GBY Grand Banks Yachts Annual Report 2010

G R AN D B AN K S YAC H TS LIMITED
2010 ANNUAL REPORT
CONTENTS
Letter to Shareholders Board of Directors Statement of Corporate Governance Directors Report Statement by Directors Independent Auditors Report Statements of Financial Position Consolidated Income Statement Consolidated Statement of Comprehensive Income Consolidated Statement of Changes in Equity Consolidated Cash Flow Statement Notes to The Financial Statements Statistics of Shareholdings Notice Of Annual General Meeting Proxy Form
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G R A N D B A N K S YA C H T S
18 19 19 20 21 22 48 49
[ 2010 ANNUAL REPORT ]
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LETTER TO SHAREHOLDERS
As we expected, this past year continued to bring challenging conditions to the recreational marine industry. While signs of leveling and slow improvement are evident, the economic downturn persisted and demand for new boats remained soft. Competitors relied often on deep discounting to generate new boat sales, and the overall market for new boats experienced its lowest level of demand in more than 45 years. In the face of these difficult circumstances, Grand Banks Yachts reported annual net sales of $29.2 million for the fiscal year ended 30 June 2010, and a net loss of $7.5 million, or approximately $.08 per share. Although these results reflect the kind of continued decline that plagued our industry the previous two years, Company losses were mitigated by deliberate management actions to resize our businesses, reduce operating expenses and preserve cash. These included targeted retrenchments at our factory in Malaysia, and strategic cuts to our production schedule.
53 Aleutian RP (hull #001) during her first photo shoot in Malaysia
Despite revenue declines, Grand Banks continued to maintain prudent levels of liquidity at a time when heavy debt loads have been a crippling factor in many failures throughout our industry. These cash reserves have helped us forego desperate price-cutting tactics that can fundamentally damage a manufacturers long-term prospects for survival and prosperity. Instead, Grand Banks continued to position itself for success when the market inevitably improves. Management evaluated every aspect of Company operations to control costs, while working hard to make new progress on three critical fronts: new product development, greater manufacturing efficiency, and improved distribution strategies. I am happy to say that we closed the fiscal year having made strong progress in each area. NEW PRODUCT DEVELOPMENT Despite the headwinds, new product development remains a priority for Grand Banks and a key component of our competitive advantage. Fiscal 2010 was another particularly strong year, with the introduction of three new models launched in markets around the world.
Perhaps the most anticipated new model was the 53 Aleutian RP. A distinct model from the Companys in-house development team, the 53RP was designed as a new, smaller Aleutian that would still provide a superior platform for extended, self-sufficient cruising. What emerged was an entirely new Aleutian capable of supporting a cruising couple or family on long voyages smaller in size but with the powerful presence customers expect from the series. Also in the Aleutian Series of yachts, our first 72SC delivered in May 2010 joined her sister RP model as the largest and most luxurious in our fleet. It is our first Aleutian to feature four staterooms plus crew quarters, as well as updated interior layouts and styling. Outside, this model is distinguished from the RP version and its step-down cockpit by an expansive single-level aft deck dining and living area. In the Eastbay Series, the Company launched its first 46SX at the Eurasia Boat Show in Istanbul this past February. This is the second GB model to feature the remarkable Zeus propulsion system with pod drives and a joystick control. With crew quarters and a three-cabin layout option, this new Eastbay was designed to take full advantage of the
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MotorBoating selects the 41 Heritage EU in their Best of the Year competition
Zeus system and its compact footprint much like its sister yacht, the 41 Heritage EU, did the prior year. In fact, the 41EU has continued to impress customers and the media, most recently by earning a Best Of the Year award from MotorBoating magazine.
customer in the coming months, and the first two US-bound 46SX boats already sold to excited buyers, we are confident that new model development will continue to drive sales and help build a stronger long-term position for Grand Banks relative to our competition. PRODUCTION IMPROVEMENTS In FY 2010 the Company made one of its biggest improvements to production efficiency in recent history, continuing our efforts to use this market slowdown to our long-term advantage. A production efficiency expert contracted by Grand Banks in FY 2009, has helped spearhead much of these improvements since being hired early this year as Vice President of Manufacturing. The most significant modification implemented by the production staff at our Malaysian facility was a major transition from a station-built to stage-built production process on all boats under 59 feet. Such a transformation brings numerous and noteworthy benefits such as improving production flow control, upgrading resource and manpower planning, boosting purchasing and scheduling proficiency, and enhancing our ability to deliver a finished yacht of the highest possible quality. The overall goal of efficiency measures like these and many others is to do more with less not just during this downturn, but as a matter of course at Grand Banks: we will aim to build our boats in fewer hours, while improving upon our already renowned level of quality.
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ROBERT W LIVINGSTON II
With the first 53RP sold almost a year before delivery, a new 72SC delivering to a European
[ PRESIDENT & CEO]

G R A N D B A N K S YA C H T S [ 2010 ANNUAL REPORT ]
LETTER TO SHAREHOLDERS, CONTINUED

DISTRIBUTION STRATEGIES Recreational marine dealers continue to face exceptionally tough conditions in todays economic climate. To bolster the strength of our distribution network and ensure our buyers enjoy a premium experience at the retail level, Grand Banks took action in key markets around the world. The Company signed two major new dealers in Florida and increased our footprint to 13 locations employing over 200 marine professionals in our busiest market territory, with HMY Yacht Sales along that states east coast and Galati Yacht Sales in the west and in Alabama. Both Galati and HMY bring tremendous expertise, integrity and customer commitment to their work: Galati Yacht Sales is the largest Five Star Re-Certified dealer in the marine industry today, and HMY is one of the largest and most comprehensive
New Dealer Locations in Florida & Alabama (U.S.) for HMY and Galati Yacht Sales
yacht sales and service organizations in the world. In addition, the Company signed Walstrom Marine, a well-established, well-respected dealership in the US Great Lakes region, to represent Grand Banks in that territory. We also continued to build on our company-owned store program, which started late June 2009 with a single location on Australias Gold Coast. Since that time, GB Australia took five new boats for both retail orders and stock inventory, and firmly established itself among the top marine dealerships in this boater-centric region. The year ended with a move to a new location at Hope Islands Boardwalk Marina in SE Queensland, with an expanded office and staff in one of the Gold Coasts premier ocean front communities. Halfway around the world, in the US Pacific Northwest, Grand Banks launched a second company-owned store in a major marine market. By the years end Grand Banks Northwest had attracted the regions top salesmen to its staff, grabbed the attention of the boating community, secured numerous lucrative brokerage listings and managed to close a number of used and new boat sales to help quickly drive cash flows through the operation.
New offices for Grand Banks Australia
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As much as I would like to tell you that the next year will be different that the recreational marine market will see a major recovery and boatbuilders will once again flourish such a turnaround does not appear to be imminent. Fragile economies in the U.S. and Europe (historically the largest marine markets in the world), low consumer confidence, high unemployment, scarcity of commercial and personal lending, and an overabundance of discounted new and brokerage boats all point to a slow turnaround for our industry. Nevertheless, Grand Banks enters the new fiscal year more strongly positioned to take on the challenges and uncertainties of the marketplace. As we execute against our strategies, we continue to operate without debt and with a healthy cash balance. Our plan for the coming year focuses on improving revenue and reducing operating expenses further as we try to gradually increase our rate of production. Needless to say, FY 2010 was a very challenging time for Grand Banks employees, but it was without question a year in which they should be extremely proud of our many accomplishments. Together we have demonstrated the resiliency of our Company and our brand and our ability to deal with some of the most severe challenges ever to face this industry. We are confident that the work we have done positions us to capture greater revenues, profits and market share when the economies improve in the United States and Europe and to establish more meaningful sales in emerging boating markets in Asia. On behalf of the entire team at Grand Banks Yachts, thank you for your investment and your continued support.
Sincerely,
Robert W. Livingston II President & CEO

The 46 Eastbay SX (hull #030) in front of the Ortaky mosque in Istanbul, Turkey
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BOARD OF DIRECTORS
Robert William Livingston [American, 70] Non-Executive Chairman Member of Nominating Committee Member of Remuneration Committee Member of Strategic Vision Committee Mr. Livingston is a founder member and has been on the Board since 8 June 1976. He was last re-elected to the Board on 9 October 2009. He holds a Bachelor of Science (major in Accounting) from Minnesota State University, USA and he is a Certified Public Accountant. He joined American Marine Ltd. (legacy company of Grand Banks Yachts Limited) in 1972 as its Treasurer. Relocating to Singapore in 1974 to manage the Singapore plant, he was subsequently elected the President of the company following a management buyout in 1975. Over the last 30 years, under his leadership, Grand Banks has designed, developed, built and exported over 5,000 high quality classic yachts worldwide. Robert William Livingston II [American, 41] Executive Director President/Chief Executive Officer Member of Strategic Vision Committee Mr. Livingston II was appointed to the Board on 9 July 2004. He was last re-elected to the Board on 9 October 2009. He holds a Master of Business Administration from Duke University, USA. He also holds a Bachelor of Science in Business Administration from Georgetown University, USA with a double major in Finance and International Management. As Chief Executive Officer, he is responsible for the operation of the entire Group. Prior to joining the Group in 2001, Mr. Livingston spent time with Dean Witter, America Online, Morgan Stanley, and aQuantive in various investment banking and business development positions. He also worked for Grand Banks from 1993 to 1995. Mr. Livingston is a member of the Young Presidents Organization (YPO) Singapore chapter. Peter Kevin Poli [American, 48] Executive Director Chief Financial Officer Executive Vice President Mr. Poli was appointed to the Board on 31 March 2008. He was last re-elected to the Board on 14 July 2008. He holds an MBA from Harvard Business School and a BA in Economics and Engineering from Brown University. He is responsible for the Groups financial, human resources, and IT functions and will also lead the evaluation of strategic business opportunities for Grand Banks. Prior to joining the Company in 2004, he spent twelve years in the securities business, the last three of which as the CFO for a Morgan Stanley subsidiary. He also served as the CFO of specialty retailer FTD, helping to take the company public in 1999. Mr. Poli is a member of the Singapore Institute of Directors (SID) and a graduate of both the Singapore Association of the Institute of Chartered Secretaries & Administrators professional qualification scheme and the Executive Certificate in Directorship programme jointly organized by SMU and SID.
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BOARD OF DIRECTORS
Michael Grenville Gray [Singaporean, 64] Independent Director Chairman of Audit Committee Member of Nominating Committee Mr Gray was appointed to the Board on 1 November 2008. He was last re-elected to the Board on 9 October 2009. He is an independent director and chairman of the Audit Committees of Avi-Tech Electronics Limited, JEL Corporation (Holdings) Ltd and Ascendos India Trust, which are listed in Singapore and a director of the VinaCapital Vietnam Opportunity Fund, which is listed in London, United Kingdom. He is the Senior Advisor to Tricor Singapore Pte Ltd, a professional firm involved in corporate secretarial, accounting services and outsourcing. Prior to his retirement at the end of 2004, Mr Gray was a partner in PricewaterhouseCoopers, Singapore and before that Territorial Senior Partner for PricewaterhouseCoopers Indochina (Vietnam, Cambodia and Laos). He has over 30 years experience in professional practice most of which has been in Southeast Asia. Mr Gray was admitted as a member to the Institute of Chartered Accountants in England and Wales (FCA) in 1976. Apart from being a FCA, Mr Gray has a Bachelor of Science Degree in Maritime Studies from the University of Plymouth and a Masters of Arts in South East Asian Studies from the National University of Singapore. He is a Fellow of the Chartered Institute of Certified Public Accountants of Singapore, Fellow of the Chartered Institute of Logistics and Transport and a Fellow of the Singapore Institute of Directors. Roger Gaimster Langdale [Singaporean, 74] Independent Director Chairman of Nominating Committee Member of Audit Committee Member of Remuneration Committee Mr. Langdale was appointed to the Board on 11 November 2003. He was last reelected to the Board on 9 October 2009. He is the proprietor of Langdale Management, providing consulting services in the areas of commercial financial management and corporate governance. He was formerly the Chief Financial Officer and Executive Director of The North Borneo Timbers Bhd and a Partner in Peat Marwick Mitchell & Co, legacy firm of KPMG. He is a Fellow of the Institute of Chartered Accountants in England and Wales and a member of the Institute of Certified Public Accountants of Singapore, the Malaysian Association of Certified Public Accountants and the Singapore Institute of Directors.
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Jeffrey Stewart Bland [American, 64] Independent Director Chairman of Strategic Vision Committee Chairman of Remuneration Committee Member of Audit Committee Dr. Bland was appointed to the Board on 2 March 2007. He was last re-elected to the Board on 9 October 2009. He holds a Ph.D. in Chemistry from the University of Oregon, and a Bachelor of Science in Biology from the University of California. He is the Chief Executive Officer of KinDex Therapeutics Ltd, a medical research company, and the President of MetaProteomics Ltd, a biotechnology entity. He is also the Chief Science Officer of Metagenics, Inc, a leading manufacturer and distributor of medical foods and nutraceutical products owned by Alticor, the multi-billion dollar global network-marketing company and a board member of Next Foods, Inc. He is an internationally recognized leader in the nutritional medicine field for over 30 years and has served on numerous private and public Boards of Directors. Dr. Bland has authored five books on nutritional medicine for the healthcare professional and four books on nutrition and health for the general public. He is also the principal author of over 100 peer-reviewed research papers on nutritional biochemistry. He also holds numerous honors and patents.
STATEMENT OF CORPORATE GOVERNANCE

The Directors of Grand Banks Yachts Limited (the Company) are committed to maintaining a high standard of corporate governance within the Company and its subsidiary companies (the Group). The Company has adopted the principles set out in the Code of Corporate Governance 2005 (the Code) established by the Singapore Corporate Governance Committee and the relevant sections of the Listing Manual issued by the Singapore Exchange Securities Trading Limited (SGX-ST). This report outlines the Companys main corporate governance practices that are in place. Where there are deviations from the Code, appropriate explanations are provided. BOARD OF DIRECTORS (Code of Corporate Governance Principles 1,2, 3, 4, 6 & 10) Robert William Livingston Robert William Livingston II Jeffrey Stewart Bland Michael Grenville Gray Peter Kevin Poli Roger Gaimster Langdale (Chairman) The Boards three independent directors are respected professionals drawn from a broad spectrum of expertise which enables them, in their collective wisdom, to contribute effectively and provide a balance of views at Board meetings. Details of the Directors academic and professional qualifications and other appointments are set out on pages 6 and 7 of this Annual Report. The role of the Chairman is separate from that of the Chief Executive Officer. The Chief Executive Officer is the son of the Chairman. There is adequate accountability and transparency as independent directors make up 50% of the Board. The Board is able to exercise its power objectively and independently from the management. The Chairmans responsibilities include promoting high standards of corporate governance, scheduling meetings that enable the Board to perform its duties, establishing the agenda for the Board meetings in consultation with the CEO and ensuring that the Board reviews and approves the Groups material strategies and policies. The CEOs responsibilities encompass managing the day-to-day business activities of the Group, developing and executing the Groups strategies, reporting back to the Board on the performance of the Group, and providing guidance to the Groups employees. Matters which specifically require the Boards approval or involvement are those involving material acquisitions and disposals of assets, borrowings, corporate or financial restructuring, share issuances, dividends and other returns to shareholders, establishment of strategies and objectives, setting the Groups budget and financial plans, monitoring financial and management performance, authorizing executive compensation, evaluating internal controls and risk management, approving quarterly and year-end financial reports and overseeing corporate governance. The Board held five scheduled meetings in the financial year ended 30 June 2010. Ad hoc Board meetings are also held whenever the Boards guidance or approval is required, outside of the scheduled Board meetings. The number of Board and Committee meetings and the record of attendance of each director during the financial year ended 30 June 2010 is set out below:
The Board of Directors consists of two executive directors, one non-executive director and three independent directors. Every Director is expected, in the course of carrying out his duties, to act in good faith and consider at all times, the interests of the Group. The Board oversees the management of the Group and meets regularly throughout the year to do so. The Board sets the overall strategy of the Group as well as policies covering various matters with an emphasis on internal controls, financial performance and risk management procedures. The Board delegates the implementation of business policies and day-to-day operations to the Executive Directors and the management of the Group.
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Board of Directors Meetings Name of Director Robert William Livingston# Robert William Livingston II Jeffrey Stewart Bland* Michael Grenville Gray Peter Kevin Poli Roger Gaimster Langdale No. held 5 5 5 5 5 5 No. attended 5 5 5 5 5 5 Audit Committee Meetings No. held NA NA 4 4 NA 4 No. attended NA NA * 4 NA 4 Remuneration Committee Meetings No. held NA NA 2 NA NA 2 No. Attended NA NA 2 NA NA 2 Nominating Committee Meetings No. held 2 NA NA 2 NA 2 No. attended 2 NA NA 2 NA 2 Strategic Vision Committee Meetings No. held 1 1 1 NA NA NA No. attended 1 1 1 NA NA NA
# A resolution proposing that Mr. Livingston be added to the Remuneration Committee going forward was tabled and approved at the Board of Directors meeting held 25 August 2010. * Dr. Bland was appointed to the Audit Committee on 20 May 2010 and as such did not attend any of the above Audit Committee meetings. NA Not applicable as not a member of the Committee
Dates of Board, Board Committee and annual general meetings are scheduled in advance in consultation with all of the Directors. A Director who is unable to attend a Board or Committee meeting in person is invited to participate in the meeting via telephone or video conference. The Directors are provided with complete and timely information prior to meetings and on an on-going basis to enable them to fulfill their duties. Management provided members of the Board with quarterly management accounts, as well as relevant background information relating to the matters that were discussed at the Board meetings. Detailed board papers are sent out to the Directors before the scheduled meetings so that Directors understand the issues in advance and may spend more time discussing the topic at the meeting. However, certain sensitive issues are tabled at the meeting and discussed without any materials being distributed. The Directors have separate and independent access to the Companys senior management and the company secretary. Each member of the Board also has direct access to the Groups independent professional advisors as and when necessary to discharge his responsibility effectively with any costs of doing so covered by the Group. In addition, the directors, either individually or as a group, may seek separate independent professional advice if necessary at the expense of the Company.
The Directors continuously update themselves on new laws, regulations and changing commercial risks. Every Director is also invited to seek additional training to develop further skills for performing his duties. The Directors may also, at any time, visit the Groups production facility, sales locations or attend dealer meetings, trade shows and customer activities in order to gain a better understanding of the Groups business. If regulatory changes have a material impact on either the Group or the Directors then Management will brief the Directors at the Board meetings. BOARD MEMBERSHIP In accordance with the Companys Articles of Association, half of the Board including the Chairman is subject to re-election annually. The directors named below are retiring and being eligible, offer themselves for re-election at the next annual general meeting. Board Member Jeffrey Stewart Bland Peter Kevin Poli Roger Gaimster Langdale Robert William Livingston Date of appointment 2 March 2007 31 March 2008 11 November 2003 8 June 1976 Date of last election 5 July 2007 14 July 2008 9 October 2009 9 October 2009
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DIRECTORS INTEREST IN SHARES The number of shares held, directly and indirectly, in the Company as at 30 June 2010 by each director is listed below Director Robert William Livingston Robert William Livingston II Jeffrey Stewart Bland Michael Grenville Gray Peter Kevin Poli Roger Gaimster Langdale BOARD COMMITTEES The Board has established a Nominating Committee, a Remuneration Committee, a Strategic Vision Committee and an Audit Committee to facilitate the discharge of certain of its responsibilities.
their knowledge of the Company, contribution during discussions and willingness to keep up to date with developments in business and legislation. It periodically engages external consultants to help in this evaluation process. The Nominating Committee periodically reviews the existing attributes and competencies of the Board in order to determine the desired expertise or experience required to strengthen or supplement the Board. This assists the Nominating Committee in identifying and nominating suitable candidates for appointment to the Board. When the need for a new Director is identified, the Nominating Committee will make recommendations to the Board regarding the identification and selection of suitable candidates based on the desired qualifications, skill sets, competencies and experience, which are required to supplement the Boards existing attributes. If need be, the Nominating Committee may seek assistance from external search consultants for the selection of potential candidates. Directors and Management may also put forward names of potential candidates, together with their curriculum vitae, for consideration. The Nominating Committee, after completing its assessment, would then meet with the short-listed candidates to assess their suitability, before submitting the appropriate recommendations to the Board for approval. REMUNERATION COMMITTEE (Code of Corporate Governance Principles 7, 8 & 9) Jeffrey Stewart Bland (Chairman) Roger Gaimster Langdale Robert William Livingston The Remuneration Committee (RC) whose terms of reference are approved by the Board is comprised of two independent directors and a non-executive director. It meets at least twice a year. The role of the Committee is to review and make recommendations to the Board on the framework of remuneration packages and policies applicable to the Chief Executive Officer (CEO) and the directors. The RC also reviews the remuneration of senior management.
Number of Shares 27,428,180 95,000 1,000 1,000 54,000 25,000
NOMINATING COMMITTEE (Code of Corporate Governance Principles 4 & 5) Roger Gaimster Langdale Robert William Livingston Michael Grenville Gray (Chairman)
The Nominating Committee whose terms of reference are approved by the Board is comprised of two independent directors and one non-executive director. It meets at least once a year. The role of the Committee is to make recommendations to the Board on all Board appointments and on the composition of executive and independent directors of the Board. It is also charged with the responsibility of re-nominating directors who are retiring by rotation as well as determining annually whether or not a director is independent. It assesses the effectiveness of the Board as a whole and the contribution of each individual director to the effectiveness of the Board. It proposes objective performance criteria to evaluate the Boards performance. Such criteria include directors attendance at meetings,
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In reviewing and determining the remuneration packages of the CEO, the Executive Directors and the Groups senior executives, the RC considers the executives responsibilities, skills, expertise and contribution to the Groups performance and if the remuneration packages are competitive and sufficient to ensure that the Group is able to attract and retain executive talent. In line with Guideline 8.4 of the Code of Corporate Governance which encourages Long-term Incentive Schemes, the RC currently administers the Groups Limited Performance Incentive Plan which was approved by Shareholders at the EGM held on 14 July 2008 with the objective of attracting and retaining key employees of the Group whose contributions are essential to the long-term growth and profitability of the Group. The RC regularly utilizes external expert advice and data to assist in the evaluation of its compensation recommendations. None of the RC members or Directors is involved in deliberations in respect of any remuneration, compensation or any form of benefit to be granted to him or someone related to him. No Independent and non-Executive Directors have Service Agreements with the Group. They are paid Directors fees, which are determined by the Board based on the effort, time spent and responsibilities of the Directors. The Directors fees are subject to approval by the Shareholders at each AGM. The schedule of annual fees for Independent and non-executive Directors is as follows: Board member: $17,500 Chairman of the Board: additional $11,000 Member of the Audit Committee: $8,000 Chairman of the Audit Committee: additional $10,000 Member of other Committees: $3,000 Chairman of other Committees: additional $4,000 The Independent and non-Executive Directors decided to take a 10% reduction in the schedule of annual Directors fees during the financial year in line with the 10% cut in salary which Executive Directors instituted for themselves more than one year ago. The tables below show the remuneration bands of the Directors and the top six senior executives of the Group who are not directors as well as the approximate percentage breakdown of the remuneration. Remuneration of Directors Remuneration Band & Name of Director $500,000 to $750,000 Robert William Livingston II $250,000 to $499,000 Peter Kevin Poli Below $250,000 Robert William Livingston Jeffrey Stewart Bland Michael Grenville Gray Roger Gaimster Langdale
(1)
Base/Fixed Incentive Salary (1) Plan
Directors Benefits-inFees kind
Total
71%
13%
16%
100%
83%
7%
10%
100%
100% 100% 100% 100%
100% 100% 100% 100%
Inclusive of Central Provident Fund contributions and other Fixed monthly payments.
Remuneration of Top Six Senior Executives (who are not Directors) Remuneration Band & Name of Key Executive $250,000 to $499,000 Neil B McCurdy Below $250,000 William Garland Finney (2) Wong Yung Pine Ler Ching Chua Mohidin Pitchai Rowther Barry Donald Wilson-Smith
(1) (2)
Base/Fixed Incentive Salary (1) Plan
Directors Benefits-inFees kind
Total
92%
8%
100%
90% 92% 100% 100% 88%
8% -
10% 12%
100% 100% 100% 100% 100%
Inclusive of Central Provident Fund contributions and other Fixed monthly payments. Mr. Finney joined as a full time employee on 1 November 2009 and as such his remuneration is for eight months.
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STRATEGIC VISION COMMITTEE Jeffrey Stewart Bland Robert William Livingston Robert William Livingston II (Chairman) With respect to the Groups audit, the Audit Committee reviews the following: the scope of the independent auditors audit plan, the cost-effectiveness of the independent audit, the independent auditors reports and the significant financial reporting issues and judgements to assess the integrity of the Groups financial statements. The Committee has full access to and the cooperation of management to enable it to properly discharge its responsibilities. The Audit Committee has full discretion to invite any Director or executive officer to attend its meetings and has access to other outside resources to enable it to complete its duties. In performing its functions, the Audit Committee also reviews the assistance given by the Groups managers to the independent auditors. The internal and the external auditors also have unrestricted access to the Audit Committee. The Committee has reviewed the non-audit services provided by the external auditors and these services, in its opinion, would not affect the independence of the external auditors. The Committee recommends their re-appointment. INTERNAL CONTROL (Code of Corporate Governance Principle 12) The Board with the assistance of the Audit Committee ensures that the Group maintains an adequate system of internal controls to safeguard shareholders investments and the Groups assets. The internal controls provide reasonable but not absolute assurance that the Group will not be adversely affected by any event that could be reasonably foreseen as it strives to achieve its business objectives. Reviews and tests of the internal control procedures and systems are carried out by the internal auditor. The Board is thus satisfied with the adequacy of the Groups internal controls. INTERNAL AUDIT FUNCTION (Code of Corporate Governance Principle 13) During the year, Management recommended to the Board that the internal audit function be outsourced to an external organization for a variety of reasons. As a result, the Audit Committee conducted an exhaustive search process and selected such an independent firm prior to the end of the fiscal year. The internal audit firm reports to the Chairman of the Audit Committee and has unrestricted, direct access to the Audit Committee. The
The Strategic Vision Committee whose terms of reference are approved by the Board is comprised of one non-executive director, one independent director and one executive director. It meets at least once a year. The role of the Committee is to provide the Board with an objective and innovative view of the future of the boating industry and a comprehensive understanding of the global market opportunities available to the Company. The Committee draws from the experience of management in market research, product development, production, quality assurance, finance and customer service along with its own independent evaluation of market dynamics, trend analysis, public relations, economic and environmental factors in carrying out its duties and responsibilities. AUDIT COMMITTEE (Code of Corporate Governance Principle 11; Listing Manual Rule 1207(6)(b)) Michael Grenville Gray Roger Gaimster Langdale Jeffrey Stewart Bland (Chairman)
The Audit Committee comprises three independent directors who are appropriately qualified to discharge their responsibilities and functions under the terms of reference approved by the Board. It meets at least four times a year. The Committee reviews the effectiveness of the Groups material internal controls including financial and operational controls, and risk management. It receives reports from the management, the internal and the external auditors and follows up on outstanding matters contained in those reports where appropriate. It reviews the Groups interim and annual announcements and financial statements before they are submitted to the Board for approval. It reviews the Groups compliance with the Listing Manual and Code of Corporate Governance including interested person transactions. It also recommends the appointment of the external auditors and reviews their independence and their fees.
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Audit Committee reviews and approves the annual internal audit plan as well as reviews the results of the regular audits. The Board is satisfied with the adequacy of the internal audit function and is confident it has an appropriate standing within the Group and is independent of the activities it audits. COMMUNICATION WITH SHAREHOLDERS (Code of Corporate Governance Principles 14 & 15) The Company makes all necessary disclosures to the public via SGXNET. The Company also maintains a comprehensive website accessible to the public which describes the Companys products and independent dealers, among other items, and includes an investor relations tab to assist shareholders. Shareholders of the Company receive the Annual Reports and notices of Annual General Meetings (AGMs) which are also advertised in the newspapers at least 14 days prior to the AGMs. The Board encourages shareholders participation at the AGMs and periodically communicates with shareholders through the course of the financial year. Members of the Board and chairmen of the Board committees are present to answer queries raised at the meetings. DEALING IN SECURITIES (Listing Manual Rule 1207(18)) The Company has adopted and complied with the section on dealings in securities in the Best Practices Guide issued by SGX-ST. Directors and senior executives of the Group are advised not to deal in the Companys shares on short-term considerations or when they are in possession of unpublished material price-sensitive information. They are also reminded regularly not to deal in the Companys shares during the period commencing one month before the announcement of the Groups interim and annual results and ending on the date of announcement of those results. And such reminders include a computer generated email sent to all Directors and Senior executives on a quarterly basis. Directors and Senior executives are required to report to the Company secretary whenever they deal in the Companys shares. The Company secretary assists the Audit Committee and the Board in monitoring such share transactions and making the necessary announcements. Directors and Senior executives are also reminded to be mindful of the law on insider trading and to ensure that their dealings in securities do not contravene the laws on insider trading as determined by the Securities and Futures Act, the Companies Act and other appropriate regulatory authorities. INTERESTED PERSON TRANSACTIONS (Listing Manual Rule 907 & 1207 (16)) There were no interested person transactions during the year. MATERIAL CONTRACTS (Listing Manual Rule 1207(8)) No material contracts of the Company or its subsidiaries involving the interests of the Chief Executive Officer or any Director or controlling shareholders existed at the end of the financial year or have been entered into since the end of the previous financial year. In addition, no Director or a related company with a Director has received a benefit from any contract entered into by the Group since the end of the previous financial year.
RISK MANAGEMENT With the help of an external consultant, the Group has designed an enterprise risk management (ERM) framework to monitor, manage and build awareness within the Group of the various risks that it is exposed to. The Board also reviews the Groups business and operational activities to identify areas of significant business risk as well as appropriate measures to control and mitigate these risks within the Groups policies and business strategies. The Audit Committee has also requested that the new independent external firm retained to perform the Groups internal audit function also update the Groups Enterprise Risk Assessment Process and create a risk register to be used by the Audit Committee and the external firm to monitor the manner in which the Group manages such risks. The previous risk assessment of the Groups operations is also being updated by the new internal audit firm. The objective of the risk assessment is to identify and assess risks which include key financial, operational, strategic and regulatory risks. The Audit Committee is regularly updated on the Groups risk management program.
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DIRECTORS REPORT
We are pleased to submit this annual report to the members of the Company together with the audited financial statements for the financial year ended 30 June 2010. DIRECTORS The directors in office at the date of this report are as follows: Robert William Livingston Robert William Livingston II Jeffrey Stewart Bland Peter Kevin Poli Roger Gaimster Langdale Michael Grenville Gray DIRECTORS INTERESTS According to the register kept by the Company for the purposes of Section 164 of the Singapore Companies Act, Chapter 50 (the Act), particulars of interests of directors who held office at the end of the financial year (including those held by their spouses and infant children) in shares, debentures, warrants and share options in the Company and in related corporations (other than wholly-owned subsidiaries) are as follows: Holdings at beginning of year The Company Ordinary shares Robert William Livingston * Robert William Livingston II Jeffrey Stewart Bland + Michael Grenville Gray Peter Kevin Poli Roger Gaimster Langdale Reggie Thein (resigned on 9 October 2009) 27,428,180 2,000 1,000 1,000 1,000 25,000 4,000 27,428,180 95,000 1,000 1,000 54,000 25,000 Holdings at end of year By virtue of his substantial interest in the share capital of the Company, Robert William Livingston is also deemed to have interest in the shares held by the Company in its subsidiaries at the beginning and at the end of the financial year. Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares, debentures, warrants or share options of the Company, or of related corporations, either at the beginning of the financial year, or at the end of the financial year. There was no change in any of the above mentioned interests in the Company between the end of the financial year and 21 July 2010. Except for shares granted under the Performance Incentive Plan, neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. Except for short-term employee benefits received and as disclosed in the accompanying financial statements, since the end of the last financial year, no director has received or become entitled to receive, a benefit by reason of a contract made by the Company or a related corporation with the director, or with a firm of which he is a member, or with a company in which he has a substantial financial interest. SHARE OPTIONS During the financial year, there were (i) (ii) no options granted by the Company to any person to take up unissued shares in the Company; and no shares issued by virtue of any exercise of option to take up unissued shares of the Company.
As at the end of the financial year, there were no unissued shares of the Company under option.
* This includes 26,250,000 (2009: 26,250,000) shares held beneficially by Merlion, LP, of which Robert William Livingston is a director and owns 100% of its voting shares with his wife, Mary Isabella Livingston. + The 1,000 shares are held in trust by Robert William Livingston.
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DIRECTORS REPORT
PERFORMANCE INCENTIVE PLAN Grand Banks Yachts Limiteds Performance Incentive Plan (the Plan) was approved and adopted by its members at an Extraordinary General Meeting of the Company held on 14 July 2008. The Plan is based on the principle of pay for performance and is designed to enable the Company to reward, retain and motivate employees whose contributions are essential to the well-being and prosperity of the Group and to give recognition to outstanding employees of the Group who have contributed to the growth of the Group. The Companys Board of Directors has authorised and appointed its Remuneration Committee, which is comprised of two independent directors and one non-executive director, to administer the Plan. The Plan shall continue in force, at the discretion of the Remuneration Committee, subject to a maximum of ten years commencing 14 July 2008. Any awards made to participants prior to such expiry or termination will continue to remain valid. Size of the Plan The total number of new shares which may be allotted and issued to the participants shall not exceed 12% of the total number of issued shares of the Company. Participants of the Plan The following persons shall be eligible to participate in the Plan: Group employees who have attained the age of 21 years, hold such rank as may be designated by the Remuneration Committee and where terms of employment are deemed acceptable to the Remuneration Committee. So far, the Remuneration Committee has kept participants to a minimum. Grant of Shares In accordance with the requirements of the SGX Listing Manual, specific shareholder approval must be sought to grant awards to one participant in the Plan who is an associate of a controlling shareholder of the Company. As an associate of a controlling shareholder, the total number of shares which may be allotted and issued to this participant shall not exceed 10% of the total number of shares available under the Plan. Share awards granted and vested, during the financial year, and share awards outstanding at the end of the financial year, under the Plan, are as follows: Date of grant 1 July 2009 000 2 October 2009 15 October 2009
(1)
Performance shares granted 000 535(1) 800

(2)
Performance shares vested 000 (219) (219)
30 June 2010 000 316 800 1,116
1,335
These shares have been earned and will vest in two tranches on 2 October 2010 and 2 October 2011, subject to the fulfilment of time-based service condition. These shares have not been earned. The number of shares that can ultimately be earned will depend on the achievement of the performance targets set and ranges from 0 to 800,000 shares. The shares, when earned, will vest on 30 June 2012 subject to the fulfilment of timebased service condition and performance conditions.
(2)
AUDIT COMMITTEE The members of the Audit Committee during the year and at the date of this report are as follows: Michael Grenville Gray Roger Gaimster Langdale Jeffrey Stewart Bland (Chairman, Independent director) (Independent director) (Independent director) (Appointed on 20 May 2010)
The Audit Committee performs the functions specified by section 201B of the Companies Act, the SGX Listing Manual and the Code of Corporate Governance. The Audit Committee held four meetings since the last directors report. In performing its functions, the Audit Committee met with the Companys external and internal auditors to discuss the scope of their work, the results of their examination and evaluation of the Companys internal accounting control system.
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DIRECTORS REPORT
The Audit Committee also reviewed the following: assistance provided by the Companys officers to the internal and external auditors; quarterly financial information and annual financial statements of the Group and the Company prior to their submission to the directors of the Company for adoption; and interested person transactions (as defined in Chapter 9 of the SGX Listing Manual).
STATEMENT BY DIRECTORS
In our opinion: (a) the financial statements set out on pages 22 to 47 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 30 June 2010 and the results, changes in equity and cash flows of the Group for the year ended on that date in accordance with the provisions of the Singapore Companies Act, Chapter 50 and Singapore Financial Reporting Standards; and at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.
The Audit Committee has full access to the management and is given the resources required for it to discharge its functions. It has full authority and the discretion to invite any director or executive officer to attend its meetings. The Audit Committee also recommends the appointment of the external auditors and reviews the level of audit and non-audit fees. The Audit Committee is satisfied with the independence and objectivity of the external auditors and has recommended to the Board of Directors that the auditors, KPMG LLP, be nominated for re-appointment as auditors at the forthcoming Annual General Meeting of the Company.
(b)
The Board of Directors has, on the date of this statement, authorised these financial statements for issue. On behalf of the Board of Directors
AUDITORS The auditors, KPMG LLP, have indicated their willingness to accept re-appointment. On behalf of the Board of Directors
Robert William Livingston Director
Robert William Livingston II Director 9 September 2010
Robert William Livingston Director
Robert William Livingston II Director 9 September 2010
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INDEPENDENT AUDITORS REPORT

Members of the Company Grand Banks Yachts Limited We have audited the accompanying financial statements of Grand Banks Yachts Limited (the Company) and its subsidiaries (the Group), which comprise the statements of financial position of the Group and the Company as at 30 June 2010, the income statement, statement of comprehensive income, statement of changes in equity and cash flow statement of the Group for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 22 to 47. MANAGEMENTS 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, Chapter 50 (the Act) and Singapore Financial Reporting Standards. This responsibility includes: (a) devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors 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 entitys 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 entitys 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 consolidated financial statements of the Group and the statement of financial position of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards to give a true and fair view of the state of affairs of the Group and of the Company as at 30 June 2010 and the results, changes in equity and cash flows of the Group for the year ended on that date; and the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.
(b) (c)
(b)
AUDITORS RESPONSIBILITY Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. KPMG LLP Public Accountants and Certified Public Accountants Singapore 9 September 2010
Page 17
STATEMENTS OF FINANCIAL POSITION

As at 30 June 2010
Group Note Non-current assets Property, plant and equipment Subsidiaries Intangible assets Deferred tax assets 2010 $000 2009 $000
Company 2010 2009 $000 $000 Current liabilities Trade and other payables Provision for warranty claims Current tax payable
Group Note 2010 $000 8,054 1,648 283 9,985 2009 $000 12,484 2,669 370 15,523
Company 2010 2009 $000 $000 259 1 260 304 5 309
3 4 5 6
16,503 224 2,717 19,444
18,343 273 2,139 20,755
19,000 19,000
19,000 19,000
13 14
Current assets Inventories Trade and other receivables Prepayments Current tax recoverable Debt securities held-fortrading Cash and cash equivalents Asset classified as heldfor-sale Total assets
7 9 10
22,820 1,067 729 1,111 24,754 50,481 50,481 69,925
20,154 2,482 678 1,080 1,089 34,600 60,083 95 60,178 80,933
124 1 817 7,019 7,961 7,961 26,961
2 13 789 6,681 7,485 7,485 26,485
Non-current liability Other payables Total liabilities Capital and reserves Share capital Share-based compensation reserve Foreign currency translation reserve Accumulated profits Total equity Total equity and liabilities
13
424 10,409
373 15,896
260
309
16 17 18
23,681 101 (19,073) 54,807 59,516 69,925
23,583 (20,876) 62,330 65,037 80,933
23,681 101 2,919 26,701 26,961
23,583 2,593 26,176 26,485
11 12
15
The accompanying notes form an integral part of these financial statements.

Page 18
CONSOLIDATED INCOME STATEMENT

Year ended 30 June 2010
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Note
Year ended 30/6/2010 $000 29,230 (28,452) 778 (4,725) (4,284) 186 (8,045) 67 (7,978) 455 (7,523)
Period from 1/4/2008 to 30/6/2009 $000 92,598 (77,514) 15,084 (7,663) (8,063) (1,067) (7,191) 3,901 (3,290) (4,999) (2,492) (245) (7,736) (11) (7,747) Loss for the year/period Other comprehensive income Translation differences relating to financial statements of foreign subsidiaries Other comprehensive income for the year/ period, net of income tax Total comprehensive income for the year/ period
Year ended 30/6/2010 $000 (7,523)
Period from 1/4/2008 to 30/6/2009 $000 (7,747)
Revenue Cost of sales Gross profit Selling and marketing expenses Administrative expenses Other operating income/(expenses), net Corporate restructuring costs, net - retrenchment benefits - gain on disposal of a manufacturing facility Loss from operations Other non-operating income/(expense), net Finance costs Loss before taxation Income tax credit/(expense) Loss for the year/period
19
1,803 1,803 (5,720)
(2,363) (2,363) (10,110)

20
21 21 23
Earnings per share (cents) - Basic - Diluted
24 (7.85) (7.85)
Restated (8.09) (8.09)

Page 19
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Group
Share capital $000
Share-based compensation reserve $000
Foreign currency translation reserve $000 (18,513)
Accumulated profits $000 71,797
Total $000 76,867
At 1 April 2008 Total comprehensive income for the period Loss for the period Other comprehensive income Translation differences relating to financial statements of foreign subsidiaries Total other comprehensive income Total comprehensive income for the period Transactions with owners, recorded directly in equity Final dividend paid in respect of 31 March 2008 of 1.8 cents per share one-tier tax exempt At 30 June 2009 At 1 July 2009 Total comprehensive income for the year Loss for the year Other comprehensive income Translation differences relating to financial statements of foreign subsidiaries Total other comprehensive income Total comprehensive income for the year Transactions with owners, recorded directly in equity Equity-settled performance shares At 30 June 2010
23,583
(7,747)
(7,747)
(2,363) (2,363) (2,363)
(7,747)
(2,363) (2,363) (10,110)
23,583 23,583
(20,876) (20,876)
(1,720) 62,330 62,330
(1,720) 65,037 65,037
(7,523)
(7,523)
1,803 1,803 1,803
(7,523)
1,803 1,803 (5,720)
98 23,681
101 101
(19,073)
54,807
199 59,516

Page 20
CONSOLIDATED CASH FLOW STATEMENT

Group Period from Year ended 1/4/2008 to 30/6/2010 30/6/2009 $000 $000 Operating activities Loss before taxation Adjustments for:Depreciation of property, plant and equipment Amortisation of intangible assets (Reversal of)/Impairment losses on property, plant and equipment Gain on disposal of property, plant and equipment Property, plant and equipment written off Interest expense Interest income Provision for warranty claims Fair valuation loss on forward contracts Fair valuation (gain)/loss on debt securities held-fortrading Equity-settled share-based compensation Changes in working capital: (Increase)/Decrease in inventories Decrease in trade and other receivables (Increase)/Decrease in prepayments Decrease in trade and other payables Net cash used in operations Net income taxes refunded/(paid) Warranty claims paid Cash flows from operating activities Investing activities Interest received Proceeds from disposal of property, plant and equipment Development expenditure Purchase of property, plant and equipment Cash flows from investing activities Financing activities Dividend paid Interest paid Cash flows from investing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of year/period Effect of exchange rate changes on balances held in foreign currency Cash and cash equivalents at end of year/period (Note 12)
Group Period from Year ended 1/4/2008 to 30/6/2010 30/6/2009 $000 $000
(7,978) 3,962 59 (7) (62) 13 (240) 376 (22) 101 (3,798) (1,760) 1,508 (35) (4,553) (8,638) 994 (1,457) (9,101)
(7,736) 4,888 76 282 (3,995) 98 245 (502) 2,626 1,066 12 (2,940) 5,495 1,647 427 (5,065) (436) (1,295) (2,686) (4,417)
240 165 (1,405) (1,000)
502 6,344 (1) (3,770) 3,075
(10,101) 34,600 255 24,754
(1,720) (245) (1,965) (3,307) 38,437 (530) 34,600

Page 21
NOTES TO THE FINANCIAL STATEMENTS

These notes form an integral part of the financial statements. The financial statements were authorised for issue by the Board of Directors on 9 September 2010. 1 DOMICILE AND ACTIVITIES Grand Banks Yachts Limited (the Company) is incorporated in the Republic of Singapore and has its registered office at 541 Orchard Road #18-01 Liat Towers Singapore 238881. The principal activities of the Company are those of an investment holding company with significant subsidiaries in the business of manufacturing and selling luxury yachts worldwide. See Note 4 to the financial statements for additional information on the subsidiaries. The consolidated financial statements relate to the Company and its subsidiaries (referred to as the Group). 2 2.1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of preparation The financial statements have been prepared in accordance with Singapore Financial Reporting Standards (FRS). The financial statements have been prepared on the historical cost basis except for certain financial assets and financial liabilities which are measured at fair value. All financial information has been rounded to the nearest thousand, unless otherwise stated. The accounting policies used by the Group have been applied consistently to all periods presented in these financial statements. 2.2 Significant accounting judgements and estimates The preparation of the financial statements in conformity with FRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. In particular, information about significant areas of critical judgements and estimation uncertainty are described in the following notes: Critical judgements a) Determination of functional currency The Group measures foreign currency transactions in the respective functional currencies of the Company and its subsidiaries. In determining the functional currencies of the entities in the Group, judgement is required to determine the currency that mainly influences sales prices for goods and services and of the country whose competitive forces and regulation mainly determines the sales prices of its goods and services. The functional currencies of the entities in the Group are determined mainly based on managements assessment of the economic environment in which the entities operate, the entitys process of determining sales prices and the currency that mainly influences labour, materials and other costs of providing goods or services. b) Review for indicators of impairment for non-financial assets The Group assessed whether there were indicators of impairment for all non-financial assets except for inventories and deferred tax assets at each reporting date. In performing its review, the Group considered the latest available management budgets, long term economic indicators and industry outlooks and sustainability, market competition, underlying business fundamentals and market perception of the corporate brand. The review requires significant assumptions particularly given the uncertainty regarding the timing of economic recoveries in the regions where the Group sells its yachts.
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2 2.2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) Significant accounting judgements and estimates (Contd) Key sources of estimation uncertainty a) b) c) d) e) f) g) 2.3 Note 2.6 and 3 estimation of useful lives of property, plant and equipment Note 2.9 and 3 estimation of recoverable amounts of non-financial assets grouped in cash-generating units Note 2.12 and 14 measurement for provision for warranty claims Note 2.14 recognition of revenue using percentage of completion method Note 2.15 and 6 recognition of deferred tax assets Note 7 measurement of allowance for inventories obsolescence Note 31 measurement of provision for legal claims (b) (ii) Comparative information has been re-presented so that it also is in conformity with the revised standard. Since the change in accounting policy only impacts presentation, there is no impact on earnings per share. Financial instruments: Disclosures The Group applies the amendments to FRS 107 Financial Instruments: Disclosures, which became effective for annual periods beginning on or after 1 January 2009. As a result, the Group discloses: (a) how the fair value of its financial instruments are measured using the three-level hierarchy and provides additional disclosures about the relative reliability of the fair value measurements; and the maximum amount of issued financial guarantees in the earliest time period for which the guarantees could be called upon in the contractual maturity analysis. Previously, the Group disclosed the maximum amount of issued financial guarantees in the contractual maturity analysis only if the Group assessed that it is probable that the guarantee would be called upon.
Changes in accounting policy With effect from 1 July 2009, the Group adopted the following new or amended FRS which are relevant to the Groups operations: FRS 1 (revised 2008) Amendments to FRS 107 FRS 108 Presentation of Financial Statements Financial Instruments Disclosures Improving Disclosures about Financial instruments Operating Segments (iii)
FRS 107 does not require comparative information to be restated and therefore, the contractual maturity analysis for the comparative period has not been represented. Since the change in accounting policy only impacts presentation and disclosure aspects, there is no impact on earnings per share. Determination and presentation of operating segments From 1 July 2009 the Group determines and presents operating segments based on the information that is provided to the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO), who are the Groups chief operating decision maker (CODM). This change in accounting policy is due to the adoption of FRS 108 Operating Segments. Previously, operating segments were determined and presented in accordance with FRS 14 Segment Reporting. The new accounting policy in respect of segment operating disclosures is presented as follows:
(i)
Presentation of financial statements The Group applies revised FRS 1 Presentation of Financial Statements (2008), which became effective for annual periods beginning on or after 1 January 2009. As a result, the Group presents in the consolidated statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the consolidated statement of comprehensive income.
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2 2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) Changes in accounting policy (Contd) An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Groups other components. An operating segments operating results are reviewed regularly by the CODM to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. Segment results that are reported to the CODM include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and intangible assets other than goodwill. 2.4 Consolidation Business combination
Accounting for subsidiaries, associates and joint ventures by the Company Investments in subsidiaries are stated in the Companys statement of financial position at cost less impairment losses. 2.5 Foreign currencies Functional and presentation currency The financial statements of the Group are presented in Singapore dollars (SGD) which is also the Companys functional currency. The financial statements of the Company and its subsidiaries are measured in respective functional currencies determined by management based on the judgemental factors discussed in 2.2. Foreign currency transactions Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date on which the fair value was determined. Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of monetary items that in substance form part of the Groups net investment in a foreign operation (see below). Foreign operations The assets and liabilities of foreign operations are translated to Singapore dollars at exchange rates at the reporting date. The income and expenses of foreign operations are translated to Singapore dollars at exchange rates at the dates of the transactions. Goodwill and fair value adjustments arising on the acquisition of a foreign operation on or after 1 January 2005 are treated as assets and liabilities of the foreign operation and translated at the closing rate. For acquisitions prior to 1 January 2005, the exchange rates at the date of acquisitions were used.
Business combinations are accounted for under the purchase method. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Subsidiaries Subsidiaries are companies controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of a company so as to obtain benefits from its activities. In assessing control, potential voting rights that are presently exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed where necessary to align them with the policies adopted by the Group. Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.
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2 2.5 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) Foreign currencies (Contd) Foreign currency differences are recognised in other comprehensive income. When a foreign operation is disposed of, in part or in full, the relevant amount in the foreign currency translation reserve is transferred to profit or loss as part of the profit or loss on disposal. When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and are presented within equity in the foreign currency translation reserve. 2.6 Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group, and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. 2.7 The estimated useful lives are as follows: Buildings on leasehold land Freehold residential buildings Leasehold land Plant and machinery Furniture, fixtures and equipment Toolings and moulds Motor vehicles and workboats 22 - 28 years 50 years Lease period of 30 years 10 years 3 to 5 years 4 to 8 years 5 to 10 years
Assets under construction are not depreciated. Depreciation commences when the assets are ready for use. Depreciation methods, useful lives and residual values are reviewed, and adjusted as appropriate, at each reporting date. Intangible assets Research and development Development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditure is capitalised only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources to complete development and to use or sell the asset. The expenditure capitalised includes the cost of materials, direct labour and overhead costs that are directly attributable to preparing the asset for its intended use. Other development expenditure is recognised in profit or loss as incurred. Capitalised development expenditure is stated at cost less accumulated amortisation and impairment losses. Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful life of approximately 6 years. Trade marks Trade marks with finite useful life are stated at cost less accumulated amortisation and impairment losses. Trade marks are amortised in profit or loss on a straight-line basis over their estimated useful life of 20 years.
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2 2.8 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) Financial instruments Non-derivative financial instruments Non-derivative financial instruments comprise investments in debt securities, trade and other receivables, cash and cash equivalents, and trade and other payables. A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Groups contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial asset to another party without retaining control or transfers substantially all the risks and rewards of the asset. Financial liabilities are derecognised if the Groups obligations specified in the contract expire or are discharged or cancelled. Purchases and sales of financial assets are accounted for at trade date, that is, the date that the Group commits itself to purchase or sell the asset. Non-derivative financial assets
Non-derivative financial liabilities Financial liabilities (including liabilities designated at fair value through profit or loss) are recognised initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. The Companys non-derivative financial liabilities are trade and other payables. Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method. Derivative financial instruments Derivatives are not used for trading purposes but rather are periodically entered into by the Group to hedge its foreign currency exposure. Derivatives are recognised initially at fair value; attributable transaction costs are recognised in profit or loss when incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are recognised in profit or loss. Impairment of financial assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its current fair value.
Non-derivative financial instruments that are not at fair value through profit or loss are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, non-derivative financial instruments are measured as described below. Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses. Loans and receivables comprise trade and other receivables and amounts due from related parties. Cash and cash equivalents comprise cash balances and bank deposits. For the purposes of the cash flow statement, cash and cash equivalents exclude short-term deposits which are pledged to the bank as security and cannot be withdrawn on demand.
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2 2.8 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) Financial instruments (Contd) Significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in profit or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised in profit or loss. Held-for-trading Financial instruments held-for-trading are classified as current assets and are stated at fair value, with any resultant gain or loss recognised in profit or loss. The fair value of financial instruments classified as held-for-trading is determined as the quoted bid price at the balance sheet date. 2.9 Impairment non-financial assets The carrying amounts of the Groups non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the assets recoverable amounts are estimated. An impairment loss is recognised if the carrying amount of an asset or its cashgenerating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that are largely independent from other assets and groups. Impairment losses are recognised in profit or loss unless it reverses a previous revaluation, credited to other comprehensive income, in which case it is charged to other comprehensive income. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax 2.10 discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit. Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Inventories Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the first-in first-out principle, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and work-in-progress, cost includes an appropriate share of production overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
2.11
Construction contracts The accounting policy for contract revenue is set out in Note 2.14. Construction contracts are measured at cost plus profit recognised to date less progress billings and recognised losses. Costs include all expenditure related directly to the construction of a specific yacht and an allocation of fixed and variable overheads incurred in the contract activities based on normal operating capacity. Construction contracts are presented either as unbilled receivables on contract work-in-progress or deferred income on contract work-in-progress. Unbilled receivables on contract work-in-progress represent the gross unbilled amount expected to be collected from customers for contract work performed to date. Whereas, deferred income on contract work-in-progress represents payments received from customers which exceed the income recognised for contract work performed to date.
Page 27

2 2.12 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) Provisions A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Provision for warranty claims A provision for warranty claims is recognised when each boat is sold. The provision is based on historical warranty data and a weighting of all possible outcomes against their associated probabilities. Claims, when incurred, are charged against this provision account. 2.13
as an employee benefit expense on a straight-line basis, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards. 2.14 Revenue recognition Construction contracts When the outcome of a construction contract can be estimated reliably, contract revenue and expenses are recognised in profit or loss by reference to the stage of completion of the contract activity at the balance sheet date. The stage of completion is measured by reference to the hours incurred to date and the estimated total hours for each contract. When the outcome of a construction contract cannot be estimated reliably, contract costs are recognised as an expense in the period in which they are incurred. When it is probable that total contract costs will exceed total revenue, the expected loss is recognised as an expense immediately in profit or loss. Sale of stock boats Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer. Revenue excludes goods and services taxes and other sales taxes and is arrived at after deduction of trade discounts. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods. Interest income Interest income from bank deposits is accrued on a time-apportioned basis. 2.15 Income tax Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to items recognised directly in equity or in other comprehensive income. Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Employee benefits Defined contribution plans Obligations for contributions to defined contribution plans are recognised as an expense in profit or loss as incurred. Other long-term employee benefits The Groups net obligation in respect of long-term employee benefits other than pension plans is the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any related assets is deducted. Share-based compensation transactions Awards of ordinary shares under Grand Banks Yachts Limiteds Performance Incentive Plan are accounted for as an equity-settled share-based payment determined in accordance with FRS 102. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value of the employees services is amortised and recognised
Page 28

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) 2.15 Income tax (Contd) 2.19 2.18 Finance costs Interest expense and similar charges are expensed in profit or loss in the period in which they are incurred. New standards and interpretations not yet adopted New standards, amendments to standards and interpretations that are not yet effective for the year ended 30 June 2010 have not been applied in preparing these financial statements, such as the Amendments to FRS 102 Sharebased Payment Group cash-settled share-based payment transactions and Improvements to FRSs 2009. The amendments to FRS 102 on group cash-settled share-based payment transactions will become effective for the Groups financial statements for the year ending 30 June 2011. The amendments require an entity receiving goods or services in either an equity-settled or a cash-settle share-based payment transaction to account for the transaction in its separate or individual financial statements. The application of these amendments is not expected to have any significant impact on the Groups financial statements. Improvements to FRSs 2009 will become effective for the Groups financial statements for the year ending 30 June 2011 for amendments relating to: FRS 1 Presentation of financial statements FRS 7 Statement of cash flows FRS 17 Leases FRS 36 Impairment of assets FRS 39 Financial Instruments: Recognition and measurement FRS 105 Non-current assets held for sale and discontinued operations FRS 108 Operating segments Improvements to FRSs 2009 contain amendments to numerous accounting standards that result in accounting changes for presentation, recognition or measurement and disclosure purposes. The Group is in the process of assessing the impact of these amendments.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. 2.16 Operating leases Where the Group has the use of assets under operating leases, payments made under the leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease payments made. Contingent rentals are charged to profit or loss in the accounting period in which they are incurred. 2.17 Other non-operating expense/income Other non-operating expense/income comprises foreign exchange differences, gain on disposal of plant and equipment, operating lease income, interest income on bank deposits, changes in the fair value of financial assets at fair value through profit or loss and others.
Page 29

3 PROPERTY, PLANT AND EqUIPMENT Freehold residential buildings $000 Furniture, fixtures and equipment $000 Motor vehicles and work Assets under boats construction $000 $000
Buildings on leasehold land Group Cost At 1 April 2008 Additions Disposals Write-off Transfer Translation adjustment Transfer to asset held-for-sale At 30 June 2009 Additions
Leasehold land $000
Plant and machinery $000
Toolings and moulds $000
Total $000
$000
14,508 116 (3,146) (544) 10,934 45 495 11,474
180 (9) (171)
2,568 (121) 2,447 111 2,558
5,285 639 (476) (218) (228) 5,002 5 (48) 223 5,182
5,560 298 (465) (575) (194) 4,624 316 (62) (201) 178 4,855
16,592 358 (1,402) 2,092 (788) 16,852 458 861 684 18,855
893 (313) (45) (11) 524 (175) 9 358
54 2,359 (2,092) (7) 314 581 (861) 5 39
45,640 3,770 (4,400) (2,240) (1,902) (171) 40,697 1,405 (285) (201) 1,705 43,321
Disposals Write-off Transfer Translation adjustment At 30 June 2010
Page 30

3 PROPERTY, PLANT AND EqUIPMENT (CONTD) Freehold residential buildings $000 Furniture, fixtures and equipment $000 Motor vehicles and work Assets under boats construction $000 $000
Group Accumulated depreciation and impairment losses At 1 April 2008 Charge for the period Impairment losses Disposals Write-off Translation adjustment Transfer to asset held-for-sale At 30 June 2009 Charge for the year Disposals Write-off Translation adjustment At 30 June 2010 Carrying amount At 1 April 2008 At 30 June 2009 At 30 June 2010
Buildings on leasehold land $000
Leasehold land $000
Plant and machinery $000
Toolings and moulds $000
Total $000
4,905 599 275 (1,063) (200) 4,516 390 217 5,123
68 4 7 (4) (75)
1,093 104 (52) 1,145 82 54 1,281
3,707 416 (396) (218) (154) 3,355 305 (48) 159 3,771
3,755 710 (325) (477) (131) 3,532 526 (62) (188) 147 3,955
8,137 2,961 (1,402) (327) 9,369 2,625 389 12,383
663 94 (267) (45) (8) 437 34 (174) 8 305
22,328 4,888 282 (2,051) (2,142) (876) (75) 22,354 3,962 (284) (188) 974 26,818
9,603 6,418 6,351
112
1,475 1,302 1,277
1,578 1,647 1,411
1,805 1,092 900
8,455 7,483 6,472
230 87 53
54 314 39
23,312 18,343 16,503
Page 31

3 PROPERTY, PLANT AND EqUIPMENT (CONTD) Assets under construction Assets under construction mainly relate to expenditure incurred for retooling existing moulds and constructing of new moulds. Asset classified as held-for-sale The freehold residential property of the Malaysian subsidiary, with a net carrying value of $95,000, was reclassified as an asset held-for-sale during the financial period ended 30 June 2009. The sale of the asset was completed during the financial year ended 30 June 2010. 4 SUBSIDIARIES Company 2010 2009 $000 $000 Unquoted ordinary shares, at cost Impairment losses
Name of subsidiaries
Principal activities
Place of Effective equity incorporation/ interest held business by the Company 2010 2009 % % Washington, United States of America (US) Washington, United States of America (US) 100 100
* Grand Banks This subsidiary carries out Yachts Ltd and the Groups sales activities its subsidiary: through independently owned dealers around the world. * Grand Banks This subsidiary was Yachts Sales incorporated during the LLC financial year. It trades in new and used boats and is involved in the brokerage business. # Ammarine Yacht Sales Pte Ltd @ Grand Banks Yachts Sdn. Bhd. * Grand Banks Yachts Australia Pty Ltd
* @ + #
100
NA
Unquoted preference shares, at cost
6,290 (100) 6,190 12,810 19,000
6,290 (100) 6,190 12,810 19,000
This subsidiary trades in new and used boats. It is currently under members voluntary liquidation. This subsidiary holds the manufacturing plant of the Group which employs 412 people at 30 June 2010. This subsidiary carries out the Groups sales activities in Australia.
Singapore
100
100
Malaysia
100
100
Details of the subsidiaries, all of which are wholly-owned, are as follows: Name of subsidiaries Place of Effective equity incorporation/ interest held business by the Company 2010 2009 % % Singapore 100 100
Australia
100
100
Principal activities
+ GB Yachts Pte. This subsidiary discontinued Ltd. and its its yacht manufacturing subsidiary: operations in Singapore and disposed of the plant in June 2009. This subsidiary provides certain management services to the Malaysian, United States and Australian subsidiaries.
Page 32
Not required to be audited by law of country of incorporation. Audited by other member firm of KPMG International. Audited by KPMG Singapore. Includes $12,810,000 in respect of Non-Cumulative Redeemable Convertible Preference Shares. Not audited for the financial year ended 30 June 2010.

5 INTANGIBLE ASSETS Club memberships $000 Group Cost At 1 April 2008 Addition Translation adjustment At 30 June 2009 Translation adjustment At 30 June 2010 Accumulated amortisation At 1 April 2008 Charge for the period Translation adjustment At 30 June 2009 Charge for the year Translation adjustment At 30 June 2010 Carrying amount At 1 April 2008 At 30 June 2009 At 30 June 2010 Trade marks $000 Development costs $000 Total $000 6 DEFERRED TAX ASSETS Movements in deferred tax assets during the period/year are as follows: (Charged)/ At credited to Effect of At 1 April profit or loss reduction Translation 30 June 2008 (Note 23) in tax rate adjustment 2009 $000 $000 $000 $000 $000 Deferred tax assets Property, plant and equipment Unabsorbed wear and tear allowances Provisions Accrued operating expenses, allowances for slow moving inventories and others (163) 653 630 73 331 (198) 1 (11) (36) (18) (89) 948 403
68 68 68
241 241 241
385 1 (38) 348 16 364
694 1 (38) 657 16 673
68 68 68
241 241 241
76 (1) 75 59 6 140 385 273 224
309 76 (1) 384 59 6 449 385 273 224
998 2,118
(79) 127
(3) (13)
(39) (93)
877 2,139
At 1 July 2009 $000 Deferred tax assets Property, plant and equipment Unabsorbed wear and tear allowances Provisions Accrued operating expenses, allowances for slow moving inventories and others (88) 948 403
(Charged)/ credited to profit or loss Translation (Note 23) adjustment $000 $000
At 30 June 2010 $000
347 358 (97)
8 54 15
267 1,360 321
Development costs relate to prototype knowledge with regards to the construction of new yachts with improved designs, hence reducing the chances of rework due to discovery of design errors during production. The development costs capitalised are amortised over the estimated useful life of 6 years. The Group holds trade marks for Grand Banks, Eastbay and Aleutian on a worldwide basis.
876 2,139
(141) 467
34 111
769 2,717
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6 DEFERRED TAX ASSETS (CONTD) Deferred tax liabilities and assets are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same tax authority. Deferred tax assets have been recognised in respect of these items because management is of the view that future taxable profit based on profit forecasts approved by management covering a four-year period will be available against which the Group can utilise the benefits. 7 INVENTORIES Group 2010 2009 $000 $000 9,596 3,047 5,003 17,646 8 5,174 22,820 11,310 4,438 3,744 19,492 662 20,154 9 Aggregate amount of costs incurred and recognised profits (less recognised losses) to date Progress billings Presented as:Unbilled receivables on contract work-inprogress Deferred income on contract work-in-progress Advance payments received from customers before the related construction work is performed TRADE AND OTHER RECEIVABLES Group 2010 2009 $000 $000 Trade receivables Refundable deposits Interest receivable Sundry receivables Loans and receivables 831 212 24 1,067 2,219 238 2 23 2,482 Company 2010 2009 $000 $000 24 100 124 2 2 8 CONTRACTUAL CONSTRUCTION WORK-IN-PROGRESS Note 2010 Group 2009 $000
$000
8,311 (4,258) 4,053
830 (168) 662
Note Statement of financial position: Raw materials and components Work-in-progress Finished products
7 13
5,174 (1,121) 4,053
662 662
13
1,306
2,071
Unbilled receivables on contract work-in-progress Income statement: - Allowance for obsolescence in raw materials and components - Allowance for obsolescence in finished products
436 (183)
538 183
Usage of raw materials, changes in work-in-progress and changes in finished goods are main components of the cost of sales shown in profit or loss. Cost of sales also includes an allowance for inventory obsolescence which was provided to be consistent with the view that assets should not be carried in excess of amounts expected to be realised from their sale or use. Estimates of net realisable value are based on the most reliable evidence available at the balance sheet date. These estimates take into consideration market demand, competition, selling price and cost directly relating to events occurring after the end of the financial year to the extent that such events confirm conditions existing at the end of the financial year.
Page 34

9 TRADE AND OTHER RECEIVABLES (CONTD) Trade and other receivables were denominated in the following currencies at the balance sheet date: Group 2010 2009 $000 $000 United States Dollar Singapore Dollar Malaysia Ringgit Others 826 186 26 29 1,067 2,306 101 75 2,482 Company 2010 2009 $000 $000 124 124 2 2 5.25% (2009: 5.25%) p.a. USD HSBC bond due 12 December 2012 5.60% (2009: 5.60%) p.a. SGD OCBC bond due 6 September 2019 3.75% (2009: 3.75%) p.a. SGD government bond due 1 September 2016 11 DEBT SECURITIES HELD-FOR-TRADING Group 2010 2009 $000 $000 Company 2010 2009 $000 $000
294
300
490
452
490
452
327 1,111
337 1,089
327 817
337 789
The Group has a policy in place to ship finished products to customers only upon payment. In addition, secured letters of credit and commitment letters issued by financial institutions, with whom the Group has entered into certain arrangements, are acceptable forms of payment. The trade receivables at each balance sheet date are current and not impaired as the receivables represent outstanding amounts due from the dealers on secured letters of credit or bank commitment letters. 10 PREPAYMENTS Group 2010 2009 $000 $000 Payments in advance for purchases of raw materials and components Prepaid operating expenses Company 2010 2009 $000 $000
12
CASH AND CASH EqUIVALENTS Group 2010 2009 $000 $000 Cash and bank balances Short-term deposits 1,851 22,903 24,754 3,243 31,357 34,600 Company 2010 2009 $000 $000 134 6,885 7,019 407 6,274 6,681
Cash and cash equivalents were denominated in the following currencies at the balance sheet date: Group 2010 2009 $000 $000 United States Dollar Singapore Dollar Malaysia Ringgit Euro Others 7,791 14,499 1,523 152 789 24,754 11,930 15,446 6,130 1,074 20 34,600 Company 2010 2009 $000 $000 16 7,003 7,019 16 6,665 6,681
344 385 729
110 568 678
1 1
13 13
Cash at banks earns interest at floating rates based on the daily bank deposits rates. Short-term deposits are placed for varying periods of between 7 to 92 days and earn interest at rates generally higher than those earned by cash and bank balances.
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13 TRADE AND OTHER PAYABLES Group 2010 2009 $000 $000 Payable within one year: Trade payables Non-trade amount due to a subsidiary Accrued retirement benefits payable to a director Refundable deposit Accrued operating expenses Deferred income on contract work-in-progress 8 Advance payments received from customers before the related construction work is performed 8 Payable after one year: Accrued retirement benefits payable to a director Financial liabilities carried at amortised cost 1,956 212 15 3,444 5,627 1,121 3,342 500 29 6,542 10,413 Company 2010 2009 $000 $000 259 259 3 301 304 Beginning of the year/period Provision made during the year/period Claims expended during the year/period Translation adjustment End of the year/period 14 Trade payables are non-interest bearing and normally settled on 45 days terms. Amount due to a subsidiary is unsecured, non-interest bearing and repayable on demand within the next one year. PROVISION FOR WARRANTY CLAIMS Group 2010 2009 $000 $000 2,669 376 (1,457) 60 1,648 2,803 2,626 (2,686) (74) 2,669
1,306 8,054
2,071 12,484
259
304 15
The provision for warranty is set up to cover the estimated liability which may arise during the warranty period in respect of warranty claims for sale of completed yachts. The provision is based on historical warranty data. The amounts at the end of the year are expected to be utilised over the next 12 months. ASSET CLASSIFIED AS HELD-FOR-SALE The freehold residential apartment of the Malaysian subsidiary, which was reclassified as asset held-for-sale as at 30 June 2009, was sold during the financial year. 16 SHARE CAPITAL 2010 Number of shares 000 $000 Fully paid with no par value: Beginning of the year/ period Issue of shares End of the year/ period 95,581 219 95,800 23,583 98 23,681 2009 Number of shares 000 $000 95,581 95,581 23,583 23,583
424 6,051
373 10,786
259
304
Financial liabilities which are carried at amortised costs are denominated in the following currencies at the balance sheet date: United States Dollar Singapore Dollar Malaysia Ringgit Others 2,578 1,740 1,632 101 6,051 4,977 3,237 2,377 195 10,786 259 259 304 304
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16 SHARE CAPITAL (CONTD) During the financial year ended 30 June 2010, 219,000 shares were issued under the Grand Banks Yachts Limiteds Performance Incentive Plan (2009: Nil). A holder of ordinary shares is entitled to receive dividends as declared from time to time and is entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the Companys residual assets. Capital management The Group considers capital to be its share capital. The Groups policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. There were no changes in the Groups approach to capital management during the year. The Company and its subsidiaries are not subject to externally imposed capital requirements. 17 SHARE-BASED COMPENSATION RESERVE The share-based compensation reserve comprises the cumulative value of services received from employees recorded on the grant date of equity-settled sharebased compensation. The expense for services received is recognised over the performance period. Shares are allotted out of the share-based compensation reserve to the entitled employees when the share awards vest. 18 FOREIGN CURRENCY TRANSLATION RESERVE The foreign currency translation reserve comprises foreign exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from the functional currency of the holding company. Revenue from construction contracts Revenue from boat brokerage Sales of stock boats Sales of parts 19 REVENUE Revenue represents revenue from construction contracts recognised based on the percentage of completion method, proceeds from the sale of stock boats as well as sale of parts. The amount of each significant category of revenue recognised during the year is as follows: Group Period from Year ended 1/4/2008 to 30/6/2010 30/6/2009 $000 $000 25,002 95 3,851 282 29,230 87,164 4,499 935 92,598
Transactions within the Group have been excluded in arriving at revenue of the Group.
20
CORPORATE RESTRUCTURING COSTS, NET During the financial period ended 30 June 2009, the corporate restructuring plans were executed to realign the Groups organisation structure and operating costs with prevailing demand for the Groups yachts. This had resulted in a total reduction in the workforce from 1,244 to 466. Retrenchment benefits of $7,191,000 were incurred and expensed in the previous year. The restructuring exercise was completed with the discontinuation of the Groups yacht manufacturing operation in Singapore and disposal of its leasehold property, manufacturing plant and other facilities in Singapore with a gain on disposal of $3,901,000.
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21 LOSS BEFORE TAXATION The following items have been included in arriving at loss before taxation: Note Group Period from Year ended 1/4/2008 to 30/6/2010 30/6/2009 $000 $000 Other non-operating income/ (expense), net Foreign exchange loss Fair valuation loss on forward foreign exchange contracts Interest income - bank - others Rental income Fair valuation gain/(loss) on debt securities held-for-trading Gain on disposal of property, plant and equipment Others Group Period from Year ended 1/4/2008 to 30/6/2010 30/6/2009 $000 $000
Note Expenses/losses Wages, salaries and other employee benefits Contributions to defined contribution plans, included in wages and salaries related costs Equity-settled share-based compensation Property, plant and equipment written off Depreciation of property, plant and equipment (Reversal of)/Impairment losses on property, plant and equipment Development costs Amortisation of intangible assets Interest expense Auditors remuneration - auditors of the Company - other auditors Non-audit fees paid to: - auditors of the Company Operating lease expenses Provision for warranty claims
(412) 124 116 108 22 62 47 67
(2,099) (1,066) 317 185 71 (12) 112 (2,492)
11,261
28,265
903 101 13 3 3 5 3,962 (7) 73 59 76 28 77 526 376
1,999 98 4,888 282 287 76 245 99 35 47 802 2,626 22
SHARE-BASED COMPENSATION The Groups Remuneration Committee which administers Grand Banks Yachts Limited Performance Incentive Plan (the Plan) makes award grants of ordinary shares (Performance Shares) in the capital of the Group to eligible participants. The participants ability to receive the Performance Shares granted is conditional upon two distinct criteria: performance and time-based service vesting conditions. The performance targets are set based on corporate objectives established for a performance period not to exceed three years with the final number of Performance Shares earned dependent on the level of achievement of those targets. Additionally, the vesting periods for all Performance Shares shall not exceed three years. A participant only receives the Performance Shares granted after the shares are earned and vested.
14
Page 38

22 SHARE-BASED COMPENSATION (CONTD) The movements of the number of shares for the Plan during the financial year were as follows: 2 October 2009 000 15 October 2009 000 The fair value of the shares is estimated using a Monte-Carlo simulation methodology at the grant dates of the Performance Share awards with the following assumptions outlined in the table below: 2 October 2009 S$0.450 15 October 2009 S$0.426 S$0.560 *
Date of grant Number of shares Outstanding at 1 July 2009 Granted Vested Forfeited Outstanding and unvested at 30 June 2010
Date of grant Fair value at measurement date
535(1) (219) 316
800(2) 800 Period from 1/4/2008 to 30/6/2009 $ 000
Assumptions under Monte-Carlo Model in respect of Grand Banks Yachts Limited Share price at grant date Expected Volatility Dividend Yield Average risk-free interest rates Expected achievement factor S$0.45 35.40% 4.44% 0.62% NA S$0.48 35.40% 4.44% 0.62% 50% - 92% *
Year ended 30/6/2010 $ 000 Fair value of awards vested during the year/period
(1)
* The range in fair value and achievement factor can be attributed to the two different performance criteria currently being used, one of which is tied to the return of the Companys shares and the other based on an operating metric.
98
These shares have been earned and will vest in two tranches on 2 October 2010 and 2 October 2011, subject to the fulfilment of time-based service condition. These shares have not been earned. The number of shares that can ultimately be earned will depend on the achievement of the performance targets set and ranges from 0 to 800,000 shares. The shares, when earned, will vest on 30 June 2012, subject to the fulfilment of timebased service condition and performance conditions.
The expected volatility is based on the historical volatility over the most recent period that is close to the expected life of the performance shares. During the year, the Group recognised a charge of $101,000 (2009: Nil) to the income statement based on the fair value of the performance shares at the grant date being expensed over the vesting period.
(2)
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23 INCOME TAX (CREDIT)/EXPENSE Group Period from Year ended 1/4/2008 to 30/6/2010 30/6/2009 $000 $000 Current tax (credit)/expense Current year Overprovided in respect of prior years Deferred tax credit Origination and reversal of temporary differences Benefits from previously unrecognised tax losses Effect of reduction in tax rate (note 6) Underprovided in respect of prior years 79 (104) (25) (518) 51 (467) 37 (455) 143 (18) 125 (143) (35) 13 51 (114) 11 Group Period from Year ended 1/4/2008 to 30/6/2010 30/6/2009 $000 $000 Reconciliation of effective tax rate Loss before taxation Tax at the domestic rates applicable to profits in the countries where the Group operates Adjustments:Retrenchment benefits incurred on a discontinued operation at a geographical segment not deductible Other non-deductible expenses Capital gain on disposal of property not taxable Other non-taxable income Partial tax exemption Effect of reduction in tax rate Derecognition of deferred tax assets previously recognised Utilisation of deferred tax assets previously not recognised Benefits from previously unrecognised tax losses Tax losses allowable for carry forward not recognized Capital allowances not recognised Others (Over)/Under provided in prior years - current tax - deferred tax Withholding tax (7,978) (1,867) (7,736) (1,452)
178 (27) (21) (115) 1,383 12 18 (104) 51 37 (455)
1,067 283 (490) (26) (21) 13 180 (35) 459 (18) 51 11
Withholding tax
[ 2010 ANNUAL REPORT ] G R A N D B A N K S YA C H T S
The above reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction.
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23 INCOME TAX (CREDIT)/EXPENSE (CONTD) Unrecognised deferred tax assets The Malaysian subsidiary has unutilised reinvestment allowances and tax losses of approximately $4,400,000 and $4,160,000 respectively (2009: Nil) which are available for carry forward and set-off against future taxable profits. The Singapore subsidiaries have unutilised tax losses of approximately $4,172,000 (2009: $2,700,000) which are available for carry forward and set-off against future taxable profits subject to agreement with the Comptroller of Income Tax and compliance with Section 37 of the Income Tax Act, Chapter 134. Deferred tax assets have not been recognised in respect of the above items as it is uncertain whether future taxable profit derived from the subsidiaries concerned will be sufficient to utilise the benefits. 24 EARNINGS PER SHARE Group Period from Year ended 1/4/2008 to 30/6/2010 30/6/2009 Basic earnings per share is based on: Net loss for the year/period ($000) Number of shares outstanding at beginning of the year/period (000) Effect of issue of bonus performance shares under Performance Incentive Plan (000) Weighted average number of ordinary shares at the end of the year/period (000) (7,523) (7,747) Restated 95,581 219 95,800 95,581 219 95,800 Short-term employee benefits Contribution to defined contribution plans Performance incentive plan Retirement benefits 25 There are 216,259 ordinary shares that are potentially issuable to participating employees under the Grand Banks Yachts Limiteds Performance Incentive Plan (note 22). These potential ordinary shares are anti-dilutive as their conversion to ordinary shares would decrease, though insignificantly, the loss per share of the Group. As such, the calculation of diluted earnings per share does not assume conversion of these potential ordinary shares. Accordingly, for disclosure purpose, diluted earnings per share is the same as basic earnings per share. DIVIDENDS No dividend is proposed for the financial year ended 30 June 2010 (2009:Nil). 26 SIGNIFICANT RELATED PARTY TRANSACTIONS Definition of related parties For the purpose of these financial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making the financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities. The transactions with key management personnel are only related to their compensation. The total compensation of the Groups two (2009: three) key management personnel is as follows: Group Year ended 30/6/2010 $000 922 104 61 1,087 Period from 1/4/2008 to 30/6/2009 $000 1,744 182 500 2,426
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27 COMMITMENTS Operating lease commitments The Group has commitments for future minimum lease payments under noncancellable operating leases as follows: Group 30/6/2010 30/6/2009 $000 $000 Payable: Within 1 year After 1 year but within 5 years After 5 years 161 40 201 364 305 669 Credit risk Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Evaluations are performed on all new dealers and when other circumstances require such analysis. Goods are generally sold on cash terms and occasionally arranged to be settled by secured letters of credit and bank commitment letters issued by reputable banks in countries where the customers are based. Cash and fixed deposits are placed with banks and financial institutions which are regulated. There are no concentrations of credit risk. The maximum exposure to credit risk is the carrying amount of each financial asset on the balance sheet. Liquidity risk The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Groups operations and to mitigate the effects of fluctuations in cash flows. Due to changes in credit environment, the Group periodically finances the purchase of yachts by dealers. The following are the expected contractual undiscounted cash outflows of financial liabilities, including interest payments and excluding the impact of netting agreements: Carrying amount Contractual cash flows $000 Cash flows Within Within More than 1 year 2 to 5 years 5 years $000 $000 $000
The Group has non-cancellable operating lease for its Singapore office. The lease is for a period of 2 years with renewal options. The lease does not include contingent rentals and are not subject to any annual revision in rent.
28
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES Overview Exposure to credit, liquidity, interest rate and currency risks arises in the normal course of the Groups business. The Group has established its general risk management philosophy to create an acceptable balance between the cost of risks occurring and the cost of managing the risks. Management continually monitors the Groups risks to ensure that an appropriate balance between risk and control is achieved and to reflect changes in market conditions. The Audit Committee oversees how management monitors compliance with the Groups risk management and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.
$000 Group 2010 Trade and other payables 2009 Trade and other payables 10,786 6,051
6,051
5,627
424
10,786
10,413
373
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28 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD) Carrying amount Contractual cash flows $000 Effective Note interest rate % Group 2010 Financial assets Debt securities held-for-trading Short-term deposits 2009 Financial assets Debt securities held-for-trading Short-term deposits 304 304 304 11 12 2.93 4.67 0.04 4.50 1,089 31,357 32,446 1,089 31,357 32,446 11 12 2.93 4.67 0.10 5.25 1,111 22,903 24,014 1,111 22,903 24,014 Total $000 Within 1 year $000
$000 Company 2010 Trade and other payables 2009 Trade and other payables Interest rate risk 259
Cash flows Within Within More than 1 year 2 to 5 years 5 years $000 $000 $000
259
259
Company 2010 Financial assets Debt securities held-for-trading Short-term deposits 2009 Financial assets Debt securities held-for-trading Short-term deposits 11 12 2.93 4.02 0.04 3.25 789 6,274 7,063 789 6,274 7,063 11 12 2.93 4.02 0.10 0.25 817 6,885 7,702 817 6,885 7,702
The Groups exposure to market risk for changes in interest rates relates primarily to interest-earning financial assets. (i) Effective interest rates and repricing analysis In respect of interest-earning financial assets, the following table indicates their effective interest rates at the balance sheet date and the periods in which they reprice.
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28 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD) (ii) Sensitivity analysis Profit or loss 100 bp 100 bp increase decrease $000 $000 2 (2) A 1% weakening of SGD and RM (2009: SGD and RM) against the USD would have had the equal but opposite effect to the amounts shown above, on the basis that all other variables remain constant. Fair values of financial assets and financial liabilities Debt securities held-for-trading Fair value is based on quoted market prices at the balance sheet date without any deduction for transaction costs. The Group has categorised debt securities held-fortrading as Level 2 of the fair value hierarchy. The different levels are defined as follows: 2 (2) Level 1 Fair values are measured based on quoted prices (unadjusted) from active markets for identical financial instruments. Level 2 Fair values are measured using inputs, other than those used for Level 1, that are observable for the financial instruments either directly (prices) or indirectly (derived from prices) Level 3 Fair values are measured using inputs which are not based on observable market data (unobservable input). Derivatives The fair value of forward exchange contracts is based on their listed market price, if available. If a listed market price is not available, fair value is estimated by discounting the difference between the contractual forward price and the current forward price for the residual period to maturity of the contract using a risk-free interest rate. Other financial assets and liabilities The carrying amounts of financial assets and liabilities with a maturity of less than one year (including trade and other receivables, cash and cash equivalents, and trade and other payables) are assumed to approximate their fair values because of the short period to maturity. All other financial assets and liabilities are discounted to determine their fair values.
Group 30 June 2010 Variable rate instruments 30 June 2009 Variable rate instruments Foreign currency risk
The foreign currency exposure arising from transactions denominated in foreign currencies is mainly in USD.
Sensitivity analysis A 1% strengthening of SGD and RM against USD (2009: SGD and RM against USD) at the reporting date would increase (decrease) profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and excludes the impact of any hedging. Profit from operations $000 At 30 June 2010 - USD At 31 June 2009 - USD (170) (550)
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29 OPERATING SEGMENTS An operating segment is a distinguishable component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Groups other components. All operating segments operating results are reviewed and evaluated regularly by the chief operating decision makers in deciding the allocation of resources and in evaluating business risk as well as performance. The Group, which engages predominantly in luxury yachts business, has reportable operating segments as described below. Reporting format Manufacturing & wholesale segment comprising manufacturing and distribution of yachts to dealers in world-wide wholesale market. Retail segment comprising the sale of yachts to retail customers. Reconciliation includes unallocated head office revenue and expenses and consolidation adjustments which are not directly attributable to a particular segment above. In addition to the operating segment reporting, the Group closely tracks the geographical regions in which it sells its yachts. Transfer pricing and allocation basis Inter-segment pricing is determined on mutually agreed terms. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items in the balance sheets comprise mainly tax assets and tax liabilities. Segment capital expenditure is the total cost incurred during the year to acquire segment assets that are expected to be used for more than one period.
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29 OPERATING SEGMENTS (CONTD)
Reconciliation Manufacturing & Wholesale $000 Year ended 30/6/2010 Revenue & expenses External revenues Inter-segment revenue Total revenue Results
Retail
Corporate
Elimination
Consolidated
$000 $000 $000 $000 $000 $000 $000 $000 $000 Period from Period from Period from Period from Period from Year 01/4/2008 Year 01/4/2008 Year 01/4/2008 Year 01/4/2008 01/4/2008 ended to ended to ended to ended to to 30/6/2009 30/6/2010 30/6/2009 30/6/2010 30/6/2009 30/6/2010 30/6/2009 30/6/2010 30/6/2009 92,598 92,598 2,852 2,852 660 660 (3,632) (3,632) 29,230 29,230 92,598 92,598
26,378 2,972 29,350
EBITDA* Depreciation and amortisation Interest income Interest expense Operating loss before tax Income tax credit / (expense) Segment loss
(1,161) (3,917) 174 (4,904) 499 (4,405)
(2) (4,964) 418 (245) (4,793) (269) (5,062)
(343) 9 (46) (380) (4) (384)
(2,038) (104) 103 (2,039) (54) (2,093)
(971) 84 (887) 258 (629)
(655) (46) 46 (655) 14 (641)
(2,056) (2,056) (2,056)
(4,197) (4,021) 240 (7,978) 455 (7,523)
(3,029) (4,964) 502 (245) (7,736) (11) (7,747)
* EBITDA : Earnings Before Interest, Taxation, Depreciation and Amortisation
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29 OPERATING SEGMENTS (CONTD) Geographical segments Geographical segment information is analysed by the principal geographical locations where the Group sells its yachts regardless of where the yachts are manufactured. The principal geographical locations are: Year ended Period from 30/6/2010 1/4/2008 to 30/6/2009 $000 $000 9,364 39,531 10,617 37,523 9,249 15,544 29,230 92,598 31 LEGAL MATTERS The Group is involved in both claims and legal proceedings. Using the latest information available, the Group accrues for its exposure based upon the managements best estimates, made in consultation with legal counsel, of the likely range of exposure stemming from the claims. In the opinion of the management, the Groups litigation or claims, when finally resolved, will not have a material adverse effect on the Groups consolidated financial position. Nevertheless, management continues to monitor both claims and legal proceedings to determine that its estimates are adequate, however, if current cost estimates for the resolution of these claims are later determined to be inadequate, then the results of the Groups operations could be adversely affected.
USA Europe* Others
* comprises mainly Italy, Denmark and Holland.
The Group manufactures yachts and holds its corporate treasury and administrative functions at locations different from the principal geographical locations which it sells its yachts as described above. The non-current assets (primarily the manufacturing facilities of $16,000,000) are substantially located in Malaysia. 30 CONTINGENT LIABILITIES The Company has outstanding corporate guarantees of RM10,000,000 (equivalent to $4,300,000) (2009: RM10,000,000 (equivalent to $4,100,000)) given to banks for facilities granted to the Malaysian subsidiary. The amount of facilities utilised as at 30 June 2010 was $200,000 (2009: $200,000).
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STATISTICS OF SHAREHOLDINGS
As at 27 August 2010 Issued Share Capital Voting Rights Directors Shareholdings As at 21 July 2010 Name of Directors Robert William Livingston Robert William Livingston II Jeffrey Stewart Bland Michael Grenville Gray Peter Kevin Poli Roger Gaimster Langdale
*
: 95,800,250 ordinary shares : 1 vote per ordinary share
Distribution of Shareholdings Size of Shareholdings 1 - 999 1,000 - 10,000 10,001 - 1,000,000 1,000,001 and above Total No of Shares 27,428,180* 95,000 1,000 1,000 54,000 25,000 As at 27 August 2010, approximately 51.6% of the Companys shares were held in the hands of the public. Therefore, the Company has complied with Rule 723 of the Listing Manual of the SGX-ST. Twenty Largest Shareholders No 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. Name No of Shares % Merlion LP 26,250,000 27.40 Morgan Stanley Asia (Singapore) Securities Pte Ltd 13,081,000*** 13.65 Bank of Singapore Nominees Pte Ltd 9,199,687**** 9.60 United Overseas Bank Nominees Pte Ltd 5,242,702 5.47 Tan Joo Hymn 4,526,000 4.72 See Tow Siew Chuan 3,564,000 3.72 Heng Peng Joo 2,703,000 2.82 DBS Nominees Pte Ltd 2,356,500 2.46 Ronald Clayton Filbert or Bernice Bernita Filbert 1,809,707 1.89 OCBC Nominees Singapore Pte Ltd 1,337,500 1.40 Cheng Kian Siong 1,225,000 1.28 Chu Thomas 886,000 0.93 Robert William Livingston or Mary Isabella Livingston 786,680 0.82 UOB Kay Hian Pte Ltd 775,700 0.81 Citibank Nominees Sijgapore Pte Ltd 756,050 0.79 Lee Siew Yuen 575,000 0.60 Macquarie Portfolio Investments Pty Limited 500,000 0.52 Cheong Soh Chin Julie 495,000 0.52 Raffles Nominees (Pte) Ltd 488,000 0.51 Ho Liong Chang Francis 484,000 0.51 TOTAL 77,041,526 80.42 No of Shareholders 196 1,311 323 11 1,841 % 10.65% 71.21% 17.54% 0.60% 100.00% No of Shares 43,943 4,969,383 19,491,828 71,295,096 95,800,250 % 0.04% 5.19% 20.35% 74.42% 100.00%
This includes 26,250,000 shares held beneficially by Merlion, LP, of which Robert William Livingston is a director and holds 100% of its voting shares with his wife, Mary Isabella Livingston.
Substantial Shareholders As at 27 August 2010, shown in Register of Substantial Shareholders Name of Substantial Shareholders Shareholdings registered in the name of the Substantial Shareholders Shareholdings in which the Substantial Shareholders are deemed to have an interest Total Percentage of Issued Shares
Merlion LP 26,250,000 Robert William Livingston 1,178,180 Wassbourne Finance Ltd 11,523,000 Shinetown Limited 7,238,828
0 26,250,000 26,250,000** 27,428,180 0 11,523,000 0 7,238,828
27.40 28.63 12.03 7.56
** Robert William Livingston is a director of Merlion, LP and deemed to have interest in the 26,250,000 shares held by Merlion, LP by virtue of him holding 100% of its voting shares with his wife, Mary Isabella Livingston.
*** Includes 11,523,000 shares held beneficially for Wassbourne Finance Ltd **** Includes 7,238,828 shares held beneficially for Shinetown Limited
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NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Annual General Meeting of the Company will be held at the Pan Pacific Orchard, 10 Claymore Road, Singapore 229540 on Friday, 8 October 2010 at 10.00 am to transact the following businesses: Ordinary Business 1) 2) To receive and consider the Directors Report and Audited Accounts for the year ended 30 June 2010 and the Auditors Report thereon. (Resolution 1) To re-elect Mr Jeffrey Stewart Bland, who retires pursuant to Article 86 of the Articles of Association of the Company and being eligible offers himself for reelection as Director. [see Explanatory Note (1)] (Resolution 2) To re-elect Mr Peter Kevin Poli, who retires pursuant to Article 86 of the Articles of Association of the Company and being eligible offers himself for re-election as Director. (Resolution 3) To re-appoint Mr Roger Gaimster Langdale, as a director pursuant to Section 153(6) of the Companies Act, Cap. 50, to hold office until the next Annual General Meeting of the Company. [see Explanatory Note (2)] (Resolution 4) To re-appoint Mr Robert William Livingston, as a director pursuant to Section 153(6) of the Companies Act, Cap. 50, to hold office until the next Annual General Meeting of the Company. [see Explanatory Note (3)] (Resolution 5) To re-appoint KPMG LLP as Auditors of the Company and to authorise the Directors to fix their remuneration. (Resolution 6) 2. at any time to such persons and upon such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fit; and (b) (notwithstanding the authority conferred by this resolution may have ceased to be in force), issue shares in pursuance of any Instrument made or granted by the Directors while this resolution was in force, the aggregate number of shares to be issued pursuant to this resolution (including shares to be issued in pursuance of Instruments made or granted pursuant to this resolution): (A) by way of renounceable rights issues on a pro-rata basis to shareholders of the Company (Renounceable Rights Issues) shall not exceed 100% of the total number of issued shares, excluding treasury shares, in the capital of the Company (as calculated in accordance with paragraph 3. below); and (B) otherwise than by way of Renounceable Rights Issues (Other Share Issues) does not exceed 50% of the total number of issued shares, excluding treasury shares, in the capital of the Company (as calculated in accordance with paragraph 3. below), of which the aggregate number of shares to be issued other than on a pro-rata basis to shareholders of the Company does not exceed 20% of the total number of issued shares, excluding treasury shares, in the capital of the Company (as calculated in accordance with paragraph 3. below); the Renounceable Rights Issues and Other Share Issues shall not, in aggregate, exceed 100% of the total number of issued shares, excluding treasury shares, in the capital of the Company (as calculated in accordance with paragraph 3. below); (subject to such manner of calculation as may be prescribed by the Singapore Exchange Securities Trading Limited) for the purpose of determining the aggregate number of shares that may be issued under paragraphs 1(A) and 1(B) above, the total number of issued shares, excluding treasury shares, shall be based on the total number of issued shares, excluding treasury shares, in the capital of the Company at the time that this resolution is passed, after adjusting for: (i) new shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the time this resolution is passed; and
provided that: 1.
3)
4)
5)
6)
Special Business 7) 8) To approve payment of Directors fees of $156,756 for the year ended 30 June 2010. (2009: $165,750) (Resolution 7) To consider and, if thought fit, to pass the following resolution as an ordinary resolution, with or without amendments: THAT authority be and is hereby given to the Directors of the Company to: (a) (i) issue shares in the capital of the Company (shares) whether by way of rights, bonus or otherwise; and/or
3.
(ii) make or grant offers, agreements or options (collectively, the (Instruments) that might or would require shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) warrants, debentures or other instruments convertible into shares,
(ii) any subsequent bonus issue, consolidation or subdivision of shares;
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4. in exercising the authority conferred by this resolution, the Company shall comply with the provisions of the Listing Manual of the Singapore Exchange Securities Trading Limited for the time being in force (unless such compliance has been waived by the Singapore Exchange Securities Trading Limited) and the Articles of Association for the time being of the Company; and (unless revoked or varied by the Company in general meeting) the authority conferred by this resolution shall continue in force until the conclusion of 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 the earlier. [see Explanatory Note (4)] (Resolution 8) Explanatory Notes: 1. Mr Jeffrey Stewart Bland, if re-elected, will remain as a member of the Companys Audit, Remuneration and Strategic Vision Committees and will also continue to be the Chairman of the Remuneration and Strategic Vision Committees. He will be considered as an independent director of the Company. Mr Roger Gaimster Langdale, if re-elected, will remain as a member of the Companys Audit, Nominating and Remuneration Committees and will also continue to be the Chairman of the Nominating Committee. He will be considered as an independent director of the Company. Mr Robert William Livingston, if re-elected, will remain as the non-executive Chairman of the Company, and will also continue to be a member of the Companys Nominating, Remuneration and Strategic Vision Committees. He will be considered as a non-independent director of the Company. The ordinary resolution set out in item 8 above, if passed, empowers the Directors from the date of this Annual General Meeting up to the date of the next Annual General Meeting, to issue shares, make or grant instruments convertible into shares and to issue shares pursuant to such instruments, up to a number not exceeding (i) 100% for Renounceable Rights Issues, and (ii) 50% for Other Share Issues of which up to 20% may be issued other than on a pro rata basis to shareholders, and provided that the total number of shares which may be issued pursuant to (i) and (ii) shall not exceed 100% of the issued shares, excluding treasury shares, in the capital of the Company. For determining the aggregate number of shares that may be issued, the total number of issued shares, excluding treasury shares, will be calculated based on the total number of issued shares, excluding treasury shares, in the capital of the Company at the time that this resolution is passed, after adjusting for (a) new shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the time that this resolution is passed, and (b) any subsequent bonus issue, consolidation or subdivision of shares. The authority for 100% Renounceable Rights Issues is proposed pursuant to the SGX news release of 19 February 2009 which introduced further measures to accelerate and facilitate listed issuers fund raising efforts (SGX News Release). 5. Ler Ching Chua Company Secretary Singapore 20 September 2010
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5.
2.
9)
To consider and, if thought fit, to pass the following resolution as an ordinary resolution, with or without amendments: THAT approval be and is hereby given to the Directors of the Company to offer and grant awards (Awards) of fully paid-up ordinary shares in the capital of the Company (Shares) in accordance with the provisions of the Grand Banks Yachts Limited Performance Incentive Plan and to allot and issue such number of fully-paid up Shares pursuant to Awards granted under the Grand Banks Yachts Limited Performance Incentive Plan. [see Explanatory Note (5)] (Resolution 9)
3.
4.
10)
To consider and, if thought fit, to pass the following resolution as an ordinary resolution, with or without amendments: THAT, contingent upon the passing of the Ordinary Resolution 8 above, authority be and is hereby given to the Directors to fix the issue price for the shares which may be issued by way of placement pursuant to the 20% sub-limit for Other Share Issues on a non-pro-rata basis referred to in Resolution 8, at a discount exceeding 10% but not more than 20% of the price as determined in accordance with the Listing Manual of Singapore Exchange Securities Trading Limited. [see Explanatory Note (6)] (Resolution 10)
11)
To transact any other ordinary business.
BY ORDER OF THE BOARD
Pursuant to Section 161(4) of the Companies Act, Chapter 50, the ordinary resolution set out in item 9 above provides the Directors certain flexibility in allotting and issuing fully-paid Shares due from Awards granted pursuant to the Grand Banks Yachts Limited Performance Incentive Plan, provided that the aggregate number of Shares which may be allotted and issued pursuant to the Grand Banks Yachts Performance Incentive Plan shall not exceed 12% of the total number of issued Shares in the capital of the Company from time to time. Approval for the

adoption of the Grand Banks Yachts Performance Incentive Plan was given by the shareholders at an Extraordinary General Meeting of the Company held on 14 July 2008. 6. The ordinary resolution set out in item 10 above, if passed, empowers the Directors to fix the issue price for shares that may be issued by way of placement pursuant to the 20% sub-limit for Other Share Issues on a non-pro-rata basis (referred to in the ordinary resolution in item 8 above) at a discount exceeding 10% but not more than 20% of the price as determined in accordance with the Listing Manual of the Singapore Exchange Securities Trading Limited. This resolution is proposed pursuant to the SGX News Release.
Note: A member of the Company entitled to attend and vote at the above Meeting is entitled to appoint one or more proxies to attend and vote in place of him. A proxy need not be a member of the Company. The instrument appointing a proxy must be deposited at the Companys registered office at 541 Orchard Road, #18-01 Liat Towers, Singapore 238881 not less than 48 hours before the time for holding the Annual General Meeting.
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GRAND BANKS YACHTS LIMITED

(Incorporated in the Republic of Singapore) Company Registration no. 197601189E
IMPORTANT 1. For investors who have used their CPF monies to buy Grand Banks Yachts Limiteds 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 is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them. 3. CPF Investors who wish to attend the Annual General Meeting as OBSERVERS have to submit their requests through their respective Agent banks so that their Agent banks may register with the Company Secretary of Grand Banks Yachts Limited not less than 48 hours before the time set for holding the Annual General Meeting.
PROXY FORM
I/We ________________________ NRIC/Passport/Co. Registration No. __________ of _____________________________________________________________________ being a member/members of GRAND BANKS YACHTS LIMITED hereby appoint NRIC/ Passport No. Proportion of Shareholdings (%)
No. Resolutions Relating To: AS ORDINARY BUSINESS 1 2 3 4 5 6 Directors Report and Audited Accounts for the financial year ended 30 June 2010 Re-election of Mr Jeffrey Stewart Bland as director Re-election of Mr Peter Kevin Poli as director Re-appointment of Mr Roger Gaimster Langdale as director Re-appointment of Mr Robert William Livingston as director Re-appointment of KPMG LLP as auditors of the Company and authority to directors to fix their remuneration Approval of directors' fees Authority to directors to issue shares and to make or grant convertible instruments Authority to directors to grant awards and to allot and issue shares in accordance with the provisions of the Grand Banks Yachts Limited Performance Incentive Plan Approval of share placement discount
For
Against
Name
Address
(i)
(ii)
AS SPECIAL BUSINESS 7 8
as *my/our *proxy/proxies to attend and to vote for *me/us on *my/our behalf, and if necessary, to demand a poll at the Annual General Meeting (AGM) of the Company to be held on Friday, 8 October 2010 at 10.00 a.m. and at any adjournment thereof. *I/We direct *my/our *proxy/proxies to vote for or against the Resolutions to be proposed at the AGM as indicated hereunder. If no specific directions as to voting are given, the *proxy/proxies will vote or abstain from voting at his/their discretion, as *he/they will on any other matter arising at the AGM.
10
* delete as appropriate
Dated this ______________ day of ______________ 2010 Total Number of Shares Held
_________________________________ Signature(s) of Member(s) or Common Seal of Corporate Member IMPORTANT PLEASE READ NOTES OVERLEAF
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Notes: 1 Please insert the total number of shares held by you. If you have shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Cap. 50), you should insert that number. If you have shares registered in your name in the Register of Members of the Company, you should insert that number. If you have shares entered against your name in the Depository Register and shares registered in your name in the Register of Members, you should insert the aggregate number. If no number is inserted, this form of proxy will be deemed to relate to all the shares held by you. A member entitled to attend and vote at a meeting of the Company is entitled to appoint one or more proxies to attend and vote on his behalf. A proxy need not be a member of the Company. The instrument appointing a proxy or proxies must be deposited at the Companys registered office at 541 Orchard Road, #18-01 Liat Towers, Singapore 238881 not less than 48 hours before the time set for the Annual General Meeting. Where a member appoints more than one proxy, he shall specify the proportion of his shareholdings to be represented by each proxy. The instrument appointing a proxy or proxies must be under the hand of the appointer or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed under its common seal or under the hand of its officer or attorney duly authorised. Where an instrument appointing a proxy or proxies is signed on behalf of the appointer by an attorney, the power of attorney or other authority or a notarially certified copy thereof shall be deposited with the instrument of proxy, failing which the instrument may be treated as invalid. Any corporation which is a member may by resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at the Annual General Meeting of the Company. 8 The Company shall be entitled to reject this instrument of proxy if it is incomplete, improperly completed, illegible or where the true intentions of the appointer are not ascertainable from the instructions of the appointer specified in this instrument of proxy. In addition, in the case of members whose shares are entered in the Depository Register, the Company may reject an instrument of proxy lodged if the member, being the appointer, is not shown to have shares entered against his name in the Depository Register as at 48 hours before the time set for holding the Annual General Meeting, as certified by The Central Depository (Pte) Limited to the Company.
4
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Corporate Information
BOARD OF DIRECTORS
NON-EXECUTIVE CHAIRMAN
GB MANAGEMENT TEAM
ROBERT WILLIAM LIVINGSTON II
RETAIL LOCATIONS
GRAND BANKS NORTHWEST
PRODUCTION FACILITY
MALAYSIA
Robert William Livingston

EXECUTIVE
[American, 41]
President & Chief Executive Officer

PETER KEVIN POLI
Robert William Livingston II Peter Kevin Poli

INDEPENDENT
[American, 48]
Jeffrey Stewart Bland Roger Gaimster Langdale Michael Grenville Gray

AUDIT COMMITTEE
Executive Vice President & Chief Financial Officer

WONG YUNG PINE
2288 West Commodore Way Suite #105 Seattle, WA 98199 USA Phone: (206) 352 0118 Fax: (206) 352 0119
GRAND BANKS AUSTRALIA
Grand Banks Yachts Sdn Bhd PLO 488, Jalan Suasa 81707 Pasir Gudang Johor, Malaysia Phone: +60 7251 7488 Fax: +60 7251 7388
[Singaporean, 60]
Chief Engineer
WILLIAM GARLAND FINNEY
Michael Grenville Gray * Roger Gaimster Langdale Jeffrey Stewart Bland

REMUNERATION COMMITTEE
[American, 57]
Vice President, Manufacturing

NEIL MCCURDY
Grand Banks Yachts Australia Pty Ltd Suite 1A, The Boardwalk 1 Rialto Quay Drive Hope Island, QLD 4212 Australia Phone: +61 (0) 755 774 847 Email: samuelc@grandbanks.com
REGISTERED OFFICE
SINGAPORE
541 Orchard Road #18-01 Liat Towers Singapore 238881 Phone: +65 6545 2929 Fax: +65 6733 1527 Email: gbsg@grandbanks.com
Jeffrey Stewart Bland * Roger Gaimster Langdale Robert William Livingston

NOMINATING COMMITTEE
[American, 47]
SALES & MARKETING

CORPORATE SALES & MARKETING
Vice President of Sales & Service
Roger Gaimster Langdale * Robert William Livingston Michael Grenville Gray

STRATEGIC VISION COMMITTEE
COMPANY SECRETARY
Ler Ching Chua
Grand Banks Yachts Ltd 2288 West Commodore Way Suite #200 Seattle, WA 98199 USA Phone: (206) 352 0116 Fax: (206) 352 1711
EAST COAST SERVICE
REGISTRAR & SHARE TRANSFER OFFICE

Boardroom Corporate & Advisory Services Pte Ltd 50 Raffles Place #32-01 Singapore Land Tower Singapore 048623
AUDITORS
KPMG Certified Public Accountants 16 Raffles Quay Hong Leong Building #22-00 Singapore 048581 Partner-in-charge: Ms. Ang Fung Fung
Since the financial year ended 31 March 2006
Jeffrey Stewart Bland * Robert William Livingston Robert William Livingston II
99 Poppasquash Road Bristol, RI 02809 USA Phone: (401) 396 5252 Fax: (401) 396 9525
EUROPEAN SALES/SERVICE
* Denotes Committee Chairman
Port de La Napoule 06210 Mandelieu La Napoule France Mobile: +33 678 780534
Grand Banks Yachts Limited 541 Orchard Road #18-01 Liat Towers Singapore 238881 Company Registration No. 197601189E

GBY Grand Banks Yachts Annual Report 2010

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GBY Grand Banks Yachts Annual Report 2010

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G R AN D B AN K S YAC H TS LIMITED

2010 ANNUAL REPORT

[ 2010 ANNUAL REPORT ]

MotorBoating selects the 41 Heritage EU in their Best of the Year competition

[ PRESIDENT & CEO]

LETTER TO SHAREHOLDERS, CONTINUED

Robert W. Livingston II President & CEO

[ 2010 ANNUAL REPORT ]

G R A N D B A N K S YA C H T S [ 2010 ANNUAL REPORT ]

STATEMENT OF CORPORATE GOVERNANCE

[ 2010 ANNUAL REPORT ]

STATEMENT OF CORPORATE GOVERNANCE

G R A N D B A N K S YA C H T S [ 2010 ANNUAL REPORT ]

STATEMENT OF CORPORATE GOVERNANCE

Number of Shares 27,428,180 95,000 1,000 1,000 54,000 25,000

STATEMENT OF CORPORATE GOVERNANCE

Base/Fixed Incentive Salary (1) Plan

Directors Benefits-inFees kind

100% 100% 100% 100%

100% 100% 100% 100%

Base/Fixed Incentive Salary (1) Plan

Directors Benefits-inFees kind

90% 92% 100% 100% 88%

100% 100% 100% 100% 100%

[ 2010 ANNUAL REPORT ]

STATEMENT OF CORPORATE GOVERNANCE

[ 2010 ANNUAL REPORT ]

STATEMENT OF CORPORATE GOVERNANCE

[ 2010 ANNUAL REPORT ]

[ 2010 ANNUAL REPORT ]

Performance shares granted 000 535(1) 800

Performance shares vested 000 (219) (219)

30 June 2010 000 316 800 1,116

[ 2010 ANNUAL REPORT ]

Robert William Livingston Director

Robert William Livingston II Director 9 September 2010

Robert William Livingston Director

Robert William Livingston II Director 9 September 2010

INDEPENDENT AUDITORS REPORT

[ 2010 ANNUAL REPORT ]

STATEMENTS OF FINANCIAL POSITION

Company 2010 2009 $000 $000 259 1 260 304 5 309

16,503 224 2,717 19,444

18,343 273 2,139 20,755

[ 2010 ANNUAL REPORT ]

22,820 1,067 729 1,111 24,754 50,481 50,481 69,925

20,154 2,482 678 1,080 1,089 34,600 60,083 95 60,178 80,933

124 1 817 7,019 7,961 7,961 26,961

2 13 789 6,681 7,485 7,485 26,485

23,681 101 (19,073) 54,807 59,516 69,925

23,583 (20,876) 62,330 65,037 80,933

23,681 101 2,919 26,701 26,961

23,583 2,593 26,176 26,485

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

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Year ended 30/6/2010 $000 (7,523)

Period from 1/4/2008 to 30/6/2009 $000 (7,747)

1,803 1,803 (5,720)

(2,363) (2,363) (10,110)

Earnings per share (cents) - Basic - Diluted

Restated (8.09) (8.09)

[ 2010 ANNUAL REPORT ]

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