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CONTENTSCORPORATE PROFILE 1 | OUR GLOBAL PRESENCE 8 | JOINT STATEMENT BY CHAIRMAN AND MANAGING DIRECTOR 10 | YEAR IN REVIEW 14 | FINANCIAL HIGHLIGHTS 18 | KEY MILESTONES 22 | BOARD OF DIRECTORS 24 | KEY MANAGEMENT 28 | INVESTOR RELATIONS 30 | GROUP STRUCTURE 31 | CORPORATE INFORMATION 32 | FINANCIAL CONTENTS 33
NO. 1in terms of fl eet size of
crawler cranes
TAT HONG
HOLDINGS LTD
(“TAT HONG”) IS ONE
OF THE WORLD’S
LARGEST CRANE
COMPANIES1:
In the Asia-Pacific region, we are the largest crane company1 with a fleet
size of almost 1,400 crawler, mobile and tower cranes ranging from under 50
tonnes to 1,600 tonnes.
We were established in Singapore in the 1970s as a supplier of cranes and heavy
equipment. In June 2000, we were listed on the Singapore Stock Exchange –
a historical milestone in our corporate history. Within three decades, we have
grown our presence to 26 cities across Australia, China and Asia, with 39 offices
in Australia alone.
Through our Australian subsidiary, Tutt Bryant Group Limited, we have a leading and
active position in three key business areas in the Australian market:
1. Crane hire and heavy haulage;
2. Equipment sale and distribution; and
3. General plant and equipment hire.
In China, Tat Hong has aggressively expanded its presence through various strategic
joint ventures with well-established Chinese companies. We will continue to lead as
the largest tower crane rental group in China2 through M&As and organic growth.
Asia remains as our second growth driver after the Australian market. In this region,
we have successfully branded ourselves as the leading name in the crane rental,
heavy lift and heavy haulage and equipment sales business. We aim to extend
our presence in the region’s offshore and marine industry through continuous
participation in notable infrastructural and resources projects.
Led by a visionary management team with rich experience in the cranes and heavy
equipment industry, Tat Hong has carved a niche for itself in the Asia-Pacific region
particularly in ASEAN countries, Australia and China.
1 Source: International Cranes, IC50 Ranking, June 20112 Source: International Cranes, IC50 Towers Ranking, June 2011
CORPORATE PROFILE
NO. 8in terms of aggregate tonne-metres
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 01
THERE ARE NO GREAT LIMITS TO GROWTH BECAUSE THERE ARE NO LIMITS OF HUMAN INTELLIGENCE, IMAGINATION, AND WONDER. RONALD REAGAN
USA
OUR GLOBAL PRESENCE
Fujian
Guizhou
Chongqing Sichuan
Gansu
Qinghai
Yunnan
Jiangxi Hunan
Hubei
Shaanxi
Shanghai
Zhejiang
Jiangsu
Beijing
Liaoning
Tianjin Hebei
Shandong
Guangdong Guangxi
Inner Mongolia
Ningxia Shanxi
CHINA
Xinjiang
Heilongjiang
Jilin
Henan
Anhui Tibet
Hainan
TAT HONG HOLDINGS LTD ANNUAL REPORT 201208
• Kuala Lumpur
• Jakarta
Bangkok •
AUSTRALIA
EUROPE
PAKISTAN
CHINA
RUSSIA
JAPAN
PHILIPPINES
• PAPUA NEW GUINEA
SOUTH AFRICA
MAURITIUS
• Ho Chi Minh
Beijing •
Guangzhou •
Shanghai •
SINGAPORE •
HONG KONG • TAIWAN
VIETNAMHanoi •
INDONESIA
GUAM
SEYCHELLES
MALDIVES
SRI LANKA
THAILAND
MALAYSIA
INDIA
SOUTH KOREA
BANGLADESH MYANMAR
MIDDLE EAST
• KwinanaPerth •• Redcliffe
Adelaide •Portland •
Karratha •• Port Hedland
• Darwin
• Cairns
• Townsville• Mackay
Dysart • • Gladstone
• Brisbane• Coffs Harbour • Muswellbrook• NewcastleSingleton •
• SydneyWollongong •• Goulburn
• Melbourne• Hallam
Doveton•
•Moolap •
Laverton
TAT HONG’S BUSINESS PRESENCETAT HONG’S BUSINESS ACTIVITIESTAT HONG’S OFFICES
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 09
JOINT STATEMENT BY CHAIRMAN AND MANAGING DIRECTOR
DEAR SHAREHOLDERS,
A year ago, in our joint statement on the performance
for the previous financial year FY2011, we had
shared that although we had a profitable FY2011,
the anticipated year-on-year growth in profitability
for that year was somewhat affected and delayed
by the natural disasters in Queensland, Australia
at the end of 2010 and also the tsunami that hit
Fukushima, Japan at the end of that financial
year. Notwithstanding these disruptions to the
physical operating environment and the further
natural disasters – another flood in New South
Wales, Australia and in Thailand in FY2012, the
Board of Directors of your Company is pleased
that the anticipated recovery back to growth in
profitability has materialised and has delivered a
commendable set of financial results for FY2012.
Tan Chok KianNon-Executive Chairman
Ng San Tiong RolandManaging Director
OUR BUSINESS IS MOVING IN THE RIGHT DIRECTION AND WE INTEND TO RIDE ON THE GROWTH MOMENTUM.
TAT HONG HOLDINGS LTD ANNUAL REPORT 201210
REVENUE GROWTH TO
S$225.0MILLION
CRANE RENTAL
OUR PERFORMANCE
Our focus on improving our fundamentals and business-building
investments in the recent years has generated strong momentum
across our businesses in FY2012 where we witnessed consistent
growth in revenue and operating profit over the last four quarters.
The strength of our FY2012 financial results demonstrates this
momentum:-
• Group revenue grew 23% to S$719.8 million compared to S$584.2
million a year ago.
• Net profit attributable to shareholders surged 63% to S$42.3
million compared to S$26.0 million in FY2011.
• Excluding one-off items, net profit attributable to shareholders
grew 33% to S$51.1 million, up from S$38.3 million a year ago.
• FY2012 EPS of 7.42 Singapore cents was 62.7% higher than
4.56 Singapore cents in FY2011.
• Return on equity in FY2012 was 7.6%, compared to 5.0% the
previous year.
• Cash position remained healthy at S$76.8 million and shareholders’
equity continued to grow, to S$556.4 million. Tat Hong witnessed
broad-based growth across all our business divisions – Distribution,
Crane Rental, General Equipment Rental and Tower Crane
Rental – in FY2012, registering both topline and bottomline growth.
Distribution was the largest contributor to revenue at S$339.2 million,
an increase of 25% from S$272.4 million previously. Growth was largely
driven by strong demand from infrastructural activities in Australia. Sales
of excavators in Indonesia also saw a significant growth.
Revenue contribution from Crane Rental grew 22% to S$225.0 million,
from S$184.9 million in FY2011. Revenue growth for this segment
was largely attributable to the robust rental markets in countries, such
as Singapore, Malaysia, Thailand, Hong Kong, Indonesia and Papua
New Guinea.
The General Equipment Rental division witnessed the largest surge
in revenue with a 39% increase to S$96.9 million, compared to S$69.7
million in the previous year. This resulted from the continued strong
demand in Australia from their rebuilding programmes following the
natural disasters that occurred in 2011.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 11TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 11
The Group’s Tower Crane Rental turned in a 3% increase
in revenue to S$58.7 million, due mainly to an increase in
rental contracts in second-tier cities in China and improved
utilisation rates achieved by Jiangsu ZhengHe Tat Hong
Equipment Rental Co., Ltd (“JZHTH”).
This growth in revenue was amidst a management and
operating environment of having to continue to manage the
China partners in 55% owned JZHTH and in 52.3% owned
Si Chuan Tat Hong Yuan Zheng Machinery Construction
Co., Ltd (“SCTH”). The Group resolved the situation in
4QFY2012 when, (a) it bought out the Chinese party’s
stake in JZHTH, and (b) SCTH disposed its crane assets
through a court-sanctioned public auction that resulted in
SCTH incurring a one-off accounting loss of S$14.8 million
at the Profit Before Tax level although those same operating
crane assets continue post-auction to belong to the Group
under a different China subsidiary.
The management has learnt a valuable lesson in doing
business in China.
Notwithstanding the one-off accounting loss incurred by
SCTH, the Group achieved a Net profit attributable to
shareholders of S$42.3 million compared to S$26.0 million
in the previous financial year.
Overall, we are particularly pleased with the robust revenue
and earnings growth, especially in the second half of FY2012.
The further details of the year’s financial performance and
corporate developments are found in the accompanying
report on the Year in Review.
With all four cylinders firing, we have reason to believe
that we are at the cusp of further growth as we see a
strong pipeline of projects across the Asia-Pacific region.
OUR YEARS OF GREAT OPPORTUNITIES
We believe that this will be a decade of growth for the
Asian economies, and Tat Hong is in the right markets,
at the right time. Over the last few quarters, the demand
for our services across Asia-Pacific countries has been
unprecedented.
In the course of FY2012, we saw the commencement of
large scale infrastructural projects across the Asia-Pacific
region. Australia, for instance, is seeing a barrage of projects
starting up and gathering momentum, most of which will
span the next few years. These include ongoing post-disaster
rebuilding programmes and growth opportunities from the
resource and infrastructural sectors in Western Australia
and Queensland. Additionally, we are also anticipating
more projects from the Northern Territory in the near future.
The Group is also seeing significant demand and excellent
opportunities for major infrastructure and construction
projects presented by Malaysia, Thailand, Indonesia
and Singapore, as these countries undertake transport
and infrastructure development to further build on their
mass rail transportation systems. In Hong Kong, we see
the commencement of projects such as the Hong Kong
Boundary Crossing Facilities, Central – Wan Chai Bypass
and the Guangzhou – Shenzhen – Hong Kong Rail Link,
as well as infrastructural works at Kai Tak Airport. In Papua
New Guinea, through Tat Hong (PNG) Limited, our 50%
joint venture which was formed in early FY2012, we see
firm demand from the many on-going and new oil and gas,
mining and infrastructure projects.
Our strategy in focusing on the second-tier cities in China
– Shenyang, Tianjin, Wuhan, Chongqing, Sichuan and
Guandong – has also paid off as we continue to be involved
in ongoing and new large building and infrastructure projects.
The revival of approval for new nuclear plants in China is
also expected to bode well for the Group.
OUR FUTURE
Looking ahead, we are heartened to say the pipeline of
infrastructure, oil and gas, nuclear and renewable energy,
as well as resource projects continue to be strong. These
are projects across the Asia-Pacific region which would
typically span a number of years, with the added benefit
of predictable, recurring income. Such a favourable
business environment presents us with good prospects
to further grow our business by increasing our fleet size
for our crane rental business.
We expect to maintain our current level of capital
investment to support fleet expansion, and ensure optimal
fleet utilisation to support our growth and achieve better
productivity. This intended fleet expansion is reminiscent
of the time when we capitalised on opportunities after the
JOINT STATEMENT BY CHAIRMAN AND MANAGING DIRECTOR
TAT HONG HOLDINGS LTD ANNUAL REPORT 201212
2007/2008 financial crisis to boost our asset base from
approximately S$840 million to S$1.38 billion, currently.
Our business is moving in the right direction and we intend
to ride on the growth momentum while remaining focused
on our rental business.
While the impact of economic trends and external factors
remain unpredictable, we expect to continue to improve
our performance for the coming year (“FY2013”) as
compared to FY2012. We will continue to place emphasis
on things that we can control. These include improving our
fundamentals, increasing the flexibility of our businesses
to meet ever-changing market conditions, and lowering
our risk profile.
In March 2012, the Group acquired the remaining 50%
interest in Indonesian company PT World Wide Equipment
South East Asia (“PTWWE”) that it did not own, making
it a wholly owned subsidiary. PTWWE operates on the
island of Batam, Indonesia, and is engaged in marine
equipment maintenance and overhaul, steel fabrication
for marine contractors, offshore lifting services, supply of
marine equipment and yard storage for the oil and gas
industry. This marine sector business, with its distinct
competitive advantage of being supported by the Group’s
14.0 hectare sea front land on Batam which the Group
was fortuitous to acquire and develop with a deep-sea
jetty facility in 2012, is expected to significantly add to Tat
Hong’s profitability in the future.
We thus approach FY2013 with optimism of growth
opportunities before us and a clear mission to capitalise
on what sets us apart – a focused, financially strong and
well-placed business.
OUR THANKS
Your Directors have proposed a final dividend of 1.5
Singapore cents per ordinary and convertible redeemable
preference share for FY2012, which, with the interim
dividend of 1.0 Singapore cents per share that was paid
during the financial year, in December 2011, adds up to a
total dividend of 2.5 Singapore cents per share for FY2012.
This is an increase of 67% compared to the total of 1.5
Singapore cents per share paid in respect of the previous
financial year, and represents a payout of approximately
34% of our FY2012 net profit attributable to shareholders.
We are confident in our strategy and people, and are poised
for growth. Our market opportunities are large and we
look optimistically towards seizing these opportunities.
We are driven towards creating a strong, focused
company that can consistently deliver long-term value
to our shareholders.
In concluding, we wish to take this opportunity to
thank all our stakeholders – you, our shareholders, our
business partners and associates, our bankers and last
but not least, our employees for the continued support
and contribution to Tat Hong.
Tan Chok Kian
Non-Executive Chairman
Ng San Tiong Roland
Managing Director
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 13
YEAR IN REVIEW
The financial year ended 31 March 2012 (“FY2012”) was
a very good year for Tat Hong, with the Group achieving
a 63% increase in net profit attributable to shareholders
to S$42.3 million on the back of a 23% growth in revenue
at S$719.8 million.
The strong performance was despite the challenging
global operating environment brought about by long drawn
economic issues in Europe and in the US, which had
widespread consequences on other regions.
All of the Group’s core business segments registered
double-digit revenue growth, with the exception of the
Tower Crane Rental division, whose revenue grew by 3%
mainly because it was somewhat affected by various local
shareholder issues in China that have since been resolved
in 4QFY2012.
Revenue in FY2012 rose to a record S$719.8 million, from
S$584.2 million in FY2011. The Group’s gross profit improved
26%, from S$208.5 million in the previous financial year
FY2011, to S$263.0 million in FY2012. Gross profit margin
also rose 0.8 percentage points to 36.5% in FY2012 mainly
due to the improved rental rates and higher utilisation from
the Crane Rental and General Equipment Rental divisions.
Due to the better performance by the Group’s major
associated companies, the Group’s FY2012 share of
associates’ profits increased by S$2.5 million to S$3.8
million as compared with FY2011.
However the Group’s share of losses in Joint Venture
companies increased by approximately S$1.9 million to
S$2.4 million in FY2012 as compared with FY2011 due
mainly to an impairment charge on oil-rigs and a provision
for doubtful debt.
With the significantly increased level of activities reflected
in the S$135.6 million and S$54.5 million increase in
Revenue and Gross Profit respectively in FY2012, total
operating expenses increased by 17% or S$28.2 million
to S$192.7 million as compared to FY2011. The increase
in operating expenses was represented mainly by a 53%
or S$7.0 million increase in total distribution expenses to
S$20.2 million and a 15% or S$20.4 million increase in
other operating expenses to S$157.9 million.
The rise in total distribution expenses resulted from increased
fuel and transport charges as well as motor vehicle lease
charges of S$2.9 million plus a S$3.6 million provision for
doubtful debts mainly for accounts receivables in China,
compared to a net write back of doubtful debt provision
of about S$744,000 in the previous year.
Included in the S$20.4 million increase in other operating
expenses was a S$14.8 million loss on disposal of tower
cranes through a public auction and a late payment penalty
charge of S$1.2 million incurred by 52.3% owned subsidiary,
Si Chuan Tat Hong Yuan Zheng Machinery Construction Co,
Ltd. Also, staff cost, from a larger headcount and annual
salary increases to cope with the increased level of activities
was higher by S$14.0 million. The higher level of activities
also resulted in S$5.6 million increase in the cost of upkeep
of machinery, vehicles, rental and insurance expenses.
The aforesaid rise in other operating expenses in FY2012
was however partially offset by a net foreign exchange
gain of S$4.7 million in FY2012 as compared to a loss
of S$1.7 million in FY2011, and the exclusion of a S$5.0
million impairment of goodwill by the Australian unit as well
as a one-off S$6.4 million charge for damages suffered as
a result of the floods in Australia in FY2011.
Equity attributable to Shareholders grew by S$37.5 million
to S$556.4 million as at 31 March 2012, from S$518.9
million a year earlier. The Group’s cash and cash equivalents
stood at a healthy S$76.8 million as at 31 March 2012.
Net gearing was 0.79 times, compared to 0.75 times
as at end March 2011 due to funding of investments in
freehold and leasehold properties - S$26.3 million, and
net purchases of plant and equipment - S$50.2 million
in FY2012, as the crane fleets continue to be expanded
to meet the strong demand.
Trade and other receivables increased by approximately
S$39.4 million in FY2012 as a result of increased revenues
and timing of sales. Trade and other payables increased
by approximately S$149.0 million in FY2012 due mainly to
purchases of inventories – S$132.3 million, which resulted
in a net increase of S$33.0 million in inventories for stocking
up to meet demand.
TAT HONG HOLDINGS LTD ANNUAL REPORT 201214
DISTRIBUTION ACHIEVES STRONG SALES IN KEY MARKETS
Revenue generated by the Distribution division in FY2012
increased by approximately 25% to S$339.2 million as
compared with FY2011. The biggest contributor to the
Group’s revenue continue to benefit from strong sales
achieved by the Group’s Australian Unit from recovery
activities to repair the damage wrought by natural disasters
in several Australian states in 2010/11. There were also
increased infrastructural activities in New South Wales and
Queensland as well as mining infrastructure in Western
Australia. Elsewhere in the Asia-Pacific, sales of excavators
rose as a result of strong demand in the logging, plantation
and mining industries in Vietnam and Indonesia.
Gross profit margin in FY2012 increased to 19.9% from
19.4% the previous financial year.
CRANE RENTAL BENEFITS FROM REGION’S GROWING INFRASTRUCTURAL NEEDS
The Group’s Crane Rental division generated S$225.0
million in revenue in FY2012 compared to S$185.0 million
in FY2011, with Gross Profit margin improving to 57.3%
from 56.0% in FY2011 as a result of higher rental and
utilisation rates.
All of the Group’s key rental markets experienced generally
higher rental rates and utilisation - in Singapore, from
construction activities on Jurong Island as well as MRT, LTA
and housing projects; in Malaysia, from increased activities
in iron ore mining as well as oil and gas and LNG projects;
in Hong Kong, the commencement of projects such as the
Hong Kong Boundary Crossing Facilities, Central – Wan
Chai Bypass and the Guangzhou – Shenzhen – Hong
Kong Express Rail Link contributed to higher revenues;
in Thailand, from the mass rail transportation system and
flood barrier project; in Australia, from ramping up activities
of the Gorgon LNG project in 4QFY2012 and improved
revenues recorded by its lift and shift arm.
AUSTRALIAN DEMAND DRIVES GENERAL EQUIPMENT RENTAL
The General Equipment Rental division registered the
highest percentage growth in revenue. Sales by this division
rose 39% to S$96.9 million in FY2012, mainly driven by
the continuing strong demand in Australia from recovery
efforts and re-building programmes following the natural
disasters that occurred in 2010 and 2011.
NEW TEAM AT TOWER CRANE RENTAL TO LEAD FUTURE GROWTH
Revenue generated by the Tower Crane Rental division
increased by 3% to S$58.7 million as compared to the
preceding year, due mainly to the overall increase in rental
contracts in second tier cities and the improved utilisation
rates achieved by Jiangsu ZhengHe Tat Hong Equipment
Rental Co., Ltd (“JZHTH”). However, 52.3% owned
subsidiary, Si Chuan Tat Hong Yuan Zheng Machinery
Construction Co., Ltd (“SCTH”) had to dispose its crane
assets through a court-sanctioned public auction that
resulted in it incurring a one-off accounting loss of S$14.8
million, and a late payment penalty charge of S$1.2 million
in settling its debts to a crane manufacturer. Although the
Group accounted for such one-off accounting loss, those
same operating crane assets continue post-auction to
belong to the Group under a different China subsidiary
which had won the public bid for the crane assets – and
in the process, preserving the unit and tonnage capacity
within the Group to meet future demand.
With the completion of the buy-over of the Chinese party’s
ownership in JZHTH in 4QFY2012 and a renewal of its
management team, the Tower Crane Rental Division is now
geared towards improving its performance.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 15
YEAR IN REVIEW
CORPORATE DEVELOPMENTS TO ADD TO FUTURE GROWTH
In FY2012, the Group undertook various corporate and
M & A activities to increase the Group’s foot-print and to
strengthen its position to better benefit from the renewed
building and construction, and resource infrastructure
developments in the Asia-Pacific region. Some of these
activities, by the Group and its associated companies,
included:-
In June 2011 - Hup Hin Transport (M) Sdn Bhd, in which the
Group has an effective interest of 42%, was incorporated
in Malaysia to undertake the business of manufacturing
and repair of lifting gears, handling of heavy equipment as
well as crane towing and recovery services in Malaysia.
In July 2011 – 100% owned Tat Hong Crane Logistics Sdn
Bhd was incorporated in Malaysia, to provide reprocessing,
reconditioning and repair services and trading of heavy
machinery and equipment in Malaysia.
In September 2011 – a 50% joint venture Company - Tat
Hong (PNG) Limited (“THPNG”), was formed in Papua New
Guinea, with Curtain Bros Papua New Guinea Limited, a major
civil construction company which provides engineering, port
and transportation services and expertise to the resources
and construction industries in Papua New Guinea as the
other 50% partner. THPNG rents cranes, general plant
and equipment to various customers in O&G, mining and
infrastructure, and wholesales machinery, equipment and
supplies for the construction industry.
In January 2012 – Tat Hong (Thailand) Co., Ltd which was
previously a 49% owned associated company became a
wholly owned subsidiary with the Group’s acquisition of
the remaining 51% interest. It rents cranes and provides
spare parts and related services in Thailand.
In March 2012 – the Group acquired the remaining 50%
interest in PT World Wide Equipment South East Asia
(“PTWWE”) not owned by the Group to make it a wholly
owned subsidiary. PTWWE’s principal business activities
are those of marine equipment maintenance and overhaul,
steel fabrication for marine contractors, offshore lifting
services, supply of marine equipment and yard storage for
the oil and gas industry. It operates from the Indonesian
island of Batam.
Additionally, the Group, through wholly owned PT Tat Hong
(Batam) had acquired in late 2011, a 14.0 hectare plot of
land with deep sea frontage on the Indonesian island of
Batam and is in the midst of constructing a deep-sea jetty
facility to support its growing marine sector crane and
haulage business.
During FY2012, various equity injection and capital
restructuring transactions were undertaken in respect of
the operating entities in China to strengthen their capital
base and support capital expenditure in growing the tower
crane fleet size to 757 units as at 31 March 2012, from
684 units at the end of the previous financial year. Various
China shareholders’ issues, such as that in JZHTH, were
also resolved by the end of the financial year under review.
TAT HONG HOLDINGS LTD ANNUAL REPORT 201216
REGIONAL OPPORTUNITIES ABOUND
Having streamlined a number of areas of our business
operations in FY2012, and barring any unforeseen
circumstances and fallout from the Eurozone crisis, the
Group expects to continue to improve its performance in
FY2013 as compared to FY2012 as it seizes opportunities
in the growing infrastructural demands across the Asia-
Pacific region.
Our Australian operations are looking particularly strong with
encouraging demand for equipment and services arising
from on-going post-disaster rebuilding programmes and
growth opportunities from the resource and infrastructural
sectors in Western Australia and Queensland. More
projects are also expected from the Northern Territory
in the near future as the Territory Government alone has
committed a record A$1.5 billion of public spending on
infrastructure in its Budget 2011-121.
Divisionally, the outlook for the Group’s Equipment Distribution
unit remains favourable, especially in Australia where it should
benefit from newly awarded exclusive distribution rights for
a range of crushers and screens, as well as in Indonesia.
The Crane Rental division is also expected to continue its
growth momentum in FY2013, with a crane fleet of 627
units as at 31 March 2012 (573 units at 31 March 2011),
from the tremendous opportunities presented by major
infrastructure and construction projects in Singapore,
Hong Kong and across Southeast Asia, including Papua
New Guinea.
Now that various local shareholders’ issues in China have
been resolved, the management of the Tower Crane Rental
division expects to turn in a better performance in FY2013,
especially with a renewed focus to increase utilisation rates
and productivity in supporting the on-going and new large
building and infrastructure projects in Shenyang, Tianjin,
Wuhan, Chongqing, Sichuan and Guangdong. China is
also expected to resume the expansion of its nuclear
power sector in the second half of 2012 with many plans
reaching the final approval stage, and these are expected
to bring new opportunities for Tat Hong in terms of the
construction of these plants2.
Based on Tat Hong’s strong standing in the industry and
its high ranking among the world’s crane companies,
the Group is optimistic of its future as it continues to
invest in fleet expansion and renewal.
Sources:1 Northern Territory Government website: www.growingnt.nt.gov.au/ growing_territory/infrastructure_plan.html2 Chinadaily.com.cn: New nuclear projects ready to power ahead (18 May 2012)3 International Cranes, IC50 Rangkings, June 2011 ranked Tat Hong: • #1 crane company in Asia-Pacific, and #8 in the world, based on aggregate tonne-metres of mobile and crawler fleet • #1 in the world based on number of crawler cranes • #1 in China, and top 6 in the world, based on aggregate tonne-metres of tower crane fleet
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 17
FINANCIAL HIGHLIGHTS (ENDED 31 MARCH)
REVENUE (S$’M)
FY2008
FY2010
FY2009
FY2011
FY2012
584.2
719.8
PROFIT BEFORE TAX (S$’M)
FY2008
FY2010
FY2009
FY2011
FY2012 58.0
NET PROFIT ATTRIBUTABLE TO SHAREHOLDERS (S$’M)
FY2008
FY2010
FY2009
FY2011
FY2012
89.8
68.9
38.6
26.0
42.3
639.9
631.8
495.4
131.7
97.5
58.3
40.6
TAT HONG HOLDINGS LTD ANNUAL REPORT 201218
CRANE FLEET SIZE
123,900
136,547 140,000
60,000
120,000
100,000
80,000
40,000
20,000
0
216
262
@ March 2008 @ March 2009 @ March 2010 @ March 2011 @ March 2012
49,040
551
684
757
35,462
103,372
Tonnage-MetresUnits
TOWER CRANE FLEET GROWTH
Units Tonnage-Metres
GROWTH IN CRAWLER AND MOBILE CRANE FLEETTonnage-MetresUnits
400
500
420
440
460
480
600
520
540
560
580
620
640
Units Tonnage-Metres
@ March 2008 @ March 2009 @ March 2010 @ March 2011 @ March 2012
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
428
469481
573
627
42,52646,261
51,216
58,261
66,438660
0
200
400
600
800
100
300
700
500
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 19
5-YEARFINANCIAL SUMMARY
FY2012 FY2011 FY2010 FY2009 FY2008
Revenue 719.8 584.2 495.4 631.8 639.9
Gross Profit 263.0 208.5 190.9 241.1 244.2
Profit Before Tax 58.0 40.6 58.3 97.5 131.7
One-off items +18.1 +12.9 -5.1 +25.3 -6.0
Profit Before Tax (Excluding One-off Items)
76.1 53.5 53.2 122.8 125.7
Profit Attributable to Shareholders 42.3 26.0 38.6 68.9 89.8
FINANCIAL HIGHLIGHTS (S$’M)
FY2012 FY2011 FY2010 FY2009 FY2008
Property, plant and equipment 765.5 623.6 520.3 385.7 315.7
Inventories 234.2 200.8 201.0 217.7 207.5
Cash and cash equivalents 76.8 61.8 76.6 46.3 75.4
Debtors 184.8 145.4 112.7 97.7 113.3
Shareholders’ equity 556.4 518.9 498.6 389.0 373.1
BALANCE SHEET (S$’M)
FY2012 FY2011 FY2010 FY2009 FY2008Earnings per share (Singapore cents) 7.42 4.56 7.20 13.62 17.73
Net Asset Value per share (Singapore cents)
98 91 88 77 74
Return on Equity (%) 7.6 5.0 7.7 17.7 24.1
Net gearing 0.79 0.75 0.44 0.57 0.30
Interest cover 6.7 6.9 7.9 12.3 14.1
FINANCIAL RATIOS
TAT HONG HOLDINGS LTD ANNUAL REPORT 201220
GROSS PROFIT BY BUSINESS ACTIVITY (FY2012)
26%DISTRIBUTION*
49%CRANE RENTAL
20%GENERAL
EQUIPMENTRENTAL
5%TOWER CRANE RENTAL
REVENUE BY REGIONS (FY2012)
38%ASEAN
53%AUSTRALIA
8%CHINA
1%OTHERS
REVENUE BY BUSINESS ACTIVITY (FY2012)
47%DISTRIBUTION*
31%CRANE RENTAL
14%GENERAL
EQUIPMENTRENTAL
8%TOWER CRANE RENTAL
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 21
KEYMILESTONES
1997Listed on the
Australian Securities
Exchange (ASX)
2005APRIL: Conversion of
Secondary to Primary
Listing on the SGX
Mainboard
AUGUST: Established
a joint venture with
Fushun Yongmao to
enter tower crane rental
business in China
NOVEMBER: Delisted
Tat Hong from the ASX
DECEMBER: Listed
Australian subsidiary,
Tutt Bryant Group
Limited (TBG), on the
ASX
2001Established joint venture
company, BT Equipment,
with PSL Industries
2007FEBRUARY: Acquired Hunter
Valley-based Muswellbrook
Crane Services through TBG
APRIL: Carried out a private
placement of 40 million new
shares at S$1.46 per share
JUNE: Established a joint
venture with Jiangsu China
Nuclear Industry Huaxing
Construction Machinery, a
tower crane rental, heavy lifting
equipment and construction
services provider in China, with
a special focus on the Chinese
nuclear industry
JULY: Established a joint
venture company with China’s
largest tower crane rental
company, Beijing ZhongJian
Zhenghe Construction
Machinery
DECEMBER: Acquired
assets of Melbourne-based
Bradshaw Ultra Heavy
Haulage through TBG
2004FEBRUARY: Private
placement of 50 million new
shares at S$0.56 per share
DECEMBER: Acquired
Kingston Industries, a
leading Australian plant hire
and haulage company
2000Secondary listing
on the SGX
Mainboard
2006JUNE: Established a foreign-
sino equity joint venture
company, Shanghai Tat Hong
Equipment Rental
DECEMBER: Acquired
Queensland-based equipment
hire company, North Sheridan,
through TBG
2002AUGUST: Private
placement of 40 million
new shares at S$0.30
per share
TAT HONG HOLDINGS LTD ANNUAL REPORT 201222
2009APRIL: Established a joint
venture, Beijing Tat Hong
Zhaomao Equipment
Rental, to grow tower
crane rental business in
China
OCTOBER: Issued
65 million convertible
redeemable preference
shares at S$1.00 per
share to AIF Capital
DECEMBER: Established
a sino-foreign equity
joint venture, Si Chuan
Tat Hong Yuan Zheng
Machinery Construction
with Guangzhou Hailin
Resource, in China
2011MARCH: Acquired
remaining 51% in
ALCII-Tat Hong Joint
Venture Co., Ltd, in line
with expansion plans in
Vietnam. Name changed
to Tat Hong Equipment
Co. Ltd.
MARCH: Rebranded
TBG’s Crane Hire and
Heavy Haulage Division
across Australia under a
new name – Tutt Bryant
Heavy Lift & Shift
JUNE: Incorporated
42% held Hup Hin
Transport (M) Sdn Bhd to
undertake manufacturing
and repair of lifting
gears, handling of heavy
equipment as well crane
towing and recovery
services in Malaysia
JULY: Formed wholly
owned Tat Hong Crane
Logistics Sdn Bhd to
provide reprocessing,
reconditioning and repair
services and trading of
heavy machinery and
equipment in Malaysia
SEPTEMBER:
Established 50% JV
Company – Tat Hong
(PNG) Limited in Papua
New Guinea, with
Curtain Bros Papua New
Guinea Limited, to rent
cranes, general plant and
equipment, wholesale
machinery, equipment
and supplies
2008FEBRUARY: Listing of
Yongmao Holdings Limited
(24%-held associate)
APRIL: Acquired Townsville-
based Paramount Hire through
North Sheridan, a subsidiary
of TBG
MAY: Acquired Goulburn-
based Caradel Hire through
Kingston Industries, a
subsidiary of TBG
JUNE: Issued 50,662,673
bonus warrants
2010JUNE: Incorporated joint-
venture investment holding
company, Tat Hong Zhaomao
Investment, jointly held with
Fushun Yongmao, to hold
joint venture investments in
China
OCTOBER: Completed
privatisation and subsequent
delisting of TBG from the
ASX
NOVEMBER: Acquired 70%
in Hup Hin Transport Co
Pte Ltd, a heavy transport
service solution provider in
Singapore
2012JANUARY:Tat Hong (Thailand) Co Ltd
became a wholly owned subsidiary
MARCH: Acquired remaining 50% in PT
World Wide Equipment South East Asia
making it a wholly owned subsidiary
Acquired a further 45% interest in
Jiangsu Zhenghe Tat Hong Equipment
Rental Co., Ltd, for an effective interest
of 95.7%
MAY: Incorporated PT Tat Hong
HeavyEquipment Indonesia, to distribute
and wholesale machinery, equipment
and supplies to the constructionn and
mining industries in Indonesia
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 23
BOARD OF DIRECTORS
1
7
89
10
2
34
56
MR TAN CHOK KIAN1 | MR NG SAN TIONG ROLAND 2 | MR LEONG HORN KEE 3 | MR LOW SEOW JUAN 4 |MR MAK LYE MUN 5 | MR NG SUN HO TONY 6 | MR NG SANG KUEY MICHAEL 7 | MR NG SAN WEE DAVID 8 | MR ONG TIEW SIAM 9 | MR TSE PO SHING ANDY 10 |
TAT HONG HOLDINGS LTD ANNUAL REPORT 201224
MR TAN CHOK KIANNon-Executive Chairman
Mr Tan Chok Kian was appointed as the Non-
Executive Chairman of Tat Hong on 29 July 1997.
As Chairman of the Board, Mr Tan approves
our overall policies and strategic plans. In
addition, he is also Chairman of the Nominating
Committee. Mr Tan has served in various senior
appointments in the Singapore civil service from
1956 until his retirement in 1986 including the
positions of Permanent Secretary in the Ministry
of Finance and other Ministries. He also served
as Chairman of the Central Provident Fund
Board, Director-General, Nanyang University
and Chairman of the Post Office Savings Bank
of Singapore.
MR NG SAN TIONG ROLANDManaging Director
Mr Roland Ng joined our Group in 1979 and has
been Managing Director of our Company since
25 October 1991. He has more than 25 years
experience in the heavy equipment and plant
hiring business. He bears overall responsibility
for developing our Group’s strategy which
encompasses the review of new business
development and potential acquisitions in the
region. Mr Ng is also responsible for our corporate
planning and policy and strategy formulation. He
holds a Bachelor of Science (Honours) Degree
from the University of Technology Loughborough
(United Kingdom).
MR LEONG HORN KEENon-Executive Director
Mr Leong Horn Kee was appointed as an
Independent Director of Tat Hong on 19 January
2001. He is the Chairman/CEO of CapitalCorp
Partners Pte Ltd, a financial services and
consultancy company. Mr Leong has experience
in both the public sector in economic planning,
trade and investments, and in the private sector
in corporate finance, venture capital, merchant
banking, hotels, property development and
management. He served as a Member of
Parliament for 22 years from 1984 to 2006. Mr
Leong was appointed Singapore’s Non-Resident
Ambassador to Mexico in 2006 and a member
of the Securities Industry Council in 2008. Mr
Leong holds a degree (Honours) in Production
Engineering from Loughborough University,
UK; a degree (Honours) in Economics from the
University of London, UK; a degree in Chinese
Language and Literature from Beijing Normal
University, an MBA from INSEAD, France; and a
Master in Business Research from University of
Western Australia.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 25
MR LOW SEOW JUANNon-Executive Director
Mr Low Seow Juan was appointed Non-Executive
Director on 25 January 2006. He is a Consultant
with the law firm Lee & Lee and Chairman of Pinetree
Capital Partners Pte Ltd, a Singapore venture capital
fund company.
Mr Low started his working career with the Singapore
Public Works Department, Morgan Grenfell (Asia)
Limited and the Singapore Economic Development
Board heading the Aerospace, Medical Optical
Division. Mr Low is a director of a number of public
and private companies including SHC Capital Limited
and Amtek Engineering Limited.
Mr Low holds a Master in Business Administration
from the National University of Singapore, a Bachelor
of Law degree from the University of London and a
Bachelor Degree in Electrical Engineering from Monash
University, Australia.
MR MAK LYE MUNNon-Executive Director
Mr Mak Lye Mun was appointed as our Non-Executive
Director on 1 June 2005. He is the Country Head
and CEO of CIMB Bank Singapore. He is also a Non-
Executive Director of CIMB Securities Pte Ltd and CIMB
Securities International Pte Ltd. In addition, Mr Mak is a
Non-Executive Director of Boardroom Limited. He has a
Bachelor of Civil Engineering (First Class Honours) degree
from the University of Malaya in Malaysia and a Master
of Business Administration degree from the University of
Texas at Austin in the United States. Mr Mak is a qualified
Chartered Financial Analyst.
MR NG SUN HO TONYDeputy Managing Director
Mr Tony Ng joined the Group in 1975 and was appointed
as an Executive Director of the Company on 2 November
1991. He is the Group’s Deputy Managing Director and
also holds the position of CEO – Singapore (Rental and
Heavy Lift), Indonesia, Indochina and Middle East. He
has more than 34 years of work experience in the heavy
equipment and plant hire business.
Besides managing the Group’s business portfolio in
Indonesia, Indochina, Papua New Guinea, Middle East
and the Singapore Rental and Heavy Lift division, Mr
Tony Ng is reponsible for identifying and exploring new
business opportunities and markets for the Group. He
has built up and maintains strong relationships with key
heavy equipment manufacturers.
MR NG SANG KUEY MICHAELExecutive Director
Mr Michael Ng joined the Group in 1977 and was
appointed as an Executive Director of the Company on
1st October 1996.
Together with our Deputy Managing Director, Mr
Michael Ng oversees the Group’s extensive Asia (ex-
China) business and operations portfolio with a focus
on the Malaysia, Thailand and Hong Kong markets. He
is responsible for Equipment Sales, the Logistics and
Transportation businesses for the Singapore market
and the Offshore and Marine business segments. He
is also responsible for Human Resource and the sales
and purchasing functions for the Singapore offices.
Mr Michael Ng has spent the majority of his working years
in the heavy equipment industry, especially in the cranes
sector, and has built strong relationships and network
with clients, major suppliers and crane manufacturers.
BOARD OF DIRECTORS
TAT HONG HOLDINGS LTD ANNUAL REPORT 201226
MR NG SAN WEE DAVIDExecutive Director
Mr David Ng has been an Executive Director of our
Company since 1 September 1999. He is the Head of our
Group’s Sales Division for our ASEAN operations and is
responsible for implementing our Group’s policies and the
conduct of businesses as well as co-ordinating activities
within our Group for our ASEAN operations. Mr Ng has
more than 13 years of experience in the heavy equipment
industry. He has an honours degree in Computer Science
from the University of Liverpool (United Kingdom).
MR ONG TIEW SIAMNon-Executive Director
Mr Ong Tiew Siam was appointed as our Director since
1999. He has more than 32 years of experience in finance
and administrations. He graduated with a Bachelor of
Commerce (Accountancy)(Honours) degree in 1975
from the Nanyang University of Singapore and is a fellow
member of the Institute of Certified Public Accountants of
Singapore and CPA Australia. He is also a member of the
Singapore Institute of Directors. Mr Ong sits on the board
of several listed companies.
MR TSE PO SHING ANDYNon-Executive Director
Mr Andy Tse was appointed to the Board as a Non-
Executive Director on 22 October 2009. He is a Managing
Director at AIF Capital Limited (“AIF Capital”) and has
accumulated more than 15 years of private equity
experience in Greater Asia, including Korea, Japan,
China, Hong Kong, Singapore, the Philippines, Indonesia,
Australia, Sri Lanka, India and Thailand. Having been with
AIF Capital since 1994, Mr Tse has led investments in
transportation, logistics and manufacturing. He represents
AIF Capital on the boards of various portfolio companies
including locally-listed Olam International Limited. Prior
to AIF Capital, Mr Tse worked with Hopewell Holdings
Limited and was involved in the investment, development,
financing, construction and operations of infrastructure
projects amongst others. He holds a Bachelor of Science
and MBA from the Chinese University of Hong Kong and
is also a CFA charterholder.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 27
KEYMANAGEMENT
MR NG SAN TIONG ROLANDPresident/Group Chief Executive Officer
Mr Roland Ng joined our Group in 1979 and assumed his current capacity since 25 October 1991.
With more than 30 years of experience in the heavy equipment and plant hiring business, he bears
overall responsibility for developing our Group’s strategy. This includes the review of new business
developments and potential acquisitions in the region.
Mr Ng also spearheads our corporate planning policy and strategy formulation.
In addition, Mr Ng oversees Tat Hong’s tower crane rental subsidiaries in China as well as our
investment in our 24%-owned associated company, Singapore-listed Yongmao Holdings Limited.
He holds a Bachelor of Science (Honours) Degree from the University of Technology Loughborough
(United Kingdom).
MR NG SUN HO TONYCEO – Singapore (Rental & Heavy Lift),Indonesia, Indochina, Middle East
Mr Tony Ng is the CEO responsible for the Singapore (Rental & Heavy Lift) Division, and the operations
in Indonesia, Indochina, Papua New Guinea and Middle East.
Mr Tony Ng maintains strong relationships with key heavy equipment manufacturers, identifying and
exploring new businesses with them to expand our Group in the respective markets.
He has more than 34 years experience in the heavy equipment and plant hiring business.
MR NG SANG KUEY MICHAELCEO – Singapore (Distribution & Marine), Malaysia, Thailand, Hong Kong
Mr Michael Ng is the CEO overseeing the Singapore (Distribution & Marine), Malaysia, Thailand and
Hong Kong operations. In Singapore, he is also responsible for Equipment Sales and the logistics,
transportation and Offshore and Marine segments. He is also in charge of Human Resource and the
sales and purchasing functions for the Singapore office.
Mr Michael Ng has spent the majority of his working years in the heavy equipment industry,
especially in the cranes sector, and has built strong relationships and network with clients, major
suppliers and crane manufacturers.
TAT HONG HOLDINGS LTD ANNUAL REPORT 201228
MR DAVID HAYNESSenior Executive Vice PresidentCEO - Australia
Following Tat Hong’s purchase of Tutt Bryant Group in 1996, Mr Haynes was appointed as an
executive director, working alongside Tat Hong to expand its crane rental business in Australia. In
1999, he was appointed as Managing Director of Tutt Bryant Group.
Since leaving the British Army in 1987 and arriving in Australia, Mr Haynes has held various senior
management and executive director positions in diverse industries including construction, property
development and commercial property management, capital goods sales, franchising and hospitality.
He brings to the Group rich experience gained from working for Tutt Bryant Group with a mixed
portfolio of businesses.
MR LIONAL TSENGGroup Chief Financial Officer/Company SecretaryHead of Corporate
Lional Tseng, CPA, is our Group Chief Financial Officer, Company Secretary and Head of Corporate.
He has overall responsibility for the Group’s financial and other corporate functions, including
treasury, tax, risk management and investor relations.
He has more than 34 years of wide experience in finance, tax and treasury management in diverse
businesses including real estate development and construction, IT and architectural and engineering
consulting, and international trading. He has held senior executive positions and directorships in
large groups of companies and has undertaken major corporate financial and M & A transactions in
Singapore, various ASEAN countries, India, China and USA.
He sits on the boards of a number of Voluntary Welfare Organisations, chairs their audit committees
and had also served as a member of the audit committee of a statutory board.
MR YAU KOK SAN SEANSenior Vice PresidentHead of Corporate - China
Mr Sean Yau is currently the Senior Vice President, Head of Corporate - China. He has more than 10
years experience in corporate finance and venture capital in China.
Mr Yau started his working life in 1987 as an engineer with Singapore Technologies, moving on to
Vertex, the venture capital arm of Singapore Technologies, as an investment manager eventually.
Thereafter, he was the Finance Director in a technology start up. Prior to joining Tat Hong, Mr Yau
was a Consultant providing corporate finance advisory to Chinese companies.
He holds a Master of Business Administration from the National University of Singapore and a Bachelor
Degree in Engineering (First Class Honours) from Nanyang Technological University (Singapore).
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 29
INVESTORRELATIONS
Tat Hong’s Investor Relations efforts have always been guided by the principle of achieving best practices in corporate governance and disclosure. We endeavour to establish and maintain proactive, transparent and engaging long-term relationships with our stakeholders. Ultimately, we strive to understand the pressing issues at hand for our investing public, and effectively address them in a timely fashion.
We remain firm in our belief to have regular and open communications with analysts, fund managers, shareholders and the media. We have a deeply entrenched spirit of corporate governance and transparency.
This year, through constant updates on corporate developments and strategic business plans via various communication channels, we have worked hard to step up communications so as to provide balanced insights into the Group’s performance, key corporate developments as well as our strategies to further growth.
Timely DisclosureTo reach out to our stakeholders in an effective manner, information is shared in a timely, equitable and fair manner with all individuals and groups. Material information is immediately uploaded onto the SGX-ST website as well as the Investor Relations section on our corporate website. We are easily accessible via our website where shareholders are able to provide their feedback or have their queries answered.
Effective CommunicationWe continued to organise regular meetings and briefing meetings, which also included conference call-ins. Additionally, we remained an active participant in the regional equity conferences organised by leading brokerage firms and participated in a number of investor conferences held in Asia. These meetings allowed us to interact with institutional shareholders and meet with potential new ones.
Shareholder ReturnsWe strive to reward our shareholders with a reasonable dividend payout to thank them for their support. Tat Hong was ranked number 411 in terms of dividend yield out of 82 companies covered by OCBC Investment Research in its report titled “Beyond the Curve” issued on 20 June 2012. Moving forward, we will continue to strive to give our shareholders good returns for their investment.
FY2013 EVENT CALENDAR
EVENTS DATES (proposed)FY2013 First Quarter Results Announcement August 13, 2012
FY2013 Second Quarter Results Announcement November 12, 2012
FY2013 Third Quarter Results Announcement February 12, 2013
FY2013 Fourth Quarter Results Announcement May 28, 2013
1 Source: OCBC Investment Research: Beyond the Curve (20 June 2012)
RESEARCH COVERAGE
CIMB Securities
DBS Vickers
OCBC Investment ResearchCiti Investment Research and Analysis
1-year Historical Trading Chart
SEP 19MAY 16 JUN 13 JUL 18 AUG 15 OCT 17 NOV 14 DEC 19 2012 16 FEB 13 MAR 19 APR 16 30
S$1.10S$1.08
S$1.02
S$0.96S$0.98
S$1.12
S$1.06S$1.04
S$1.00
S$0.94
S$0.90S$0.88S$0.86S$0.84S$0.82S$0.80S$0.78S$0.76S$0.74S$0.72S$0.70S$0.68S$0.66S$0.64
S$0.92
TAT HONG HOLDINGS LTD ANNUAL REPORT 201230
SINGAPORE
Tat Hong Plant Leasing Pte Ltd
100%
Tat Hong
HeavyEquipment (Pte.) Ltd
100%
Tat Hong Machinery Pte Ltd
100%
Tat Hong Training Services
Pte Ltd
100%
Tat Hong United Logistics
Pte Ltd
100%
Tat Hong Heavylift Pte Ltd
100%
Load Controls Systems Pte Ltd
70%
Peng Koon
Heavy Machinery Pte Ltd
70%
Hup Hin Transport Co Pte Ltd
70%
Tat Hong Offshore and
Marine Services Pte Ltd
50%
THL Foundation
Equipment Pte Ltd
45%
Kian Ho Bearings Ltd
31%
Yongmao Holdings Limited
24%
AUSTRALIA
Tutt Bryant Group Limited
100%
BT Equipment Pty Ltd
100%
Muswellbrook
Crane Services Pty Ltd
100%
Kingston Industries WA Pty Ltd
100%
TBF Oceania Pty Ltd
50%
Kingston Industries Pty Ltd
100%
Office Cleaning Services Pty Ltd
100%
North Sheridan Pty Ltd
100%
Relsok Pty Ltd
100%
CHINA
Shanghai Tat Hong
Equipment Rental Co., Ltd.
91%*
China Nuclear Huaxing TatHong
Machinery Construction Co. Ltd
71%*
Tat Hong Zhaomao
Investment Co., Ltd
75%
Jiangsu Zheng He TatHong
Equipment Rental Co., Ltd
96%*
Beijing Tat Hong ZhaoMao
Equipment Rental Co., Ltd
61%*
Si Chuan Tat Hong Yuan Zheng
Machinery Construction Co. Ltd.
52%*
GROUP STRUCTUREKEY OPERATING ENTITIES AS AT MARCH 2012
TAT
HO
NG
HO
LDIN
GS
LTD
Distribution & Crane Rental
Subsidiaries
Associates
General Equipment Rental Tower Crane Rental
MALAYSIA VIETNAM
THAILAND
INDONESIA
HONG KONG
Tat Hong Plant Hire Sdn Bhd
100%
Tat Hong (Thailand) Co., Ltd
100%
Tat Hong HeavyEquipment
(Hong Kong) Limited
100%
Tat Hong HeavyEquipment
(Macau) Limited
100%
PT Tatindo HeavyEquipment
95%
PT World Wide Equipment
South East Asia
100%
PT Tat Hong Batam
100%
PAPUA NEW GUINEA
Tat Hong (PNG) Limited
50%
* rounded to nearest percent
Tat Hong Equipment Co. Ltd
100%
Tat Hong Vietnam Co., Ltd
70%
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 31
CORPORATEINFORMATION
BOARD OF DIRECTORS
Mr Tan Chok Kian
(Chairman)
Mr Ng San Tiong Roland
(Managing Director)
Mr Ng Sun Ho Tony
(Deputy Managing Director)
Mr Ng Sang Kuey Michael
Mr Ng San Wee David
Mr Leong Horn Kee
Mr Low Seow Juan
Mr Mak Lye Mun
Mr Ong Tiew Siam
Mr Tse Po Shing Andy
AUDIT COMMITTEE
Mr Leong Horn Kee
(Chairman)
Mr Low Seow Juan
Mr Tan Chok Kian
Mr Tse Po Shing Andy
REMUNERATION COMMITTEE
Mr Leong Horn Kee
(Chairman)
Mr Low Seow Juan
Mr Mak Lye Mun
Mr Tan Chok Kian
NOMINATING COMMITTEE
Mr Tan Chok Kian
(Chairman)
Mr Ng San Tiong Roland
Mr Low Seow Juan
Mr Leong Horn Kee
SHARE OPTION /PERFORMANCE SHARES PLAN COMMITTEE
Mr Mak Lye Mun
(Chairman)
Mr Ng San Tiong Roland
Mr Ng Sun Ho Tony
Mr Ong Tiew Siam
RISK MANAGEMENT COMMITTEE
Mr Mak Lye Mun
(Chairman)
Mr Ong Tiew Siam
Mr Tan Chok Kian
Mr Tse Po Shing Andy
COMPANY SECRETARIES
Mr Lional Tseng
Ms Ong Beng Hong
(Joint Company Secretaries)
SINGAPORE REGISTERED OFFICE
18 Sungei Kadut Avenue
Singapore 729489
Tel: (65) 6269 0022
SINGAPORE SHARE REGISTRAR & SHARE TRANSFER OFFICE
M & C Services Private Limited
138 Robinson Road
The Corporate Office #17-00
Singapore 068906
Tel: (65) 6227 6660
AUDITOR
KPMG LLP
Certified Public
Accountants
16 Raffles Quay #22-00
Hong Leong Building
Singapore 048581
Partner-in-Charge:
Mr Tan Huay Lim
(Appointed in FY2012)
TAT HONG HOLDINGS LTD ANNUAL REPORT 201232
FINANCIAL CONTENTSCORPORATE GOVERNANCE 34 | DIRECTORS’ REPORT 45 | STATEMENT BY DIRECTORS 52 | INDEPENDENT AUDITORS’ REPORT 53 | STATEMENTS OF FINANCIAL POSITION 54 | CONSOLIDATED INCOME STATEMENT 55 | CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 56 | CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 57 | CONSOLIDATED STATEMENT OF CASH FLOWS 59 | NOTES TO THE FINANCIAL STATEMENTS 61 | ANALYSIS OF SHAREHOLDINGS 129 | ANALYSIS OF WARRANTHOLDINGS 131 | NOTICE OF ANNUAL GENERAL MEETING 132 | PROXY FORM
CORPORATEGOVERNANCE
INTRODUCTION
The Board of Directors (the “Board”) of Tat Hong Holdings Ltd (the “Company”) is committed to a high standard
of corporate governance and has always recognised the importance of good governance to enhance corporate
performance, accountability and protection of key stakeholders’ interests. This report describes the Company’s
corporate governance practices with specific reference to the Code of Corporate Governance 2005 (the “Code”),
pursuant to Rule 710 (1) of the Listing Manual of Singapore Exchange Securities Trading Limited (“SGX-ST”).
BOARD MATTERS
Board’s Conduct of its Affairs
The Board’s primary role is to protect and enhance long-term shareholders’ value. The Board meets at least quarterly
each year to oversee the business affairs of the Group, reviews and approves the financial objectives and the strategies
to be implemented by Management including significant acquisitions and divestments; reviews management’s
performance and sets the Company’s standards on major policies; establishes a framework of prudent and effective
controls which enables the identification, assessment and management of risks; and approves the release of the
quarterly and full year financial results. The Board also establishes controls over capital expenditure, investments and
divestments, funding decisions and bank borrowings.
Board meetings are scheduled in advance on a yearly basis. This enables the Board to meet on a regular basis
without interfering with the Company’s operation. The Board may request for further clarification and information from
Management on all matters within its purview. Ad-hoc meetings are convened as and when circumstances require.
To assist the Board in the execution of its responsibilities, Board Committees, namely Audit, Nominating, Remuneration,
Risk Management and Share Options/Performance Shares Plan Committees have been established and delegated
certain functions. All Board Committees are chaired by Independent Directors. The various Committees have written
terms of references which are reviewed from time to time.
The Company’s Articles of Association provides for meetings of the Board to be conducted by way of telephone
conference or video conference or other methods of simultaneous communication by electronic means.
Directors’ Training
Management conducts briefings and orientation programmes to familiarise newly appointed Directors with the various
businesses, operations and processes of the Group. The Board is also updated regularly on any changes in policies,
laws and regulations that are relevant and apply to the Group and its businesses. Relevant courses for directors
conducted by various professional institutions are attended by Directors when possible as part of their continuous
training. The Company organises seminars in-house on various topics such as the Code of Corporate Governance
and other relevant legislations conducted by legal and other professionals for Directors and Management.
Board Composition and Guidance
The composition and size of the Board are reviewed from time to time by the Nominating Committee to ensure that the
Board has an appropriate number of independent Directors and a balance of expertise, skills and core competencies
in areas including finance, legal, business or management experience.
Factors that are considered in evaluating a Director as independent include where a Director has no relationship with
the Company or Group, with any shareholder with 10% or more interest in the Company, or its officers that could
interfere, or be reasonably perceived to interfere, with the exercise of his independent business judgement in the
interest of the Company.
TAT HONG HOLDINGS LTD ANNUAL REPORT 201234
CORPORATEGOVERNANCE
The Board comprises ten members consisting of four Executive Directors, two Non-Executive Non-Independent
Directors and four Independent Directors. The Board members are:
Mr Tan Chok Kian (Non-Executive and Independent Chairman)
Mr Ng San Tiong Roland (Managing Director)
Mr Leong Horn Kee (Non-Executive Independent Director)
Mr Low Seow Juan (Non-Executive Independent Director)
Mr Mak Lye Mun (Non-Executive Independent Director)
Mr Ng Sun Ho Tony (Deputy Managing Director)
Mr Ng Sang Kuey Michael (Executive Director)
Mr Ng San Wee David (Executive Director)
Mr Ong Tiew Siam (Non-Executive Non-Independent Director)
Mr Tse Po Shing Andy (Non-Executive Non-Independent Director)
The Board believes that there is a strong and independent element on the Board, with a majority of non-executive
Directors, which allows the Board to exercise its objective and independent judgement on all affairs. No individual
or small group of individuals dominate the Board’s decision-making process. The Directors consider the Board
an appropriate size and possesses the right mix of skills and experience. This composition of the Board enables
Management to benefit from its diverse and objective perspective on issues brought before the Board.
The Chairman & the Group Chief Executive Officer
The Chairman and the Group CEO are not related. There is a clear separation of the roles and responsibilities of the
Chairman and the Group CEO. The Chairman is an independent Director who leads the Board and is responsible for
the Board’s workings and proceedings. The Chairman, together with other non-executive directors, ensures that the
Board engages in constructive debate with Management on various matters, including strategic issues and business
plans. The Group CEO is responsible for implementing the Group’s strategies and policies, and for conducting the
Group’s businesses.
The following table shows the appointment of Directors on Board committees for FY2012:
Board MemberAudit
CommitteeNominating Committee
Remuneration Committee
Risk Management Committee
Share Options / Performance Shares Plan Committee
Tan Chok Kian Member Chairman Member Member
Ng San Tiong Roland Member Member
Ng Sun Ho Tony Member
Tse Po Shing Andy Member Member
Leong Horn Kee Chairman Member Chairman
Ong Tiew Siam Member Member
Low Seow Juan Member Member Member
Mak Lye Mun Member Chairman Chairman
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 35
CORPORATEGOVERNANCE
The following table shows Directors’ attendance at Board and Board Committee Meetings for FY2012:-
Board MemberBoard
Meeting
Audit Committee
Meeting
Nominating Committee
Meeting
RemunerationCommitteeMeetings
Risk Management Committee
Meeting
Share Options /Performance Shares Plan Committee
Meeting
Tan Chok Kian 4/4 4/4 1/1 1/1 2/2 –
Ng San Tiong Roland 4/4 – 1/1 – – 2/2
Ng Sun Ho Tony 4/4 – – – – 2/2
Ng Sang Kuey Michael 3/4 – – – – –
Ng San Wee David 4/4 – – – – –
Tse Po Shing Andy 4/4 4/4 – – 2/2 –
Leong Horn Kee 4/4 4/4 1/1 1/1 – –
Ong Tiew Siam 4/4 – – – 2/2 2/2
Low Seow Juan 4/4 4/4 1/1 1/1 – –
Mak Lye Mun 4/4 – – 1/1 2/2 2/2
Board Membership and Performance
The Nominating Committee (the “NC”) comprises four members of whom three are Non-Executive Independent
Directors:-
Mr Tan Chok Kian (Chairman)
Mr Leong Horn Kee
Mr Low Seow Juan
Mr Ng San Tiong Roland
The NC is responsible for the following:
• Assessing the necessary and desirable competencies of Board members and Board composition;
• Reviewing Board succession plans and recommending the appointment, re-appointment and/or removal of
Directors;
• Evaluating the Board’s performance and effectiveness as a whole;
• Reviewing the independence of Directors in accordance with the Code’s definition of “Independent Director”;
and
• Identifying, reviewing and recommending candidates for Senior Management positions in the Group.
The Chairman of the NC is not associated with the substantial shareholder.
TAT HONG HOLDINGS LTD ANNUAL REPORT 201236
CORPORATEGOVERNANCE
The NC applies the following principles in making recommendations to the Board:
• Ensuring a formal and transparent procedure for the appointment and re-appointment of Directors to the Board
and of Senior Management or, if in the case of a new Director or senior manager, consider the recommendations
of the Board members as well as candidates from external executive search consultants;
• Ensuring that multiple board representations held by any Board member does not impede that Director’s
performance in carrying out his duties to the Company; and
• Ensuring the Board comprises Directors who, as a group, have the necessary range of expertise, skills and core
competencies.
The NC has reviewed the independence of each Independent Non-Executive Director in accordance with the Code’s
definition of independence and considered the independence in character and judgement of such Director.
The NC has also considered the multiple board representations held by some Directors and has satisfied itself that
they do not impede such Director’s performance in carrying out his duties to the Company.
The NC adopts a formal board evaluation process, including using evaluation questionnaires covering areas which
include Board composition, information management, Board processes, CEO performance and succession planning,
and standards of conduct, in assessing the effectiveness of the Board as a whole and the contribution of each Director
to the effectiveness of the Board. The results of such appraisals were presented to the Board with recommendations
for improvement to the overall standard of governance.
Access to information
All Directors are provided with complete, adequate and timely information prior to meetings and upon request to enable
them to fulfil their duties properly. Management provides financial reports and other relevant and material information
with adequate explanations to all Directors on a regular and monthly basis outside the specific requirements for Board
and Board Committees’ meetings.
In exercising their duties, the Directors have access to the advice of Senior Management and the Company Secretary
who is responsible to the Board for ensuring that Board procedures are followed and that applicable laws and
regulations are complied with. If necessary, the Directors can seek professional advice and service in areas which
they deem necessary, at the expense of the Company. The Company Secretary and/or his representative is present
at all Board and Board Committees’ meetings. All Board members have separate and independent access to the
Company Secretary at all times.
REMUNERATION MATTERS
The policies on remuneration - salaries, benefits and incentives of the Group’s Executive Directors and Senior
Management are reviewed and set by the Remuneration Committee (the “RC”) of the Board of Directors. The RC
comprises four Non-Executive and Independent members. They are:
Mr Leong Horn Kee (Chairman)
Mr Low Seow Juan
Mr Mak Lye Mun
Mr Tan Chok Kian
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 37
CORPORATEGOVERNANCE
The RC meets at least once a year and performs the following principal functions:
• Reviews and approves recommendations on remuneration policies and the remuneration for the Group’s Senior
Management;
• Approves the annual increment and bonuses of key executives as recommended by Management;
• Reviews all matters concerning Non-Executive Directors’ fees to ascertain that such fees commensurate with
the contribution and responsibility of the Director; and
• Reviews and approves any executive related to the controlling shareholders whose remuneration is above
$150,000 per annum.
The RC ensures that none of the Directors is involved in deciding his own remuneration. Each member of the RC
refrains from voting on any resolutions in respect of the assessment of his remuneration.
In setting the remuneration packages of the Executive Directors and other senior managers, the Company makes a
comparative study of the packages of executives in comparable industries or companies of a similar market size and
takes into account the performance of the company.
There are no service agreements with any Non-Executive Director whose terms of appointment are in accordance
with the Articles of Association of the Company.
Where the need arises, the RC engages external professional human resource consultants for advice on matters
relating to remuneration.
The Share Options/Performance Shares Plan Committee (the “SOC”) comprises of four Directors –
Mr Mak Lye Mun (Chairman)
Mr Ong Tiew Siam
Mr Ng San Tiong Roland
Mr Ng Sun Ho Tony
The SOC is responsible for and has absolute discretion, provided that no member of the SOC shall participate in
any deliberation or decision in respect share options to be granted to him or held by him, for the administration of
the Company’s Employee Share Options Scheme 2006 and the Performance Shares Plan and includes the following
functions:
• Review share options scheme and performance shares plan to ensure that they are effective in rewarding
deserving employees;
• Determine the eligibility of employees to participate in the share options scheme and performance shares plan;
• Offer and grant share options and / or performance shares in accordance with the provisions of the Employee
Share Options Scheme 2006 and the Performance Shares Plan.
TAT HONG HOLDINGS LTD ANNUAL REPORT 201238
CORPORATEGOVERNANCE
As a safeguard against abuse, where share options are proposed to be granted to or held by Executive Directors,
controlling shareholders or associates of controlling shareholders, all members of the Board who are not executive
directors, controlling shareholders or associates of controlling shareholders will be involved in the deliberations of
the same.
Non-executive Directors are not eligible to participate in the Performance Shares Plan. A grant of award of performance
shares to any controlling shareholder or associates of controlling shareholders require the specific approval of
shareholders to be obtained at a general meeting.
No share options or performance shares were granted during the financial year in review.
Remuneration of Directors and Senior Management
The compensation of Non-Executive Directors is based on a framework comprising a basic retainer fee, fee for
chairmanship of the Board or a Committee of the Board and service on a Committee. Executive Directors of the
Company do not receive Directors’ fees from the Company. The details of remuneration paid to or accrued to the
Directors of the Company for the financial year ended 31 March 2012 are set out in the table below:
Name of DirectorRemuneration Band ($’000)
Total %
Fees %
Salaries * %
Bonus ** %
1 Tan Chok Kian ® 1 to 200 100 100 0 0
2 Leong Horn Kee ® 1 to 200 100 100 0 0
3 Mak Lye Mun ® 1 to 200 100 100 0 0
4 Low Seow Juan ® 1 to 200 100 100 0 0
5 Ong Tiew Siam ^ 1 to 200 100 100 0 0
6 Tse Po Shing Andy ^ 1 to 200 100 100 0 0
7 Ng San Tiong Roland 1401 to 1600 100 5 43 52
8 Ng Sang Kuey Michael © 1001 to 1200 100 0 38 62
9 Ng Sun Ho Tony © 801 to 1000 100 8 46 46
10 Ng San Wee David © 401 to 600 100 0 54 46
The aggregate remuneration of the Group’s 5 top-earning Senior Executives for the financial year ended
31 March 2012 is set out below:
Name of ExecutiveRemuneration Band ($’000)
Total %
Fees %
Salaries * %
Bonus ** %
1 D.J. Haynes 1001 to 1200 100 0 92 8
2 Jim Blaker 401 to 600 100 0 79 21
3 Yen Sze Hwa 401 to 600 100 50 46 4
4 Chia Hai Kwang Roy 401 to 600 100 68 30 2
5 Kelvin Woon 201 to 400 100 0 73 27
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 39
CORPORATEGOVERNANCE
Family members related to Group CEO
Remuneration Band ($’000)
Total %
Fees %
Salaries * %
Bonus ** %
1 Ng Sun Hoe Patrick © 401 to 600 100 0 52 48
2 Ng Chen Wei n 401 to 600 100 0 90 10
3 Ng San Guan William © 201 to 400 100 0 70 30
4 Ng Sun Oh Lewis © 201 to 400 100 0 54 46
© Mr Ng Sun Ho Tony, Mr Ng Sang Kuey Michael, Mr Ng San Wee David, Mr Ng San Hoe Patrick, Mr Ng San Guan William and Mr Ng Sun Oh Lewis
are the brothers of Mr Ng San Tiong Roland, Group Managing Director. n Mr Ng Chen Wei is the son of Mr Ng San Tiong Roland, Group Managing Director.® Non-Executive and Independent Director^ Non-Executive and Non-Independent Director
* Salaries included Allowance, Central Provident Fund contribution, Transport Allowance, Superannuation Fund, Long Service Leave and Benefits-
in-kind.
** Bonuses and fees are paid in accordance with service agreements.
Accountability
It is the Board’s aim to present the Company’s stakeholders with a fair, balanced and clear assessment of the
Company’s financial performance, position and prospects. To facilitate the Board’s regular oversight of the Group,
Management provides the Board with appropriate detailed management accounts and report of the Group’s financial
performance and position on a monthly basis. The Group CEO and Group CFO have provided written confirmation
to the Board on the integrity of the Company’s and the Group’s financial statements and the internal control systems
and compliance for the financial year ended 31 March 2012.
Internal Controls, Audit Committee and Internal Audit
The Board acknowledges that it is responsible for the overall internal control framework adopted by the Group but
also notes that no cost-effective system of internal controls can preclude and provide absolute assurance against
errors, irregularities or loss as a system is designed to manage rather than eliminate the risk of failure to achieve
business objectives. The Company maintains a sound internal control system to safeguard the Company’s assets.
The Audit Committee, through the assistance of the internal auditors and external auditors, reviews and reports to the
Board on the adequacy of the Company’s system of internal controls, including financial, operational and compliance
controls. In assessing the effectiveness of internal controls, the Audit Committee ensures that the key objectives are
met, material assets are safeguarded, fraud or errors in the accounting records are prevented or detected, accounting
records are accurate and complete, and reliable financial information is prepared in compliance with applicable internal
policies, laws and regulations.
The Board is satisfied that the Company’s framework on internal controls is adequate to provide reasonable assurance
on the effectiveness of the internal control systems put in place by the management. The Board, with the concurrence
of the Audit Committee, is of the opinion that the system of internal controls put in place by the management is
adequate to address financial, operational and compliance risks of the Group.
The Audit Committee (the “AC”) comprises the following four members, three of whom are Non-Executive Independent
Directors and one a Non-Executive Non-Independent Director:
Mr Leong Horn Kee (Chairman)
Mr Low Seow Juan
Mr Tan Chok Kian
Mr Tse Po Shing Andy
TAT HONG HOLDINGS LTD ANNUAL REPORT 201240
CORPORATEGOVERNANCE
The AC meets four times a year and performs the following functions:
• Assessment of performance and independence of external Auditor and recommendations for the appointment
or removal of external Auditor;
• Assessment of the performance and objectivity of the internal audit function;
• Review the reports on internal audit undertaken by third party audit practitioners and in-house audit staff;
• Review the Company’s quarterly financial statements and the audited annual financial statements and related
notes, and external auditors’ report, and the formal announcements relating thereto, and recommend the same
for approval to the Board;
• Review material Interested Persons Transactions;
• Review the adequacy of the Company’s and Group’s internal financial controls as well as operational and
compliance controls and systems;
• Consider any whistle-blower reports;
• Review and approve the annual internal audit plan.
The AC would commission and review the findings of internal investigations into matters where there is any suspected
fraud or irregularity, or failure of internal controls or infringement of any applicable law, rule or regulation which has,
or is likely to, have a material impact on the Group’s operating results and/or financial position.
The AC has full access to Management and also full discretion to invite any Director or key management to attend
meetings of the AC, and has been given reasonable resources to discharge its functions. The AC meets with the external
and internal Auditors, without the presence of Management, at least once a year, and has obtained assurances that
Management has co-operated fully in providing the auditors with such information as they required in the conduct
of their audits.
During the year, the AC, on behalf of the Board, has reviewed the effectiveness of the Group’s material internal controls,
including financial, operational and compliance controls.
The Company’s internal audit function is outsourced to professional accounting firms. The Internal Auditor (the “IA”)
reports directly to the Chairman of the AC and administratively to the Group CFO. The IA has appropriate standing
within the Company and meets the standards of the Professional Practice of Internal Auditing set by the Institute of
the Internal Auditors.
The Company has put in place a whistle-blowing policy and procedures, endorsed by the AC, where employees
of the Company may, in confidence, raise concerns about possible corporate improprieties in matters of financial
reporting or other matters and to ensure that arrangements are in place for the independent investigations of such
matters and for appropriate follow-up action.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 41
CORPORATEGOVERNANCE
External Auditors
The Board is responsible for the initial appointment of external Auditors and Shareholders then approve the appointment
at the Annual General Meeting. The Audit Committee evaluates the external Auditors’ performance, quality of their
audit and their independence and recommends their appointment to the Board. The Company’s external Auditors
are KPMG Singapore and the Company complies with Rules 712 and 715 of the Listing Manual of the SGX-ST.
KPMG rotated the audit engagement partner for the audit of the financial statements for FY2012 to enhance the
independence of the audit.
The amount of fees for audit services for the financial year ended 31 March 2012 provided by KPMG Singapore
and its overseas member firms totalled approximately $724,000 whilst fees for non-audit services amounted to
approximately $66,000. The AC has satisfied itself with the independence and objectivity of the external Auditors in
carrying out their audit of the financial statements for the financial year ended 31 March 2012, having reviewed the
volume of non-audit services provided by the external Auditors and also having received written confirmation from
the Auditors of their independence.
Risk Management
The Board has overall responsibility for the oversight of material risks in the Group’s business. The Board is assisted
by a Risk Management Committee (“RMC”) which comprises four Non-Executive Directors, two of whom are
Independent Directors:
Mr Mak Lye Mun (Chairman)
Mr Ong Tiew Siam
Mr Tan Chok Kian
Mr Tse Po Shing Andy
The RMC identifies and reviews significant risks to the Group, and oversees the Group’s risk management practices
and procedures to ensure the overall effectiveness of risk identification, management, monitoring, and compliance
with internal guidelines and/or external requirements. The RMC meets at least twice a year, and had met twice in
FY2012, and as it deems necessary in discharging its duties and carrying out its functions of:
• Overseeing the development and improvement of the group-wide risk management processes and approving
risk policies and the Enterprise Risk Management framework;
• Reviewing at high level the major types of risk faced by the Group and the current and future strategies necessary
to manage them. The various matters and high-level enterprise risk that the Committee would review from
time to time include, inter alia, capital allocation risks; key business, project management and operational risks
including, risk relating to inventory, loss of key customers, suppliers, key staff, reputation, health and safety
issue, country of operations, etc, and financial risks including interest rate, foreign exchange, liquidity, tax and
market risk; and
• Monitoring a portfolio view of risks and the adequacy of management’s responses for managing risk, including
the mitigating actions being taken to reduce the key risks.
Management regularly reviews the Group’s businesses and operational activities to identify areas of significant business
risks as well as appropriate measures to control and mitigates these risks within the Group’s policies and strategies.
TAT HONG HOLDINGS LTD ANNUAL REPORT 201242
CORPORATEGOVERNANCE
Communication with Shareholders
The Company is committed to regular and proactive communications with its shareholders in line with continuous
disclosure obligations of the Company according to the Listing Manual of the SGX-ST. Pertinent information will be
disclosed to shareholders in a timely and equitable manner.
The announcement of results is published through the SGXNET and news releases. Information on the Company’s
new initiatives is first disseminated via SGXNET and may be followed by a news release. The quarterly financial results
and annual report are announced or issued within the relevant mandatory periods. All announcements and news
releases can also be found on the Company’s website at www.tathong.com.sg.
The Company holds formal and informal media and analysts briefings for the Company’s half-year and full-year
financial results or as and when the need arises.
All shareholders of the Company receive the annual report, circulars and notices of Annual General Meeting (the
“AGM”). The notices are also advertised in a local newspaper. The Directors including the respective Chairman of the
AC, NC and the RC, and Senior Management, are in attendance at AGMs to address queries and concerns relating
to the Company’s affairs and the work of the various committees. The external Auditors are in attendance to assist
the Directors in addressing shareholders’ queries that are related to the conduct of the audit or the Auditors’ reports.
DEALINGS IN SECURITIES
The Group has adopted an internal code of conduct on dealings in securities of the Company by Directors, Management
staff and employees in possession of confidential information. The Group’s Directors and affected employees are
prohibited from dealing in securities of the Company while in possession of price-sensitive information or during an
embargo period surrounding the issue of the Company’s financial results, including during the period commencing
two weeks before the announcement of the Company’s financial statements for each of the first three quarters of the
financial year and during the period commencing one month before the announcement of the financial statements
for the financial year, and ending on the date of the announcement of the relevant results. The Company’s internal
compliance code requires that the officer should not deal in his company’s securities on short term considerations.
This internal code is modelled on the Best Practices Guide and has been disseminated to Directors and affected
employees. A copy of the code on dealings in securities is also issued to new affected employees when they join
the Company.
POLICY ON INTERESTED PERSONS TRANSACTIONS
The Company has adopted a policy in respect of any transaction with Interested Persons and has procedures
established for the review and approval of the Company’s Interested Persons Transactions to ensure that they are
carried out on normal commercial terms or entered into on an arm’s length basis.
The Company also adopts the materiality thresholds imposed under Chapter 9 of the Listing Manual of SGX-ST
to announce such transactions, or to announce and convene separate General Meetings as and when potential
transactions with the Interested Persons arise, to seek shareholders’ prior approval for these transactions.
Save as disclosed below, there are no Interested Persons Transactions between the Company or its subsidiaries and
any of its interested persons during the financial year under review.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 43
CORPORATEGOVERNANCE
Name of Interested Person
Aggregate value of all Interested Person Transactions during
the financial year under review (excluding transactions
less than S$100,000 and transactions conducted
under shareholders’ mandate pursuant to Rule 920)
Aggregate value of all Interested Person Transactions conducted
under the shareholders’ mandate pursuant to Rule 920
(excluding transactions less than S$100,000)
Group 12 months ended
Group 12 months ended
31March 2012
S$’000
31 March 2011
S$’000
31 March 2012
S$’000
31 March 2011
S$’000
(A) Sales
CS Construction & Geotechnic Pte Ltd – – 832 –
CS Bored Pile System Pte Ltd – – 6,747 1500
THL Foundation Equipment Pte Ltd – – 260 429
L&M Foundation Specialist Pte Ltd – – – 4,144
Double Wong Foundation Pte Ltd – – – 2,130
CMC Construction Pte Ltd – – 1,250 –
(B) Purchases
L&M Foundation Specialist Pte Ltd – – 720 –
CS Bored Pile System Pte Ltd – – 415 –
CS Construction & Geotechnic Pte Ltd – – 100 –
CMC Construction Pte Ptd – – 460 –
MATERIAL CONTRACTS
There are no material contracts of the Group or its subsidiaries involving the interests of any Director or controlling
shareholder subsisting at the end of the financial year ended 31 March 2012 other than those that have been
announced via SGXNET.
TAT HONG HOLDINGS LTD ANNUAL REPORT 201244
DIRECTORS’REPORT Year ended 31 March 2012
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 31 March 2012.
DIRECTORS
The directors in office at the date of this report are as follows:
Tan Chok Kian
Ng San Tiong Roland
Ng Sun Ho Tony
Ng Sang Kuey Michael
Ong Tiew Siam
Ng San Wee David
Leong Horn Kee
Mak Lye Mun
Low Seow Juan
Tse Po Shing Andy
DIRECTORS’ INTERESTS
According to the register kept by the Company for the purposes of Section 164 of the Companies Act, Chapter 50,
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, share options and warrants in the Company and related corporations are as follows:
Name of director and corporationin which interests are held
Number of shares held at beginning of
the year
Number of shares held at end of
the year
Tan Chok Kian
The Company
- ordinary shares
- interests held 784,000 784,000
- warrants
- interests held 57,000 57,000
- share options
- interests held 100,000 100,000
Ng San Tiong Roland
The Company
- ordinary shares
- interests held 8,959,345 9,540,345
- deemed interests 247,573,160 253,511,160
- warrants
- interests held 845,934 845,934
- deemed interests 21,021,516 21,021,516
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 45
DIRECTORS’REPORT Year ended 31 March 2012
DIRECTORS’ INTERESTS (CONT’D)
Name of director and corporationin which interests are held
Number of shares held at beginning of
the year
Number of shares held at end of
the year
Chwee Cheng & Sons Pte Ltd *
- ordinary shares
- interests held 1,583,022 1,583,022
- deemed interests 5,994,580 5,994,580
Ng Sun Ho Tony
The Company
- ordinary shares
- interests held 6,138,630 6,138,630
- deemed interests 247,573,160 253,511,160
- warrants
- interests held 613,863 613,863
- deemed interests 21,021,516 21,021,516
Chwee Cheng & Sons Pte Ltd *
- ordinary shares
- interests held 1,376,230 1,376,230
- deemed interests 5,994,580 5,994,580
Ng Sang Kuey Michael
The Company
- ordinary shares
- interests held 4,345,350 4,345,350
- warrants
- interests held 412,535 412,535
Chwee Cheng & Sons Pte Ltd *
- ordinary shares
- interests held 911,863 911,863
Ong Tiew Siam
The Company
- ordinary shares
- interests held 2,617,000 2,617,000
- warrants
- interests held 241,700 241,700
- share options
- interests held 200,000 200,000
* Immediate and ultimate holding company
TAT HONG HOLDINGS LTD ANNUAL REPORT 201246
DIRECTORS’ INTERESTS (CONT’D)
Name of director and corporationin which interests are held
Number of sharesheld at beginning of
the year
Number of sharesheld at end of
the year
Ng San Wee David
The Company
- ordinary shares
- interests held 2,961,250 2,961,250
- deemed interests 247,573,160 253,511,160
- warrants
- interests held 291,125 291,125
- deemed interests 21,021,516 21,021,516
Chwee Cheng & Sons Pte Ltd *
- ordinary shares
- interests held 463,497 463,497
- deemed interests 5,994,580 5,994,580
Leong Horn Kee
The Company
- ordinary shares
- interests held 700,000 700,000
- warrants
- interests held 50,000 50,000
- share options
- interests held 100,000 100,000
Mak Lye Mun
The Company
- share options
- interests held 100,000 100,000
Low Seow Juan
The Company
- ordinary shares
- interests held 40,000 40,000
- share options
- interests held 100,000 100,000
* Immediate and ultimate holding company
Year ended 31 March 2012
DIRECTORS’REPORT
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 47
DIRECTORS’ INTERESTS (CONT’D)
Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares
or debentures of the Company or of related corporations either at the beginning of the financial year or at the end
of the financial year.
There were no changes in any of the above mentioned interests in the Company between the end of the financial
year and 21 April 2012.
Except as disclosed in this report, neither at the end of, nor at any time during the financial year, was the Company a
party to any arrangements 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.
In the normal course of business, the Company and its related corporations entered into transactions with companies
in which directors have substantial interests as disclosed in note 29 to the financial statements. However, the directors
have neither received nor become entitled to receive any benefit arising out of these transactions other than those
to which they are ordinarily entitled to as shareholders of these companies.
Except as disclosed above and in the notes to the financial statements, since the end of the last financial year, no
director has received or become entitled to receive, a benefit by reason of a contract made by the Company or a
related corporation with the director or with a firm of which he is a member or with a company in which he has a
substantial financial interest.
SHARE OPTIONS
Tat Hong Employee Share Option Scheme 2006 and Performance Share Plan
The Tat Hong Employee Share Option Scheme 2006 (“ESOS 2006”) and Performance Share Plan (“PSP”) were
approved by the Company at its Extraordinary General Meeting on 8 December 2006. The ESOS 2006 and PSP are
administered by the Shares Option/Performance Shares Plan Committee, comprising four directors, Mak Lye Mun
(Chairman), Ng San Tiong, Ng Sun Ho and Ong Tiew Siam.
Other information regarding the ESOS 2006 and PSP are set out as follows:
- the Board of the Company may specify the vesting conditions which must be satisfied or waived by the Board
before options and awards allocated under the ESOS 2006 and PSP may be dealt with;
- the exercise price for each share in respect of which an option is exercisable shall be a price equal to the
market price;
- the options can be exercised 1 year after the grant; and
- the options granted expire after 5 years for non-executive directors and 10 years for the employees of the
Company and its subsidiaries.
Year ended 31 March 2012
DIRECTORS’REPORT
TAT HONG HOLDINGS LTD ANNUAL REPORT 201248
SHARE OPTIONS (CONT’D)
Tat Hong Employee Share Option Scheme 2006 and Performance Share Plan (cont’d)
At the end of the financial year, details of the options granted under the Scheme on the unissued ordinary shares of
the Company, are as follows:
Date ofgrant ofoptions
Exerciseprice
per share
Optionsoutstanding at
1 April 2011
Optionsexercised/ forfeited
Optionsoutstandingat 31 March
2012
Numberof optionholders at
31 March 2012Exerciseperiod
30 September 2009 1.08 3,920,000 (405,000) 3,515,000 73 1 October 2010 –
30 September 2020
30 September 2009 1.08 400,000 – 400,000 4 1 October 2010 –
30 September 2015
4,320,000 (405,000) 3,915,000
Details of options granted to directors of the Company under the Scheme are as follows:
Name of director
Options grantedfor financialyear ended
31 March 2012
Aggregateoptions
granted sincecommencement
of Scheme to31 March 2012
Aggregateoptions
exercised sincecommencement
of Scheme to31 March 2012
Aggregateoptions
outstandingas at
31 March 2012
Ong Tiew Siam – 200,000 – 200,000
Tan Chok Kian – 100,000 – 100,000
Leong Horn Kee – 100,000 – 100,000
Low Seow Juan – 100,000 – 100,000
Mak Lye Mun – 100,000 – 100,000
Since the commencement of the Scheme, no options have been granted to the controlling shareholders of the
Company or their associates and no participant under the Scheme has been granted 5% or more of the total options
available under the Scheme.
The options granted by the Company do not entitle the holders of the options, by virtue of such holdings, to any rights
to participate in any share issue of any other company.
No award of shares have been granted under the PSP since its commencement to 31 March 2012.
WARRANTS
On 8 August 2008, the Company issued 50,662,672 warrants to be traded separately on the Singapore Exchange
Securities Trading Limited for no consideration. Each warrant can be converted into 1 new ordinary share in the share
capital of the Company at $2.50 each for cash, to be exercised at any time after the 6 months upon the listing of the
warrants, i.e. commencing 8 February 2009. The warrants expire on 2 August 2013.
Except as disclosed above, there were no other unissued shares of the Company or its subsidiaries under options
granted by the Company or its subsidiaries as at the end of the financial year.
Year ended 31 March 2012
DIRECTORS’REPORT
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 49
AUDIT COMMITTEE
The members of the Audit Committee during the year and at the date of this report are as follows:
• Leong Horn Kee (Chairman)
• Tan Chok Kian
• Low Seow Juan
• Tse Po Shing Andy
The Audit Committee performs the functions specified by section 201B of the Companies Act, Chapter 50, the SGX
Listing Manual and the Code of Corporate Governance.
The Audit Committee held four meetings during the year. In performing its functions, the Audit Committee met with
the Company’s external and internal auditors to discuss the scope of their work and the results of their examination
and evaluation of the Company’s system of internal accounting controls.
The Audit Committee also reviewed the following:
• assistance provided by the Company’s officers to the internal and external auditors;
• quarterly financial information and annual financial statements of the Group and of 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).
The Audit Committee has full access to management and is given the resources required for it to discharge its functions.
It has full authority and 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 has reviewed the independence of the external auditors and determined that the external
auditors were independent in carrying out the audit of the financial statements.
The Audit Committee 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.
Year ended 31 March 2012
DIRECTORS’REPORT
TAT HONG HOLDINGS LTD ANNUAL REPORT 201250
AUDITORS
The auditors, KPMG LLP, have indicated their willingness to accept re-appointment.
On behalf of the Board of Directors
Tan Chok Kian
Chairman
Ng San Tiong
Director
28 May 2012
Year ended 31 March 2012
DIRECTORS’REPORT
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 51
STATEMENT BY DIRECTORS
In our opinion:
(a) the financial statements set out on pages 54 to 128 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 31 March 2012 and the results, changes in equity and cash flows
of the Group for the year ended on that date in accordance with the provisions of the Singapore Companies
Act, Chapter 50 and Singapore Financial Reporting Standards; and
(b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they fall due.
The Board of Directors has, on the date of this statement, authorised these financial statements for issue.
On behalf of the Board of Directors
Tan Chok Kian
Chairman
Ng San Tiong
Director
28 May 2012
Year ended 31 March 2012
TAT HONG HOLDINGS LTD ANNUAL REPORT 201252
INDEPENDENT AUDITORS’ REPORT
We have audited the accompanying financial statements of Tat Hong Holdings Ltd (the “Company”) and its subsidiaries (the “Group”), which comprise the statements of financial position of the Group and the Company as at 31 March 2012, the income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows of the Group for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 54 to 128.
MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act, Chapter 50 (the Act) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets.
AUDITORS’ RESPONSIBILITY
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OPINION
In our opinion, the consolidated financial statements of the Group and the statement of financial position of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards to give a true and fair view of the state of affairs of the Group and of the Company as at 31 March 2012 and the results, changes in equity and cash flows of the Group for the year ended on that date.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.
KPMG LLPPublic Accountants andCertified Public Accountants
Singapore28 May 2012
Members of the Company Tat Hong Holdings Ltd
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 53
Group CompanyNote 2012 2011 2012 2011
$’000 $’000 $’000 $’000
Assets
Property, plant and equipment 4 765,487 623,625 11 13
Subsidiaries 5 – – 230,073 182,756
Associates 6 63,385 60,549 27,451 27,392
Joint ventures 7 2,279 6,176 2,309 5,324
Other financial assets 8 115 201 – –
Deferred tax assets 9 6,319 6,581 – –
Intangible assets 10 49,704 49,044 – –
Non-current assets 887,289 746,176 259,844 215,485
Inventories 11 234,191 200,821 – –
Trade and other receivables 12 184,818 145,445 76,043 119,964
Cash and cash equivalents 13 76,770 61,813 309 418
Current assets 495,779 408,079 76,352 120,382
Total assets 1,383,068 1,154,255 336,196 335,867
Equity
Share capital 14 252,860 252,860 252,860 252,860
Reserves 15 303,537 265,995 40,205 35,688
Equity attributable to owners
of the Company 556,397 518,855 293,065 288,548
Non-controlling interests 41,792 53,024 – –
Total equity 598,189 571,879 293,065 288,548
Liabilities
Trade and other payables 16 1,719 1,517 – –
Financial liabilities 17 282,440 244,532 31,110 28,386
Deferred tax liabilities 9 18,113 14,275 – –
Non-current liabilities 302,272 260,324 31,110 28,386
Trade and other payables 16 298,070 149,252 3,422 2,682
Financial liabilities 17 173,515 164,898 8,500 16,000
Current tax payable 11,022 7,902 99 251
Current liabilities 482,607 322,052 12,021 18,933
Total liabilities 784,879 582,376 43,131 47,319
Total equity and liabilities 1,383,068 1,154,255 336,196 335,867
The accompanying notes form an integral part of these financial statements.
STATEMENTS OF FINANCIAL POSITION As at 31 March 2012
TAT HONG HOLDINGS LTD ANNUAL REPORT 201254
CONSOLIDATED INCOME STATEMENT
Note 2012 2011$’000 $’000
Revenue 19 719,758 584,188
Cost of sales (456,739) (375,676)
Gross profit 263,019 208,512
Other operating income 21 8,729 14,833
Distribution expenses (20,212) (13,203)
Administrative expenses (14,579) (13,692)
Other operating expenses (157,914) (137,561)
Results from operating activities 79,043 58,889
Finance expense 20 (22,464) (19,111)
56,579 39,778
Share of profits of associates (net of tax) 3,832 1,347
Share of losses of joint ventures (net of tax) (2,427) (568)
Profit before income tax 21 57,984 40,557
Income tax expense 22 (21,538) (8,896)
Profit for the year 36,446 31,661
Attributable to:
Owners of the Company 42,257 25,957
Non-controlling interests (5,811) 5,704
Profit for the year 36,446 31,661
Earnings per share
Basic earnings per share (cents) 23(a) 7.42 4.56
Diluted earnings per share (cents) 23(b) 7.42 4.56
Year ended 31 March 2012
The accompanying notes form an integral part of these financial statements.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 55
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2012 2011$’000 $’000
Profit for the year 36,446 31,661
Other comprehensive income
Net gain/(loss) on translation of net investment in foreign entities 6,656 (7,373)
Other comprehensive income for the year, net of income tax 6,656 (7,373)
Total comprehensive income for the year 43,102 24,288
Attributable to:
Owners of the Company 45,802 20,793
Non-controlling interests (2,700) 3,495
Total comprehensive income for the year 43,102 24,288
Year ended 31 March 2012
The accompanying notes form an integral part of these financial statements.
TAT HONG HOLDINGS LTD ANNUAL REPORT 201256
CONSOLIDATED STATEMENTOF CHANGES IN EQUITY
NoteSharecapital
Reserve for ownshares
Share optionreserve
Capital reserves
Currency translation
reserveAccumulated
profits
Total attributable to owners
of the Company
Non-controlling interests
Total equity
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
At 1 April 2010 252,860 (1,780) 711 12,856 4,735 229,184 498,566 94,777 593,343
Total comprehensive
income for the year
Profit for the year – – – – – 25,957 25,957 5,704 31,661
Other comprehensive
income
Net loss on translation
of net investment in
foreign entities – – – (101) (5,063) – (5,164) (2,209) (7,373)
Total other
comprehensive income – – – (101) (5,063) – (5,164) (2,209) (7,373)
Total comprehensive
income for the year – – – (101) (5,063) 25,957 20,793 3,495 24,288
Transactions with
owners of the
Company, recognised
directly in equity
Contributions by
and distributions
to owners of the
Company
Value of employee
services received for
issue of share options – – 646 – – – 646 – 646
Capital injection by non-
controlling interest – – – – – – – 13,273 13,273
Dividends 25 – – – – – (14,241) (14,241) (1,214) (15,455)
Total contributions by and
distributions to owners
of the Company – – 646 – – (14,241) (13,595) 12,059 (1,536)
Changes in ownership
interests in
subsidiaries
Acquisition of non-
controlling interests
without changes
in control – – – 10,769 2,610 – 13,379 (61,546) (48,167)
Dilution of interest in
subsidiary – – – (288) – – (288) 341 53
Acquisition of controlling
interests – – – – – – – 3,898 3,898
Total changes in
ownership interests in
subsidiaries – – – 10,481 2,610 – 13,091 (57,307) (44,216)
Transfer to reserves – – – 563 – (563) – – –
At 31 March 2011 252,860 (1,780) 1,357 23,799 2,282 240,337 518,855 53,024 571,879
Year ended 31 March 2012
The accompanying notes form an integral part of these financial statements.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 57
CONSOLIDATED STATEMENTOF CHANGES IN EQUITY
NoteSharecapital
Reserve for ownshares
Share optionreserve
Capital reserves
Currency translation
reserveAccumulated
profits
Total attributable to owners of the Company
Non-controlling interests
Total equity
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
At 1 April 2011 252,860 (1,780) 1,357 23,799 2,282 240,337 518,855 53,024 571,879
Total comprehensive
income for the year
Profit/(Loss) for the year – – – – – 42,257 42,257 (5,811) 36,446
Other comprehensive
income
Net gain on translation
of net investment in
foreign entities – – – 76 3,469 – 3,545 3,111 6,656
Total other
comprehensive income – – – 76 3,469 – 3,545 3,111 6,656
Total comprehensive
income for the year – – – 76 3,469 42,257 45,802 (2,700) 43,102
Transactions with
owners of the
Company, recognised
directly in equity
Contributions by
and distributions
to owners of the
Company
Capital injection by non-
controlling interest – – – – – – – 6,957 6,957
Dividends 25 – – – – – (8,546) (8,546) (90) (8,636)
Total contributions by and
distributions to owners
of the Company – – – – – (8,546) (8,546) 6,867 (1,679)
Changes in ownership
interests in
subsidiaries
Acquisition of non-
controlling interests
without changes in
control – – – (263) 781 – 518 (15,631) (15,113)
Dilution of interest in
subsidiaries – – – (232) – – (232) 232 –
Total changes in
ownership interests in
subsidiaries – – – (495) 781 – 286 (15,399) (15,113)
Transfer to reserves – – – 409 – (409) – – –
At 31 March 2012 252,860 (1,780) 1,357 23,789 6,532 273,639 556,397 41,792 598,189
Year ended 31 March 2012
The accompanying notes form an integral part of these financial statements.
TAT HONG HOLDINGS LTD ANNUAL REPORT 201258
Note 2012 2011$’000 $’000
Operating activities
Profit for the year 36,446 31,661
Adjustments for:
Inventory written off 65 2,021
Impairment loss on property, plant and equipment – 4,053
Impairment loss on intangible assets 160 4,916
Bargain purchase gain arising from acquisition of a subsidiary (760) (1,395)
Depreciation of property, plant and equipment 68,955 58,422
Loss/(Gain) on disposal of property, plant and equipment 11,759 (3,243)
Loss on disposal of intangible asset 14 –
Property, plant and equipment written off 96 137
Amortisation of intangible assets 632 885
Cost of long service and annual leave 4,472 4,416
Insurance claim recovered (2,857) (5,385)
Share of profits of associates (3,832) (1,347)
Share of losses of joint ventures 2,427 568
Loss on fair value adjustment on derivatives 274 70
Provisions made/(reversed) net 563 (265)
Value of employee services received for issue of share options – 646
Interest income (1,396) (1,654)
Finance expense 22,464 19,111
Income tax expense 21,538 8,896
Operating profit before working capital changes 161,020 122,513
Changes in working capital:
Inventories (132,262) (54,592)
Trade and other receivables (33,364) (23,221)
Trade and other payables 124,216 (19,872)
Cash generated from operations 119,610 24,828
Income taxes paid (11,954) (8,500)
Payment for long service and annual leave and others (3,823) (3,524)
Net cash from operating activities 103,833 12,804
Year ended 31 March 2012
CONSOLIDATEDSTATEMENT OF CASH FLOWS
The accompanying notes form an integral part of these financial statements.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 59
Note 2012 2011$’000 $’000
Investing activities
Purchase of property, plant and equipment (125,919) (79,289)
Purchase of intangible assets (1,003) (640)
Proceeds from disposal of property, plant and equipment 43,639 27,224
Investments in associates (195) (143)
Acquisition of subsidiaries 24 3,477 (5,520)
Interest received 1,390 1,649
Dividends received from associates 439 990
Dividends received from joint ventures 1,925 1,367
Non-trade amounts due from related parties (2,547) (2,820)
Net cash used in investing activities (78,794) (57,182)
Financing activities
Proceeds from/(Repayment of) trust receipts 17,139 (11,782)
Purchase of non-controlling interest in subsidiaries (15,113) (48,167)
Proceeds from bank loans 68,542 211,049
Repayment of bank loans (71,316) (39,806)
Capital injection by non-controlling interests 6,957 5,188
Loan to an associate – (750)
Repayment of loans by associates 29 570
Repayment of loans by joint ventures 305 250
Proceeds from finance lease obligations 80,197 29,780
Repayment of finance lease obligations (66,001) (81,145)
Interest paid (22,316) (19,125)
Dividends paid to non-controlling interests (90) (1,214)
Dividends paid (8,546) (14,241)
Fixed deposit earmarked for certain banking facilities (2,212) (374)
Net cash (used in)/from financing activities (12,425) 30,233
Net increase/(decrease) in cash and cash equivalents 12,614 (14,145)
Cash and cash equivalents at beginning of the year 53,975 69,334
Effect of exchange rate fluctuations on cash held 227 (1,214)
Cash and cash equivalents at end of the year 13 66,816 53,975
During the year ended 31 March 2012, the Group acquired property, plant and equipment with an aggregate cost of
$158,175,000 (2011: $118,985,000) of which $32,256,000 (2011: $31,611,000) was acquired by means of finance
leases. In addition, property, plant and equipment of $99,237,000 (2011: $52,616,000) was reclassified from inventories
during the financial year, of which $80,197,000 (2011: $29,780,000) was financed by means of finance leases.
During the year ended 31 March 2011, non-controlling interests of a subsidiary injected capital into that subsidiary
in the form of property, plant and equipment at a fair value of $8,085,000.
Year ended 31 March 2012
CONSOLIDATEDSTATEMENT OF CASH FLOWS
The accompanying notes form an integral part of these financial statements.
TAT HONG HOLDINGS LTD ANNUAL REPORT 201260
Year ended 31 March 2012
NOTESTO 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 28 May 2012.
1 DOMICILE AND ACTIVITIES
Tat Hong Holdings Ltd (the Company) is incorporated in the Republic of Singapore and has its registered office
at 18 Sungei Kadut Avenue, Singapore 729489.
The principal activities of the Company are those relating to investment holding. The principal activities of the
subsidiaries are set out in note 5 below.
The immediate and ultimate holding company is Chwee Cheng & Sons Pte Ltd, a company incorporated in the
Republic of Singapore.
The consolidated financial statements relate to the Company and its subsidiaries (together referred to as the
Group) and the Group’s interest in associates and joint ventures.
2 BASIS OF PREPARATION
2.1 Statement of compliance
The financial statements have been prepared in accordance with the Singapore Financial Reporting
Standards (FRS).
2.2 Basis of measurement
The financial statements have been prepared on the historical cost basis except for the following material items
in the statement of financial position:
• derivative financial instruments are measured at fair value; and
• financial instruments at fair value through profit or loss are measured at fair value.
2.3 Functional and presentation currency
The financial statements are presented in Singapore dollars which is the Company’s functional currency. All financial
information presented in Singapore dollars has been rounded to the nearest thousand, unless otherwise stated.
2.4 Use of estimates and judgements
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.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 61
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
2 BASIS OF PREPARATION (CONT’D)
2.4 Use of estimates and judgements
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material
adjustment within the next financial year are included in the following notes:
• Note 4 – useful life and residual values of property, plant and equipment;
• Note 6 – impairment losses on investment in associates;
• Note 7 – impairment losses on investment in joint ventures;
• Note 10 – assumptions of recoverable amounts relating to goodwill impairment;
• Note 22 – income taxes;
• Note 24 – valuation of assets, liabilities and contingent liabilities acquired in business combinations;
and
• Note 26 – valuation of financial instruments.
2.5 Changes in accounting policies
(i) Measurements of non-controlling interests in business combinations
From 1 April 2011, the Group has applied the improvements to FRS 103 Business Combinations resulting
from the Improvements to FRSs 2010 in measuring at the acquisition date, non-controlling interests
that do not present ownership interests and do not entitle their holders to a proportionate share of the
acquiree’s net assets in the event of liquidation. Such non-controlling interests are now measured at fair
value (see note 3.1).
Previously, the Group has elected on a transaction-by-transaction basis whether to measure non-controlling
interests that are not present ownership interests and do not entitle holders to proportionate shares of the
acquirees’ net assets on liquidation at fair value, or at the non-controlling interests’ proportionate share of
the recognised amounts of the acquiree’s identifiable net assets, at the acquisition date.
This change in accounting policy has been applied prospectively to new business combinations occurring
on or after 1 April 2011 and has no material impact on earnings per share.
(ii) Identification of related party relationships and related party disclosures
From 1 April 2011, the Group has applied the revised FRS 24 Related Party Disclosures (2010) to identify
parties that are related to the Group and to determine the disclosures to be made on transactions and
outstanding balances, including commitments, between the Group and its related parties. FRS 24 (2010)
improved the definition of a related party in order to eliminate inconsistencies and ensure symmetrical
identification of relationships between two parties.
The adoption of FRS 24 (2010) affects only the disclosures made in the financial statements. There is no
financial effect on the results and financial position of the Group for the current and previous financial
years. Accordingly, the adoption of FRS 24 (2010) has no impact on earnings per share.
TAT HONG HOLDINGS LTD ANNUAL REPORT 201262
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
3 SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these financial
statements, and have been applied consistently by Group entities, except as explained in note 2.5 which
addresses changes in accounting policies.
3.1 Basis of consolidation
Business combinations
Business combinations are accounted for using the acquisition method at the acquisition date, which is the date
on which control is transferred to the Group. Control is the power to govern the financial and operating policies
of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration
potential voting rights that are currently exercisable.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships.
Such amounts are generally recognised in profit or loss.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the
Group incurs in connection with a business combination are expensed as incurred.
Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent
consideration is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise,
subsequent changes to the fair value of the contingent consideration are recognised in profit or loss.
For non-controlling interests that are present ownership interests and entitle their holders to a proportionate
share of the acquiree’s net assets in the event of liquidation, the Group elects on a transaction-by-transaction
basis whether to measure them at fair value, or at the non-controlling interests’ proportionate share of the
recognised amounts of the acquiree’s identifiable net assets, at the acquisition date. All non-controlling interests
are measured at acquisition-date at fair value or, when applicable, on the basis specified in another standard.
When share-based payment awards (replacement awards) are required to be exchanged for awards held by
the acquiree’s employees (acquiree’s awards) and relate to past services, then all or a portion of the amount
of the acquirer’s replacement awards is included in measuring the consideration transferred in the business
combination. This determination is based on the market-based value of the replacement awards compared
with the market-based value of the acquiree’s awards and the extent to which the replacement awards relate
to past and/or future service.
Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the
financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control,
potential voting rights 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.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 63
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.1 Basis of consolidation (cont’d)
Associates and jointly controlled entities
Associates are those entities in which the Group has significant influence, but not control, over their financial
and operating policies. Significant influence is presumed to exist when the Group holds between 20% and
50% of the voting power of another entity. Joint ventures are those entities over whose activities the Group
has joint control, established by contractual agreement and requiring unanimous consent for strategic financial
and operating decisions.
Investments in associates and joint ventures (collectively referred to as “equity-accounted investees”) are accounted
for using the equity method. The consolidated financial statements include the Group’s share of profit or loss
and other comprehensive income of the equity-accounted investees, after adjustments to align the accounting
policies with those of the Group, from the date that significant influence or joint control commences until the
date that significant influence or joint control ceases. When the Group’s share of losses exceeds its interest
in an equity-accounted investee, the carrying amount of that interest, including any long-term investments, is
reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has
an obligation or has made payments on behalf of the investee.
Acquisitions of non-controlling interests
Acquisitions of non-controlling interests are accounted for as transactions with owners in their capacity as owners
and therefore the carrying amounts of assets and liabilities are not changed and goodwill is not recognised as a
result of such transactions. The adjustments to non-controlling interests are based on a proportionate amount
of the net assets of the subsidiary. Any difference between the adjustment to non-controlling interests and the
fair value of consideration paid is recognised directly in equity and presented as part of equity attributable to
owners of the Company.
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. Unrealised gains arising from
transactions with associates and joint ventures are eliminated against the investment to the extent of the Group’s
interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the
extent that there is no evidence of impairment.
Accounting for subsidiaries, and associates and jointly controlled ventures
Investments in subsidiaries, associates and joint ventures are stated in the Company’s statement of financial
position at cost less accumulated impairment losses.
TAT HONG HOLDINGS LTD ANNUAL REPORT 201264
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.2 Foreign currency
Foreign currency transactions
Transactions in foreign currencies are translated at the respective functional currencies of Group entities at
exchange rates at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies
at the reporting date are retranslated to the functional currency at the exchange rate at the reporting date. The
foreign currency gain or loss on monetary items is the difference between amortised cost in the functional
currency at the beginning of the year, adjusted for effective interest and payments during the year, and the
amortised cost in foreign currency translated at the exchange rate at the end of the year.
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 that the fair value was determined.
Non-monetary items in a foreign currency that are measured in terms of historical cost are translated using the
exchange rate at the date of the transaction. Foreign currency differences arising on retranslation are recognised
in profit or loss, except for differences arising on the retranslation of available-for-sale equity instruments, a
financial liability designated as a hedge of the net investment in a foreign operation that is effective, or qualifying
cash flow hedges, which are recognised in other comprehensive income.
Foreign operations
The assets and liabilities of foreign operations, excluding goodwill and fair value adjustments arising on
acquisition, are translated to Singapore dollars at exchange rates at the end of the reporting period. The income
and expenses of foreign operations, excluding foreign operations in hyperinflationary economies, 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 April 2005 are treated as assets and liabilities of
the foreign operation and translated at the closing rate. For acquisitions prior to 1 April 2005, the exchange
rates at the date of acquisition were used.
Foreign currency differences are recognised in other comprehensive income, and presented in the foreign
currency translation reserve (translation reserve) in equity. However, if the foreign operation is a non-wholly-
owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-
controlling interests. When a foreign operation is disposed of such that control, significant influence or joint
control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified
to profit or loss as part of the gain or loss on disposal. When the Group disposes of only part of its interest in
a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative
amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in
an associate that includes a foreign operation while retaining significant influence, the relevant proportion of
the cumulative amount is reclassified to profit or loss.
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 in the translation reserve in equity.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 65
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.3 Financial instruments
Non-derivative financial assets
The Group initially recognises loans and receivables and deposits on the date that they are originated. All other
financial assets (including assets designated at fair value through profit or loss) are recognised initially on the
trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire,
or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which
substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred
financial assets that is created or retained by the Group is recognised as a separate asset or liability.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position
when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net
basis or to realise the asset and settle the liability simultaneously.
The Group classifies non-derivative financial assets into the following categories: loans and receivables and
available-for-sale financial assets.
Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an
active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective
interest method, less any impairment losses.
Loans and receivables comprise trade and other receivables and cash and cash equivalents.
Cash and cash equivalents comprise cash balances and bank deposits. Bank overdrafts that are repayable on
demand and form an integral part of the Group’s cash management are included as a component of cash and
cash equivalents for the purpose of the statement of cash flows.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale
and that are not classified in any of the previous categories. The Group’s investments in equity securities and
certain debt securities are classified as available-for-sale financial assets. Available-for-sale financial assets are
recognised initially at fair value plus directly attributable transaction costs. Subsequent to initial recognition,
they are measured at fair value and changes therein, other than impairment losses (see note 3.7) and foreign
exchange differences on available-for-sale monetary items, are recognised in other comprehensive income and
presented in the fair value reserve in equity. When an investment is derecognised, the cumulative gain or loss
in other comprehensive income is transferred to profit or loss.
For those financial assets where there is no active market and where fair value cannot be measured reliably,
they are measured at cost.
TAT HONG HOLDINGS LTD ANNUAL REPORT 201266
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.3 Financial instruments (cont’d)
Non-derivative financial liabilities
The Group initially recognises debt securities issued and subordinated liabilities on the date that they are
originated. All other financial liabilities (including liabilities designated at fair value through profit or loss) are
recognised initially on the trade date, which is the date that the Group becomes a party to the contractual
provisions of the instrument.
The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expired.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position
when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net
basis or to realise the asset and settle the liability simultaneously.
The Company classifies non-derivative financial liabilities into the other financial liabilities category. 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.
Other financial liabilities comprise financial liabilities, and trade and other payables.
Financial guarantees
Financial guarantees are financial instruments issued by the Group that require the issuer to make specified
payments to reimburse the holder for the loss it incurs because a specified debtor fails to meet payment when
due in accordance with the original or modified terms of a debt instrument.
Financial guarantees are recognised initially at fair value. Subsequent to initial measurement, the financial
guarantees are stated at the higher of the initial fair value less cumulative amortisation and the amount that would
be recognised if they were accounted for as contingent liabilities. When the financial guarantees are terminated
before their original expiry date, the carrying amount of the financial guarantees is transferred to the profit or loss.
Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares
and share options are recognised as a deduction from equity, net of any tax effects.
Convertible redeemable preference share
Convertible redeemable preference share is classified as equity if it is non-redeemable, or redeemable only at
the Company’s option, and any dividends are discretionary. Dividends thereon are recognised as distributions
within equity upon approval by the Company’s shareholders.
Convertible redeemable preference share capital is classified as a financial liability if it is redeemable on a specific
date or at the option of the shareholders, or if dividend payments are not discretionary. Dividends thereon are
recognised as interest expense in profit or loss as accrued.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 67
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.3 Financial instruments (cont’d)
Share capital (cont’d)
Repurchase of share capital (treasury shares)
When share capital recognised as equity is repurchased, the amount of the consideration paid, which includes
directly attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased shares
are classified as treasury shares and are presented as a deduction from total equity. When treasury shares are
sold or reissued subsequently, the amount received is recognised as an increase in equity, and the resulting
surplus or deficit on the transaction is transferred to/from accumulated profits.
Distribution of non-cash assets to owners of the Company
The Group measures a liability to distribute non-cash assets as a dividend to the owners of the Company at the
fair value of the assets to be distributed. The carrying amount of the dividend is remeasured at each reporting
date and at the settlement dates with any changes recognised directly in equity as adjustments to the amount
of the distribution. On settlement of the transactions, the Group recognises the difference, if any, between the
carrying amount of the assets distributed and the carrying amount of the liability in profit or loss.
Derivative financial instruments, including hedge accounting
The Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures.
Embedded derivatives are separated from the host contract and accounted for separately if the economic
characteristics and risks of the host contract and the embedded derivative are not closely related, a separate
instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the
combined instrument is not measured at fair value through profit or loss.
Derivatives are recognised initially at fair value; attributable transaction costs are recognised in profit or loss
as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and all changes in its fair
value are recognised immediately in profit or loss.
3.4 Property, plant and equipment
Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated
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 their intended use, the cost of dismantling and removing the items and restoring
the site on which they are located and capitalised borrowing costs. 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 gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds
from disposal with the carrying amount of property, plant and equipment, and is recognised net within other
operating income/other operating expenses in profit or loss.
TAT HONG HOLDINGS LTD ANNUAL REPORT 201268
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.4 Property, plant and equipment (cont’d)
Subsequent costs
The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying
amount of the item if it is probable that the future economic benefits embodied within the component will
flow to the Group, and its cost can be measured reliably. The carrying amount of the replaced component is
derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit
or loss as incurred.
Depreciation
Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted
for cost, less its residual value.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of property,
plant and equipment, since this most closely reflects the expected pattern of consumption of the future economic
benefits embodied in the asset. Leased assets are depreciated over the shorter of the lease term and their
useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term.
Freehold land is not depreciated.
The estimated useful lives for the current and comparative periods are as follows:
• Leasehold properties Over the terms of the leases between 25 to 43 years
• Freehold properties 50 years
• Plant and machinery 10 to 20 years
• Furniture, fittings, office and
workshop equipments 3 to 5 years
• Motor vehicles 5 years
• Vessels 12 years
No depreciation is provided on assets under construction.
Depreciation methods, useful lives and residual values are reviewed at the end of each reporting period and
adjusted if appropriate.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 69
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.5 Intangible assets
Goodwill
Goodwill that arises upon the acquisition of subsidiaries is included in intangible assets and represents the
excess of:
• the fair value of the consideration transferred; plus
• the recognised amount of any non-controlling interests in the acquiree; plus
• if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree,
over the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
Goodwill arising on the acquisition of subsidiaries is presented in intangible assets. Goodwill arising on the
acquisition of associates and joint ventures is presented together with investments in associates and joint ventures.
Goodwill is measured at cost less accumulated impairment losses, and tested for impairment.
Other intangible assets
Other intangible assets that are acquired by the Group and have finite useful lives are measured at cost less
accumulated amortisation and accumulated impairment losses.
Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill
and brands, is recognised in profit or loss as incurred.
Amortisation
Amortisation calculated over the cost of the asset, less its residual value.
Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible
assets, other than goodwill, from the date that they are available for use, since this closely reflects the expected
pattern of consumption of the future economic benefits embodied in the assets.
The estimated useful lives for the current and comparative periods are as follows:
• Customer relationships 1 to 7 years
• Computer software 3 years
Amortisation methods, useful lives and residual values are reviewed at the end of each reporting period and
adjusted if appropriate.
TAT HONG HOLDINGS LTD ANNUAL REPORT 201270
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.6 Inventories
Heavy machinery, equipment and spare parts
Inventories held for resale are stated at the lower of cost (principally specific identification and weighted average
cost method) and net realisable value. Net realisable value is the estimated selling price in the ordinary course
of business less the estimated costs of completion and selling expenses.
Cost of machinery and equipment is determined on specific identification cost basis. Cost of spare parts is
calculated using weighted average cost basis.
Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories
to their present location and condition. In the case of work in progress, cost includes an appropriate share of
overheads based on normal operating capacity.
3.7 Impairment
Non-derivative financial assets
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine
whether there is any objective evidence that it is impaired. A financial asset is impaired if objective evidence
indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a
negative effect on the estimated future cash flows of that asset that can be estimated reliably.
Objective evidence that financial assets (including equity securities) are impaired can include default or delinquency
by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider otherwise,
indications that a debtor or issuer will enter bankruptcy and the disappearance of an active market for a security.
In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its
cost is objective evidence of impairment.
Loans and receivables
The Group considers evidence of impairment for loans and receivables at both a specific asset and collective level.
All individually significant loans and receivables are assessed for specific impairment. All individually significant
loans and receivables found not to be specifically impaired are then collectively assessed for any impairment
that has been incurred but not yet identified. Loans and receivables that are not individually significant are
collectively assessed for impairment by grouping together loans and receivables with similar risk characteristics.
In assessing collective impairment, the Group uses historical trends of the probability of default, timing of
recoveries and the amount of loss incurred, adjusted for management’s judgement as to whether current
economic and credit conditions are such that the actual losses are likely to be greater or less than suggested
by historical trends.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 71
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.7 Impairment (cont’d)
Non-derivative financial assets (cont’d)
Loans and receivables (cont’d)
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference
between its carrying amount, and the present value of the estimated future cash flows discounted at the asset’s
original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account against
receivables. Interest on the impaired asset continues to be recognised through the unwinding of the discount.
When a subsequent event causes the amount of the impairment losses to decrease, the decrease in impairment
loss is reversed through profit or loss. Impairment losses on unquoted equity instruments, that are not carried
at fair value because the fair value cannot be reliably measured, are measured as the difference between the
equity instruments carrying amount and the present value of the estimated future cash flows discounted at the
current market rate of return for a similar financial asset. The loss recognised is not reversed in future periods.
Available-for-sale financial assets
Impairment losses on available-for-sale equity financial assets are recognised by reclassifying the losses
accumulated in the fair value reserve in equity to profit or loss. The cumulative loss that is reclassified from equity
to profit or loss is the difference between the acquisition cost, net of any principal repayment and amortisation,
and the current fair value, less any impairment loss previously recognised in profit or loss. Changes in impairment
provisions attributable to application of the effective interest method are reflected as a component of interest
income.
If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the
increase can be related objectively to an event occurring after the impairment loss was recognised in profit or
loss, then the impairment loss is reversed. The amount of the reversal is recognised in profit or loss. However,
any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognised in other
comprehensive income.
Non-financial assets
The carrying amounts of the Group’s 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, then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite
useful lives or that are not yet available for use, the recoverable amount is estimated each year at the same time.
An impairment loss is recognised if the carrying amount of an asset of its related cash-generating unit (CGU)
exceeds its estimated recoverable amount.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the
asset or CGU. For the purpose of impairment testing, assets that cannot be tested individually are grouped
together into the smallest group of assets that generates cash inflows from continuing use that are largely
independent of the cash inflows of other assets or CGU. Subject to an operating segment ceiling test, for the
purposes of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the
level at which impairment is tested reflects the lowest level at which goodwill is monitored for internal reporting
purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to
benefit from the synergies of the combination.
TAT HONG HOLDINGS LTD ANNUAL REPORT 201272
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.7 Impairment (cont’d)
Non-financial assets (cont’d)
The Group’s corporate assets do not generate separate cash inflows and are utilised by more than one CGU.
If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for
the CGU to which the corporate asset belongs.
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated
first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amount
of the other assets in the unit (group of units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, 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 asset’s 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.
Goodwill that forms part of the carrying amount of an investment in an associate is not recognised separately,
and therefore is not tested for impairment separately. Instead, the entire amount of the investment in an associate
is tested for impairment as a single asset when there is objective evidence that the investment in an associate
may be impaired.
3.8 Employee benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions
into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for
contributions to defined contribution pension plans are recognised as an employee benefit expense in profit or
loss in the periods during which services are rendered by employees.
Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the
related service is provided. A liability is recognised for the amount expected to be paid under short-term cash
bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as
a result of past service provided by the employee and the obligation can be estimated reliably.
Long service leave
The liability for employee benefits for long service leave represents the present value of the estimated future
cash outflows to be made by the employer resulting from employee’s services provided up to the reporting date.
In determining the provision for long service leave, consideration has been given to future increases in wage
and salary rates, expired settlement dates and experience with staff departures. Related on-costs, as described
above, have also been included in the liability.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 73
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.8 Employee benefits (cont’d)
Long service leave (cont’d)
Provision for employee entitlements which are not expected to be settled within twelve months are discounted
using the rates attached to certain government securities at the reporting date, which most closely match the
terms of maturity of the related liabilities.
Share-based payment transactions
The grant date fair value of share-based payment awards granted to employees is recognised as an employee
expense, with a corresponding increase in equity, over the period that the employees unconditionally become
entitled to the awards. The amount recognised as an expense is adjusted to reflect the number of awards for
which the related service and non-market vesting conditions are expected to be met, such that the amount
ultimately recognised as an expense is based on the number of awards that do meet the related service and
non-market performance conditions at the vesting date. For share-based payment awards with non-vesting
conditions, the grant date fair value of the share-based payment is measured to reflect such conditions and
there is no true-up for differences between expected and actual outcomes.
The fair value of the amount payable to employees in respect of share appreciation rights, which are settled in
cash, is recognised as an expense with a corresponding increase in liabilities, over the period that the employees
unconditionally become entitled to payment. The liability is remeasured at each reporting date and at settlement
date. Any changes in the fair value of the liability are recognised as personnel expense in profit or loss.
Share-based payment arrangements in which the Group receives goods or services as consideration for its
own equity instruments are accounted for as equity-settled share-based payment transactions, regardless of
how the equity instruments are obtained by the Group.
3.9 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. The
unwinding of the discount is recognised as finance cost.
Warranties
A provision for warranties is recognised when the underlying products are sold. The provision is based on
historical warranty data and a weighting of all possible outcomes against their associated probabilities.
Reinstatement costs for leased property
A provision for reinstatement costs for leased property is recognised when an underlying make good obligation
clause exists in property lease contracts.
The provision is the best estimate of the present value of the expenditure required to settle the make good
obligation at the reporting date, based on current legal requirements and technology. Future make good costs
are reviewed annually and any changes are reflected in the present value of the make good provision at the
end of the reporting period.
The unwinding of the discount is recognised as finance cost.
TAT HONG HOLDINGS LTD ANNUAL REPORT 201274
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.10 Revenue recognition
Rental income
Rental income receivable under operating leases is recognised in profit or loss on a straight-line basis over
the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income to
be received. Contingent rentals are recognised as income in the accounting period in which they are earned.
Sale of equipment, machinery and spare parts
Revenue from sale of equipment, machinery and spare parts are recognised upon the delivery to the customer
which is taken to be the point in time when the significant risks and rewards of ownership have been transferred
to the customer. Revenue excludes goods and services 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.
Dividend
Dividend income is recognised in profit or loss when the shareholder’s right to receive payment is established.
3.11 Lease payments
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term
of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the
term of the lease.
Minimum lease payments made under finance leases are apportioned between the finance expense and the
reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so
as to produce a constant periodic rate of interest on the remaining balance of the liability.
Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term
of the lease when the lease adjustment is confirmed.
3.12 Finance expense
Finance expense comprise interest expense on borrowings, changes in the fair value of financial assets at fair
value through profit or loss, and losses on hedging instruments that are recognised in profit or loss. Borrowing
costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are
recognised in profit or loss using the effective interest method.
Foreign currency gains and losses are reported on a net basis.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 75
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.13 Income tax expense
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit
or loss except to the extent that it relates to a business combination, or items recognised directly in equity or
in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax
rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of
previous years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not
recognised for:
• temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business
combination and that affects neither accounting nor taxable profit or loss;
• temporary differences related to investments in subsidiaries and jointly controlled entities to the extent
that it is probable that they will not reverse in the foreseeable future; and
• taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax is measured at the tax rates that are expected to be applied to the 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 for unused tax losses, tax credits and deductible temporary differences, to the
extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred
tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that
the related tax benefit will be realised.
3.14 Earnings per share
The Group presents basic and diluted earnings per share (“EPS”) data for its ordinary and convertible
redeemable preference shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary and
convertible redeemable preference shareholders of the Company by the weighted average number of ordinary
and convertible redeemable preference shares outstanding during the year, adjusted for its own shares held.
Diluted EPS is determined by adjusting the profit or loss attributable to ordinary and convertible redeemable
preference shareholders and weighted average number of ordinary shares outstanding, adjusted for its own
shares held, for the effects of all dilutive potential ordinary shares, which comprise warrants issued and share
options granted to employees.
TAT HONG HOLDINGS LTD ANNUAL REPORT 201276
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.15 Segment reporting
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
Group’s other components. All operating segments’ operating results are reviewed regularly by the Group’s
chief operating decision maker 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 Group’s chief operating decision maker include items directly attributable
to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly
corporate assets, head office expenses, and income tax assets and liabilities.
Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment,
and intangible assets other than goodwill.
3.16 New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are effective for annual periods
beginning after 1 April 2011, and have not been applied in preparing these financial statements. None of these
are expected to have a significant effect on the financial statements of the Group.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 77
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
4 PROPERTY, PLANT AND EQUIPMENT
Group NoteFreehold
landFreehold
propertiesLeaseholdproperties
Assets under construction
Plant and machinery
Motor vehicles
Furniture, fittings,
office and workshop equipment Vessels Total
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Cost
At 1 April 2010 10,101 13,337 30,586 – 574,823 39,007 12,619 30,351 710,824
Additions 246 598 961 – 108,018 5,611 2,488 1,063 118,985
Disposals/Write offs – – (55) – (31,948) (1,062) (853) (95) (34,013)
Reclassification from
inventories – – – – 52,616 – – – 52,616
Acquisition of
subsidiaries/
businesses 24 – – 3,535 – 22,348 – 251 – 26,134
Translation difference
on consolidation 37 138 (107) – (7,020) 825 (1,326) (537) (7,990)
At 31 March 2011 10,384 14,073 34,920 – 718,837 44,381 13,179 30,782 866,556
Additions 3,592 3,489 19,231 2,682 120,590 2,804 2,710 3,077 158,175
Disposals/Write offs – – (252) – (70,401) (1,826) (421) (9,860) (82,760)
Reclassification from
inventories – – – – 87,859 – – 11,378 99,237
Acquisition of
subsidiaries 24 – – – – 2,824 33 42 – 2,899
Translation difference
on consolidation (6) (1,186) (211) (84) 4,507 745 299 (18) 4,046
At 31 March 2012 13,970 16,376 53,688 2,598 864,216 46,137 15,809 35,359 1,048,153
Accumulated
depreciation and
impairment losses
At 1 April 2010 781 4,495 10,824 – 147,148 15,074 7,835 4,332 190,489
Depreciation charge
for the year – 303 1,632 – 48,070 3,975 2,096 2,346 58,422
Disposals/Write offs – – (52) – (8,248) (890) (703) (2) (9,895)
Impairment loss – 1,182 – – 2,871 – – – 4,053
Translation difference
on consolidation – 100 (49) – 94 600 (606) (277) (138)
At 31 March 2011 781 6,080 12,355 – 189,935 18,759 8,622 6,399 242,931
Depreciation charge
for the year – 416 1,949 – 58,338 4,130 1,859 2,263 68,955
Disposals/Write offs – – (227) – (22,970) (1,577) (297) (2,195) (27,266)
Translation difference
on consolidation – (1,199) 21 – (1,702) 627 307 (8) (1,954)
At 31 March 2012 781 5,297 14,098 – 223,601 21,939 10,491 6,459 282,666
Carrying amounts
At 1 April 2010 9,320 8,842 19,762 – 427,675 23,933 4,784 26,019 520,335
At 31 March 2011 9,603 7,993 22,565 – 528,902 25,622 4,557 24,383 623,625
At 31 March 2012 13,189 11,079 39,590 2,598 640,615 24,198 5,318 28,900 765,487
Property, plant and equipment with carrying amount of $279,980,000 (2011: $238,662,000) were acquired under
finance lease arrangements.
TAT HONG HOLDINGS LTD ANNUAL REPORT 201278
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
4 PROPERTY, PLANT AND EQUIPMENT (CONT’D)
Impairment losses
No impairment loss was recognised on property, plant and equipment during the year ended 31 March 2012.
As a result of a major flood that occurred in Australia in January 2011, the Group tested the affected property,
plant and equipment for impairment and recognised an impairment loss of $4,053,000 as the recoverable amount
was determined to be lower than the carrying amount. The recoverable amount was determined by reference
to the fair value less costs to sell of the affected property, plant and equipment.
Furniture, fittings, office and workshop
equipmentCompany $’000
Cost
At 1 April 2010 23
Additions 7
At 31 March 2011 30
Additions 3
At 31 March 2012 33
Accumulated depreciation
At 1 April 2010 11
Depreciation charge for the year 6
At 31 March 2011 17
Depreciation charge for the year 5
At 31 March 2012 22
Carrying amount
At 1 April 2010 12
At 31 March 2011 13
At 31 March 2012 11
The carrying amount of the property, plant and equipment is depreciated on a straight-line basis over the
remaining useful life of each property, plant and equipment. Management reviews and revises the estimates of
the remaining useful life and residual values of the property, plant and equipment at the end of each financial
year based on their age and condition at that time. Changes in the way the property, plant and equipment are
used and other factors (such as market or technological factors) could impact the useful life and residual values
of the property, plant and equipment, therefore future depreciation charges could be revised. Any changes in
the useful life and residual values of the property, plant and equipment would impact the depreciation charges
and consequently affect the Group’s and the Company’s results.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 79
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
5 SUBSIDIARIES – COMPANY
2012 2011$’000 $’000
Unquoted shares in subsidiaries, at cost 42,116 40,864
Loans to subsidiaries 187,957 141,892
230,073 182,756
Loans to subsidiaries which form part of the Company’s net investments in subsidiaries, are interest-free,
unsecured and settlement is neither planned nor likely to occur in the foreseeable future. As the amounts are,
in substance, a part of the Company’s net investment in subsidiaries, they are stated at cost.
Details of the subsidiaries are as follows:
Name of subsidiaries Principal activitiesPlace of
incorporation
Effective equity interest held by
the Group2012 2011
% %
Tat Hong HeavyEquipment (Pte.)
Ltd.1 and its subsidiaries:
Trading, reconditioning, repairing
and supply of heavy machinery
and equipment
Singapore 100 100
Tat Hong Machinery Pte Ltd1 and its
subsidiary:
Supply of spare parts Singapore 100 100
Tat Hong Flo-Line Pte Ltd1 Remanufacturing, repair
and testing services of hydraulic
pumps and motors
Singapore 60 60
Hup Hin Transport Co Pte Ltd1 and
its subsidiaries:
Provision of lorry transport and
crane service
Singapore 70 70
Chip Eng Engineering Works
Pte Ltd1
Provision of rental of leasehold
property and machinery, servicing
and trading of machinery
Singapore 70 70
Hup Hin Transport (M) Sdn Bhd2 Manufacturing and repair of
lifting gears, handling of heavy
equipment, crane towing and
recovery services
Malaysia 42* –
Load Controls Systems Pte Ltd1 Supply of scientific and precision
equipment
Singapore 70 70
Tat Hong Crane Logistics Sdn Bhd2 Reprocessing, reconditioning,
repair and trading of heavy
machinery and equipment
Malaysia 100 –
Tat Hong (Thailand) Co., Ltd3# Rental of construction equipment
and provision of parts and related
services
Thailand 100 –
TAT HONG HOLDINGS LTD ANNUAL REPORT 201280
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
5 SUBSIDIARIES – COMPANY (CONT’D)
Name of subsidiaries Principal activitiesPlace of
incorporation
Effective equity interest held by
the Group2012 2011
% %
Tat Hong Plant Leasing Pte Ltd1
and its subsidiaries:
Rental of heavy machinery
and equipment and holding of
investments
Singapore 100 100
Tat Hong United Logistics
Pte Ltd1
Provision of transportation and
logistics services
Singapore 100 100
TH Heavylift Pte Ltd4 In the process of voluntary
liquidation
Singapore 95 95
Tat Hong Heavylift Pte Ltd1 Crane rental, heavy lifting, haulage
and erection service
Singapore 100 100
Peng Koon Heavy Machinery
Pte Ltd1
Supply of heavy machinery and
equipment, motor trucks and
motor lorries
Singapore 70 70
Tat Hong Offshore and Marine
Services Pte Ltd1
Provision of offshore and marine
services
Singapore 50* 50*
PT Tat Hong Batam5 Rental of property Indonesia 100 100
PT World Wide Equipment
South East Asia5
Repair and maintenance services
of machinery and heavy equipment
Indonesia 100 50*
Tat Hong Crane Hire Pte Ltd1 Rental and trading of heavy
equipment and the provision of
related services
Singapore 100 100
Tat Hong Training Services
Pte Ltd1
Provision of training courses and
management consultancy work
Singapore 100 100
Leadpoint Pte Ltd1 and its
subsidiary:
Investment holding Singapore 70 70
Dyno Engineering Pte Ltd1 Manufacturer and trading of
construction equipment
Singapore 70 70
Tat Hong International Pte Ltd1
and its subsidiaries:
Investment holding Singapore 100 100
Tat Hong Plant Hire Sdn Bhd6 Rental of heavy machinery,
industrial equipment and cranes
Malaysia 100 100
KP Equipment Services Inc.4 In the process of voluntary
liquidation
Philippines 100 100
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 81
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
5 SUBSIDIARIES – COMPANY (CONT’D)
Name of subsidiaries Principal activitiesPlace of
incorporation
Effective equity interest held by
the Group2012 2011
% %
PT Tatindo HeavyEquipment7 Distribution of heavy equipment
and spare parts
Indonesia 95 95
Tat Hong HeavyEquipment
Middle East FZE8
In the process of voluntary
liquidation
United Arab
Emirates
100 100
Tat Hong Heavy Equipment
Middle East LLC8
In the process of voluntary
liquidation
United Arab
Emirates
49* 49*
Tat Hong Equipment Co. Ltd9 Import, export, trade and lease
industrial and construction
machinery and equipment; repair
and maintain industrial machine
and equipment of construction and
lease warehouses
Vietnam 100 100
Tat Hong HeavyEquipment
(Hong Kong) Limited10 and
its subsidiary:
Rental of heavy equipment and
related services
Hong Kong 100 100
Tat Hong HeavyEquipment
(Macau) Limited10
Rental of heavy equipment and
related services
Macau 100 100
Tat Hong (V.N.) Pte Ltd1 and its
subsidiary:
Investment holding Singapore 70 70
Tat Hong Vietnam Co., Ltd11 Rental of heavy equipment and
machineries and provision of
related services
Vietnam 70 70
Tat Hong Equipment (China) Pte.
Ltd.1 and its subsidiaries:
Investment holding Singapore 100 100
Shanghai Tat Hong Equipment
Rental Co., Ltd.12
Rental of tower cranes and other
construction machineries
People’s Republic
of China
90 98
Tat Hong Zhaomao Investment
Co., Ltd12
Investment holding People’s Republic
of China
75 75
China Nuclear Huaxing TatHong
Machinery Construction Co., Ltd13
Rental of construction machinery
and heavy lifting equipment,
installation and related engineering
services and supplies
People’s Republic
of China
71 73
TAT HONG HOLDINGS LTD ANNUAL REPORT 201282
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
5 SUBSIDIARIES – COMPANY (CONT’D)
Name of subsidiaries Principal activitiesPlace of
incorporation
Effective equity interest held by
the Group2012 2011
% %
Jiangsu Zheng He TatHong
Equipment Rental Co., Ltd14
Rental, maintenance and repair
of construction machines and
equipment, sale of construction
equipment and, technology
consultancy and related technical
services
People’s Republic
of China
96 55
Beijing Tat Hong ZhaoMao
Equipment Rental Co., Ltd15
Rental of construction machinery
and heavy lifting equipment,
installation and related engineering
services & supplies
People’s Republic
of China
61 54
Si Chuan Tat Hong Yuan Zheng
Machinery Construction Co., Ltd.16
Rental of construction machinery
and heavy lifting equipment,
installation and related engineering
services and supplies
People’s Republic
of China
52 36*
Tutt Bryant Group Limited17 and
its subsidiaries:
Supply of construction equipment
and related services
Australia 100 100
Tat Hong Equipment Finance Pty
Ltd17
In the process of voluntary
liquidation
Australia 100 100
BT Equipment Pty Ltd17 Supply of heavy machinery,
equipment and related services
Australia 100 100
EQR Investments Pty Ltd17 and its
subsidiaries:
Investment holding Australia 100 100
Office Cleaning Services Pty Ltd17
(EQ Hire Vic)
Rental of equipment Australia 100 100
North Sheridan Pty Ltd17 General hire operations Australia 100 100
Kingston Industries Pty Ltd17 and
its subsidiaries:
Plant hire services and contracting
for heavy haulage, compaction
services, civil engineering, rail
maintenance and excavation
Australia 100 100
Kingston Industries (WA) Pty Ltd17 Heavy haulage Australia 100 100
Relsok Pty Ltd17 Property holding Australia 100 100
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 83
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
5 SUBSIDIARIES – COMPANY (CONT’D)
Name of subsidiaries Principal activitiesPlace of
incorporation
Effective equity interest held by
the Group2012 2011
% %
Falconer Administration Trust17 Provision of trust administration
services
Australia 100 100
Muswellbrook Crane Services
Pty Ltd17
Provision of crane rental
and related services
Australia 100 100
* Although the Group owns 50% or less than half of the voting power of these companies, it is able to govern the financial and operating
policies of the companies by virtue of agreement with the other investors. Consequently, the Group consolidates its investments in the
companies as subsidiaries of the Group.
# During the year, the Group acquired the remaining 51% interest in Tat Hong (Thailand) Co., Ltd and accordingly, the associate became a
wholly-owned subsidiary as at 31 March 2012 (refer to note 24).
1 Audited by KPMG Singapore.
2 Not audited as it was recently incorporated.
3 Audited by KPMG Bangkok.
4 Not required to be audited as the company is in the process of voluntary liquidation.
5 Audited by Jamaludin, Aria, Sukimto & Rekan Registered Public Accountants.
6 Audited by KPMG Petaling Jaya.
7 Audited by Yuwono, H & Rekan Registered Public Accountant.
8 Audited by HLB Hamt Chartered Accountants.
9 Audited by DNP Auditing-Financial Consulting Co. Ltd.
10 Audited by Baker Tilly Hong Kong.
11 Audited by Moore Stephens International Limited, Vietnam.
12 Audited by for local statutory reporting purpose and Audit Alliance for group reporting purpose.
13 Audited by for local statutory reporting purpose and Audit Alliance for group reporting purpose.
14 Audited by for local statutory reporting purpose and Audit Alliance for group reporting purpose.
15 Audited by for local statutory reporting purpose and Audit Alliance for group reporting purpose.
16 Audited by for local statutory reporting purpose and Audit Alliance for group reporting purpose.
17 Audited by KPMG Sydney.
TAT HONG HOLDINGS LTD ANNUAL REPORT 201284
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
6 ASSOCIATES
Group2012 2011$’000 $’000
Investments in associates 63,347 60,485
Loans to associates – interest free 38 64
63,385 60,549
Company2012 2011$’000 $’000
Quoted equity shares 34,037 34,037
Unquoted equity shares 264 205
34,301 34,242
Loans to associates – interest free 38 38
34,339 34,280
Less: Impairment loss (6,888) (6,888)
27,451 27,392
Market value of quoted equity shares 27,862 31,641
Loans to associates which form part of the Group’s net investments in associates are interest-free, unsecured
and settlement is neither planned nor likely to occur in the foreseeable future. As the amounts are, in substance,
a part of the Group’s net investment in the associates, they are stated at cost.
Movements in allowance for impairment losses are as follows:
Group Company2012 2011 2012 2011$’000 $’000 $’000 $’000
At 1 April 6,888 – 6,888 –
Impairment losses recognised
during the year – 6,888 – 6,888
At 31 March 6,888 6,888 6,888 6,888
In view of a decline in the market price of a listed associate in 2011, the Group tested the investment in that
associate for impairment and recognised an impairment loss of $6,888,000 as the recoverable amount was
determined to be lower than the carrying amount. The recoverable amount was determined based on value-
in-use calculations using discounted cash flow projections of estimated future dividends to be received from
that associate. The pre-tax discount rate applied was 8% (2011: 8%). No impairment loss was recognised on
investments in associates in 2012.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 85
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
6 ASSOCIATES (CONT’D)
The summarised information is as follows:
Group2012 2011$’000 $’000
Revenue 324,667 318,663
Expenses (309,857) (288,818)
Profit before income tax 14,810 29,845
Income tax expense (4,949) (5,888)
Profit for the year 9,861 23,957
Non-current assets 137,345 99,942
Current assets 386,766 302,812
Current liabilities (230,336) (163,146)
156,430 139,666
Non-current liabilities (59,503) (25,300)
Net assets 234,272 214,308
The summarised financial information relating to the associates is not adjusted for the percentage of ownership
held by the Group.
The Group’s share of the capital commitments of the associates is $Nil (2011: $498,000).
Details of associates are as follows:
Name of associates Principal activitiesPlace of
incorporation
Effective equity interest held by
the Group2012 2011
% %
Kian Ho Bearings Ltd Stockists, distributors and retailers in bearings and seal products
Singapore 31 31
Global Heavyequipment Sdn Bhd Rental of construction equipment and provision of parts and related services
Malaysia 49 –
KT Lion Oilfield Services Limited Dormant British Virgin Islands
30 30
EMC Cranes (KL) Sdn. Bhd. Dormant Malaysia 22 22
Tat Hong (Thailand) Co., Ltd# Rental of construction equipment and provision of parts and related services
Thailand – 49
THL Foundation Equipment Pte Ltd and its subsidiaries
Trading and rental of construction equipment and related parts
Singapore 45 45
Tat Hong Properties Sdn Bhd Dormant Malaysia 30 30
Yongmao Holdings Limited and its subsidiaries
Manufacture and sale of towercranes
Singapore 24 24
R&D Holdings Pte Ltd and its subsidiary
Precision engineering and mould making
Singapore 21 21
# During the year, the Group acquired the remaining 51% interest in Tat Hong (Thailand) Co., Ltd and accordingly, the associate became a
wholly-owned subsidiary of the Group as at 31 March 2012 (refer to note 24).
TAT HONG HOLDINGS LTD ANNUAL REPORT 201286
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
7 JOINT VENTURES
Group Company2012 2011 2012 2011$’000 $’000 $’000 $’000
Investments in joint ventures 2,166 5,758 7,968 7,968
Loans to joint ventures 113 418 113 418
2,279 6,176 8,081 8,386
Less: Impairment loss – – (5,772) (3,062)
2,279 6,176 2,309 5,324
Loans to joint ventures which form part of the Group’s net investments in joint ventures are interest-free,
unsecured and settlement is neither planned nor likely to occur in the foreseeable future. As the amounts are,
in substance, a part of the Group’s net investment in the joint ventures, they are stated at cost.
Movement in allowance for impairment losses is as follows:
Company2012 2011$’000 $’000
At 1 April 3,062 2,188
Impairment losses recognised during the year 2,710 874
At 31 March 5,772 3,062
Two of the joint ventures have been making losses for the past few years and accordingly an impairment
assessment was carried out by the management. The recoverable amount of these joint ventures’ assets is
estimated based on their fair value less costs to sell. Accordingly, the Company recognised an impairment loss
of $2,710,000 (2011: $874,000) during the financial year.
Particulars of the joint ventures are as follows:
Name of company Principal activitiesPlace of
incorporation
Effective equity interest held by
the Group2012 2011
% %
Girdnal Oilfield Services Inc. Dormant United States of
America
50 50
Global Oilfield Services Pte Ltd In the process of liquidation Singapore 50 50
Tat Hong Energy Pte Ltd and its
subsidiary:
Dormant Singapore 50 50
PT Tat Hong Energy Indonesia Dormant Indonesia 50 50
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 87
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
7 JOINT VENTURES (CONT’D)
Name of company Principal activitiesPlace of
incorporation
Effective equity interest held by
the Group2012 2011
% %
T.B.F. Oceania Pty Ltd Provide lifting, logistic and
transport service
Australia 50 50
Tat Hong (PNG) Limited Crane hire, general plant and
equipment hire, and wholesale
of machinery, equipment and
suppliers
Papua New
Guinea
50 –
The Group’s share of the joint ventures’ results, assets and liabilities is as follows:
2012 2011$’000 $’000
Revenue 2,295 292
Expenses (4,622) (708)
Loss before income tax (2,327) (416)
Income tax expense (100) (152)
Loss for the year (2,427) (568)
Non-current assets 3,994 5,714
Current assets 2,163 4,090
Current liabilities (3,802) (3,095)
(1,639) 995
Non-current liabilities (189) (951)
Net assets 2,166 5,758
8 OTHER FINANCIAL ASSETS
Group2012 2011$’000 $’000
Available-for-sale
Unquoted equity shares – at cost 115 201
TAT HONG HOLDINGS LTD ANNUAL REPORT 201288
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
9 DEFERRED TAX ASSETS AND LIABILITIES – GROUP
Movements in deferred tax assets and liabilities (prior to offsetting of balances) during the year are as follows:
At 1 April 2010
Recognised in profit or loss
(note 22)
Acquisition of a
subsidiary (note 24)
Translation difference
on consolidation
At 31 March
2011
Recognised in profit or loss
(note 22)
Acquisition of a
subsidiary (note 24)
Translation difference
on consolidation
At 31 March
2012
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Deferred tax assets
Property, plant and
equipment 144 224 − (13) 355 (181) − (1) 173
Unabsorbed wear and
tear allowances and
unutilised tax losses 332 (241) − (9) 82 2,080 − (6) 2,156
Allowances 3,451 2,080 − 124 5,655 (406) − 29 5,278
Other items 926 (265) − (8) 653 (603) − − 50
4,853 1,798 − 94 6,745 890 − 22 7,657
Deferred tax
liabilities
Property, plant and
equipment (13,956) 211 (779) 304 (14,220) (3,991) (63) (41) (18,315)
Other items (557) 358 (20) − (219) (1,058) − 141 (1,136)
(14,513) 569 (799) 304 (14,439) (5,049) (63) 100 (19,451)
Deferred tax liabilities and assets are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when the deferred taxes relate to the same taxation authority. The following
amounts, determined after appropriate offsetting, are included in the statement of financial position as follows:
2012 2011$’000 $’000
Deferred tax liabilities (18,113) (14,275)
Deferred tax assets 6,319 6,581
(11,794) (7,694)
Utilised tax losses of the Group amounting to $3,331,000 (2011: $Nil) expire between 2016 and 2017. The
remaining unutilised tax losses and deductible temporary differences do not expire under current tax legislation.
Deferred tax assets of $116,000 (2011: $103,000) have not been recognised in respect of the following temporary
differences:
2012 2011$’000 $’000
Deductible temporary differences 283 180
Unutilised tax losses and capital allowances 402 427
Deferred tax assets have not been recognised in respect of these items because it is not probable that future
taxable profit will be available against which the Group can utilise these benefits.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 89
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
10 INTANGIBLE ASSETS – GROUP
Note 2012 2011$’000 $’000
Goodwill arising on consolidation
At 1 April 55,441 54,925
Goodwill arising on acquisition of a subsidiary 24 160 –
Translation difference on consolidation 327 516
At 31 March 55,928 55,441
Less:
Accumulated amortisation and impairment loss
At 1 April 7,456 2,342
Impairment loss 160 4,916
Translation difference on consolidation 39 198
At 31 March 7,655 7,456
Carrying amount 48,273 47,985
Customer relationships
At 1 April 6,686 6,648
Translation difference on consolidation 19 38
At 31 March 6,705 6,686
Less:
Accumulated amortisation
At 1 April 6,686 6,175
Amortisation charge for the year − 461
Translation difference on consolidation 19 50
At 31 March 6,705 6,686
Carrying amount − −
Computer software
At 1 April 2,969 2,307
Additions 1,003 640
Disposal (122) −
Translation difference on consolidation 28 22
At 31 March 3,878 2,969
Less:
Accumulated amortisation
At 1 April 1,910 1,460
Amortisation charge for the year 632 424
Disposal (108) −
Translation difference on consolidation 13 26
At 31 March 2,447 1,910
Carrying amounts 1,431 1,059
Total carrying amounts 49,704 49,044
The amortisation and impairment loss is recognised in other operating expenses in profit or loss.
TAT HONG HOLDINGS LTD ANNUAL REPORT 201290
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
10 INTANGIBLE ASSETS – GROUP (CONT’D)
Impairment testing for cash-generating units containing goodwill
For the purpose of impairment testing, goodwill is allocated to the Group’s operating divisions or cash-generating
units (“CGU”), which represents the lowest level within the Group at which the goodwill is monitored for internal
management purposes and is not higher than the Group’s operating segments as reported in note 27.
The carrying amounts of goodwill are allocated as follows:
Group2012 2011
$’000 $’000
Tutt Bryant Group Limited and its subsidiaries (“Tutt Bryant Group”) 47,138 46,889
Multiple units without significant goodwill 1,135 1,096
48,273 47,985
The recoverable amount of Tutt Bryant Group CGU is determined based on value-in-use calculation, using cash
flow projections derived from financial budgets derived from management’s forecast results for the year ending
31 March 2013. Cash flows are projected using growth rates ranging from 0% to 3% (2011: 0% to 3%), based
on management’s knowledge and past experience of the businesses. Cash flows beyond the five-year period
are extrapolated using the estimated terminal growth rate of 3% (2011: 3%). A pre-tax discount rate of 12.5%
(2011: 15%) was used in discounting the projected cash flows.
For the financial year ended 31 March 2012, based on the impairment assessment performed by management,
the carrying amount of the Tutt Bryant Group CGU was determined to be lower than its recoverable amount
and no impairment loss was recognised. In 2011, impairment loss amounting to $4,916,000 was recognised
as the carrying amount was higher than its recoverable amount. The impairment loss recognised in 2011 was
allocated fully to goodwill, and was included in other operating expenses.
11 INVENTORIES - GROUP
2012 2011$’000 $’000
Inventories for resale 211,266 191,306
Inventories in transit 22,587 12,721
Work-in-progress 3,636 1,680
237,489 205,707
Allowance for inventory:
At 1 April 4,886 6,979
Allowance made during the year 250 453
Inventory written off against allowance (1,802) (2,551)
Acquisition of subsidiaries 17 –
Translation difference on consolidation (53) 5
At 31 March 3,298 4,886
234,191 200,821
During the year, inventories recognised as cost of sales amounted to $260,913,000 (2011: $214,650,000). The
allowance made during the year of $250,000 (2011: $453,000) are included in cost of sales.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 91
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
12 TRADE AND OTHER RECEIVABLES
Group Company2012 2011 2012 2011$’000 $’000 $’000 $’000
Trade receivables 149,358 92,487 – –
Allowance for receivables (5,716) (3,024) – –
143,642 89,463 – –
Non-trade receivables 4,045 9,262 – –
Deposits:
- for purchase of inventories 230 2,983 – –
- for purchase of property, plant
and equipment 2,999 3,135 – –
- others 2,221 2,615 4 –
Staff loans and advances 337 292 – –
Expenses recoverable 1,812 396 1 2
Interest receivable 11 5 – –
Non-trade amounts due from:
- related parties 4,120 2,820 – –
- subsidiaries − − 75,811 119,884
- an associate 750 750 – –
- a joint venture 1,247 − – –
Trade amounts due from:
- related corporations 2,730 7,345 – –
- associates 8,018 13,513 – –
- a joint venture 1,567 − − −
Loans and receivables 173,729 132,579 75,816 119,886
Advance payments 1,869 881 – –
Prepayments 7,344 7,594 227 78
Tax recoverable 1,876 4,391 – –
184,818 145,445 76,043 119,964
Included in trade receivables as at 31 March 2012 is an amount of $503,000 (2011: $496,000) relating to bills
receivable which are interest-free.
The non-trade amounts due from related parties, subsidiaries and an associate are unsecured, and interest-free
and repayable on demand. The non-trade amount due from a joint venture is unsecured, bears interest at rate
of 7% per annum and is repayable on demand.
The Group’s primary exposure to credit risk arises through its trade receivables. Concentration of credit
risk relating to trade receivables is limited due to the Group’s many varied customers. These customers are
internationally dispersed, engage in a wide spectrum of manufacturing and distribution activities, and sell in a
variety of end markets. The Group’s historical experience in the collection of accounts receivable falls within
the recorded allowances. Due to these factors, management believes that no additional credit risk beyond the
amounts provided for collection losses is inherent in the Group’s trade receivables.
TAT HONG HOLDINGS LTD ANNUAL REPORT 201292
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
12 TRADE AND OTHER RECEIVABLES (CONT’D)
Impairment losses
The ageing of trade receivables and related parties balances at the reporting date is:
GrossImpairment
losses GrossImpairment
losses2012 2012 2011 2011$’000 $’000 $’000 $’000
Group
Not past due 119,746 (451) 81,791 (13)
Past due 0 – 90 days 28,146 (238) 22,142 (242)
Past due 91 – 180 days 5,694 (290) 5,793 (788)
Past due 181 – 365 days 6,000 (3,004) 2,943 (1,345)
Past due more than one year 2,087 (1,733) 676 (636)
161,673 (5,716) 113,345 (3,024)
The change in impairment loss in respect of trade receivables balances during the year is as follows:
Group2012 2011$’000 $’000
At 1 April 3,024 5,838
Impairment loss recognised 4,801 2,835
Amount reversed (1,180) (3,579)
Amount utilised (989) (1,871)
Translation difference 60 (199)
At 31 March 5,716 3,024
Based on historical default rates, the Group believes that no impairment allowance is necessary in respect of
trade receivables not past due or past due up to 90 days, unless specifically provided for due to uncertainties
in the collection of debts. These receivables are mainly arising by customers that have good payment records
with the Group.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 93
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
13 CASH AND CASH EQUIVALENTS
Group CompanyNote 2012 2011 2012 2011
$’000 $’000 $’000 $’000
Cash at banks and in hand 66,806 54,481 309 418
Fixed deposits with banks 9,964 7,332 – –
76,770 61,813 309 418
Fixed deposit earmarked for certain
banking facilities (9,492) (7,280)
Bank overdrafts (unsecured) 17 (462) (558)
Cash and cash equivalents in the
consolidated statement of cash flows 66,816 53,975
The effective interest rates per annum relating to cash and cash equivalents, excluding bank overdrafts, at the
reporting date for the Group are between 0.20% - 13% (2011: between 0.24% – 2.75%). Interest rates reprice
within one year.
Cash and cash equivalents totalling the equivalent of $12,468,000 (2011: $11,207,000) are held in countries
which operate foreign exchange controls.
The bank overdrafts of a subsidiary are guaranteed by the Company. The effective interest rate of the bank
overdrafts at the reporting date for the Group is 5.25% (2011: 5.25%) per annum. Interest rates reprice within
one year.
14 SHARE CAPITAL – COMPANY
Ordinary sharesConvertible redeemable
preference shares2012 2011 2012 2011
No. ofshares
No. ofshares
No. ofshares
No. ofshares
’000 ’000 ’000 ’000
Issued and fully-paid with no par value:
At 1 April and 31 March 506,627 506,627 65,000 65,000
Convertible redeemable preference shares
Convertible redeemable preferences shares (“CRPS”) do not carry the right to vote unless it is a resolution
proposed at a General Meeting to:
1. vary the rights attached to the CRPS;
2. wind-up the Company; or
3. appoint, re-appoint or remove any Director nominated by the Preference Shareholders (or any
majority thereof).
TAT HONG HOLDINGS LTD ANNUAL REPORT 201294
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
14 SHARE CAPITAL – COMPANY (CONT’D)
The holders of the CRPS are entitled to receive annual dividend based on the following amounts:
- in respect of the first five financial years commencing from 1 April 2009, the dividend on each CRPS will
carry similar dividend rights as declared from time to time to the ordinary shareholders of the Company; and
- For the financial year ending after 31 March 2014, unless and until the redemption of all the issued CRPS
in full in accordance with the terms and conditions of the CRPS, and provided that the Company at its
discretion has declared a dividend to ordinary shareholders at the same time or earlier, a dividend equal
to 25% of the issue price of the CRPS will be paid on each CRPS.
Each CRPS shall be convertible into one ordinary share in the share capital of the Company. After the first
anniversary of the date of issuance, the outstanding CRPS will be automatically converted into ordinary shares in
the event the volume weighted average price of the ordinary shares of the Company as computed over a period
of 30 trading days on the Singapore Stock Exchange was over 50% of the issue price (“mandatory conversion
condition”). The conversion ratio will be subject to the usual anti-dilution adjustments and shall be mandatorily
converted into ordinary share based on the above mandatory conversion condition:
- for the period commencing on the first anniversary and ending on the third anniversary of the date of
issuance of CRPS, one-third of the outstanding CRPS shall be converted into ordinary shares;
- for the period commencing on the third anniversary and ending on the fourth anniversary of the date of
issuance of CRPS, one-third of the outstanding CRPS plus a further half of the remaining and outstanding
CRPS shall be converted into ordinary shares; and
- for the period commencing on the fourth anniversary and ending on the fifth anniversary of the date of
issuance of CRPS, all remaining CRPS shall be converted.
Ordinary shares
The holders of ordinary shares (excluding treasury shares) are entitled to receive dividends as declared from
time to time and are entitled to one vote per share at meetings of the Company. All shares (excluding treasury
shares) rank equally with regard to the Company’s residual assets.
Capital management
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence
and to sustain future development of the business.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions.
To maintain or adjust the capital structure, the Group may adjust the dividend payments to shareholders, return
capital to shareholders or issues new shares.
From time to time, the Group purchases its own shares on the market; the timing of these purchases depends
on market prices. Primarily, the shares purchased are intended to be used for issuing shares under the Group’s
share option programme. Buy and sell decisions are made on a specific transaction basis by the Board; the
Group does not have a defined share buy-back plan.
There were no changes in the Group’s approach to capital management during the year.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 95
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
14 SHARE CAPITAL – COMPANY (CONT’D)
Capital management (cont’d)
The Group monitors capital using a gearing ratio, which is net debt divided by total capital. The Group includes
within net debt, financial liabilities and trust receipts, less cash and cash equivalents. Capital includes equity
attributable to the owners of the Company.
Group2012 2011$’000 $’000
Trust receipts 58,918 41,573
Financial liabilities 455,955 409,430
Less: Cash and cash equivalents (76,770) (61,813)
Net debt 438,103 389,190
Total equity attributable to the owners of the Company 556,397 518,855
Gearing ratio 79% 75%
15 RESERVES
Group Company2012 2011 2012 2011$’000 $’000 $’000 $’000
Reserve for own shares (1,780) (1,780) (1,780) (1,780)
Share option reserve 1,357 1,357 1,357 1,357
Currency translation reserve 6,532 2,282 – –
Capital reserves 23,789 23,799 – –
Accumulated profits 273,639 240,337 40,628 36,111
303,537 265,995 40,205 35,688
Reserve for own shares comprises the cost of the Company’s 1,961,000 (2011: 1,961,000) ordinary shares
held by the Company.
The share option reserve comprises the cumulative value of employee services rendered for the issue of share
options.
The currency translation reserve comprises all foreign exchange differences arising from the translation of the
financial statements of foreign entities as well as the translation of loans which form part of the Company’s net
investment in subsidiaries, associates and joint ventures.
Capital reserves represent the amount capitalised from accumulated profits upon bonus issue by subsidiaries
and effects arising from dilution and acquisition of interest in subsidiaries and associates. Capital reserves
include statutory reserve funds of $2,358,000 (2011: $1,873,000) as at 31 March 2012.
Subsidiaries in the People’s Republic of China (“PRC”) follow the accounting principles and relevant financial
regulations of the PRC (“PRC GAAP”) relating to the appropriation of profit to a statutory reserve fund, which
is not distributable.
TAT HONG HOLDINGS LTD ANNUAL REPORT 201296
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
16 TRADE AND OTHER PAYABLES
Group Company2012 2011 2012 2011$’000 $’000 $’000 $’000
Trade payables 205,389 87,842 366 483
Non-trade payables 21,443 11,361 – 8
Interest payable 862 669 – –
Deposits received 4,389 2,512 – –
Unclaimed dividends 7 7 7 7
Accrued operating expenses 27,514 15,948 1,564 854
Amounts due to:
- related corporations 358 546 – 53
- associates 18,528 13,383 – –
- shareholder of a subsidiary 2,507 1,642 – –
- a joint venture 750 750 750 750
Derivative financial instruments 2,285 2,036 571 367
Classified as financial liabilities 284,032 136,696 3,258 2,522
Liability for long service and annual leave 12,163 11,214 164 160
Provisions 1,242 934 – –
Advance billings and advance receipts 2,352 1,925 – –
299,789 150,769 3,422 2,682
Classified as :
Current 298,070 149,252 3,422 2,682
Non-current 1,719 1,517 – –
299,789 150,769 3,422 2,682
The amounts due to related corporations, associates, a shareholder of a subsidiary, directors of a subsidiary
and a joint venture are non-trade in nature, unsecured, interest-free and repayable on demand.
Trade payables of the Group included trust receipts of certain subsidiaries amounting to $58,712,000 (2011:
$41,573,000) which are guaranteed by the Company. The following table indicates the effective interest rates
at the reporting date and the period in which they reprice:
EffectiveFixed interest
rates maturinginterest within
Group rate Total 1 year% $’000 $’000
2012
Trust receipts 1.19 – 2.55 58,712 58,712
2011
Trust receipts 1.35 – 2.48 41,573 41,573
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 97
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
16 TRADE AND OTHER PAYABLES (CONT’D)
Movements in provisions are as follows:
Provision for
warranty
Provision for leased property
reinstatement costs Total
Group $’000 $’000 $’000
At 1 April 2010 1,254 270 1,524
Provision made during the year 133 – 133
Payments made during the year (321) – (321)
Provision reversed during the year (398) – (398)
Translation difference on consolidation (7) 3 (4)
At 31 March 2011 661 273 934
Provision made during the year 497 66 563
Payments made during the year (258) – (258)
Translation difference on consolidation 2 1 3
At 31 March 2012 902 340 1,242
Provision for warranty claims are made by a subsidiary for claims received and claims expected to be received
in relation to sales made prior to the reporting date, based on historical claims rates, adjusted for specific
information arising from internal quality assurance processes.
The Group provides an amount to reinstate the premises upon termination of leases when this is a requirement
specified in the terms of the leases. The amount provided is based on an estimate of likely costs to be incurred.
Movements in liability for long service and annual leave are as follows:
Group Company2012 2011 2012 2011$’000 $’000 $’000 $’000
At 1 April 11,214 9,910 160 132
Provision made during the year 4,472 4,446 15 30
Provision reversed during the year – (30) – –
Payments made during the year (3,565) (3,203) (11) (2)
Translation difference on
consolidation 42 91 – –
At 31 March 12,163 11,214 164 160
TAT HONG HOLDINGS LTD ANNUAL REPORT 201298
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
17 FINANCIAL LIABILITIES
Group Company2012 2011 2012 2011$’000 $’000 $’000 $’000
Non-current liabilities
Secured bank loans 45,640 12,593 – –
Unsecured bank loans 106,558 147,672 26,500 24,000
Finance lease liabilities 130,242 84,267 – –
Intra-group financial guarantees – – 4,610 4,386
282,440 244,532 31,110 28,386
Current liabilities
Secured bank loans 24,412 12,442 – –
Unsecured bank overdrafts 462 558 – –
Unsecured bank loans 81,903 86,268 8,500 16,000
Finance lease liabilities 66,738 65,630 – –
173,515 164,898 8,500 16,000
455,955 409,430 39,610 44,386
Total loans and borrowings 455,955 409,430 35,000 40,000
Intra-group financial guarantees – – 4,610 4,386
Total financial liabilities 455,955 409,430 39,610 44,386
The secured bank loans are secured on property, plant and equipment with a carrying amount of $103,642,000
(2011: $37,602,000) and fixed deposits of $9,492,000 (2011: $7,280,000) (see note 13).
At 31 March 2012, the Group had obligations under finance leases that are repayable as follows:
Payments Interest Principal Payments Interest Principal2012 2012 2012 2011 2011 2011$’000 $’000 $’000 $’000 $’000 $’000
Repayable:
Within 1 year 76,485 (9,747) 66,738 74,960 (9,330) 65,630
After 1 year but within 5 years 140,195 (9,953) 130,242 92,823 (8,556) 84,267
Total 216,680 (19,700) 196,980 167,783 (17,886) 149,897
Under the terms of the finance lease arrangements, no contingent rents are payable.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 99
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
17 FINANCIAL LIABILITIES (CONT’D)
Terms and debt repayment schedule
Terms and conditions of outstanding loans and borrowings are as follows:
Nominalinterest
rate
2012 2011Year of
maturityFacevalue
Carryingamount
Facevalue
Carryingamount
Group $’000 $’000 $’000 $’000
S$ fixed rate loans 2.91% to 6.25% 2013 - 2015 10,325 10,325 4,407 4,407
S$ floating rate loans SOR + 1.15% to 1.75% 2013 - 2019 179,204 179,204 182,801 182,801
A$ fixed rate loans 5.08% to 7.69% 2012 - 2014 1,504 1,504 1,336 1,336
RMB floating rate loans PBOC*1.00% to 1.25% 2013 - 2017 66,720 66,720 68,839 68,839
MYR fixed rate loans 5.25% 2014 477 477 646 646
HKD floating rate loans 1.5% below prime
lending rate
2012 283 283 946 946
Bank overdrafts Prime lending rate + 1% 2012 462 462 558 558
Finance lease liabilities –
fixed rate
1.18% to 8.51% 2012 - 2017 189,780 189,780 147,228 147,228
Finance lease liabilities –
floating rate
Prime lending rate -
0.5% to Prime lending
rate - 1.5%
2014 - 2015 7,200 7,200 2,669 2,669
455,955 455,955 409,430 409,430
Nominalinterest
rate
2012 2011Year of
maturityFacevalue
Carryingamount
Facevalue
Carryingamount
Company $’000 $’000 $’000 $’000
S$ floating rate loans SOR + 1.5% 2016 35,000 35,000 30,000 30,000
S$ floating rate loans SGD cost of funds
+ 1.5%
2012 – – 10,000 10,000
35,000 35,000 40,000 40,000
* PBOC denotes People’s Bank of China interest rates
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012100
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
17 FINANCIAL LIABILITIES (CONT’D)
The following indicates the effective interest rates at the reporting date and the period in which they reprice:
Effective Floating Fixed interest rates maturinginterest interest within within
rate Total rate 1 year 1 to 5 yearsGroup $’000 $’000 $’000 $’000
2012
Secured loans
- S$ floating rate 1.47% to 3.8% 22,152 22,152 – –
- MYR fixed rate 5.22% 477 – 167 310
- RMB floating rate 6.90% to 8.31% 47,423 47,423 – –
Unsecured loans
- A$ fixed rate 5.08% to 7.69% 1,504 – 1,218 286
- RMB floating rate 6.67% to 7.41% 19,297 19,297 – –
- HKD floating rate 3.75% 283 283 – –
- S$ fixed rate 2.91% to 6.25% 10,325 – 4,196 6,129
- S$ floating rate 1.39% to 2.61% 157,052 157,052 – –
Finance lease liabilities 2.22% to 14.41% 196,980 7,200 63,460 126,320
Bank overdrafts 5.25% 462 462 – –
455,955 253,869 69,041 133,045
2011
Secured loans
- A$ fixed rate 6.87% 416 – 416 –
- S$ floating rate 1.53% to 1.85% 10,750 10,750 – –
- MYR fixed rate 5.25% 646 – – 646
- RMB floating rate 6.22% to 7.63% 13,224 13,224 – –
Unsecured loans
- A$ fixed rate 5.96% 920 – 920 –
- RMB floating rate 6.67% to 7.41% 55,615 55,615 – –
- HKD floating rate 4.31% 946 946 – –
- S$ fixed rate 2.58% to 6.25% 4,407 – 3,177 1,230
- S$ floating rate 1.64% to 2.37% 172,051 172,051 – –
Finance lease liabilities 2.80% to 12.82% 149,897 2,669 6,140 141,088
Bank overdrafts 5.25% 558 558 – –
409,430 255,813 10,653 142,964
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 101
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
17 FINANCIAL LIABILITIES (CONT’D)
Effective Floating Fixed interest rates maturinginterest interest within within
rate Total rate 1 year 1 to 5 yearsCompany $’000 $’000 $’000 $’000
2012
Financial liabilities
Unsecured loans
- S$ floating rate 1.69% to 1.89% 35,000 35,000 – –
2011
Financial liabilities
Unsecured loans
- S$ floating rate 1.69% to 2.52% 40,000 40,000 – –
The following are the expected contractual undiscounted cash outflows of financial liabilities, including interest payments and excluding the impact of netting agreements:
Carrying amount Cash flows
GroupContractualcash flows
Within1 year
Within1 to 5 years
More than5 years
$’000 $’000 $’000 $’000 $’000
2012
Non-derivative financial liabilities
Variable interest rate loans 246,207 (261,184) (107,957) (150,058) (3,169)
Fixed interest rate loans 12,306 (12,795) (5,853) (6,942) –
Finance lease liabilities 196,980 (216,680) (76,485) (140,195) –
Bank overdrafts 462 (486) (486) – –
Trade and other payables 281,747 (281,747) (280,028) (1,719) –
751,107 (772,892) (470,809) (298,914) (3,169)
Derivative financial liabilities
Interest rate swap 765 (693) (416) (277) –
Forward contracts
- inflow 1,520 61,637 61,637 – –
- outflow – (62,812) (62,812) – –
2,285 (1,868) (1,591) (277) –
2011
Non-derivative financial liabilities
Variable interest rate loans 252,586 (268,918) (100,654) (168,264) –
Fixed interest rate loans 6,389 (6,789) (5,334) (1,455) –
Finance lease liabilities 149,897 (167,783) (74,960) (92,823) –
Bank overdrafts 558 (588) (588) – –
Trade and other payables 134,660 (134,660) (133,143) (1,517) –
556,238 (578,738) (314,679) (264,059) –
Derivative financial liabilities
Interest rate swap 793 (821) (700) (121) –
Forward contracts –
- inflow 1,243 37,099 37,099 − –
- outflow − (38,387) (38,387) − –
2,036 (2,109) (1,988) (121) –
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012102
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
17 FINANCIAL LIABILITIES (CONT’D)
Carrying amount Cash flows
CompanyContractualcash flows
Within1 year
Within1 to 5 years
More than5 years
$’000 $’000 $’000 $’000 $’000
2012
Non-derivative financial liabilities
Variable interest rate loans 35,000 36,356 9,084 27,272 –
Trade and other payables 2,687 2,686 2,686 − –
37,687 39,042 11,770 27,272 –
Derivative financial liabilities
Interest rate swap 571 (284) (284) − –
2011
Non-derivative financial liabilities
Variable interest rate loans 40,000 (41,421) (16,580) (24,841) –
Trade and other payables 2,155 (2,155) (2,155) – –
42,315 (43,576) (18,735) (24,841) –
Derivative financial liabilities
Interest rate swap 367 (336) (313) (23) –
Intra-group guarantees
Intra-group financial guarantees comprise guarantees granted by the Company to banks in respect of banking facilities amounting to $350,078,000 (2011: $316,963,000). The periods in which the financial guarantees expire are as follows:
Company2012 2011$’000 $’000
Less than 1 year 139,336 115,073
Between 1 and 5 years 210,742 201,890
350,078 316,963
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 103
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
18 SHARE-BASED PAYMENT
Equity compensation benefits
Tat Hong Employee Share Option Scheme 2006 and Performance Share Plan
The Tat Hong Employee Share Option Scheme 2006 (“ESOS 2006”) and Performance Share Plan (“PSP”) were approved by the Company at its Extraordinary General Meeting on 8 December 2006. The ESOS 2006 and PSP are administered by the Option Shares/Performance Shares Plan Committee, comprising four directors, Mak Lye Mun (Chairman), Ng San Tiong, Ng Sun Ho and Ong Tiew Siam.
Other information regarding the ESOS 2006 and PSP are set out as follows:
- the Board of the Company may specify the vesting conditions which must be satisfied or waived by the Board before options and awards allocated under the ESOS 2006 and PSP may be dealt with;
- the exercise price for each share in respect of which an option is exercisable shall be a price equal to the market price;
- the options can be exercised 1 year after the grant; and
- the options granted expire after 5 years for non-executive directors and 10 years for the employees of the Company and its subsidiaries.
At the end of the financial year, details of the options granted under the Scheme on the unissued ordinary shares of the Company are as follows:
Date ofgrant ofoptions
Exerciseprice per
share
Optionsoutstanding at
1 April 2011Options
cancelled
Optionsoutstandingat 31 March
2012
Numberof optionholders at
31 March 2012Exerciseperiod
30 September 2009 1.08 3,920,000 (405,000) 3,515,000 73 1 October 2010 –
30 September 2020
30 September 2009 1.08 400,000 – 400,000 4 1 October 2010 –
30 September 2015
4,320,000 (405,000) 3,915,000
Details of options granted to directors of the Company under the Scheme are as follows:
Name of director
Options grantedfor financialyear ended
31 March 2012
Aggregateoptions
granted sincecommencement
of Scheme to31 March 2012
Aggregateoptions
exercised sincecommencement
of Scheme to31 March 2012
Aggregateoptions
outstandingas at
31 March 2012
Ong Tiew Siam – 200,000 – 200,000
Tan Chok Kian – 100,000 – 100,000
Leong Horn Kee – 100,000 – 100,000
Low Seow Juan – 100,000 – 100,000
Mak Lye Mun – 100,000 – 100,000
Since the commencement of the Scheme, no options have been granted to the controlling shareholders of the Company or their associates and no participant under the Scheme has been granted 5% or more of the total options available under the Scheme.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012104
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
18 SHARE-BASED PAYMENT (CONT’D)
Disclosure of the Scheme
The number and weighted average exercise prices of share options is as follows:
Weighted average exercise
priceNumber of
options
Weighted average exercise
priceNumber of
options2012 2012 2011 2011
$ ’000 $ ’000
Outstanding at 1 April 1.08 4,320 1.08 4,541
Cancelled during the year 1.08 (405) 1.08 (221)
Outstanding at 31 March 1.08 3,915 1.08 4,320
Exercisable at 31 March 1.08 3,915 1.08 4,320
The options outstanding at 31 March 2012 have an exercise price of $1.08 (2011: $1.08) and a weighted average
contractual life of 5 years for non-executive directors and 10 years for executive directors and employees from
the date of grant respectively, in accordance with the terms of the scheme.
Inputs for measurement of grant date fair values
The grant date fair value of the rights granted through the employee share purchase plan was measured based
on Trinomial Option Model Pricing (“TOPM”). The grant date fair value of all other share-based payment plans
was measured based on TOPM. Expected volatility is estimated by considering historic average share price
volatility. The inputs used in the measurement of the fair values at grant date of the share-based payment plans
are the following:
Fair value of share options and assumptionsAs at
30 September 2009
Fair value at grant date $0.313
Share price at grant date $1.05
Exercise price $1.08
Expected volatility (weighted average volatility) 50%
Option life (expected weighted average life) 3 years
Expected dividends $0.01 - $0.015
Risk-free interest rate (based on government bonds) 0.7%
19 REVENUE – GROUP
Revenue comprises income from rental of equipment and machinery, material and related labour charges to
customers and invoiced trading sales (refer to note 27).
All inter-company transactions have been eliminated in arriving at the Group’s revenue.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 105
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
20 FINANCE EXPENSE – GROUP
2012 2011$’000 $’000
Interest paid and payable to:
- banks 9,861 6,643
- finance lease payable 11,958 11,302
Cost of borrowing 629 846
Loss on fair value adjustment on derivatives 16 320
Finance expense 22,464 19,111
21 PROFIT BEFORE INCOME TAX – GROUP
The following items have been included in arriving at profit before income tax:
Note 2012 2011$’000 $’000
Other operating income
Bargain purchase gain arising from acquisition of a subsidiary 760 1,395
Gain on disposal of property, plant and equipment – 3,243
Insurance claims recovered 2,857 5,385
Interest income 1,396 1,654
Rental income 1,086 804
Trade receivable recovered 39 175
Others 2,591 2,177
8,729 14,833
Staff costs
Wages and salaries 103,207 81,623
Contributions to defined contribution plans 8,700 7,403
Cost of long service leave and annual leave 4,472 4,416
Value of employee services received for issue of share options – 646
116,379 94,088
Key management personnel compensation:
Compensation payable to key management personnel comprises:
Short-term employee benefits 9,313 7,844
Post employment benefits 129 196
Value of employee services received for issue of share options – 270
9,442 8,310
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012106
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
21 PROFIT BEFORE INCOME TAX – GROUP (CONT’D)
Note 2012 2011$’000 $’000
Other expenses
Allowance for inventories made 11 250 453
Allowance for trade receivables made/(reversed) 12 3,621 (744)
Amortisation of intangible assets 10 632 885
Audit fees paid to:
- auditors of the Company 348 314
- other auditors 466 546
Trade receivables written off 10 116
Depreciation of property, plant and equipment 4 68,955 58,422
Directors’ fees:
- directors of the Company:
- payable by the Company 380 378
- payable by subsidiary 144 129
- directors of the subsidiaries 472 669
Exchange (gain)/loss (4,934) 1,594
Inventory written off 65 2,021
Loss on fair value adjustment on derivatives, net 274 70
Loss on disposal of property, plant and equipment 11,759 –
Non-audit fees paid to:
- auditors of the Company 66 88
- auditors of subsidiaries 23 220
Operating lease expenses 9,192 7,313
Property, plant and equipment written off 96 137
Provisions made/(reversed) (net) 16 563 (265)
Impairment loss on intangible assets 10 160 4,916
Impairment loss on property, plant and equipment 4 – 4,053
No ofdirectors
No of directors
2012 2011
Directors’ remuneration bands
Company’s directors receiving remuneration from the Group:
Number of directors in remuneration band:
- $500,000 and above 3 3
- $250,000 to $499,999 1 1
- below $250,000 6 6
10 10
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 107
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
22 INCOME TAX EXPENSE – GROUP
2012 2011Recognised in profit or loss $’000 $’000
Current tax expense
Current year 18,154 12,586
Over provision in respect of prior years (1,749) (2,246)
Foreign taxes suffered 974 923
17,379 11,263
Deferred tax expense
Movement in temporary differences 2,938 (2,011)
Under/(Over) provision in respect of prior years 1,221 (356)
4,159 (2,367)
Income tax expense 21,538 8,896
2012 2011
$’000 $’000
Reconciliation of effective tax rate
Profit before income tax 57,984 40,557
Tax calculated using Singapore tax rate of 17% (2011: 17%) 9,857 6,895
Effect of tax rates in foreign jurisdictions 3,830 2,561
Effect of utilisation of capital allowances and tax losses previously not recognised (420) –
Effect of concessionary tax rate (209) (94)
Foreign taxes suffered 974 923
Net non-deductible expenses 7,218 936
Over provision in respect of prior years (528) (2,602)
Unrecognised deferred tax assets during the year 13 30
Other items, net 803 247
21,538 8,896
Significant judgement is required in determining the capital allowances, the types and rates of taxes payable, deductibility of certain expenses, and taxability of certain income during the estimation of the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group and the Company recognises liabilities for anticipated tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the provision for income tax and deferred income tax provisions in the period in which such determination is made.
Deferred tax assets are recognised for deductible temporary differences, wear and tear allowances, and tax losses carried forward to the extent that realisation of the related tax benefits through future taxable profits is probable.
Group Company2012 2011 2012 2011$’000 $’000 $’000 $’000
Current tax payable 11,022 7,902 99 251
Deferred tax assets 6,319 6,581 – –
Deferred tax liabilities 18,113 14,275 – –
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012108
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
23 EARNINGS PER SHARE – GROUP
(a) Basic earnings per share
The calculation of earnings per share is based on:
2012 2011$’000 $’000
Profit attributable to ordinary and convertible redeemable preference
shareholders 42,257 25,957
Number of shares2012 2011’000 ’000
Issued ordinary shares at 31 March 569,666 569,666
(b) Diluted earnings per share
The calculation of diluted earnings per share is based on:
2012 2011$’000 $’000
Profit attributable to ordinary and convertible redeemable preference
shareholders 42,257 25,957
Number of shares2012 2011’000 ’000
Weighted average number of shares (used in the
calculation of basic earnings per share) 569,666 569,666
As at 31 March 2012, the Group has a contractual obligation to convert 50,662,556 (2011: 50,662,656)
warrants into 50,662,556 (2011: 50,662,656) new ordinary shares in the share capital of the Company
at $2.50 each for cash commencing on 8 February 2009. The warrants were not included in the
computation of diluted earnings per share because the warrants were anti-dilutive. The warrants
expire on 2 August 2013.
As at 31 March 2012, there were 3,915,000 (2011: 4,320,000) options which were issued on
30 September 2009 available for conversion ordinary shares. Similarly, the share options were deemed
to be anti-dilutive as they were out of money.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 109
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
24 ACQUISITION OF INTEREST IN SUBSIDIARIES
(i) Acquisition of subsidiaries
(a) Hup Hin Transport Co Pte Ltd (“Hup Hin”)
In December 2010, the Group acquired equity interest of 70% in Hup Hin for a purchase consideration
of $7,700,000. The effect of the acquisition is summarised as follows:
Note 2011 2011 2011$’000 $’000 $’000
Carrying Fair value Recognisedamounts adjustments value
Property, plant and equipment 4 21,553 4,581 26,134
Trade and other receivables 5,691 – 5,691
Cash and cash equivalents 2,180 – 2,180
Trade and other payables (3,943) – (3,943)
Current tax payable (671) – (671)
Financial liabilities (15,599) – (15,599)
Deferred tax liabilities 9 (20) (779) (799)
Total identifiable net assets 9,191 3,802 12,993
Non-controlling interests, based on
their proportionate interest in the
total identifiable net assets (3,898)
Bargain purchase gain recognised
in other operating income 21 (1,395)
Cash consideration paid 7,700
Less: Cash and cash equivalents
acquired (2,180)
Net cash outflow 5,520
The fair value of the property, plant and equipment has been determined based on directors’ estimate
of the amount that the Group could obtain, at acquisition date, from the disposal of the property,
plant and equipment in an arm’s length transaction between knowledgeable, willing parties, after
deducting the costs of disposal. In determining this amount, the directors have made their best
assessment, taking into account the conditions and current information available to them, including
recent transactions for similar assets within the same industry.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012110
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
24 ACQUISITION OF INTEREST IN SUBSIDIARIES (CONT’D)
(i) Acquisition of subsidiaries (cont’d)
(b) Tat Hong Equipment Co. Ltd
In March 2011, the Group acquired the remaining equity interest of 51% in Tat Hong Equipment
Co. Ltd it does not own for a purchase consideration of $1,381,000 which was only accounted for
by the Group from 1 April 2011 as the financial impact to the consolidated financial statements for
the year ended 31 March 2011 was insignificant.
The effect of the acquisition is summarised as follows:
Note 2012 2012 2012$’000 $’000 $’000
Carrying Fair value Recognisedamounts adjustments value
Property, plant and equipment 4 842 – 842
Trade and other receivables 42 – 42
Inventories 1,045 – 1,045
Cash and cash equivalents 681 – 681
Trade and other payables (216) – (216)
Total identifiable assets 2,394 – 2,394
Fair value of the existing interest in the
acquiree (1,173)
Goodwill on consolidation 10 160
Cash consideration paid 1,381
Less: Cash and cash equivalents
acquired (681)
Net cash outflow 700
The fair value of the property, plant and equipment has been determined based on the directors’
estimate of the amount that the Group could obtain, at acquisition date, from the disposal of the
property, plant and equipment in an arm’s length transaction between knowledgeable, willing parties,
after deducting the costs of disposal. In determining this amount, the directors have made their best
assessment, taking into account the conditions and current information available to them, including
recent transactions for similar assets within the same industry.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 111
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
24 ACQUISITION OF INTEREST IN SUBSIDIARIES (CONT’D)
(i) Acquisition of subsidiaries (cont’d)
(c) Tat Hong (Thailand) Co., Ltd
In December 2011, the Group acquired the remaining equity interest of 51% in Tat Hong (Thailand)
Co., Ltd for a purchase consideration of $132,000. From the date of acquisition, Tat Hong (Thailand)
Co., Ltd contributed revenue of $1,642,000 and loss for the year of $417,000 to the Group’s results.
If the acquisition had occurred on 1 April 2011, management estimates that the contributed revenue
would have been $5,692,000 and the consolidated profit for the year would have been $187,000. In
determining these amounts, management has assumed that the fair value adjustments that arose on
the date of acquisition would have been the same if the acquisition had occurred on 1 April 2011.
The effect of the acquisition is summarised as follows:
Note 2012 2012 2012$’000 $’000 $’000
Carrying Fair value Recognisedamounts adjustments value
Property, plant and equipment 4 1,683 374 2,057
Trade and other receivables 1,974 – 1,974
Current tax receivable 143 – 143
Inventories 55 – 55
Cash and cash equivalents 4,309 – 4,309
Trade and other payables (6,726) – (6,726)
Deferred tax liabilities 9 – (63) (63)
Total identifiable assets 1,438 311 1,749
Fair value of the existing interest in the
acquiree (857)
Bargain purchase gain recognised in
other operating income 21 (760)
Cash consideration paid 132
Less: Cash and cash equivalents
acquired (4,309)
Net cash inflow (4,177)
The fair value of the property, plant and equipment has been determined based on the independent
valuer assessment, at the acquisition date, from the disposal of the property, plant and equipment
in an arm’s length transaction between knowledgeable, willing parties, after deducting the cost of
disposal.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012112
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
24 ACQUISITION OF INTEREST IN SUBSIDIARIES (CONT’D)
(ii) Acquisition of non-controlling interests
(a) PT World Wide Equipment South East Asia (“PTWW”)
During the year ended 31 March 2012, a subsidiary of the Company acquired additional equity interest
of 50% in PTWW for a purchase consideration of $8,175,000, increasing its equity interest held
from 50% to 100%. The carrying amount of PTWW’s net assets in the Group’s financial statements
on the date of acquisition was $12,231,000. The Group recognised a decrease in non-controlling
interests and capital reserves of $6,789,000 and $2,124,000 respectively and an increase in currency
translation reserve of $738,000.
(b) Jiangsu Zheng He TatHong Equipment Co., Ltd (“ZHTH”)
During the year ended 31 March 2012, a subsidiary of the Company acquired additional equity
interest of 45% in ZHTH for a purchase consideration of $6,938,000 increasing its effective equity
interest held from 55% to 96%. The carrying amount of ZHTH’s net assets in the Group’s financial
statements on the date of acquisition was $20,027,000. The Group recognised a decrease in non-
controlling interests of $8,842,000 and an increase in capital reserves and currency translation
reserve of $1,861,000 and $43,000 respectively.
25 DIVIDENDS
Group and Company2012 2011$’000 $’000
Final dividend paid of 0.5 cents (2011: 1.5 cents)
per ordinary share 2,523 7,570
Final dividend paid of 0.5 cents (2011: 1.5 cents) per share to
convertible redeemable preference shareholders 325 975
Interim dividend paid of 1.0 cents (2011: 1.0 cents)
per ordinary share 5,048 5,046
Interim dividend paid of 1.0 cents (2011: 1.0 cents) per share to
convertible redeemable preference shareholders 650 650
8,546 14,241
After the reporting date, the directors proposed the following dividends. The dividends have not been provided for.
Group and Company2012 2011$’000 $’000
Proposed dividend of 1.5 cents (2011: 0.5 cents) per share to:
- ordinary shareholders 7,570 2,523
- convertible redeemable preference shareholders 975 325
8,545 2,848
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 113
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
26 FINANCIAL INSTRUMENTS
Overview
The Group’s activities in the normal course of business expose it to credit, liquidity and market risks. The Group’s
risk management approach seeks to minimise the potential material adverse effects from these exposures.
Risk management framework
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk
management framework. The Board has established a Risk Management Committee, which oversees how
management monitors compliance with the Group’s risk management policies and procedures and reviews
the adequacy of the risk management framework in relation to the risks faced by the Group. The committee
reports to the Board of Directors on the outcome of its review and discussions and makes recommendations
from time to time on matters arising and requiring the attention of the Board.
The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to
set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies
and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group,
through its training and management standards and procedures, aims to develop a disciplined and constructive
control environment in which all employees understand their roles and obligations.
Credit risk
Credit risk is the potential financial loss to the Group if a customer or counterparty to settle its financial and
contractual obligations to the Group as and when it fall due. Credit risk is managed and monitored through the
application of credit approvals, performing credit evaluations and setting credit limits. For trade receivables, the
Group adopts the policy of dealing only with customers with appropriate credit history to mitigate credit risk.
The Group also monitors the collectability on an on-going basis.
The Group establishes an allowance for impairment that represents its estimates of incurred losses in respect of
trade and other receivables. The main components of this allowance are a specific loss component that relates
to individually significant exposures, and a collective loss component established for groups of similar assets
in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined
based on historical data of payment statistics for similar financial assets.
The allowance account in respect of trade and other receivables is used to record impairment losses unless
the Group is satisfied that no recovery of the amount owing is possible. At that point, the financial asset is
considered irrecoverable and the amount charged to the allowance account is written off against the carrying
amount of the impaired financial asset.
Investments and bank transactions are allowed with counter-parties that meet the appropriate credit criteria
and are of high credit standing. As such, management does not expect any counter-party to fail to meet its
obligations. At the reporting date, there were no significant concentrations of credit risk. The maximum exposure
to credit risk is represented by the carrying amount of each financial asset in the statement of financial position.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012114
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
26 FINANCIAL INSTRUMENTS (CONT’D)
Liquidity risk
The objective of liquidity management is to ensure that the Group has sufficient funds to meet its contractual
and financial obligations as and when it falls due. The Group’s approach to managing liquidity is to ensure, as far
as possible, that it will always have sufficient liquidity to meet its liabilities when due, under normal and stressed
conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.
The Group focuses on ensuring the matching maturities of the Group’s assets and liabilities. A sufficient amount
of credit facilities from financial institutions have been secured and an adequate level of funding is maintained.
The Group will also maintain a level of cash and cash equivalents deemed adequate by management to finance
the Group’s operations and to mitigate the effects of fluctuations in cash flows. Typically the Group ensures
that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days, including
the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot
reasonably be predicted, such as natural disasters.
Market risk
Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates and equity
prices will have on the Group’s income or the value of the holdings of the financial instruments. The objective
of market risk management is to manage and control market risk exposures within acceptable parameters,
while optimising the return on risk.
It is the Group’s policy not to engage in foreign exchange and/or derivatives speculation or trading. It is not
in the interest of the Group to speculate or trade in treasury instruments. The purpose of engaging in treasury
transactions is solely for hedging.
The Group has establishments in countries other than Singapore. These establishments are exposed to changes
in government regulations and unfavourable political developments, which may limit the realisation of business
opportunities and investments in these countries. In addition, the Group’s business operations are exposed to
economic uncertainties that continue to affect the global economy and international capital market. Although
these circumstances may be beyond its control, the Board and the Management consistently keep themselves
up-to-date on the changes in political and industry regulations so as to be able to anticipate or respond to any
adverse changes in market conditions in an efficient and timely manner.
Interest rate risk
The Group’s interest rate risk is managed on an on-going basis with the objective to limit the extent to which the
Group’s results could be affected by an adverse movement in interest rate. The Group’s cash balances are placed
with reputable banks. For financing obtained through borrowings and finance lease arrangements, the Group’s
policy is to obtain the most favourable interest rates available. Where necessary, the Group will use derivative
financial instruments to hedge the interest rate risks or to convert borrowings from floating rates to fixed rates.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 115
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
26 FINANCIAL INSTRUMENTS (CONT’D)
Interest rate risk (cont’d)
At the reporting date, the interest rate profile of the Group’s and Company’s interest-bearing financial
instruments were:
Group CompanyCarrying amount Carrying amount
2012 2011 2012 2011$’000 $’000 $’000 $’000
Variable rate instruments
Fixed deposits 9,964 7,332 – –
Financial liabilities (253,869) (255,813) (35,000) (40,000)
(243,905) (248,481) (35,000) (40,000)
Sensitivity analysis
A change of 100 bp in interest rate at the reporting date would increase/(decrease) profit or loss before tax (and
accumulated profits) by the amounts shown below. This analysis assumes that all other variables, in particular
foreign currency rates, remain constant.
Profit or loss100 bp
increase100 bp
decreaseGroup $’000 $’000
2012
Variable rate instruments (2,439) 2,439
2011
Variable rate instruments (2,485) 2,485
Company
2012
Variable rate instruments (350) 350
2011
Variable rate instruments (400) 400
Foreign currency risk
The foreign currency risk of the Group arises from sales and purchases that are denominated in a currency other
than Singapore dollars. The currencies giving rise to this risk are primarily Japanese Yen, United States dollars,
Euro, Thai Baht, Malaysian ringgit, Vietnam dong, Hong Kong dollars and the Australian dollars. Exposure to
foreign currency risk is monitored on an ongoing basis by the Group to ensure that the net exposure is at an
acceptable level.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012116
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
26 FINANCIAL INSTRUMENTS (CONT’D)
Foreign currency risk (cont’d)
The Group aims to reduce the exposures of the net position in each currency by using foreign currency
borrowings in the respective foreign subsidiaries, and use external forward contracts with financial institution
where appropriate. With the exception of Tutt Bryant Group Limited which have their own Board-approved
policies and procedures to manage their foreign currency risks, all treasury transactions are approved and/or
executed by Group Treasury, whereby only authorised staff can transact with the banks on behalf of the Group.
The Group has established guidelines and procedures to manage its foreign currencies hedging policies. It
continuously monitors the exchange rates of the currencies concerned and enters into hedging contracts with
banks from time to time to reduce the adverse impact on the Group’s profitability.
The Group’s and the Company’s exposure to foreign currencies and the sensitivity to a 10% strengthening of
the respective functional currencies of the Group’s entities against the foreign currencies, are shown below. A
10% strengthening of the respective functional currencies of the Group’s entities against the foreign currencies
at the reporting date would increase/(decrease) equity and profit or loss by the amounts shown below. The
analysis assumes that all other variables, in particular interest rates, remain constant.
Singaporedollars
USdollars
Malaysian ringgit
Japanese Yen Euro
Australian dollars Thai Baht
Vietnam dong
Hong Kong
dollars Others Total
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Group
2012
Trade and other
receivables 10,958 44,467 3,765 14,173 3,424 107 2,411 3,640 5,291 – 88,236
Cash and cash
equivalents 10,148 12,041 150 1,556 2,999 1,431 – – – 18 28,343
Trade and other
payables (10,944) (71,729) (744) (129,890) (21,906) (4,244) (4) – – (556) (240,017)
Forward
exchange
contracts
held – 302 – 56,969 13,397 – – – – – 70,668
Loan from
holding
company (6,924) (60,961) – – – – – – – – (67,885)
Loan to
subsidiaries 112 61,084 – – – – – – – – 61,196
Loans to
associates – 38 – – – – – – – – 38
Loans to joint
ventures – 113 – – – – – – – 1,246 1,359
3,350 (14,645) 3,171 (57,192) (2,086) (2,706) 2,407 3,640 5,291 708 (58,062)
Sensitivity
analysis
- income
statement (1,016) 1,492 (317) 5,719 209 271 (241) (364) (529) 54 5,278
Sensitivity
analysis -
equity 681 (27) – – – – – – – (125) 529
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 117
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
26 FINANCIAL INSTRUMENTS (CONT’D)
Foreign currency risk (cont’d)
Singaporedollars
USdollars
Malaysian ringgit
Japanese Yen Euro
Australian dollars Thai Baht
Vietnam dong
Hong Kong
dollars Others Total
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Group
2011
Trade and other
receivables 6,305 26,995 4,352 3,421 4 186 2,756 − 1,274 216 45,509
Cash and cash
equivalents 1,091 10,497 1 450 314 28 − − − 100 12,481
Trade and other
payables (4,827) (29,907) (948) (49,212) (1,663) (436) (3) − (6) (513) (87,515)
Forward
exchange
contracts
held − − − 14,839 2,165 − − − − − 17,004
Loan from
holding
company (3,384) (46,687) − − − − − − − − (50,071)
Loan to
subsidiaries 112 46,811 − − − − − − − − 46,923
Loans to
associates − 38 − − − − 26 − − − 64
Loans to joint
ventures − 114 − − − − − − − − 114
(703) 7,861 3,405 (30,502) 820 (222) 2,779 − 1,268 (197) (15,491)
Sensitivity
analysis
- income
statement (257) (758) (340) 3,050 (82) 22 (275) − (127) 20 1,253
Sensitivity
analysis -
equity 327 (28) − − − − (3) − − − 296
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012118
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
26 FINANCIAL INSTRUMENTS (CONT’D)
Foreign currency risk (cont’d)
2012 2011US
dollarsAustralian
dollars TotalUS
dollarsAustralian
dollars Total$’000 $’000 $’000 $’000 $’000 $’000
Company
Loans to associates 38 – 38 38 – 38
Loans to joint ventures 113 – 113 114 – 114
Cash and cash equivalents 3 7 10 5 7 12
Trade and other payables – – – – (7) (7)
154 7 161 157 – 157
Sensitivity analysis (16) – (16) (16) – (16)
A 10% weakening of Singapore dollars against the above currencies would have had the equal but opposite
effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.
Recognised assets and liabilities
The fair value of forward exchange contracts used as economic hedges of monetary assets and liabilities in
foreign currencies as at 31 March 2012 is $1,520,000 (2011: $1,243,000) which has been recognised as fair
value derivative liabilities.
The fair value of interest rate swaps used as economic hedges as at 31 March 2012 is $765,000 (2011: $793,000)
which has been recognised as fair value derivative liabilities.
Estimation of fair values
The following summarises the significant methods and assumptions used in estimating the fair values of financial
instruments of the Group and the Company.
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 (based on government bonds).
The fair value of interest rate swaps is based on broker’s quotes.
Non-derivative financial liabilities
Fair value of financial liabilities, which is determined for disclosure purposes, is calculated based on the present
value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date.
For finance leases, the market rate of interest is determined by reference to similar lease agreements.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 119
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
26 FINANCIAL INSTRUMENTS (CONT’D)
Estimation of fair values (cont’d)
Intra-group financial guarantees
The value of financial guarantees provided by the Company to its subsidiaries is determined by reference to the
difference in the interest rates, by comparing the actual rates charged by the banks with these guarantees made
available, with the estimated rates that the banks would have charged had these guarantees not been available.
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.
Financial instruments by category
Set out below is a comparison by category of carrying amounts of all the Group’s and the Company’s financial
instruments that are carried in the financial statements:
Assets
Loans and receivables
Available-for-sale financial assets Total Fair value
Group $’000 $’000 $’000 $’000
2012
Cash and cash equivalents 76,770 – 76,770 76,770
Trade and other receivables 173,729 – 173,729 173,729
Other financial investments – 115 115 115
250,499 115 250,614 250,614
2011
Cash and cash equivalents 61,813 – 61,813 61,813
Trade and other receivables 132,579 – 132,579 132,579
Other financial investments – 201 201 201
194,392 201 194,593 194,593
Company
2012
Cash and cash equivalents 309 – 309 309
Trade and other receivables 75,816 – 75,816 75,816
76,125 – 76,125 76,125
2011
Cash and cash equivalents 418 – 418 418
Trade and other receivables 119,886 – 119,886 119,886
120,304 – 120,304 120,304
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012120
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
26 FINANCIAL INSTRUMENTS (CONT’D)
Financial instruments by category (cont’d)
Liabilities
Financial liabilities at amortised cost
Financial liabilities at fair value
through profit or loss Total Fair value
Group $’000 $’000 $’000 $’000
2012
Trade and other payables 281,747 2,285 284,032 284,032
Financial liabilities 455,955 – 455,955 441,194
737,702 2,285 739,987 725,226
2011
Trade and other payables 134,660 2,036 136,696 136,696
Financial liabilities 409,430 – 409,430 404,880
544,090 2,036 546,126 541,576
Company
2012
Trade and other payables 2,686 571 3,257 3,257
Financial liabilities 39,610 – 39,610 39,610
42,296 571 42,867 42,867
2011
Trade and other payables 2,155 367 2,522 2,522
Financial liabilities 44,386 – 44,386 44,386
46,541 367 46,908 46,908
Fair value hierarchy
The following defines the fair value hierarchy of financial instruments carried at fair value, by valuation method:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (i.e., as prices) or indirectly (i.e., derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 121
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
26 FINANCIAL INSTRUMENTS (CONT’D)
Financial instruments by category (cont’d)
As at 31 March 2012, in order to determine the fair value of the forward exchange contracts and interest rate
swap, management had obtained independent valuation from banks, which was based on valuation techniques
in which significant inputs were based on observable market data. The forward exchange contracts and interest
rate swap were analysed as Level 2 as the inputs used for the valuation were based on observable market data.
Level 1 Level 2 Total
$’000 $’000 $’000
Group
2012
Derivative financial liabilities – 2,285 2,285
2011
Derivative financial liabilities – 2,036 2,036
27 OPERATING SEGMENTS
(a) Business segments
The Group has four reportable segments as described below, which are the Group’s strategic business
units. The strategic business units offer different products and services, and are managed separately
because they are located in different geographical areas and require different marketing strategies. For each
of the strategic business unit, the Group’s chief operating decision maker reviews internal management
reports on at least a quarterly basis. The following summary describes the operations in each of the
Group’s reportable segments:
Crane rental: The rental income of cranes.
Tower crane rental: The rental income of tower cranes.
General equipment rental: The equipment rental income of other construction equipment.
Distribution: The sales of cranes and other construction equipment, spareparts, and
provision of other ancilliary services.
Information regarding the results of each reportable segment is included below. Performance is measured
based on segment profit before income tax, as included in the internal management reports that are
reviewed by the Group’s chief operating decision maker. Segment profit is used to measure performance
as management believe that such information is the most relevant in evaluating the results of certain
segments relative to other entities that operate within these industries.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012122
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
27 OPERATING SEGMENTS (CONT’D)
(a) Business segments (cont’d)
Information about reportable segments
Crane rental
Tower crane rental
General equipment
rental Distribution Total $’000 $’000 $’000 $’000 $’000
2012
Revenue and expenses
Total revenue from external customers 224,987 58,713 96,889 339,169 719,758
Inter-segment revenue 31,193 3,229 – 163,235 197,657
Total revenue 256,180 61,942 96,889 502,404 917,415
Results
Interest income 453 345 263 308 1,369
Depreciation expense (35,333) (12,143) (18,152) (3,321) (68,949)
Amortisation expense (236) (47) (199) (150) (632)
Reportable segment profit before
income tax 56,918 (13,390) 15,929 34,669 94,126
Share of profit of associates (net of tax) 2,500 – – 1,332 3,832
Share of loss of joint ventures (net of tax) (2,427) – – – (2,427)
Other material non-cash items:
- Allowance made for receivables (499) (2,499) (331) (293) (3,622)
- Allowance made for inventories – – – (250) (250)
- Gain/(Loss) on disposal of property,
plant and equipment 2,820 (15,749) 294 876 (11,759)
- Impairment loss on intangible assets (160) – – – (160)
- Inventories written off – – – (65) (65)
- Bargain purchase gain arising from
acquisition of a subsidiary 760 – – – 760
Other segment information
Reportable segment assets 633,253 183,232 134,122 316,891 1,267,498
Investment in associates 20,010 – – 43,375 63,385
Investment in joint ventures 2,279 – – – 2,279
22,289 – – 43,375 65,664
Capital expenditure 40,559 46,326 33,597 37,606 158,088
Reportable segment liabilities 44,383 14,768 10,490 218,504 288,145
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 123
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
27 OPERATING SEGMENTS (CONT’D)
(a) Business segments (cont’d)
Information about reportable segments
Crane rental
Tower crane rental
General equipment
rental Distribution Total $’000 $’000 $’000 $’000 $’000
2011
Revenue and expenses
Total revenue from external customers 184,918 57,178 69,708 272,384 584,188
Inter-segment revenue 36,558 1,905 – 97,206 135,669
Total revenue 221,476 59,083 69,708 369,590 719,857
Results
Interest income 767 117 383 357 1,624
Depreciation expense (29,106) (10,728) (15,536) (3,045) (58,415)
Amortisation expense (211) (28) (624) (22) (885)
Reportable segment profit before
income tax 31,031 10,058 5,285 22,296 68,670
Share of profit of associates (net of tax) 3,741 – – (2,394) 1,347
Share of loss of joint ventures (net of tax) (568) – – – (568)
Other material non-cash items:
- Allowance reversed/(made) for
receivables 916 – (306) 134 744
- Allowance made for inventories – – – (453) (453)
- Gain/(Loss) on disposal of property,
plant and equipment 2,251 (264) 149 1,107 3,243
- Impairment loss on intangible assets (4,916) – – – (4,916)
- Impairment loss on property, plant
and equipment (4,053) – – – (4,053)
- Inventories written off – – – (2,021) (2,021)
- Bargain purchase gain arising from
acquisition of a subsidiary 1,395 – – – 1,395
Other segment information
Reportable segment assets 456,699 195,671 118,659 295,965 1,066,994
Investment in associates 14,406 – – 46,143 60,549
Investment in joint ventures 6,176 – – – 6,176
20,582 – – 46,143 66,725
Capital expenditure 20,541 64,246 23,809 10,381 118,977
Reportable segment liabilities 22,884 22,389 8,046 94,606 147,925
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012124
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
27 OPERATING SEGMENTS (CONT’D)
(a) Business segments (cont’d)
Reconciliations of reportable segment profit or loss, assets and liabilities and other material items
2012 2011
$’000 $’000
Profit or loss
Total reportable segment profit before income tax 94,126 68,670
Elimination of inter-segment profits (8,254) (2,406)
Unallocated amounts:
- Other corporate expenses (29,293) (26,486)
Share of profits of associates (net of tax) 3,832 1,347
Share of losses of joint ventures (net of tax) (2,427) (568)
Consolidated profit before income tax 57,984 40,557
Assets
Total reportable segment assets 1,267,498 1,066,994
Investment in associates 63,385 60,549
Investment in joint ventures 2,279 6,176
Other unallocated assets 49,906 20,536
Consolidated total assets 1,383,068 1,154,255
Liabilities
Total reportable segment liabilities 288,145 147,925
Other unallocated liabilities 496,734 434,451
Consolidated total liabilities 784,879 582,376
(b) Geographical segments
ASEAN Australia
People’s Republic of
ChinaOther
regions Consolidated$’000 $’000 $’000 $’000 $’000
2012
Total revenue from external
customers 270,345 380,132 58,713 10,568 719,758
Non-current assets* 369,373 329,657 163,795 18,145 880,970
2011
Total revenue from external
customer 202,909 314,932 57,178 9,169 584,188
Non-current assets* 278,106 261,586 189,773 10,130 739,595
* Non-current assets exclude deferred tax assets.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 125
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
27 OPERATING SEGMENTS (CONT’D)
(c) Major customers
There are no major customers who solely account for 10% or more of the Group’s revenue.
28 COMMITMENTS – GROUP
Operating lease commitments
As at 31 March 2012, the commitments of the Group for minimum lease payments under non-cancellable
operating leases are as follows:
2012 2011$’000 $’000
Within 1 year 13,453 9,307
Between 1 and 5 years 24,011 17,132
More than 5 years 14,559 14,916
52,023 41,355
The Group leases motor vehicles and a number of premises for production, warehouse and office purposes
under operating leases. The leases typically run for an initial period of two to forty-three years, with options to
renew the leases after that date. Lease payments are subject to increases annually to reflect market rentals.
None of the leases includes contingent rentals.
The Group leases out its plant and machinery (refer to note 4). Non-cancellable operating lease rentals are
receivable as follows:
2012 2011$’000 $’000
Within 1 year 45,593 24,118
Between 1 and 5 years 1,290 −
46,883 24,118
Capital commitments
Authorised cost not contracted for 29,966 −
Contracted for but not provided for 25,997 20,486
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012126
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
29 SIGNIFICANT RELATED PARTY TRANSACTIONS – GROUP
For the purposes of these financial statements, parties are considered to be related to the Group if the Group
has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making
financial and operating decisions, or vice versa, or where the Group and the party are subject to common control.
Related parties may be individuals or other entities.
In addition to the related party information disclosed elsewhere in the financial statements, there were significant
related party transactions which were carried out in the normal course of business on terms agreed between
the parties during the financial year as follows:
2012 2011$’000 $’000
Transactions with companies in which certain directors of the
Company have substantial financial interests
Rental income receivable 3,275 1,831
Sales 8,174 6,690
Purchases 1,695 4
Hiring charges payable 7 1
Transactions with associates of the Group
Rental income receivable 682 1,965
Sales 351 8,372
Purchases 31,140 35,994
Hiring charges payable 105 144
Transactions with joint ventures of the Group
Rental income receivable 1,254 –
Hiring charges payable 578 –
Transactions with related parties
Rental income receivable 13,986 11,370
Hiring charges payable 2,305 220
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 127
Year ended 31 March 2012
NOTESTO THE FINANCIAL STATEMENTS
30 SUBSEQUENT EVENTS
Incorporation of a subsidiary
On 4 May 2012, the Group incorporated an indirect wholly owned subsidiary, PT Tat Hong HeavyEquipment
Indonesia (“PTTHI”) in Jakarta, Indonesia. PTTHI has a registered share capital of US$1.0 million which will
be fully paid up from the Group’s internal cash resources. Its primary business activity is the distribution and
wholesale of machinery, equipment and supplies for the construction and mining industries in Indonesia.
Liquidation of a subsidiary
On 4 May 2012, the Group has completed its voluntary liquidation of a dormant indirect subsidiary, Tat Hong
HeavyEquipment Middle East LLC.
Grant of award of shares under the Performance Share Plan (“PSP”)
On 30 April 2012, the Shares Option/Performance Shares Plan Committee granted awards of shares under
the PSP totalling 384,000 shares of which 96,000 shares were vested on 30 April 2012 to be satisfied from the
Company’s holding of treasury shares.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012128
As at 19 June 2012
ANALYSIS OF SHAREHOLDINGS
SHAREHOLDINGS STATISTICS
No of Issued Shares : 506,626,823
No of Treasury Shares : 1,865,000
Class of shares : Ordinary shares
Voting rights : On a show of hands: One vote for each member
: On a poll: 1 vote for each ordinary share
Range of Shareholdings No. of Shareholders % No. of Shares %
1 - 999 27 0.79 6,154 0.00
1,000 - 10,000 2,301 67.48 12,156,605 2.40
10,001 - 1,000,000 1,053 30.88 64,859,398 12.80
1,000,001 and above 29 0.85 429,604,666 84.80
TOTAL 3,410 100.00 506,626,823 100.00
SUBSTANTIAL SHAREHOLDERS
Name Direct Interest %* Deemed Interest %*
Ng San Tiong Roland – – 263,051,505 52.11
Ng Sun Ho Tony 6,006,130 1.19 253,643,660 50.25
Ng San Wee David 2,611,750 0.52 253,860,660 50.59
Ng Sun Giam Roger 792,500 0.16 253,511,160 50.22
Chwee Cheng & Sons Pte Ltd 222,176,160 44.00 31,335,000 6.21
Ng Chwee Cheng 34,364,000 6.81 19,789,646 3.92
* The percentage of shareholdings is computed based on the share capital of 504,761,823 shares which excludes 1,865,000 treasury shares
NOTES :
1. Pursuant to the terms of a trust deed dated 29 July 1997 (as supplemented by a deed dated 12 October 1998)
(the “Trust Deed”), Messrs Ng San Tiong Roland, Ng Sun Ho Tony, Ng San Wee David, the Directors and their
brother, Mr Ng Sun Giam Roger are joint trustees of the Chwee Cheng Trust, constituted under the Trust Deed,
which owns approximately 42.03% of the issued share capital of Chwee Cheng & Sons Pte Ltd. Under the
terms of the Trust Deed, the beneficiaries of the said trust are the sons of Mr Ng Chwee Cheng, namely, Messrs
Ng San Tiong Roland, Ng Sun Ho Tony, Ng Sun Hoe Patrick, Ng Sang Kuey Michael, Ng San Guan William,
Ng Sun Giam Roger, Ng San Wee David, Ng San Eng Sunny, Ng Sun Oh Lewis, and their descendants. Being
joint trustees, Messrs Ng San Tiong Roland, Ng Sun Ho Tony, Ng Sun Giam Roger and Ng San Wee David,
are deemed to be interested in the 253,511,160 shares (both direct and deemed) held by Chwee Cheng &
Sons Pte Ltd.
2. Ng San Tiong Roland is deemed interested in 8,996,095 shares held through nominees and 544,250 shares
held by his spouse.
3. Ng Sun Ho Tony is deemed interested in 132,500 shares held by his spouse.
4. Ng San Wee David is deemed interested in 349,500 shares held by his spouse.
5. Chwee Cheng & Sons Pte Ltd is deemed interested in 31,335,000 shares held through nominees.
6. Ng Chwee Cheng is deemed interested in 19,789,646 shares held through nominees.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 129
As at 19 June 2012
ANALYSIS OF SHAREHOLDINGS
SHAREHOLDINGS HELD IN HANDS OF PUBLIC
Based on information available to the Company as at 19 June 2012, approximately 31.10% of the Company’s shares
listed on the Singapore Exchange Securities Trading Limited were held by the public. Therefore the Company has
complied with Rule 723 of the Listing Manual.
TOP 20 SHAREHOLDERS
S/No. Name of Shareholder No. of Shares %*
1 CHWEE CHENG & SONS PTE TLD 222,176,160 44.00
2 HSBC (SINGAPORE) NOMINEES PTE LTD 78,416,095 15.54
3 NG CHWEE CHENG 34,484,000 6.83
4 CITIBANK NOMINEES SINGAPORE PTE LTD 19,937,751 3.95
5 DBS NOMINEES PTE LTD 11,818,500 2.34
6 UNITED OVERSEAS BANK NOMINEES PTE LTD 6,700,000 1.33
7 NG SUN HO 6,006,130 1.19
8 PHILLIP SECURITIES PTE LTD 5,462,278 1.08
9 STARICH INVESTMENTS PTE LTD 4,140,000 0.82
10 NG SANG KUEY 3,565,350 0.71
11 BNP PARIBAS SECURITIES SERVICES SINGAPORE BRANCH 3,095,000 0.61
12 DBSN SERVICES PTE LTD 2,993,924 0.59
13 NG SUN ENG 2,726,328 0.54
14 NG SAN WEE 2,611,750 0.52
15 ONG TIEW SIAM 2,599,500 0.52
16 MAYBANK KIM ENG SECURITIES PTE LTD 2,403,500 0.48
17 DB NOMINEES (S) PTE LTD 2,334,000 0.46
18 NG SAN GUAN 2,255,908 0.45
19 CIMB SECURITIES (S) PTE LTD 1,964,368 0.39
20 DBS VICKERS SECURITIES (S) PTE LTD 1,947,000 0.39
TOTAL 417,637,542 82.74
* The percentage of shareholdings is computed based on the share capital of 504,761,823 shares which excludes 1,865,000 treasury shares
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012130
As at 19 June 2012
ANALYSIS OF WARRANTHOLDINGS
Range of Warrantholdings No. of Warrantholders % No. of Warrants %
1 - 999 2,012 63.69 734,488 1.45
1,000 - 10,000 967 30.61 2,101,726 4.15
10,001 - 1,000,000 172 5.45 14,792,446 29.20
1,000,001 and above 8 0.25 33,033,896 65.20
TOTAL 3,159 100.00 50,662,556 100.00
TOP 20 WARRANTHOLDERS
S/No. Name of Warrantholder No. of Warrants %
1 CHWEE CHENG & SONS PTE LTD 21,021,516 41.49
2 NG CHWEE CHENG 3,237,000 6.39
3 NG LIANG YEW 2,388,000 4.71
4 OCBC SECURITIES PTE LTD 1,992,400 3.93
5 DBS VICKERS SECURITIES (S) PTE LTD 1,190,100 2.35
6 HSBC (SINGAPORE) NOMINEES PTE LTD 1,105,300 2.18
7 NG TOONG SENG 1,050,000 2.07
8 CITIBANK NOMINEES SINGAPORE PTE LTD 1,049,580 2.07
9 LOH KAH WAI 949,000 1.87
10 NG SAN TIONG 791,509 1.56
11 NG SUN HO 600,613 1.19
12 TAN LEE-LIN 578,000 1.14
13 LEONG CHONG LING 508,800 1.00
14 PHILLIP SECURITIES PTE LTD 414,999 0.82
15 LAU WING CHOONG 380,000 0.75
16 NG SANG KUEY 356,535 0.70
17 LIM YOKE KIAN 328,500 0.65
18 CHEONG FOOK CHUN 305,000 0.60
19 DBSN SERVICES PTE LTD 296,851 0.59
20 DBS NOMINEES PTE LTD 261,800 0.52
TOTAL 38,805,503 76.58
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 131
NOTICEOF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Tat Hong Holdings Ltd (“the Company”) will be held
at 18 Sungei Kadut Avenue Singapore 729489 on Friday, 27 July 2012 at 10.00 a.m. for the following purposes:
AS ORDINARY BUSINESS
1. To receive and adopt the Directors’ Report and the Audited Accounts of the Company and the Group for the
year ended 31 March 2012 together with the Auditors’ Report thereon. (Resolution 1)
2. To declare a final dividend of 1.5 Singapore Cents per share for the year ended 31 March 2012 (previous year:
0.5 Singapore Cents per share). (Resolution 2)
3. To re-elect the following Directors of the Company retiring pursuant to Article 113 of the Articles of Association
of the Company:
Mr Ng Sun Ho Tony (Resolution 3)
Mr Low Seow Juan (Resolution 4)
Mr Ong Tiew Siam (Resolution 5)
[See Explanatory Note (i)]
4. To re-appoint Mr Tan Chok Kian, a director of the Company retiring under Section 153(6) of the Companies Act,
Chapter. 50, to hold office from the date of this Annual General Meeting until the next Annual General Meeting
of the Company.
[See Explanatory Note (ii)] (Resolution 6)
5. To approve the payment of Directors’ fees of S$475,000 for the year ended 31 March 2012 (previous year: S$378,370).
[See Explanatory Note (iii)] (Resolution 7)
6. To re-appoint Messrs KPMG LLP as the Auditors of the Company and to authorise the Directors of the Company
to fix their remuneration. (Resolution 8)
7. To transact any other ordinary business which may properly be transacted at an Annual General Meeting.
AS SPECIAL BUSINESS
To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without any modifications:
8. Authority to issue shares in the capital of the Company (excluding treasury shares) pursuant to Section 161
of the Companies Act, Cap. 50 and Rule 806 of the Listing Manual of the Singapore Exchange Securities
Trading Limited (the “SGX-ST”)
That pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806 of the Listing Manual of the SGX-ST,
the Directors of the Company be authorised and empowered to:
(a) (i) issue shares in the Company (“shares”) whether by way of rights, bonus or otherwise; and/or
(ii) make or grant offers, agreements or options (collectively, “Instruments”) that might or would require
shares to be issued, including but not limited to the creation and issue of (as well as adjustments
to) options, warrants, debentures or other instruments convertible into shares,
at any time and upon such terms and conditions and for such purposes and to such persons as the
Directors of the Company may in their absolute discretion deem fit; and
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012132
NOTICEOF ANNUAL GENERAL MEETING
(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 of the Company while this Resolution
was in force,
(the “Share Issue Mandate”)
provided that:
(1) the aggregate number of shares (including shares to be issued in pursuance of the Instruments, made
or granted pursuant to this Resolution) and Instruments to be issued pursuant to this Resolution shall
not exceed fifty per centum (50%) of the total number of issued shares (excluding treasury shares) in the
capital of the Company (as calculated in accordance with sub-paragraph (2) below), of which the aggregate
number of shares and Instruments to be issued other than on a pro rata basis to existing shareholders of
the Company shall not exceed twenty per centum (20%) of the total number of issued shares (excluding
treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (2) below);
(2) (subject to such calculation as may be prescribed by the SGX-ST) for the purpose of determining the
aggregate number of shares and Instruments that may be issued under the sub-paragraphs 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 of the passing of this Resolution,
after adjusting for:
(a) new shares arising from the conversion or exercise of the Instruments or any convertible securities;
(b) new shares arising from exercising share options or vesting of share awards outstanding and
subsisting at the time of the passing of this Resolution; and
(c) any subsequent consolidation or subdivision of shares;
(3) in exercising the Share Issue Mandate conferred by this Resolution, the Company shall comply with the
provisions of the Listing Manual of the SGX-ST for the time being in force (unless such compliance has
been waived by the SGX-ST) and the Articles of Association of the Company; and
(4) unless revoked or varied by the Company in a general meeting, the Share Issue Mandate shall continue
in force (i) 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 earlier or
(ii) in the case of shares to be issued in pursuance of the Instruments, made or granted pursuant to this
Resolution, until the issuance of such shares in accordance with the terms of the Instruments.
[See Explanatory Note (iv)] (Resolution 9)
9. Authority to issue shares under the Tat Hong Share Option Scheme 2006
That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors of the Company be authorised and
empowered to offer and grant options under the Tat Hong Share Option Scheme 2006 (“the Scheme 2006”) and
to issue from time to time such number of shares in the capital of the Company as may be required to be issued
pursuant to the exercise of options granted by the Company under the Scheme 2006, whether granted during
the subsistence of this authority or otherwise, provided always that the total aggregate number of additional
ordinary shares to be issued pursuant to the Scheme 2006 and the Share Plan shall not exceed fifteen per
centum (15%) of the total number of issued shares (excluding treasury shares) in the capital of the Company
from time to time and that such authority shall, unless revoked or varied by the Company in a general meeting,
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 earlier.
[See Explanatory Note (v)] (Resolution 10)
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 133
NOTICEOF ANNUAL GENERAL MEETING
10. Authority to issue shares under the Tat Hong Performance Share Plan
That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors of the Company be authorised
and empowered to offer and grant awards under the Tat Hong Performance Share Plan (“the Share Plan”)
and to issue from time to time such number of shares in the capital of the Company as may be required to be
issued pursuant to the vesting of awards under the Share Plan, whether granted during the subsistence of this
authority or otherwise, provided always that the total aggregate number of additional ordinary shares to be
issued pursuant to the Scheme 2006 and the Share Plan shall not exceed fifteen per centum (15%) of the total
number of issued shares (excluding treasury shares) in the capital of the Company from time to time and that
such authority shall, unless revoked or varied by the Company in a general meeting, 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 earlier.
[See Explanatory Note (vi)] (Resolution 11)
11. Proposed renewal of shareholders’ mandate for Interested Person Transactions
That:-
(1) approval be and is hereby given for the Company, its subsidiaries and associated companies that are
entities at risk (as that term is used in Chapter 9 of the SGX-ST Listing Manual), or any of them to enter
into any of the transactions falling within the categories of Interested Person Transactions particulars
of which are set out in the appendix to this Notice of Annual General Meeting to Shareholders dated
12 July 2012 (the “Appendix”), with the Interested Persons as described in the Appendix, provided
that such transactions are made on normal commercial terms in accordance with the guidelines and
procedures for review and administration of Interested Person Transactions as described in the Appendix
(the “Shareholders’ IPT Mandate”);
(2) the Shareholders’ IPT Mandate shall, unless revoked or varied by the Company in general meeting,
continue to be in force until the conclusion of the next Annual General Meeting of the Company;
(3) the Audit Committee of the Company be and is hereby authorised to take such action as it deems proper
in respect of procedures and/or to modify or implement such procedures as may be necessary to take
into consideration any amendment to Chapter 9 of the SGX-ST Listing Manual which may be prescribed
by SGX-ST from time to time; and
(4) the Directors of the Company be and are hereby authorised and empowered to complete and to do all
such acts and things, and to approve, modify, ratify and execute such documents, acts and things as
they may consider necessary, desirable or expedient to give effect to the Shareholders’ IPT Mandate and
this Resolution.
[See Explanatory Note (vii)] (Resolution 12)
By Order of the Board
Lional Tseng / Ong Beng Hong
Joint Company Secretaries
Singapore
12 July 2012
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012134
NOTICEOF ANNUAL GENERAL MEETING
Explanatory Notes:
(i) Mr Ng Sun Ho Tony will, upon re-election as Deputy Managing Director of the Company, remain as a member
of the Share Options/Performance Shares Plan Committee.
Mr Low Seow Juan will, upon re-election as a Director of the Company, remain as a member of the Audit
Committee, Nominating Committee and Remuneration Committee and will be considered independent.
Mr Ong Tiew Siam will, upon re-election as a Director of the Company, remain as a member of the Share Options/
Performance Shares Plan Committee and will be considered non-independent.
(ii) The effect of the Ordinary Resolution 6 above; is to re-appoint a Director of the Company who is over 70 years
of age. Mr Tan Chok Kian will, upon re-appointment as a Director of the Company, remain as Chairman of
the Board, Chairman of the Nominating Committee and member of the Audit Committee, the Remuneration
Committee and the Risk Management Committee, and will be considered independent.
(iii) The Company will disregard any votes cast on this resolution by non-executive Directors who are eligible to
be paid fees. However, the Company need not disregard a vote if it is cast by a person as proxy for a person
who is entitled to vote, in accordance with the directions on the proxy form, or it is cast by the person who is
entitled to vote, in accordance with the discretions on the proxy form to vote as the proxy decides provided
that the person entitled to vote excludes any non-executive Director that is eligible to be paid fees.
(iv) The Ordinary Resolution 9 above, if passed, will empower the Directors of the Company from the date of this
Meeting until the date 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 or such authority is varied or revoked by the
Company in a general meeting, whichever is the earlier, to issue shares, make or grant instruments convertible
into shares and to issue shares pursuant to such instruments, up to a number not exceeding, in total, 50%
of the total number of issued shares (excluding treasury shares) in the capital of the Company, of which up to
20% may be issued other than on a pro-rata basis to such persons as the Directors of the Company may in
their absolute discretion deem fit.
For determining the aggregate number of shares that may be issued, the percentage of issued shares in the
capital of the Company will be calculated based on the total number of issued shares (excluding treasury shares)
in the capital of the Company at the time this Ordinary Resolution is passed after adjusting for new shares
arising from the conversion or exercise of the Instruments or any convertible securities, the exercise of share
options or the vesting of share awards outstanding or subsisting at the time when this Ordinary Resolution is
passed and any subsequent consolidation or subdivision of shares.
(v) The Ordinary Resolution 10 above, if passed, will empower the Directors of the Company, from the date of this
Meeting until 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 or such authority is varied or revoked by the Company in
a general meeting, whichever is the earlier, to issue shares in the Company pursuant to the exercise of options
granted or to be granted under the Scheme 2006 provided always that the total aggregate number of additional
ordinary shares to be issued pursuant to the Scheme 2006 and the Share Plan does not exceed in total (for the
entire duration of the Scheme 2006) fifteen per centum (15%) of the total number of issued shares (excluding
treasury shares) in the capital of the Company from time to time.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012 135
NOTICEOF ANNUAL GENERAL MEETING
(vi) The Ordinary Resolution 11 above, if passed, will empower the Directors of the Company, from the date of this
Meeting until 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 or such authority is varied or revoked by the Company in
a general meeting, whichever is the earlier, to issue shares in the Company pursuant to the vesting of awards
under the Share Plan provided always that the total aggregate number of additional ordinary shares to be issued
pursuant to the Share Plan and the Scheme 2006 does not exceed in total (for the entire duration of the Share
Plan) fifteen per centum (15%) of the total number of issued shares (excluding treasury shares) in the capital of
the Company from time to time.
(vii) The Ordinary Resolution 12 above, if passed, will renew the mandate given by the shareholders of the Company
to allow the Company, its subsidiaries and associated companies or any of them to enter into any of the
transactions falling within the categories of Interested Person Transactions as defined in Chapter 9 of the
SGX-ST Listing Manual. Please refer to the Appendix for further details.
Notes:
1. A Member entitled to attend and vote at the Annual General Meeting (the “Meeting”) is entitled to appoint not more than two proxies to attend
and vote in his/her stead. A proxy need not be a Member of the Company.
2. If the appointer is a corporation, the instrument of proxy must be executed under seal or the hand of its duly authorised officer or attorney.
3. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 18 Sungei Kadut Avenue Singapore 729489
not less than forty-eight (48) hours before the time appointed for holding the Meeting.
TAT HONG HOLDINGS LTD ANNUAL REPORT 2012136
PROXY FORM(Please see notes overleaf before completing this Form)
TAT HONG HOLDINGS LTDCompany Registration No. 199105392H
(Incorporated In The Republic of Singapore)
IMPORTANT:
1. For investors who have used their CPF monies to buy Tat Hong Holdings Ltd’s shares,
this Report is forwarded to them at the request of the CPF Approved Nominees
and is sent solely FOR INFORMATION ONLY.
2. This Proxy Form is not valid for use by CPF investors and shall be ineffective for all
intents and purposes if used or purported to be used by them.
3. CPF investors who wish to attend the Meeting as an observer must submit their
requests through their CPF Approved Nominees within the time frame specified. If
they also wish to vote, they must submit their voting instructions to the CPF Approved
Nominees within the time frame specified to enable them to vote on their behalf.
I/We,
of
being a member/members of Tat Hong Holdings Ltd (the “Company”), hereby appoint:
Name NRIC/Passport No. Proportion of Shareholdings
No. of Shares %
Address
and/or (delete as appropriate)
Name NRIC/Passport No. Proportion of Shareholdings
No. of Shares %
Address
or failing the person, or either or both of the persons, referred to above, the Chairman of the Meeting as my/our
proxy/proxies to vote for me/us on my/our behalf at the Annual General Meeting (the “Meeting”) of the Company to
be held at 18 Sungei Kadut Avenue Singapore 729489 on Friday, 27 July 2012 at 10.00 a.m. and at any adjournment
thereof. I/We direct my/our proxy/proxies to vote for or against the Resolutions proposed at the Meeting as indicated
hereunder. If no specific direction as to voting is given or in the event of any other matter arising at the Meeting and at
any adjournment thereof, the proxy/proxies will vote or abstain from voting at his/her discretion. The authority herein
includes the right to demand or to join in demanding a poll and to vote on a poll.
(Please indicate your vote “For” or “Against” with a tick [√] within the box provided.)
No. Resolutions relating to: For Against
1 Directors’ Report and Audited Financial Statements for the year ended 31 March 2012
2 Payment of a proposed final dividend of 1.5 Singapore Cents per Share for the financial
year ended 31 March 2012
3 Re-election of Mr Ng Sun Ho Tony as a Director
4 Re-election of Mr Low Seow Juan as a Director
5 Re-election of Mr Ong Tiew Siam as a Director
6 Re-appointment of Mr Tan Chok Kian as a Director
7 Approval of Directors’ fees amounting to S$475,000 for the financial year ended 31 March 2012
8 Re-appointment of Messrs KPMG LLP as Auditors
9 Authority to allot and issue new Shares
10 Authority to allot and issue Shares under the Tat Hong Share Option Scheme 2006
11 Authority to allot and issue Shares under the Tat Hong Performance Share Plan
12 Renewal of Shareholders’ Mandate for Interested Person Transactions
Dated this day of 2012
Signature of Shareholder(s)
or, Common Seal of Corporate Shareholder
Total number of Shares in: No. of Shares
(a) CDP Register
(b) Register of Members
Notes:
1. Please insert the total number of Shares held by you. If you have Shares entered against your name in the
Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should
insert that number of Shares. If you have Shares registered in your name in the Register of Members, you should
insert that number of Shares. If you have Shares entered against your name in the Depository Register and
Shares registered in your name in the Register of Members, you should insert the aggregate number of Shares
entered against your name in the Depository Register and registered in your name in the Register of Members.
If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the Shares
held by you.
2. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one
or two proxies to attend and vote in his/her stead. A proxy need not be a member of the Company.
3. Where a member appoints more than one proxy, he shall specify the proportion of his shareholding to be
represented by each proxy. If no such proportion or number is specified the first named proxy may be treated
as representing one hundred per cent (100%) of the shareholding and any subsequent named proxy as an
alternate to the first named.
4. Completion and return of this instrument appointing a proxy shall not preclude a member from attending and
voting at the Meeting. Any appointment of a proxy or proxies shall be deemed to be revoked if a member attends
the meeting in person, and in such event, the Company reserves the right to refuse to admit any person or
persons appointed under the instrument of proxy to the Meeting.
5. The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 18
Sungei Kadut Avenue Singapore 729489 not less than 48 hours before the time appointed for the Meeting.
6. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly
authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it
must be executed either under its seal or under the hand of an officer or attorney duly authorised. Where the
instrument appointing a proxy or proxies is executed by an attorney on behalf of the appointor, the letter or
power of attorney or a duly certified copy thereof must be lodged with the instrument.
7. A corporation which is a member may authorise by resolution of its directors or other governing body such person
as it thinks fit to act as its representative at the Meeting, in accordance with Section 179 of the Companies Act,
Chapter 50 of Singapore.
General:
The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly
completed or illegible, or where the true intentions of the appointor are not ascertainable from the instructions of the
appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of Shares entered in the
Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member,
being the appointor, is not shown to have Shares entered against his name in the Depository Register as at 48 hours
before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.