. Marsala & Co., United States of America *. Advanti Racing USA LLC is regarded as a subsidiary on the basis that the Group has power to govern its financial and operating policies.

(i) Not required to be audited under the laws of the country of incorporation. For the purpose of preparing the consolidated financial statements, certain review procedures have been carried out on these financial statements by PricewaterhouseCoopers, Japan

(j) YHI Corporation (Thailand) Co Ltd is regarded as a subsidiary on the basis that the Group has power to govern its financial and operating policies. This subsidiary is audited by Adisorn & Associates Ltd, Thailand *

(k) Audited by N.R. Doshi & Co., United Arab Emirates *

(l) Audited by Guangzhou Haizheng Public Accountants Co., Ltd for local statutory purposes. For the purpose of preparing the consolidated financial statements, these financial statements have been audited by Wilson Ho & Co. C.P.A., Hong Kong *

(m) Audited by Henderson Tse Chartered Accountants, Canada *

(n) Audited by Thalib Daeng & Rekan, Indonesia *

* For the subsidiaries not audited by PricewaterhouseCoopers LLP, Singapore and its network firms, the Board of Directors and the Audit Committee are satisfied with the appointment of their auditors in accordance with Rule 716 of the SGX Listing Manual.

17. property, plant and equipment

Buildings Office on equipment, Freehold freehold Leasehold plant and Motor Furniture land land properties machinery vehicles Renovation Computers and fittings Total $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Group 2008 Cost Beginning of financial year 3,431 7,722 33,954 67,590 5,047 1,264 2,756 1,335 123,099 Currency translation differences – (779) 1,403 2,797 (309) (101) (78) (68) 2,865 Additions – – 217 9,467 1,144 100 215 102 11,245 Disposals – – (2,625) (1,679) (945) – (96) (47) (5,392)

End of financial year 3,431 6,943 32,949 78,175 4,937 1,263 2,797 1,322 131,817

Accumulateddepreciation Beginning of financial year – 366 6,642 21,450 2,393 671 1,971 963 34,456 Currency translation differences – (43) 124 1,116 (166) (29) (67) (56) 879 Depreciation charge – 157 1,459 8,769 687 86 447 120 11,725 Disposals – – (479) (814) (491) – (89) (41) (1,914)

End of financial year – 480 7,746 30,521 2,423 728 2,262 986 45,146

net book value end of financial year 3,431 6,463 25,203 47,654 2,514 535 535 336 86,671



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17. property, plant and equipment (cont’d)

Buildings Office on equipment, Freehold freehold Leasehold plant and Motor Furniture land land properties machinery vehicles Renovation Computers and fittings Total $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Group 2007 Cost Beginning of financial year 4,103 8,684 33,926 52,806 4,449 1,247 2,269 1,000 108,484 Currency translation differences (319) 486 (54) 163 96 (1) 15 275 661 Additions – 52 84 14,730 958 74 477 65 16,440 Disposals (353) (1,500) (2) (109) (456) (56) (5) (5) (2,486)

End of financial year 3,431 7,722 33,954 67,590 5,047 1,264 2,756 1,335 123,099 Accumulateddepreciation Beginning of financial year – 273 5,258 14,689 1,869 636 1,646 601 24,972 Currency translation differences – 8 (65) (29) 55 (21) 18 277 243 Depreciation charge – 162 1,449 6,793 868 70 311 86 9,739 Disposals – (77) – (3) (399) (14) (4) (1) (498)

End of financial year – 366 6,642 21,450 2,393 671 1,971 963 34,456

net book value end of financial year 3,431 7,356 27,312 46,140 2,654 593 785 372 88,643

Motor vehicles $’000

Company 2008 Cost Beginning of financial year 900 Additions 250 Disposals (450)

End of financial year 700 Accumulateddepreciation Beginning of financial year 549 Depreciation charge 157 Disposals (383)

End of financial year 323 net book value end of financial year 377



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17. property, plant and equipment (cont’d)

Motor vehicles $’000

Company 2007 Cost Beginning of financial year 900 Additions –

End of financial year 900 Accumulateddepreciation Beginning of financial year 369 Depreciation charge 180

End of financial year 549 net book value end of financial year 351

(a) Included in additions in the consolidated financial statements are $696,000 (2007: $374,000) of motor vehicles acquired under finance leases.

The carrying amounts of motor vehicles, and office equipment, plant and machinery held under finance leases at 31 December 2008 amounted to $1,107,000 (2007: $1,104,000) and $41,000 (2007: $85,000) respectively.

(b) At the balance sheet date, the carrying amounts of property, plant and equipment of the Group pledged as securities for borrowings (Note 20) are as follows:

Group 2008 2007 $’000 $’000

Freehold land 2,028 3,431 Buildings on freehold land 7,431 6,899 Leasehold properties 1,595 2,471 Plant and machinery 9,403 8,059

20,457 20,860



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18. intanGible aSSetS

Composition:

Group 2008 2007 $’000 $’000

Goodwill arising on consolidation, at cost [Note (a)] 2,301 3,442 Trademark [Note (b)] 1,798 1,861

4,099 5,303

(a) goodwill Arising on consolidation

Group 2008 2007 $’000 $’000

Cost Beginning of financial year 3,442 3,442 Disposal of a subsidiary (Note 10) (1,141) –


Impairmenttestsforgoodwill

Goodwill is allocated to the Group’s cash generating units (“CGUs”) identified according to countries of operation and business segments.

A segment-level summary of the goodwill allocation is as follows:

2008 2007

Distribution Distribution of automotive of automotive products manufacturing products and Manufacturing and industrial of alloy industrial of alloy products wheels* total products wheels Total $’000 $’000 $’000 $’000 $’000 $’000

Singapore 881 – 881 881 – 881 Malaysia 505 – 505 505 – 505 China/Hong Kong 59 – 59 59 1,141 1,200 New Zealand 86 – 86 86 – 86 USA 770 – 770 770 – 770

2,301 – 2,301 2,301 1,141 3,442 * Disposed of during the financial year (Note 10). The recoverable amount of a CGU was determined based on value-in-use. Cash flow projections used in the

value-in-use calculations were based on financial budgets approved by management covering a five-year period.

Key assumptions used for value-in-use calculations:

Distribution of automotive products and industrial products

Gross margin 1 20% Growth rate 2 5% Discount rate 3 5%

1 Budgeted gross margin. 2 Weighted average growth rate used to extrapolate cash flows beyond the budget period. 3 Pre-tax discount rate applied to the pre-tax cash flow projections.



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18. intanGible aSSetS (cont’d)

(a) goodwill Arising on consolidation (cont’d)

These assumptions were used for the analysis of each CGU within the business segment. Management determined weighted average gross margin based on past performance and its expectations of market development. The weighted average growth rates used are consistent with the forecasts included in industry reports. The weighted average discount rates used are pre-tax and reflect specific risks relating to the relevant segments.

(b) trademark

Group 2008 2007 $’000 $’000

Cost

Beginning and end of financial year 1,861 1,861

Accumulatedamortisation

Beginning of financial year – – Amortisation charge 63 –

End of financial year 63 –

Netbookvalue 1,798 1,861

19. trade and other payableS

Group Company 2008 2007 2008 2007 $’000 $’000 $’000 $’000

Trade payables to - Non-related parties 22,949 35,953 – – - Associated companies 187 121 – –

23,136 36,074 – – Due to a related party (non-trade) 176 186 – – Due to directors (non-trade)* 3,471 4,070 3,471 4,070 Accrued operating expenses 8,469 8,678 601 613 Other payables 5,313 6,490 332 370 Payable for purchase of property, plant and equipment 845 807 – – Advance payments received 1,810 3,532 – –

43,220 59,837 4,404 5,053

* This amount relates primarily to performance bonus payable to the Executive Directors of the Company based on the results of the financial year ended pursuant to the service agreements entered between the Executive Directors and the Company.

The related party refers to a company in which certain directors have financial interests. The non-trade amount due to a related party is unsecured, interest-free and is repayable on demand.



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20. borrowinGS

Group 2008 2007 $’000 $’000

Current Current portion of long-term bank loans 5,977 7,815 Short-term bank loans 57,729 51,801 Trust receipt loans 16,495 21,732 Bank overdrafts (Note 10) 3,380 3,410 Finance lease liabilities (Note 21) 412 451

83,993 85,209

Non-current Long-term bank loans 5,892 7,416 Finance lease liabilities (Note 21) 886 891

6,778 8,307

Total borrowings 90,771 93,516

The exposure of the borrowings of the Group to interest rate changes and the contractual repricing dates at the balance sheet dates are as follows:

Group 2008 2007 $’000 $’000

6 months or less 82,262 83,540 6 – 12 months 1,731 1,669 1 – 5 years 6,778 7,901 Over 5 years – 406

90,771 93,516

(a) security granted

Certain borrowings granted to the Group are guaranteed by the Company and secured on the following: (i) Borrowings of $11,570,000 (2007: $10,310,000) are secured over a first legal mortgage on certain subsidiaries’

freehold and leasehold properties [Note 17(b)];

(ii) Borrowings of $3,400,000 (2007: $3,669,000) are secured over a first legal charge on plant and machinery of a subsidiary [Note 17(b)];

(iii) Borrowings of $16,000,000 (2007: $4,481,000) are secured over a first and floating charge on all the assets of a subsidiary; and

(iv) Borrowings of $14,254,000 (2007: $17,411,000) are secured over banker’s guarantees, up to $20.1 million (2007: $20.1 million), given as security to other financial institutions which granted banking facilities to certain subsidiaries. The banker’s guarantees are in turn secured by a first and floating charge on all the assets of a subsidiary referred to in paragraph (iii) above.

Finance lease liabilities are secured by the rights to the leased property, plant and equipment [Note 17(a)], which will revert back to the lessor in the event of default by the Group.



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20. borrowinGS (cont’d)

(b) fair Values of non-current borrowings

Group 2008 2007 $’000 $’000

Long-term bank loans 5,478 6,383 Finance lease liabilities 886 891

The fair values above are determined from cash flow analyses, discounted at the per annum borrowing rates which the directors expected to be available to the Group as follows:

Group 2008 2007

Long-term bank loans 4.4% 6.9% Finance lease liabilities 9.0% 9.0%

(c) interest rate risk

The weighted average effective per annum interest rates of total borrowings at the balance sheet date are as follows:

Group

2008 2007 AuD nZD mYr sgD usD rmb other AUD NZD MYR SGD USD RMB Other % % % % % % % % % % % % % %

Trust receipt loan 8.3 – 4.1 – 5.3 – 3.2 7.9 – 4.2 3.8 5.8 – 3.9 Bank overdrafts 10.3 – 7.5 – – – – 10.3 – 7.7 – – – – Bank loans 6.4 7.0 3.5 3.8 – 6.6 3.4 8.4 9.7 5.1 3.8 5.6 6.0 3.3 Finance lease liabilities 10.4 – 5.8 – 8.3 – 2.5 9.4 – 3.7 – 6.5 – 3.9

21. finance leaSe liabilitieS

The Group leases certain property, plant and equipment from non-related parties under finance leases.

Group 2008 2007 $’000 $’000

Minimum lease payments due: - Not later than one year 520 557 - Between two and five years 1,004 1,015

1,524 1,572 Less: Future finance charges (226) (230)

Present value of finance lease liabilities 1,298 1,342



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21. finance leaSe liabilitieS (cont’d)

The present values of finance lease liabilities are analysed as follows:

Group 2008 2007 $’000 $’000

Not later than one year (Note 20) 412 451 Between one and five years (Note 20) 886 891

1,298 1,342

22. Share capital

The share capital of the Company and the Group comprised fully paid-up 584,592,000 (2007: 584,592,000) ordinary shares with no par value, amounting to a total of $77,001,000 (2007: $77,001,000).

23. other reServeS

Group 2008 2007 $’000 $’000

(a) composition: General reserve 4,268 3,485 Currency translation reserve (1,880) (2,360)

2,388 1,125

Other reserves are non-distributable.

Group 2008 2007 $’000 $’000

(b) movements:

(i) Generalreserve

Beginning of financial year 3,485 2,853 Currency translation differences 245 (16) Transfer from retained earnings 538 648

End of financial year 4,268 3,485 (ii) Currencytranslationreserve

Beginning of financial year (2,360) (3,143) Currency translation differences 480 783

End of financial year (1,880) (2,360)

Generalreservefund

Subsidiaries established in the People’s Republic of China (the “PRC Subsidiaries”) are required to maintain certain statutory reserves by transferring from their profit after taxation in accordance with the relevant laws and regulations and, if applicable, Articles of Association of the PRC Subsidiaries, before any dividend is declared and paid.



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23. other reServeS (cont’d)

Generalreservefund(cont’d)

The PRC Subsidiaries are required to transfer at least 10% of their profit after taxation calculated in accordance with the PRC Accounting Standards and Systems, to the general reserve fund until the balance reaches 50% of their respective registered capital, where further transfers will be at their directors’ recommendation. The general reserve fund can only be used to make up prior year losses or to increase share capital, provided that the fund does not fall below 25% of the registered capital.

For the current financial year, the Board of Directors of the PRC Subsidiaries approved to appropriate 10% of their profit after taxation to general reserve fund amounted to $538,000 (2007: $648,000).

24. retained earninGS

(a) Retained profits of the Group are distributable except for accumulated retained earnings of associated companies amounting to $3,140,000 (2007: $2,618,000). Retained profits of the Company are distributable.

(b) Movement in retained profits for the Company is as follows:

Company 2008 2007 $’000 $’000

Beginning of financial year 41,045 32,120 Net profit 10,249 15,940 Dividends paid (Note 25) (7,892) (7,015)


25. dividendS

Group and Company 2008 2007 $’000 $’000

Ordinary dividends paid or proposed Final exempt dividend paid in respect of the previous financial year of 1.35 cents (2007: 1.2 cents) per share 7,892 7,015

At the Annual General Meeting to be held on 30 April 2009, a final exempt dividend of 1.0 cent per share amounting to a total of $5,846,000 will be recommended. These financial statements do not reflect this dividend, which will be accounted for in shareholders’ equity as an appropriation of retained earnings in the financial year ending 31 December 2009.

26. commitmentS

(a) capital commitments Capital expenditures contracted for at the balance sheet date but not recognised in the financial statements are

as follows:

Group 2008 2007 $’000 $’000

Property, plant and equipment 707 988



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26. commitmentS (cont’d)

(b) operating lease Arrangements – where the group is a lessee

The future aggregate minimum lease payments payable under non-cancellable operating leases contracted for at the balance sheet date but not recognised as liabilities are as follows:

Group 2008 2007 $’000 $’000

Not later than one year 3,428 3,044 Between two and five years 8,866 7,929 Later than five years 1,595 1,816

13,889 12,789

Included in the above are the Group’s lease commitments in respect of leases of land which are as follows:

(i) Lease of land up to 31 August 2009 for a monthly rental presently of $6,601; and

(ii) Lease of land up to 30 September 2014 for a monthly rental presently of $10,226.

The above lease rentals are subject to annual revision up to 5.5% per annum.

27. financial riSk manaGement

financial risk factors

The Group’s activities expose it to market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management strategy seeks to minimise adverse effects from the unpredictability of financial markets on the Group’s financial performance. The Group’s risk management policies and guidelines are set to monitor and control the potential material adverse impact of these exposures. The Board of Directors is responsible for setting the objectives and underlying principles of financial risk management for the Group.

(a) market risk

(i) Currencyrisk

The Group operates principally in the Asia-Pacific region with dominant operations in Singapore and People’s Republic of China. Entities in the Group regularly transact in currencies other than their respective functional currencies (“foreign currencies”).

Currency risk arises when transactions are denominated in foreign currencies such as United States Dollar (“USD”), Renminbi (“RMB”), Malaysian Ringgit (“MYR”), Australian Dollar (“AUD”) and New Zealand Dollar (“NZD”). To manage the currency risk, individual Group entities enter into currency forwards, where appropriate. The Group’s exposures to foreign currencies are primarily managed through matching financial assets and financial liabilities denominated in foreign currencies. The Group does not utilise currency forwards or other arrangements for trading or speculative purposes.



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27. financial riSk manaGement (cont’d)

(a) market risk (cont’d)

(i) Currencyrisk(cont’d)

The Group’s currency exposure based on the information provided to key management is as follows:

SGD USD RMB AUD MYR NZD Other Total $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

2008 financial assets Cash and cash equivalents and financial assets, available-for-sale 4,458 11,080 5,878 2,228 398 831 2,886 27,759 Trade and other receivables 72,450 39,221 15,725 21,120 13,637 4,305 19,331 185,789 Other financial assets 99 156 3,864 419 2,876 208 1,587 9,209

77,007 50,457 25,467 23,767 16,911 5,344 23,804 222,757 financial liabilities Borrowings 19,000 14,840 35,687 4,526 11,347 3,737 1,634 90,771 Other financial liabilities 71,084 14,437 30,981 9,276 11,347 1,940 7,859 146,924

90,084 29,277 66,668 13,802 22,694 5,677 9,493 237,695 net financial (liabilities)/assets (13,077) 21,180 (41,201) 9,965 (5,783) (333) 14,311 (14,938)

Less: Net financial assets/(liabilities) denominated in the respective entities’ functional currencies 3,243 6,529 38,452 378 1,782 1,157 (1,349) 50,192

currency exposure on financial assets and liabilities (9,834) 27,709 (2,749) 10,343 (4,001) 824 12,962 35,254



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SGD USD RMB AUD MYR NZD Other Total $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

2007 financial assets Cash and cash equivalents and financial assets, available-for-sale 3,553 13,173 5,831 4,620 1,335 118 1,560 30,190 Trade and other receivables 63,410 46,955 29,859 19,952 13,062 5,398 7,239 185,875

Other financial assets 149 75 6,446 338 1,196 297 1,363 9,864

67,112 60,203 42,136 24,910 15,593 5,813 10,162 225,929

financial liabilities Borrowings 7,481 9,542 42,399 15,353 10,651 3,781 4,309 93,516 Other financial liabilities 58,388 24,304 48,952 6,685 12,173 2,189 6,136 158,827

65,869 33,846 91,351 22,038 22,824 5,970 10,445 252,343 net financial assets/(liabilities) 1,243 26,357 (49,215) 2,872 (7,231) (157) (283) (26,414)

Less: Net financial (liabilities)/ assets denominated in the respective entities’ functional currencies (6,458) 4,692 40,014 1,121 2,876 714 1,544 44,503 currency exposure on financial assets and liabilities (5,215) 31,049 (9,201) 3,993 (4,355) 557 1,261 18,089

The Company’s currency exposure based on the information provided to key management is as follows:

2008 2007 sgD usD AuD other total SGD USD AUD Other Total $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

financial assets Cash and cash equivalents 594 21 – – 615 421 50 – – 471 Trade and other receivables 34,415 – 2,458 1,315 38,188 46,268 – 2,604 1,292 50,164 Other financial assets 15 – – – 15 39 – – – 39

35,024 21 2,458 1,315 38,818 46,728 50 2,604 1,292 50,674



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2008 2007 sgD usD AuD other total SGD USD AUD Other Total $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

financial liabilities Other financial liabilities 4,404 – – – 4,404 5,053 – – – 5,053

4,404 – – – 4,404 5,053 – – – 5,053

net financial assets 30,620 21 2,458 1,315 34,414 41,675 50 2,604 1,292 45,621

Less: Net financial assets denominated in functional currency (30,620) – – – (30,620) (41,675) – – – (41,675)

currency exposure – 21 2,458 1,315 3,794 – 50 2,604 1,292 3,946

If the USD, RMB and AUD change against the SGD by 6 percentage points (2007: 5 percentage points), 3 percentage points (2007: 1 percentage point) and 5 percentage points (2007: 6 percentage points) respectively with all other variables including tax rate being held constant, the effects arising from the net financial liability/asset position will be as follows:

2008 2007 Increase/(decrease) Profit Profit after tax equity after tax Equity $’000 $’000 $’000 $’000

group USD against SGD - Strengthened 1,663 (70) 1,552 (56) - Weakened (1,663) 70 (1,552) 56 RMB against SGD - Strengthened (82) 511 (92) 145 - Weakened 82 (511) 92 (145) AUD against SGD - Strengthened 517 664 239 657 - Weakened (517) (664) (239) (657) company USD against SGD - Strengthened 1 – 2 – - Weakened (1) – (2) – AUD against SGD - Strengthened 123 – 156 – - Weakened (123) – (156) –



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(ii) Cashflowandfairvalueinterestraterisks

Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market interest rates. As the Group has no significant interest-bearing assets, the Group’s income is substantially independent of changes in market interest rates.

The Group’s policy is to maintain 80 - 90% of its borrowings in fixed rate instruments. The Group’s and Company’s borrowings at variable rates on which effective hedges have not been entered

into are denominated mainly in AUD and MYR. If the AUD and MYR interest rates increase/decrease by 0.50 percentage points (2007: 0.50 percentage points) with all other variables including tax rate being held constant, the profit after tax will be lower/higher by $10,000 (2007: $19,000) and $19,000 (2007: $14,000) as a result of higher/lower interest expense on these borrowings.

(iii) Pricerisk

The Group and Company have insignificant exposure to equity security price risk as the Group and Company do not hold significant financial assets.

(b) credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. For trade receivables, the Group adopts the policy of dealing only with customers of appropriate credit history, and obtaining sufficient collateral where appropriate to mitigate credit risk.

Credit exposure to an individual counterparty is restricted by credit limits that are approved by the respective Heads of the various subsidiaries based on ongoing credit evaluation. The counterparty’s payment profile and credit exposure are continuously monitored at the entity level by the respective management and at the Group level by the Head of Finance.

As the Group and Company do not hold any collateral, the maximum exposure to credit risk for each class of

financial instruments is the carrying amount of that class of financial instruments presented on the balance sheet, except as follows:

Company 2008 2007 $’000 $’000

Corporate guarantees provided to banks on subsidiaries’ loans 73,056 72,043 The Group’s and Company’s major classes of financial assets are bank deposits and trade receivables.

The Company’s investment holding activities do not expose it to significant credit risk.



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(b) credit risk (cont’d)

The credit risk for trade receivables based on the information provided to key management is as follows:

Group 2008 2007 $’000 $’000

By geographical areas

Singapore 18,190 19,454 Malaysia 7,563 7,634 Taiwan 519 1,876 Australia 17,209 16,428 New Zealand 3,524 4,707 United States 3,299 6,384 United Kingdom 241 1,041 Italy 225 1,970 Indonesia 882 2,468 Sweden 175 1,731 People’s Republic of China 9,078 6,692 Other countries 10,934 11,297

71,839 81,682

Group 2008 2007 $’000 $’000

By types of customers Non-related parties - Multi-national companies – – - Other companies 71,839 81,682

71,839 81,682

(i) Financialassetsthatareneitherpastduenorimpaired

Bank deposits that are neither past due nor impaired are mainly deposits with banks with high credit-ratings assigned by international credit-rating agencies. Trade receivables that are neither past due nor impaired are substantially companies with a good collection track record with the Group.

The Group and Company do not have any receivables that would have been past due or impaired if the terms were not re-negotiated during the financial year.

(ii) Financialassetsthatarepastdueand/orimpaired

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

The age analysis of trade receivables past due but not impaired is as follows:

Group 2008 2007 $’000 $’000

Past due one month 6,212 5,714 Past due two months 2,850 1,418 Past due over two months 849 1,771

9,911 8,903



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27. Financialriskmanagement(cont’d)

(b) CreditRisk(cont’d)

(ii) Financialassetsthatarepastdueand/orimpaired(cont’d)

Thecarryingamountoftradereceivablesindividuallydeterminedtobeimpairedandthemovementintherelatedallowanceforimpairmentareasfollows:

Group 2008 2007 $’000 $’000

Grossamount 4,274 5,790 Less:Allowanceforimpairment (4,274) (5,790)

– –

Beginningoffinancialyear 5,790 6,495 Currencytranslationdifferences (177) 297 Allowancemade 904 711 Allowanceutilised (1,474) (1,165) Baddebtsrecovered (769) (548)

Endoffinancialyear 4,274 5,790

Theimpairedtradereceivablesarelongoutstandingandarenotexpectedtoberecovered.

(c) LiquidityRisk

TheGroupandCompanymanagetheliquidityriskbymaintainingsufficientcashtoenablethemtomeettheirnormaloperatingcommitmentsandhavinganadequateamountofcommittedcreditfacilities(Note20).

ThetablebelowanalysesthematurityprofileoftheGroup’sandCompany’sfinancialliabilities(includingderivativefinancialliabilities)basedoncontractualundiscountedcashflows.

Less Between than 1and5 Over 1year years 5years Total $’000 $’000 $’000 $’000

Group 2008 Tradeandotherpayables 43,220 – – 43,220 Borrowings 83,993 6,778 – 90,771

127,213 6,778 – 133,991 2007 Tradeandotherpayables 59,837 – – 59,837 Borrowings 85,209 7,901 406 93,516

145,046 7,901 406 153,353



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(c) liquidity risk (cont’d)

Less Between than 1 and 5 Over 1 year years 5 years Total $’000 $’000 $’000 $’000

company 2008 Trade and other payables 4,404 – – 4,404 2007 Trade and other payables 5,053 – – 5,053

(d) capital risk

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value. In order to maintain or achieve an optimal capital structure, the Group may adjust the amount of dividend payment, return capital to shareholders, issue new shares, buy back issued shares, obtain new borrowings or sell assets to reduce borrowings.

Management monitors capital based on a gearing ratio. The Group’s and Company’s strategies, which were unchanged from 2007, are to maintain gearing ratios within 50% to 70%.

The gearing ratio is calculated as total borrowings divided by total capital and reserves attributable to equity

holders of the Company.

Group Company 2008 2007 2008 2007 $’000 $’000 $’000 $’000

Total borrowings 90,771 93,516 – – Total capital and reserves attributable to equity holders 180,378 168,109 120,403 118,046

Gearing ratio 50% 56% – –

28. immediate and ultimate holdinG company

The immediate and ultimate holding company is YHI Holdings Pte Ltd, incorporated in Singapore.

29. related party tranSactionS

In addition to the information disclosed elsewhere in the financial statements, the following transactions took place between the Group and related parties at terms agreed between the parties during the financial year:

(a) sales and Purchases of goods and services

Group 2008 2007 $’000 $’000

Legal fees paid to Hee Theng Fong & Co – 3

Hee Theng Fong & Co is a firm owned by a director of the Company, Mr Hee Theng Fong.

Outstanding balances at 31 December 2008 are set out in Notes 11 and 19 respectively.



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29. RelatedpaRtytRansactions(cont’d) (b) KeyManagementPersonnelCompensation Thekeymanagementpersonnelcompensationisanalysedasfollows:

Group 2008 2007 $’000 $’000

Salariesandothershort-termemployeebenefits 7,919 8,228 Post-employmentbenefits–contributiontoCPF 175 143

8,094 8,371

Included in the above was total compensation to directors of the Company amounted to $4,671,000(2007:$5,467,000).

30. segmentinfoRmation (a) PrimaryReportingFormat–BusinessSegments

Distributionof automotive productsand industrial Manufacturing products ofalloywheels Elimination Group $’000 $’000 $’000 $’000

2008 Sales: - externalsales 300,119 157,855 – 457,974 - inter-segmentsales – 39,479 (39,479) –

300,119 197,334 (39,479) 457,974 Segmentresult 26,700 4,592 – 31,292 Othergains-net 1,594 Unallocatedcosts (157)

32,729 Financeexpenses (6,333) Shareofprofitofassociatedcompanies 31 491 – 522

Profitbeforeincometax 26,918 Incometaxexpense (5,835)

Totalprofit 21,083

Othersegmentitems Capitalexpenditure–Property,plant andequipment 2,160 9,085 – 11,245 Depreciation 2,580 9,145 – 11,725 Amortisation 63 – – 63 Segmentassets 178,018 167,586 (45,503) 300,101 Associatedcompanies 2,302 14,870 – 17,172 Unallocatedassets 5,873

Consolidatedtotalassets 323,146 Segmentliabilities (86,708) (34,793) 79,770 (41,731) Unallocatedliabilities (96,761)

Consolidatedtotalliabilities (138,492)



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30. SeGment information (cont’d)

(a) Primary reporting format – business segments (cont’d)

Distribution of automotive products and industrial Manufacturing products of alloy wheels Elimination Group $’000 $’000 $’000 $’000

2007 sales: - external sales 274,134 152,753 – 426,887 - inter-segment sales – 34,769 (34,769) –

274,134 187,522 (34,769) 426,887 segment result 26,929 7,450 – 34,379 Other gains - net 1,959 Unallocated costs (181)

36,157 Finance expenses (4,844) Share of profit of associated companies (121) 2,597 – 2,476

Profit before income tax 33,789 Income tax expense (5,950)

total profit 27,839 other segment items Capital expenditure – Property, plant and equipment 2,577 13,863 – 16,440 Depreciation 2,371 7,368 – 9,739 segment assets 169,787 173,144 (32,436) 310,495 Associated companies 2,271 14,379 – 16,650 Unallocated assets 4,349

consolidated total assets 331,494 segment liabilities (89,665) (46,759) 78,222 (58,202) Unallocated liabilities (100,221)

consolidated total liabilities (158,423)

At 31 December 2008, the Group is organised into two main business segments: • Distribution of automotive products and industrial products.

• Manufacturing of alloy wheels.

Inter-segment transactions are recorded at their transacted price which is generally at fair value. Unallocated costs represent corporate expenses. Segment assets consist primarily of property, plant and equipment, intangible assets, inventories, receivables and operating cash, and exclude deferred income tax assets. Segment liabilities comprise operating liabilities and exclude income tax liabilities and borrowings. Capital expenditure comprise additions to property, plant and equipment and intangible assets, including those acquired through business combinations.



84

30. SeGment information (cont’d)

(b) secondary reporting format - geographical segments

The Group’s two business segments operate in following geographical areas:

• Singapore, Malaysia, Indonesia, Thailand, Japan, USA, Canada, Australia and New Zealand - The areas of operation mainly arise from distribution of automotive and industrial products.

• China/Hong Kong - The areas of operation mainly arise from both distribution of automotive products and manufacturing of

alloy wheels.

• Taiwan - The areas of operation mainly arise from manufacturing of alloy wheels.

Capital Sales Total assets expenditure 2008 2007 2008 2007 2008 2007 $’000 $’000 $’000 $’000 $’000 $’000

Singapore 96,455 99,031 57,852 54,756 703 607 Malaysia 63,608 50,413 27,502 27,899 3,013 1,059 Thailand 1,713 1,844 1,528 1,158 82 8 Indonesia 321 – 817 – 50 – China/Hong Kong 177,313 169,342 179,798 184,311 5,851 13,233 Taiwan 24,553 27,724 9,902 10,498 476 551 Australia 85,021 65,911 52,320 46,731 904 510 New Zealand 21,753 21,302 11,498 13,624 78 342 Japan 4,758 5,056 2,128 1,299 13 14 USA 20,399 20,566 11,546 10,493 73 6 Canada 1,074 235 414 411 2 78 Middle East 485 232 – 600 – 32 Unallocated corporate assets – – 13,344 12,150 – –

497,453 461,656 368,649 363,930 11,245 16,440 Eliminations (39,479) (34,769) (45,503) (32,436) – –

457,974 426,887 323,146 331,494 11,245 16,440

31. eventS occurrinG after balance Sheet date

On 26 February 2009, the Company made an additional capital injection into a subsidiary, YHI Manufacturing (Singapore) Pte Ltd, amounting to $9,503,600. The newly issued shares rank pari passu in all respect with the previously issued shares.



85

32. new or reviSed accountinG StandardS and interpretationS

Certain new standards, amendments and interpretations to existing standards have been published and are mandatory for the Group’s accounting periods beginning on or after 1 January 2009 or later periods and which the Group has not early adopted. The Group’s assessment of the impact of adopting those standards, amendments and interpretations that are relevant to the Group is set out below:

(a) frs 1(r) Presentation of financial statements (effective for annual periods beginning on or after 1 January 2009)

The revised standard requires: • All changes in equity arising from transactions with owners in their capacity as owners to be presented

separately from components of comprehensive income;

• Components of comprehensive income not to be included in statement of changes in equity;

• Items of income and expenses and components of other comprehensive income to be presented either in a single statement of comprehensive income with subtotals, or in two separate statements (a separate statement of profit and loss followed by a statement of comprehensive income);

• Presentation of restated balance sheet as at the beginning of the comparative period when entities make restatements or reclassifications of comparative information.

The revisions also include changes in the titles of some of the financial statements primary statements.

The Group will apply the revised standard from 1 January 2009 and provide comparative information that conforms to the requirements of the revised standard. The key impact of the application of the revised standard is the presentation of an additional primary statement, that is, the statement of comprehensive income.

(b) frs 108 operating segments (effective for annual periods beginning on or after 1 January 2009)

FRS 108 supersedes FRS 14 Segment Reporting and requires the Group to report the financial performance of its operating segments based on the information used internally by management for evaluating segment performance and deciding on allocation of resources. Such information may be different from the information included in the financial statements, and the basis of its preparation and reconciliation to the amounts recognised in the financial statements shall be disclosed.

The Group will apply FRS 108 from 1 January 2009 and provide comparative information that conforms to the requirements of FRS 108. The Group expects the new operating segments to be significantly different from business segments currently disclosed and expects more information to be disclosed under FRS 108.

33. authoriSation of financial StatementS

These financial statements were authorised for issue in accordance with a resolution of the Board of Directors of YHI International Limited on 10 March 2009.



86

STATISTICS

OF SHAREHOLDINGS

AS AT 10 MARCH 2009

analySiS of ShareholdinGS

Number of shares 584,591,628Class of shares ordinary sharesVoting rights one vote per share

No. of % of % ofSize of Shareholdings Shareholders Shareholders No. of Shares Shareholdings

1 - 999 75 3.70 30,502 - 1,000 - 10,000 660 32.57 4,273,192 0.73 10,001 - 1,000,000 1,270 62.69 79,369,706 13.58 1,000,001 - and above 21 1.04 500,918,228 85.69

Grand Total 2,026 100.00 584,591,628 100.00

public ShareholderS %

Non-public shareholders 58.4Public shareholders 41.6

Pursuant to Rule 723 of the Listing Manual of the Singapore Exchange Securities Trading Limited, it is confirmed that at least 10% of the issued ordinary shares of the Company is at all times held by the public.

SubStantial ShareholderS

No. of Shares Direct Interest Deemed Interest %

YHI Holdings Pte Ltd 341,391,628 - 58.40Tay Tian Hoe Richard 18,674,000 344,949,628 62.20 (1)

Note

(1) MrTayTianHoeRichard isdeemedtohavean interest in the341,391,628sharesheld in thenameofYHIHoldingsPteLtdand3,558,000sharesheldbyhisspouse,MdmLeeSuatKwan,byvirtueofSection7oftheCompaniesAct,Cap.50.MrTay’s62.20%interestincludeshisdirectanddeemedinterestintheCompany.

87

STATISTICS

OF SHAREHOLDINGS

AS AT 10 MARCH 2009

twenty larGeSt ShareholderS aS at 10 march 2009

% of Name of Shareholder No. of Shares Shareholdings

1 YHI HOLDINGS PTE LTD 341,391,628 58.40

2 HSBC (SINGAPORE) NOMINEES PTE LTD 30,711,000 5.25

3 CITIBANK NOMINEES SINGAPORE PTE LTD 28,330,000 4.85

4 DBS VICKERS SECURITIES (SINGAPORE) PTE LTD 21,483,800 3.68

5 TAY TIAN HOE RICHARD 18,674,000 3.19

6 PHILLIP SECURITIES PTE LTD 6,591,200 1.13

7 NTUC THRIFT & LOAN CO-OPERATIVE LIMITED 6,340,000 1.08

8 DB NOMINEES (SINGAPORE) PTE LTD 5,524,200 0.94

9 ORIX INVESTMENT AND MANAGEMENT PTE LTD 4,800,000 0.82

10 DBS NOMINEES PTE LTD 4,048,400 0.69

11 NG CHWEE CHENG 3,847,000 0.66

12 KIM ENG SECURITIES PTE. LTD. 3,801,000 0.65

13 TAY TIANG GUAN 3,800,000 0.65

14 UOB KAY HIAN PTE LTD 3,722,000 0.64

15 LEE SUAT KWAN 3,558,000 0.61

16 TAY THIAM SENG 3,000,000 0.51

17 ING NOMINEES (SINGAPORE) PTE LTD 2,619,000 0.45

18 LEE LING LING 2,475,000 0.42

19 UNITED OVERSEAS BANK NOMINEES PTE LTD 2,451,600 0.42

20 TAN YONG CHIANG OR TAN HUI LIANG 1,970,000 0.34

Total: 499,137,828 85.38

88

NOTICE OFANNUAL GENERAL

MEETING

AS ORDINARY BUSINESS

1. To receive and adopt the Directors’ Report and the Audited Accounts of the Company for the financial year ended 31 December 2008 together with the Auditor’s Report thereon.

2. To declare a first and final tax exempt dividend of 1.00 Singapore cent per ordinary share for the financial year ended 31 December 2008 (2007: 1.35 Singapore cents).

3. To re-elect the following Directors retiring pursuant to Article 107 of the Company’s Articles of Association:

Mr Tay Tiang Guan Mr Henry Tan Song Kok Mr Henry Tan Song Kok will, upon re-election as a Director of the Company, remain as a member of

the Remuneration and Nominating Committees and Chairman of the Audit Committee and will be considered independent for the purposes of Rule 704(8) of the Listing Manual of the Singapore Exchange Securities Trading Limited.

4. To approve the payment of Directors’ fees of S$135,000 for the financial year ended 31 December 2008 (2007: S$135,000).

5. To re-appoint PricewaterhouseCoopers LLP, Certified Public Accountants as Auditor of the Company and to authorise the Directors to fix their remuneration.

6. To transact any other ordinary business which may properly be transacted at an Annual General Meeting.

AS SPECIAL BUSINESS

To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without any modifications:

7. Authority to allot and issue shares

“That, pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806(2) of the Listing Manual of the Singapore Exchange Securities Trading Limited, authority be and is hereby given to the Directors of the Company to:-

(a) allot and issue shares in the Company; and (b) issue convertible securities and any shares in the Company pursuant to convertible

securities (whether by way of rights, bonus or otherwise) at any time and upon such terms and conditions and for such purposes and to such persons as the Directors shall in their absolute discretion deem fit, provided that the aggregate number of shares (including any shares to be issued pursuant to the convertible securities) in the Company to be issued pursuant to such authority:-

(i) shall not exceed fifty per cent (50%) of the issued share capital of the Company (excluding treasury

Resolution 1

Resolution 2

Resolution 3Resolution 4

Resolution 5

Resolution 6

NOTICE IS HEREBY GIVEN that the Annual General Meeting of YHI International Limited (the “Company”) will be held at Jurong Country Club, Ficus 2 & 3, Level 2, 9 Science Centre Road, Singapore 609078 on Thursday, 30 April 2009 at 10.00 a.m. for the following purposes:

89


MEETING

shares)atthetimethisResolutionispassedandthattheaggregate number of shares in theCompanytobeissuedotherthanonapro-ratabasistotheexistingshareholdersoftheCompanyshallnotexceedtwentypercent(20%)oftheissuedsharecapitaloftheCompany(excludingtreasuryshares)atthetimethisResolutionispassed;and

(ii) notwithstandingparagraph(i)above,wherethesharecapitalistobeallottedviaapro-ratarenounceablerightsissue,shallnotexceedonehundredpercent(100%)oftheissuedsharecapitaloftheCompany(excludingtreasuryshares)atthetimethisResolutionispassed.

ThatunlessrevokedorvariedbytheCompanyinageneralmeeting,suchauthorityshallcontinueinfullforceuntiltheconclusionofthenextAnnualGeneralMeetingoftheCompanyorthedatebywhichthenextAnnualGeneralMeeting is requiredby lawtobeheld,whichever is theearlier,except that theDirectorsshallbeauthorisedtoallotand issuenewsharespursuant totheconvertiblesecuritiesnotwithstandingthatsuchauthorityhasceased.

ForthepurposesofthisResolutionandRule806(3)oftheListingManual,thepercentageofissuedsharecapital is basedon the issued share capital of theCompany at the time thisResolution is passedafteradjustingfor:-

(i) newsharesarisingfromtheconversionorexerciseofconvertiblesecurities;(ii) newsharesarisingfromexercisingshareoptionsorvestingofshareawardsoutstandingorsubsisting

atthetimeofthepassingofthisResolution,providedtheoptionsorawardsweregrantedincompliancewiththerulesoftheListingManual;and

(iii) anysubsequentbonusissue,consolidationorsubdivisionofshares.” [SeeExplanatoryNote(i)]

8. AuthoritytograntoptionsandissuesharesundertheYHIShareOptionScheme

“ThattheDirectorsoftheCompanybeandareherebyauthorisedtoofferandgrantoptionsandshareawardsinaccordancewiththeYHIShareOptionScheme(the“Scheme”)andtoissuesuchsharesasmayberequiredtobeissuedpursuanttotheexerciseoftheoptionsundertheSchemeprovidedalwaysthattheaggregatenumberofsharestobeissuedpursuanttotheSchemeshallnotexceed15percent(15%)oftheissuedsharecapitaloftheCompanyfromtimetotime.”[SeeExplanatoryNote(ii)]

ByOrderOfTheBOard

GnJongyuhGwendolynCompanySecretary

Singapore08April2009

resolution7

resolution8

90


MEETING

explanatory notes:

(i) The Ordinary Resolution 7 proposed in item 7 above, if passed, will empower the Directors from the date of this Meeting until the date of the next Annual General Meeting, to allot and issue shares and convertible securities in the Company. The aggregate number of shares (including any shares issued pursuant to the convertible securities) which the Directors may allot and issue under this Resolution (a) shall not exceed fifty per cent (50%) of the issued share capital (as defined in Resolution 7) of the Company.

For issues of shares other than on a pro-rata basis to all shareholders, the aggregate number of shares to be issued shall not exceed twenty per cent (20%) of the issued share capital (as defined in Resolution 7) of the Company.

For issue of shares via a pro-rata renounceable rights issue, the aggregate number of shares to be issued shall not exceed one hundred per cent (100%) of the issued share capital (as defined in Resolution 7) of the Company. This is one of the new measures introduced by the Singapore Exchange Limited, in consultation with the Monetary Authority of Singapore, on 20 February 2009 to accelerate and facilitate listed issuers’ fund raising efforts and will be in effect until 31 December 2010.

This authority will, unless previously revoked or varied at a general meeting, expire at the next Annual

General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier. However, notwithstanding the cessation of this authority, the Directors are empowered to issue shares pursuant to any convertible securities issued under this authority.

(ii) The Ordinary Resolution 8 proposed in item 8 above, if passed, will empower the Directors of the Company, to grant options and to allot and issue shares upon the exercise of such options in accordance with the Scheme.

note:

1. A Member entitled to attend and vote at the Annual General Meeting 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.

2. If the appointor is a corporation, the instrument appointing a proxy must be executed under seal or

the hand of its duly authorised officer or attorney. 3. The instrument appointing a proxy must be deposited at the registered office of the Company at No. 2

Pandan Road, Singapore 609254 not less than forty-eight (48) hours before the time appointed for holding the Annual General Meeting.

91important

1. For investors who have used their CPF monies to buy

YHI International Limited shares, the Annual Report is

forwarded to them at the request of their CPF Approved

Nominees and is sent solely FOR INFORMATION ONLY.

2. This Proxy Form is not valid for use by CPF investors and

shall be ineffective for all intents and purposes if used or

purported to be used by them.

total number of no. of shares

shares in: held

(a) CDP Register

(b) Register of Members

YHI INTERNATIONAL LIMITED (Incorporated In the Republic of Singapore -

Company Registration No. 200007455H)

ProXY form(Please see notes overleaf before completing this Form)

I/We, (name) of

(address) being a member/members of YHI International Limited (the “Company”), hereby appoint:

name Address nric/ Proportion of

Passport no. shareholdings

%

and/or (delete as appropriate)

or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the Annual General

Meeting of the Company to be held at Jurong Country Club, Ficus 2 & 3, Level 2, 9 Science Centre Road, Singapore 609078

on Thursday, 30 April 2009 at 10.00 a.m. and at any adjournment thereof. The proxy is to vote on the business before the

Meeting as indicated below. If no specific direction as to voting is given, the proxy will vote or abstain from voting at his/her

discretion, as he/she will on any other matter arising at the Meeting:

no. resolutions relating to: for Against

1. Directors’ and Auditor’s Report and Audited Accounts of the Company for the year ended 31 December 2008

2. Payment of proposed first and final dividend of 1.00 Singapore cent per share

3. Re-election of Mr Tay Tiang Guan as Director of the Company

4. Re-election of Mr Henry Tan Song Kok as Director of the Company

5. Approval of Directors’ fees amounting to S$135,000 for the financial year ended 31 December 2008 (2007: S$135,000)

6. Re-appointment of PricewaterhouseCoopers LLP, Certified Public Accountants as Auditor and to authorise the Directors to fix their remuneration

7. Authority to allot and issue new shares

8. Authority to grant options and issue shares under the YHI Share Option Scheme

(Please indicate with a cross [X] in the space provided whether you wish your vote to be cast for or against the Resolutions as

set out in the Notice of the Meeting).

Dated this ……… day of …………….. 2009

…………………………………………………………….

Signature(s) of Member(s) or Common Seal

✁

92

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 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 will 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 instead of him/her.

3. Where a member appoints more than one proxy, he shall specify the proportion of his shareholding to be represented by each proxy. If no such proportion or number is specified the first named proxy may be treated as representing 100% of the shareholding and any second named proxy as an alternate to the first named.

4. A proxy need not be a member of the Company.

5. The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at No. 2 Pandan Road, Singapore 609254 not less than 48 hours before the time appointed for the Annual General Meeting.

6. The instrument appointing a proxy or proxies must be under the hand of the appointor or 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.

7. Where an instrument appointing a proxy or proxies is signed on behalf of the appointor by the attorney, the letter or power of attorney or a duly certified copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy, failing which the instrument may be treated as invalid.

8. 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 Annual General Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore.

9. 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 Annual General Meeting, as certified by The Central Depository (Pte) Limited to the Company.

Five-Year Financial Highlights 02 // Financial Summary 03 // Corporate Profile 06 //

Group Managing Director's Message 08 // Board of Directors 12 // Corporate Structure 16 //

Our Global Presence 18 // Heads of Subsidiaries & Key Officers 20 //

Manufacturing Milestones 22 // Financial Calendar & Corporate Information 24 //

Review of Operations 28 // Corporate Governance Report 30 // Financial Report 37

CONTENTS

2 PANDAN ROAD SINGAPORE 609254

TEL: (65) 6264 2155 FAX: (65) 6265 9927 / 6266 5368

EMAIL: [email protected]

WEBSITE: www.yhi.com.sg

Listed on the mainboard of the Singapore ExchangeCompany Registration Number 200007455H


BUILDING A

GLOBAL BRANDANNUAL REPORT 2008

BUILDING A

GLOBAL BRANDListed on the mainboard of the Singapore Exchange

Company Registration Number 200007455H


ANNUAL REPORT 2008

ANNUAL REPORT 2008

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