ROKKO Holdings 2011 Annual Report

Annual Report 2011

ExploringOpportunities

BOARD OF DIRECTORSTey Kim HweeNon-Executive Chairman

Lim Chong ChenManaging Director

Lim Yee ChuanExecutive Director andFinancial Controller

Lee Sen ChoonLead Independent Director

Wai Chee LeongIndependent Director

AUDIT COMMITTEELee Sen Choon (Chairman)

Tey Kim HweeWai Chee Leong

NOMINATING COMMITTEEWai Chee Leong (Chairman)

Tey Kim HweeLee Sen Choon

REMUNERATION COMMITTEEWai Chee Leong (Chairman)

Tey Kim HweeLee Sen Choon

COMPANY SECRETARYVincent Lim Bock Hui

REGISTERED OFFICE61 Kaki Bukit Road 2Singapore 417869Tel : 65 6749 5885Fax : 65 6747 5979Website : www.rokkogroup.com

Corporate Information

SHARE REGISTRARBoardroom Corporate &Advisory Services Pte. Ltd.50 Raffles Place#32-01 Singapore Land TowerSingapore 048623Tel : 65 6536 5355Fax : 65 6536 1360

INDEPENDENT AUDITORSMazars LLPCertified Public Accountants133 Cecil Street #15-02Keck Seng TowerSingapore 069535Tel : 65 6224 4022Fax : 65 6225 3974Partner-in-charge :Denis Usher (Date of appointment :since FY ended31 December 2011)

PRINCIPAL BANKERS ANDFINANCIAL INSTITUTIONUnited Overseas Bank Limited80 Raffles Place, UOB Plaza 1Singapore 048624

ORIX Leasing Singapore Limited331 North Bridge Road#19-01/06 Odeon TowersSingapore 188720

About Rokko GroupEstablished in 1994, Rokko Holdings Ltd. (“Rokko”) and its subsidiaries (the “Group”) are a precision engineering group that provides automated equipment and precision engineering services to customers in the semiconductor and electronics industries. Rokko has been listed on the Singapore Exchange Securities Trading Limited (the “SGX-ST”) since October 2007. Its manufacturing facilities are located in Singapore and Malaysia and it has an established presence in Taiwan. Rokko’s business is divided into four (4) segments – Equipment, Leadframes, Stamping and Tooling.

The Equipment Division designs, develops and manufactures customized automated equipment specific to customer requirements under the

proprietary “Rokko” brand. The Leadframes Division manufactures lead frames for the semiconductor industry. The Stamping Division provides connector stamping and plating services to manufactures in the electronics industry. The Tooling Division designs, develops, manufactures precision tools used in the front-and back-end semiconductor manufacturing processes.

Rokko’s customers include established worldwide names such as Texas Instruments, Unisem, Infineon, UTAC, FATC, Molex, STATS ChipPAC, Dai-ichi Seiko, SMIC, Kuliche and Soffa, Lite-on, Panasonic and Micron. Rokko had over 330 employees as at 15 March 2012.

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Contents01 About Rokko Group

02 Message to Shareholders

04 Operations Review

06 Board of Directors

08 Key Management Staff

09 Corporate Structure

10 Financial Contents

2 ROKKO HOLDINGS LTD ANNUAL REPORT 2011

Message to Shareholders

Dear Shareholders,

The Board of Directors (the “Board”) of Rokko Holdings Ltd. (“Rokko”) is pleased to present our annual report for the financial year ended 31 December (“FY”) 2011.

During FY2011, the global semiconductor industry was affected by the negative sentiments surrounding the European debt crisis as well as two natural disasters in Asia, namely the earthquake and tsunami in Japan and the flooding in Thailand, which disrupted the supply chain of the electronics sector. While Rokko does not have a physical presence in these two countries, we were still affected by the calamities because some of our products’ components are sourced from Japan, while a good number of our customers depend on components from both countries. However, many of our customers have since resumed operations in Thailand.

Financial Scorecard Our financial performance must therefore be seen against the backdrop of these circumstances as well as the exceptional profit of FY2010. Revenue and gross profit margin for the Equipment Division (our main sales and profit driver) both declined in FY2011 – the former by 13% to S$22.9 million and the latter to 28.4% from 30.8% a year earlier. The Stamping and Tooling Divisions also slowed down due to the circumstances stated above.

The Group recorded a net profit after tax of S$3.4 million in FY2011 (FY2010: S$4.3 million) on revenue of S$58.0 million (FY2010: S$42.6 million). The net profit included a one-time gain of S$3.3 million from the acquisition of a 100%-stake in Rokko Leadframes Pte. Ltd. (“RLF”) which was completed on 28 February 2011. We recognised ten months’ revenue contribution from RLF, which accounted for 36.9% of the Group’s revenue in FY2011.

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RLF manufactures leadframes and offers electroplating services for the semiconductor sector, and is also involved in consumable tooling and connector plating activities. Following the acquisition, we have been busy with integration efforts which have paid off with RLF contributing a gross profit margin of 2.7% for FY2011, reversing from a negative 7.0% in the three-month period before the acquisition.

We continued to invest in research and development (“R&D”), incurring expenditure of S$1.2 million in FY2011, bringing total R&D investments since FY2007 to S$7.0 million. The Group was granted six patents in FY2011. To date, the Group has a total of 23 patents granted.

Our financial position remains healthy with cash and cash equivalents of S$9.6 million and a net gearing ratio of 0.51 times as at 31 December 2011.

Dividends and Shareholders’ ValueTo reward our shareholders, the Board has proposed a final dividend of 0.25 Singapore cent per share, representing 12% of net profit after tax for FY2011. To enhance shareholders’ value, the Company purchased 1.7 million shares in FY2011 as part of our share buy-back scheme, increasing our treasury shares held to 6.7 million as at 31 December 2011.

OutlookWe expect the semiconductor equipment sector to gain momentum from the second half of FY2012 as it recovers from the economic uncertainty and the supply chain disruptions. The sector as a whole will continue to be underpinned by demand for computer chips used in tablet computers, smartphones, mobile devices and the automotive industry.

We will continue to improve the performance of RLF, which provides the Group synergies in consumable tooling, connectors plating and base material products for the semiconductor sector. These efforts

at RLF are likely to require further capital investments to modernise RLF, on top of the S$3.2 million incurred in FY2011. We believe these investments will significantly strengthen the operations of RLF as well as our overall value proposition to our customers in terms of synergy and efficiency. We will continue to focus on integrating RLF with the rest of the Group.

Efforts to enhance the technological capabilities of the entire Group, including RLF, are expected to require capital expenditure of approximately S$5.0 million which will be incurred in FY2012.

While expanding our product lines in Singapore, we will continue to relocate our labour-intensive operations and low margin products to our new plant in Malaysia.

Developments Subsequent To FY2011On 23 February 2012, the Company announced the disposal of two properties in Kaki Bukit (28 Kaki Bukit Industrial Terrace and 30 Kaki Bukit Industrial Terrace) with an aggregate area of 9,204 square feet for a total consideration of S$3.9 million. Completion of the disposal is scheduled to take place in May 2012. Subject to completion, the disposal is expected to result in a gain on disposal of approximately S$1.7 million and will allow the Group to consolidate its Tooling Division and streamline its manufacturing facilities in Singapore and Malaysia to achieve better utilisation and energy savings.

AppreciationThis has been an eventful year marked by several challenges and the inclusion of a new group of employees from RLF to the Rokko family. On behalf of the Board, I wish to thank all management and staff, directors, customers, business partners and shareholders for their continuous support, faith and trust in Rokko.

Gary LimManaging Director

March 2012


Equipment DivisionThe Equipment Division designs, develops and manufactures customised automated equipment specific to customer requirements for semiconductor “back-end” assembly processes.

Revenue from the Equipment Division decreased by 13.0% mainly due to the weakening of the United States Dollar (“USD”) against the Singapore Dollar (“SGD”) by around 8% as compared to a year earlier. The Equipment Division remains the major revenue driver, contributing S$22.9 million or 39.4% to the Group’s revenue in FY2011.

Gross profit margin for the Equipment Division decreased by 2.4 percentage points from 30.8% for FY2010 to 28.4% for FY2011 mainly due to the impact of the weakening USD despite sustaining sales volume.

Development of advanced versions of the RS8000 series sawing singulation system and latest RS5000 series of stand-alone pick-and-place system complete inspection solution for customers to handle small and complex packages of semiconductor chip, was completed in FY2011.

Through continued investments in new product development and intensive research and development (“R&D”) activities, the Equipment Division was granted four new patents in FY2011. These patents relate to the flagship sawing singulation product and the processing of integrated circuit units.

Leadframes DivisionThe Leadframes Division provides metal stamping, chemical etching and electroplating of a wide range of semiconductor lead frames.

The acquisition of Jade Precision Engineering Pte Ltd (currently known as “Rokko Leadframes Pte. Ltd.” or “RLF”) was completed in February 2011. This new division which was formed pursuant to the acquisition

contributed ten months of post-acquisition revenue, amounting to S$21.4 million or 36.9% to the Group’s revenue for FY2011. It is now the second largest revenue contributor following the Equipment Division.

After implementing various cost-cutting measures, the Leadframes Division recorded a gross profit margin of 2.7% for the ten-month post-acquisition period, reversing a negative gross margin of 7.0% in the three-month period before the acquisition.

Additional factory building and water treatment plant will be developed on the Group’s existing plot of land at Nusa Cemerlang Industrial Park, Johor Bahru, to house certain operations of the Leadframes Division and Stamping Division. It is targeted to be completed at the end of 2012 and will start operation in the first quarter of 2013. It is estimated to increase 40% to the existing production capacity in Singapore.

Stamping DivisionThe Stamping Division provides connector stamping and plating services to manufacturers in the electronics industry.

Revenue from the Stamping Division decreased by 10.1% in FY2011 mainly due to lower demand in the second half of FY2011 following supply chain disruptions caused by the two natural disasters in Asia. This division contributed S$9.7 million or 16.7% to the Group’s revenue.

Gross profit margin for the Stamping Division decreased by 13.2 percentage points from 27.3% for FY2010 to 14.1% for FY2011 due to higher raw material prices and lower margin sales to a major customer. The average capacity utilisation rate also declined from 61.1% for FY2010 to 55.1% for FY2011, in line with the decrease in sales volume to customers.

The Stamping Division ceased to provide plating services pursuant to the inclusion of RLF to the Group. Plating services which was previously subcontracted by the Group had also terminated, thereby improving the Group’s cost efficiencies.

Operations Review

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Tooling DivisionThe Tooling Division designs, develops and manufactures precision tools used in the front and back-end semiconductor manufacturing processes.

Revenue from the Tooling Division decreased by 26.5% due to a decrease in customers’ orders amidst the slowdown in the global economy, particularly in the second half of FY2011.

Gross profit margin for the Tooling Division decreased from 39.1% for FY2010 to 33.3% for FY2011 as sales volume declined due to weaker demand from major customers. The average capacity utilisation rate for FY2011 remained stable at 66.2% as compared to 67.7% for FY2010 as it continued to support inter-segment demands from the Equipment, Stamping and Leadframes Divisions.

To further improve factory space utilisation and reduce operating costs, the Group sold two units of terrace factories in February 2012 which are currently occupied by the Tooling Division and will relocate the entire Tooling Division to other available premises.

Research & DevelopmentIn line with the commitment to develop cutting-edge products, the Group incurred S$1.2 million in R&D expenditure in FY2011, of which S$0.1 million was capitalised. Since FY2007, the Group has incurred S$7.0 million in R&D expenditure of which S$2.0 million has been capitalised.

With the amalgamation of Finix Technology Pte. Ltd. with Rokko Systems Pte. Ltd. (“Rokko Systems”), the Group wrote off the deferred R&D expenditure of S$0.5 million in FY2011. Investment of S$0.3 million in a solar

equipment project under Rokko Mechatronics Pte. Ltd. (“Rokko Mechatronics”) was also written off as the Group channelled its resources on existing products development and improvement.

As it has always been the Group’s objective to maintain and add value to its products, the Group consistently commits about 5% of revenue to R&D each year and will continue to invest in R&D in FY2012, with a focus on the Equipment Division.

As of 15 March 2012, the Group has filed over 100 patents in various strategic countries and 23 have already been granted and enforced.

Manufacturing FacilitiesThe Group has been streamlining its various manufacturing facilities in view of its expansion in Iskandar in Johor (Malaysia) and following its acquisition of RLF.

As at the end of FY2011, the Group had manufacturing locations in Singapore and Malaysia. In Singapore, the facilities are located in Tuas, Kaki Bukit, and Loyang, totalling 121,002 square feet while the manufacturing facilities in Malaysia are located at Sri Alam and Nusa Cemerlang, Johor Bahru with total built-up area of 52,321 square feet.

In February 2012, the Group announced the disposal of two properties - terrace factories located at Kaki Bukit Industrial Terrace. The disposal provides the Group with the opportunity to consolidate its Tooling Division and re-organise its manufacturing facilities in Singapore to achieve better factory space utilisation and reduce energy cost with facilities sharing. Following the disposal, the Group will continue to own and operate in aggregate 111,798 square feet of industrial properties in Singapore.


Board of Directors

Lim Chong ChenManaging Director

Lim Chong Chen (Managing Director)

Tey Kim HweeNon-Executive Chairman

Tey Kim Hwee (Non-Executive Chairman)

Tey Kim Hwee is our Non-Executive Chairman and has been our Director since our incorporation on 30 September 2003. He was one of our founding shareholders in 1994. Mr Tey is currently the managing director of Palmas Freight Sdn Bhd, a Malaysian company founded by him in 1987. He holds a Higher Stage Certificates in Accounting, Economics and Commercial Law from the London Chamber of Commerce and Industry.

Lim Chong Chen is our Managing Director and has been our Director since our incorporation on 30 September 2003. He manages the operations of our Group, and is responsible for our Group’s overall performance as well as charting and reviewing our corporate direction and business strategies. He was one of our founding shareholders in 1994 and has steered our Company onto the path of providing precision engineering services to customers in the semiconductor and electronics industries. He is instrumental to the business development and operational aspects of our business. Since 1994, our Group has grown from about 25 staff in a flatted factory in Singapore to over 300 staff with operations in Singapore and Malaysia as at 31 December 2011. Mr Lim holds a pre-university qualifications and a Certificate in Computer Programming and Information Processing from the City and Guilds of London Institute.

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Lim Yee ChuanFinancial Controller

Lim Yee Chuan (Executive Director and Financial Controller)

Lim Yee Chuan is our Executive Director and Financial Controller and was appointed as our Director on 30 May 2007. Ms Lim is overall in-charge of the financial and management reporting, as well as the human resource functions of our Group. She had more than 10 years of working experience in a similar field in established companies prior to joining our Group. She holds a professional accountancy certificate issued by the Association of Chartered Certified Accountants and is a non-practising member of the Institute of Certified Public Accountants of Singapore.

Wai Chee LeongIndependent Director

Wai Chee Leong (Independent Director)

Wai Chee Leong was appointed as our Independent Director on 7 September 2007. He is currently a director and shareholder of Dominion LLC, a law firm established in Singapore in 2004. Prior to that, he was a journalist, then an associate and later a partner in law firms. He holds a Bachelor of Laws (Honours) Second Class Upper Division degree from the University of London, London School of Economics.

Lee Sen Choon (Lead Independent Director)

Lee Sen Choon was appointed as our Lead Independent Director on 7 September 2007. He has been a partner at UHY Lee Seng Chan & Company, a certified public accounting firm in Singapore since 1984. He has more than 30 years of experience in accounting, auditing, taxation and corporate secretarial work. Mr Lee is the treasurer of the board of directors of the Singapore Chinese High School and the treasurer of the board of governors of Hwa Chong Institution. He is also the vice chairman of the school advisory committee of Xingnan Primary School. In addition, he sits on a number of publicly listed companies as an independent director. These companies are Best World International Ltd, Hor Kew Corporation Ltd and Soon Lian Holdings Limited. Mr Lee holds a Bachelor of Science (Honours) degree from the then Nanyang University and a Post-Graduate Diploma in Management Studies from the University of Salford, United Kingdom. He is a member of the Institute of Chartered Accountants in England and Wales and a practising member of the Institute of Certified Public Accountants of Singapore.

Lee Sen ChoonLead Independent Director


Key Management StaffCheh Mei Lee is our Accounting Manager and her duties include the preparation of the consolidated financial statements for our Group and cashflow management. She had more than 14 years of experience in accounting and administration functions prior to joining our Group in January 2003. Ms Cheh holds a Higher Stage Group Diploma in Accounting from the London Chamber of Commerce and Industry.

Chey Long Wan is our Operations Manager and his duties include overseeing the production and quality management functions of our Stamping and Leadframes Divisions. Prior to joining our Group in May 2004, he had been a design engineer with a company in Singapore from 1999. Mr Chey holds a Diploma in Mechanical Engineering from the Ungku Omar Polytechnic, Malaysia.

Jang Deok Chun is our Head of Assembly and Test, Equipment Division and oversees all our existing products and new products research and development work carried out for our Equipment Division. His main responsibilities include overseeing the assembly, programming, wiring and testing of our existing and new equipment. Prior to joining our Group in May 2005, he had worked as a senior engineer in the software department of a Korean company from 2000 where he was responsible for the software and electrical test for new equipment. Mr Jang holds a Bachelor of Engineering degree (Control and Instrumentation Engineering Major) from Gyeongsang National University, South Korea.

Shen Xue Fang is our Head of Research and Development, Tooling Division. She manages all the research and development work carried out for our Tooling Division. Her responsibilities

include the design and development of new systems, improvement of drawings, design of assembly parts, quality control and supporting all other departments in the Tooling Division. Prior to joining our Group in July 1999, she had worked as a design engineer in a company in China where she was responsible for designing and developing trim and forming die sets. Ms Shen holds a Masters in Mechanical Engineering from the Xidian University, PRC and a Master of Science (Electrical Engineering) from the National University of Singapore.

Lim Yoke Mein is our Administration Manager and is responsible for the administration matters of our Group, including those related to accounting, human resource and intellectual property. She reports to our Financial Controller on such matters. She also assists our Accounting Manager with the accounts of Rokko Systems. Prior to joining our Group in June 2004, she had worked in Malaysia where she performed administrative duties and was involved in the ISO9001 projects. Ms Lim holds a Bachelor of Arts (Honours) degree in Business Studies with Marketing from Middlesex University, United Kingdom.

Seng Kwong Seng is our Toolroom Manager and is in-charge of quality control as well as production and material control for our Tooling Division. Prior to joining our Group in January 1993, he was a team leader in the grinding department of a company in Singapore. Mr Seng holds a National Trade Certificate Grade Two in Tool and Die Making (Press Tool) from the Vocational and Industrial Training Board, Singapore. He also received a Craftman Certificate from Brown Boveri Government Training Centre Singapore.

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Corporate Structure

Rokko Materials Pte Ltd

(Singapore)

Rokko StampingPte Ltd

(Singapore)

Rokko Mechatronics

Pte Ltd(Singapore)

RokkoTechnology

Sdn. Bhd.(Malaysia)

Rokko Leadframes

Pte Ltd (Singapore)

Rokko SystemsPte Ltd

(Singapore)

Rokko VenturesPte Ltd

(Singapore)

Rokko Technology

Pte Ltd (Singapore)


Financial Contents11 Report to the Directors

14 Statement by the Directors

15 Report of the Independent Auditors

17 Consolidated Statement of Comprehensive Income

18 Statement of Financial Position

19 Consolidated Statement of Changes in Equity

20 Consolidated Statement of Cash Flows

23 Noted to the Financial Statements

76 Statistics of Shareholdings

78 Corporate Governance

92 Notice of Annual General Meeting

98 Notice of Book Closure

99 Appendix

Proxy Form

11ROKKO HOLDINGS LTD ANNUAL REPORT 2011

We are pleased to submit this annual report to the members of the Company together with the audited financial statements of the Company and consolidated financial statements of the Company and its subsidiaries (the “Group”) for the year ended 31 December 2011.

DIRECTORS

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

Tey Kim Hwee (Non-executive Chairman)Lim Chong Chen (Managing Director)Lim Yee Chuan (Executive Director and Financial Controller)Lee Sen Choon (Lead Independent Director)Wai Chee Leong (Independent Director)

DIRECTORS’ INTERESTS

According to the register of directors’ shareholdings kept by the Company for the purposes of Section 164 of the Singapore Companies Act, Chapter 50 (the “Act”), the directors of the Company holding office at the end of the financial year (including those held by their spouses and infant children) had an interest in shares of the Company and in related corporations (other than wholly-owned subsidiaries) as detailed below:

Ordinary Shares without par valueThe Company At beginning of the year At end of the year At 21 January 2012

Lim Chong Chen 112,460,260 112,460,260 112,460,260Tey Kim Hwee 1,225,560 1,225,560 1,225,560Lim Yee Chuan 450,000 450,000 450,000Lee Sen Choon 50,000 50,000 50,000Wai Chee Leong 50,000 50,000 50,000

By virtue of Section 7 of the Act, Mr. Lim Chong Chen is deemed to have interests in the wholly-owned subsidiaries of Rokko Holdings Ltd. at the beginning and at the end of the financial year.

There was no change in any of the above mentioned interests in the Company between the end of the financial year and 21 January 2012.

Since the end of the previous financial year, no director has received or become entitled to receive a benefit which is required to be disclosed by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest, except as disclosed in Note 7 to the accompanying financial statements.

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 or at the end of the financial year.

Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose objects are, or one of whose object is to enable the directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

Report of the Directors


SHARE OPTIONS

(a) No options were granted by the Company or any of its subsidiaries during the financial year to subscribe for unissued shares of the Company or its subsidiaries.

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

(c) There were no unissued shares of the Company or its subsidiaries under option at the end of the financial year.

AUDIT COMMITTEE

The Audit Committee of the Company, consisting of all Non-Executive Directors, is chaired by Mr. Lee Sen Choon, an Independent Director, and includes Mr. Tey Kim Hwee, Non-Executive Chairman and Mr. Wai Chee Leong, an Independent Director. The Audit Committee has met (2) two times during the financial year and has reviewed the following, where relevant, with the directors and external auditors of the Company:-

(a) the external and internal audit plans and results of the external and internal auditors’ examination and evaluation of the Group’s systems of internal accounting controls;

(b) the Group’s financial and operating results and accounting policies;

(c) the financial statements of the Company and the consolidated financial statements of the Group before their submission to the directors of the Company and external auditors’ report on those financial statements;

(d) half-yearly and annual announcements as well as the related press releases on the results and financial position of the Company and the Group;

(e) the co-operation and assistance given by the management to the Group’s external auditors; and

(f) the re-appointment of the external auditors of the Group.

The Audit Committee has full access to and has the co-operation of the management and has been given the resources required for it to discharge its function properly. It also has full discretion to invite any Director and executive officer to attend its meetings. The external auditors have unrestricted access to the Audit Committee.

The Audit Committee has recommended to the directors the nomination of Mazars LLP, Public Accountants and Certified Public Accountants, for re-appointment as external auditors of the Group at the forthcoming Annual General Meeting of the Company.



AUDITORS

Mazars LLP, Public Accountants and Certified Public Accountants, have expressed their willingness to accept re-appointment.

On behalf of the Board of Directors

………………………………... ……………………………….Tey Kim Hwee Lim Chong Chen Director Director

Date: 19 March 2012



In our opinion:-

(a) the accompanying financial statements 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 December 2011 and of the results, changes in equity and cash flows of the Group for the year ended on that date in accordance with the provisions of 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

………………………………... ……………………………….Tey Kim Hwee Lim Chong Chen Director Director

Date: 19 March 2012

Statement by the Directors


Report on the Financial Statements

We have audited the accompanying financial statements of ROKKO 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 December 2011, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated 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 17 to 75.

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 auditors’ judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal controls 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 controls. 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.

Report of the Independent Auditors to the Members of Rokko Holdings Ltd.


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 so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2011 and of 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.

……………………………………………… MAZARS LLP PUBLIC ACCOUNTANTS AND CERTIFIED PUBLIC ACCOUNTANTS

Denis Usher Partner-in-charge

Singapore: 19 March 2012

Report of the Independent Auditors to the Members of Rokko Holdings Ltd.


GROUPNote 2011 2010

S$ S$

Revenue 3 58,048,630 42,584,498

Cost of sales (48,259,640) (29,377,273)

Gross profit 9,788,990 13,207,225

Other income 4 3,607,001 716,948

Distribution costs (1,817,698) (2,127,945)

Administrative expenses (6,334,558) (4,914,887)

Other operating expenses (1,968,552) (1,507,985)

Finance costs 5 (841,377) (555,388)

Profit before taxation 6 2,433,806 4,817,968

Income tax credit/(expense) 8 963,891 (555,907)

Net profit for the year 3,397,697 4,262,061

Other comprehensive (loss)/income:Provision for deferred tax arising from revaluation surplus, net of reversal 22 (195,157) -Exchange differences on translation of foreign operations, net of tax (33,380) (355,798)Surplus on revaluation of property, plant and equipment, net of tax (29,380) 2,050,067

Other comprehensive (loss)/income for the year (257,917) 1,694,269

Total comprehensive income for the year 3,139,780 5,956,330

Profit attributable to equity holders of the Company 3,397,697 4,262,061

Total comprehensive income attributable to:The equity holders of the Company 3,139,780 5,956,330Earnings per share for profit attributable to the equity holders of the Company (cents) - Basic 30 2.13 2.76

The annexed notes form an integral part of and shouldbe read in conjunction with these financial statements.

Consolidated Statement of Comprehensive Incomefor the year ended 31 December 2011


Group CompanyNote 2011 2010 2011 2010

S$ S$ S$ S$AssetsNon-current assetsProperty, plant and equipment 9 32,400,329 21,696,390 111,472 212,777Goodwill 10 760,828 760,828 - -Deferred development expenditure 11 427,002 1,455,525 - -Investment in subsidiaries 12 - - 6,994,881 6,346,301

33,588,159 23,912,743 7,106,353 6,559,078

Current assetsInventories 13 13,919,877 13,802,848 - -Trade and other receivables 14 10,491,318 5,755,417 211,760 28,271Amount owing by subsidiaries 15 - - 5,157,304 5,147,401Cash and cash equivalents 16 9,629,230 12,767,104 636,013 1,361,239

34,040,425 32,325,369 6,005,077 6,536,911

Total assets 67,628,584 56,238,112 13,111,430 13,095,989

EquityEquity attributable to equity

holders of the CompanyShare capital 17 12,442,108 12,442,108 12,442,108 12,442,108Treasury shares 18 (712,630) (525,717) (712,630) (525,717)Foreign currency translation reserves 19 (941,480) (908,100) - -Revaluation reserve 20 923,437 2,050,067 - -Accumulated profits 16,205,056 12,704,531 1,160,433 914,008Total equity 27,916,491 25,762,889 12,889,911 12,830,399

LiabilitiesNon-current liabilitiesInterest-bearing liabilities 21 12,548,038 8,259,316 - -Deferred tax liabilities 22 955,845 1,499,814 20,082 20,082Amount owing to directors 24 521,160 - - -

14,025,043 9,759,130 20,082 20,082

Current liabilitiesTrade and other payables 23 9,620,582 9,296,390 168,225 173,175Amount owing to directors 24 - 533,629 - -Interest-bearing liabilities 21 15,578,008 10,620,765 - 49,633Provision for taxation 488,460 265,309 33,212 22,700

25,687,050 20,716,093 201,437 245,508

Total liabilities 39,712,093 30,475,223 221,519 265,590

Total equity and liabilities 67,628,584 56,238,112 13,111,430 13,095,989


Statements of Financial Positionas at 31 December 2011


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Consolidated Statement of Changes In Equityfor the year ended 31 December 2011


Note GROUP2011 2010

S$ S$

Operating activitiesProfit before income tax 2,433,806 4,817,968Adjustments for:-Depreciation of property, plant and equipment, net of

eliminated accumulated depreciation on revaluation reserve 9 3,092,472 2,329,866

Amortisation of research and development expenditure 11 283,906 262,892Deferred research and development expenditure written-off 11 842,994 -Impairment of inventories to net realisable value 13 258,615 -Write-back of impairment of property, plant and equipment

made previously 6 - (412,516)Revaluation loss on certain property, plant and equipment 6 - 250,090Gain on acquisition of a subsidiary A (3,285,956) -Gain on disposal of property, plant and equipment 4 (213,984) (1,299)Recovery of bad debts previously written-off 4 (7,404) -Allowance/(write-back) for slow moving and obsolete

inventories 13 378,966 (80,019)Provision for/(write-back of) equipment warranty no longer

required 23 11,083 (51,642)Interest income 4 (13,733) (6,156)Interest expense 5 841,377 555,388Operating profit before working capital changes 4,622,142 7,664,572

Changes in working capital:-Inventories 2,357,322 (1,716,949)Trade and other receivables 889,295 6,186,055Trade and other payables (3,553,308) (6,464,698)Trust receipts 1,368,199 3,581,139Invoice financing 16,956 (638,159)Cash pledged (500,000) 1,368,199Cash generated from operations 5,200,606 8,611,960

Interest received 13,733 6,156Income tax paid (115,898) (153,174)Cash flows from operating activities 5,098,441 8,464,942

Consolidated Statement of Cash Flowsfor the year ended 31 December 2011

he annexed notes form an integral part of and shouldbe read in conjunction with these financial statements.


Note GROUP2011 2010

S$ S$

Financing activitiesRepayment of bank loans and overdrafts (9,009,028) (1,263,003)Finance lease repayments/obtained (net of repayment) 358,664 (422,563)Proceeds from bank loans 8,909,145 975,672Proceeds from bridging loan 2,500,000 -Bank overdraft assumed (net of cash in bank) from acquisition

of a subsidiary A (1,076,227) -Interest paid (841,377) (555,388)Dividend paid 29 (799,265) (1,526,635)Proceeds from issue of new shares(net) - 2,009,300Purchase of treasury shares 18 (186,913) (89,770)Cash flows used in financing activities (145,001) (872,387)

Investing activitiesPurchase of property, plant and equipment (2,801,778) (3,212,285)Acquisition of a subsidiary A (8,000,000) -Proceeds from disposal of property, plant and equipment 2,158,234 54,217Deferred development expenditure (98,377) (125,840)Cash flows used in investing activities (8,741,921) (3,283,908)

Net (decrease)/increase in cash and cash equivalents (3,788,481) 4,308,647Effect of currency translation on cash and cash equivalents 150,607 (505,161)Cash and cash equivalents at beginning of year 12,767,104 8,963,618Cash and cash equivalents at end of year 16 9,129,230 12,767,104

During the financial year ended 31 December 2011, the Group acquired property, plant and equipment with an aggregate cost of approximately S$6,178,257 (2010: S$7,464,802). Payments of S$6,111,166 (2010: S$6,596,613) were made for the acquisitions, of which S$1,981,557 (2010: S$3,394,528) was financed by bank loan and finance lease, S$1,327,831 (2010: Nil) by trust receipts and remaining S$2,801,778 (2010: S$3,212,285) by internal cash flow. As at 31 December 2011, S$67,092 (2010: S$857,989) was recorded as trade and other payables.


Consolidated Statement of Cash Flowsfor the year ended 31 December 2011 (Cont'd)


Note A. Acquisition of a Subsidiary

On 28 February 2011, the Group acquired 100% equity interests of Rokko Leadframes Pte. Ltd. (formerly known as Jade Precision Engineering Pte. Ltd.) for a total consideration of S$8,000,000 and the fair value of assets and liabilities acquired at acquisition date including the cash flow effect is set out below:

Note Group2011 S$

Property, plant and equipment 9 9,634,339Cash and cash equivalents 72,976Trade and other receivables 5,754,126Inventories 3,111,932Trade and other payables (3,799,325)Interest bearing liabilities (1,792,638)Bank overdraft (1,149,203)Deferred tax liabilities 22 (546,251)Net identifiable assets and liabilities (11,285,956)Gain on acquisition of a subsidiary 3,285,956Purchase consideration in cash (8,000,000)Less: bank overdraft assumed (net of cash in bank) (1,076,227)Net cash outflows on acquisition of a subsidiary (9,076,227)

The acquisition has resulted a gain on acquisition of a subsidiary of S$3,285,956 and was included as part of the other income in the consolidated financial statements of the Group.

Presented in the consolidated statement of cash flows as follows:

GroupInvesting activities S$

Acquisition of a subsidiary (8,000,000)

Financing activitiesBank overdraft assumed (net of cash in bank) from acquisition of a

subsidiary (1,076,227)

Consolidated Statement of Cash Flowsfor the year ended 31 December 2011 (Cont'd)


Notes to the Financial Statements31 December 2011

These notes form an integral part of the financial statements. These financial statements have been authorised for issue by the board of directors on 19 March 2012.

1. DOMICILE AND ACTIVITIES

Rokko Holdings Ltd. (the “Company”) was incorporated in the Republic of Singapore on 30 September 2003 as a public company limited by shares.

The Company’s registered office and principal place of business is at 61 Kaki Bukit Road 2, Singapore 417869. The principal activity of the Company is that of investment holding. The principal activities of its subsidiaries are as set out in Note 12.

The consolidated financial statements relate to the Company and its subsidiaries (herein referred to as the “Group”).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

These financial statements have been prepared in accordance with Singapore Financial Reporting Standards (“FRSs”).

During the year, the Group and the Company adopted the new or revised FRSs and Interpretation to FRSs (“INT FRSs”) that are mandatory for application from that date. Changes to the Group’s accounting policies have been made as required, in accordance with the relevant transitional provisions in the respective FRSs and INT FRSs.

There are no significant changes to the financial statements of the Group and the Company upon the adoption of these new standards.

On 1 January 2011, the Group and the Company have adopted all applicable FRSs or INT FRSs as follows:

DescriptionsEffective date for period

beginning on or after

Amendments to FRS 32 Financial Instruments: Presentation – Classification of Right Issues

1 February 2010

Revised FRS 24 Related Party Disclosures 1 January 2011Amendments to INT FRS 114 Prepayments of a Minimum Funding Requirement

1 January 2011

Amendments to INT FRS 115 Agreements for the Construction of Real Estate

1 January 2011

INT FRS 119 Extinguishing Financial Liabilities with Equity Instruments 1 July 2010


Notes to the Financial Statements31 December 2011 (Cont'd)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

2.1 Basis of preparation (Cont’d)

Revised FRS 24 Related Party Disclosures clarifies the definition of a related party to simplify the identification of such relationships and to eliminate consistencies in its application. The revised FRS 24 expands the definition of a related party and would treat two entities as related to each other whenever a person (or a close member of that person’s family) or a third party has control or joint control over the entity, or has significant influence over the entity. The revised standard also introduces a partial exemption of disclosure requirements for government-related entities. As this is a disclosure standard, it will have no impact on the financial position or financial performance of the Group or the Company for the financial year ending 31 December 2011.

Critical accounting estimates and judgements

Estimates and judgements are currently evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Apart from information disclosed elsewhere in these financial statements, the following summarises estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year and significant judgements made in the process of applying the Group’s accounting policies:

(i) Impairment of receivables

The Group makes allowance for impairment based on an assessment of the recoverability of trade and other receivables. Allowance is applied to trade and other receivables where events or changes in circumstances indicate that the balances may not be collectible. The identification of doubtful receivables requires the use of judgement and estimates. Where the expectation is different from the original estimate, such difference will impact the carrying amount of trade and other receivables and the allowance for impairment in the financial year in which such estimate has been changed. The carrying value of trade and other receivables at reporting date is disclosed in Note 14 to the financial statements.

(ii) Impairment of goodwill and deferred development expenditure

In determining whether goodwill and deferred development expenditure is impaired, this requires an estimation of the value in use of these assets. The value in use calculation requires the Group to estimate the future cash flows expected to arise from these assets and a suitable discount rate in order to calculate present value. Actual transactions will take place at a later date which may differ from the estimates made by the Group. Further details of the key assumptions applied in the impairment assessment of goodwill and deferred development expenditure are given in Notes 10 and 11 respectively.

(iii) Depreciation of property, plant and equipment

The cost of property, plant and equipment is depreciated on a straight-line basis over their economic useful lives estimated to be within 3-50 years, net of residual value. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation could be revised. The carrying value of property, plant and equipment at the reporting date is disclosed in Note 9 to the financial statements.





Critical accounting estimates and judgements (Cont’d)

(iv) Net realisable value of inventories

Net realisable value of inventories is the estimated selling price in the ordinary course of business, less estimated costs of completion and selling expenses. These estimates are based on the current market condition and the historical experience of selling products of similar nature. It could change significantly as a result of competitor actions in response to severe industry cycles. Management will reassess the estimations at each reporting date. The carrying value of inventories at the reporting date is disclosed in Note 13 to the financial statements.

(v) Income taxes

The Group is subject to income taxes in Singapore and Malaysia. Significant judgement is required in determining the capital allowance and deductibility of certain expenses 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 recognises liabilities for anticipated tax audit issues based on estimation 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 income tax and deferred income tax provisions in the year in which such determination is made.

(vi) Impairment of financial assets

The Group follows the guidance of FRS 39 Financial Instruments: Recognition and Measurement (“FRS 39”) in determining when an asset is impaired in respect of its financial assets. This assessment requires significant judgement. The Group evaluates, among other factors, the duration and extent to which the fair value of an asset is less than its cost; and the financial health of and near-term business outlook for the asset, including factors such as industry and sector performance, changes in technology and operational and financing cash flow.

(vii) Provision for warranty

Provisions for product warranties are based on current volumes of products sold still under warranty and on historic quality rates for mature products as well as estimates and assumptions on future quality rates for new products and estimates of costs to remedy the various qualitative issues that might occur. Whether a present obligation is probable or not requires judgement. The nature and type of risks for these provisions differ and management’s judgement is applied regarding the nature and extent of obligations in deciding if an outflow of resources is probable or not.





Critical accounting estimates and judgements (Cont’d)

(vii) Provision for warranty (Cont’d)

The management provide for the estimated cost of product warranties at the time revenue is recognised. The Group’s products are covered by product warranty plans of varying periods, depending on local practices and regulations. While the Group is engaged in product quality programs and processes, including actively monitoring and evaluating the quality of their component suppliers, its product warranty obligations are affected by actual product failure rates (field failure rates) and by material usage and service delivery costs incurred in correcting a product failure. The management’s warranty provision is established based upon their best estimates of the amounts necessary to settle future and existing claims on products sold as of the reporting date. While management believe that their warranty provisions are adequate and that the judgments applied are appropriate, the ultimate cost of product warranty could differ materially from their estimates.

2.2 Basis of consolidation

Subsidiary companies

A subsidiary is an entity over which the Group, has the power to govern the financial and operating policies so as to obtain benefits from its activities.

In the Company’s separate financial statements, investments in subsidiary companies are accounted for at cost less any accumulated impairment losses.

Consolidation

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

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

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

Business combinations

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




2.2 Basis of consolidation (Cont’d)

Business combinations (Cont’d)

When the group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

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

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

The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any) is recognised on the acquisition date at fair value, or at the non-controlling interest’s proportionate share of the acquiree identifiable net assets.

Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in the acquiree (if any), and the fair value of the Group’s previously held equity interest in the acquiree (if any), over the net fair value of the acquiree’s identifiable assets and liabilities is recorded as goodwill. The accounting policy for goodwill is set out in Note 2.17. In instances where the latter amount exceeds the former, the excess is recognised as gain on acquisition of a subsidiary in profit or loss on the acquisition date.

2.3 Functional and presentation currency

The individual financial statements of each entity within the Group are presented in the currency of the primary economic environment in which the entity operates (the functional currency). The functional currency of the Company is the Singapore dollar. The consolidated financial statements of the Group and the statement of financial position of the Company are presented in Singapore dollars.

2.4 Foreign currency transactions

Transactions in foreign currencies are translated at foreign exchange rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into Singapore dollars at foreign exchange rates ruling at that date. Foreign exchange differences arising from translation are recognised in profit or loss. Non-monetary assets and liabilities measured at cost in a foreign currency are translated using exchange rates at the date of the transaction. Non-monetary assets and liabilities measured at fair value in foreign currencies are translated to Singapore dollars at foreign exchange rates ruling at the dates the fair value was determined.

Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of monetary items that in substance form part of the Group’s net investment in a foreign operation.




2.5 Foreign operations

The assets and liabilities of foreign operations are translated to Singapore dollars at exchange rates prevailing at the reporting date. The income and expenses of foreign operations are translated to Singapore dollars at average rates for the year.

Foreign currency differences are recognised in the foreign currency translation reserves. When a foreign operation is disposed of, in part or in full, the relevant amount in the foreign currency translation reserves is transferred to profit or loss.

2.6 Net investment in foreign operations

Exchange differences arising from monetary items that in substance form part of the Company’s net investment in foreign operations are recognised in the Company’s profit or loss. Such exchange differences are reclassified to the foreign currency translation reserves in the consolidated financial statements. When the hedged net investment is disposed of, the cumulative amount in the foreign currency translation reserves is transferred to profit or loss.

2.7 Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be measured reliably. Revenue is measured at the fair value of consideration received or receivable.

(i) Sale of goods

Revenue is recognised when goods are delivered at the customers’ premises or collected by the customers at the Group’s premises which is taken to be the point in time when the customer has accepted the goods/services and the related risks and rewards of ownership.

(ii) Interest income

Interest income is recognised on a time proportion basis using the effective interest method.

(iii) Government grant

Government grants are not recognised until there is reasonable assurance that the grants will be received and that the Group will comply with conditions applying to them. Grants are recognised in profit and loss on a systematic basis matching them with the related costs for which the grants are intended to compensate.

(iv) Job Credit Scheme

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

(v) Rendering of services

The Group recognises revenue when services are rendered to customers.




2.8 Employee benefits

Contributions to defined contribution plans including Central Provident Fund (“CPF”) contributions are recognised as an expense in the profit and loss as incurred.

(i) Short term benefits

Salaries, wages, allowances, bonuses and social security contributions are recognised as an expense in the financial year in which the services are rendered by the employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlements to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur. Non-monetary benefits such as medical care and other staff related expenses are recognised as an expense in the period when incurred.

(ii) Defined contribution plan

As required by law, companies in Singapore and Malaysia make contributions to the CPF and Employees Provident Fund (“EPF”) respectively. Such contributions are recognised as an expense in the financial year to which they relate.

(iii) Termination benefits

Employee termination benefits are recognised only either after an agreement is in place with the appropriate employee representatives specifying the terms of redundancy or after individual employees have been advised of the specific terms.

(iv) Share based payments

The Rokko Employee Share Option Scheme (“ESOS”) has been put in place to grant options to eligible employees. Details of the Rokko ESOS are disclosed in the Directors’ Report. The fair value of options is recognised as an employee expense with a corresponding increase in fair value reserve. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. At each reporting date, the Company revises its estimates of the number of options that are expected to become exercisable. It recognises the impact of the revision of original estimates in employee expense and in a corresponding adjustment to equity over the remaining vesting period. The proceeds received net of any directly attributable transaction costs are credited to share capital when the options are exercised. No shares or share options have been issued during the year.

2.9 Operating leases

Where the Group has the use of assets under operating leases, payments made under the leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease payments made. Contingent rentals are charged to profit or loss in the accounting period in which they are incurred.




2.10 Impairment

Impairment of financial assets

A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in profit or loss.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost, the reversal is recognised in profit or loss.

Impairment of non-financial assets

The carrying amounts of the Group’s non-financial assets, other than inventories are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups.

Impairment losses are recognised in profit or loss unless it reverses a previous revaluation, where the revaluation was taken to the revaluation reserve account. In this case, the impairment is also recognised in profit and loss up to the amount previous revaluation. Impairment losses recognised in respect of cash-generating units 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.

Calculation of recoverable amount

The recoverable amount of an asset or cash-generating unit is the greater of their fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

Reversals of impairment

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.




2.11 Finance costs

Interest expense and similar charges are expensed to profit or loss in the period in which they are incurred, except to the extent that they are capitalised as being directly attributable to the acquisition, construction or production of qualifying assets. Finance costs are captitalised until the assets are substantially completed for their intended use or sale.

The interest component of interest-bearing liabilities is recognised in profit or loss using the effective interest method.

2.12 Income taxes

Current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date.

Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.

Deferred tax

Deferred income tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all temporary differences, except:-

• where the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:-

• where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of deductible temporary differences associated with investments in subsidiaries, deferred income tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.




2.12 Income taxes (Cont’d)

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.

Deferred income tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.

Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

2.13 Financial instruments

Financial assets within the scope of FRS 39 are classified as either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale financial assets, as appropriate. Financial assets are recognised on the statement of financial position when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. The Group does not hold financial assets at fair value through profit or loss or held-to-maturity financial assets or available-for-sale financial assets.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs. The Group determines the classification of its financial assets after initial recognition and, where allowed and appropriate, re-evaluates this designation at each year-end. Financial assets are derecognised if the Group’s contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial asset to another party without retaining control or transfers substantially all the risks and rewards of the asset.

All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date that the Group commits to purchase the asset or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned.

Loans and receivables

Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process. Trade and other receivables, amount owing by subsidiaries, cash and cash equivalents of the Group are classified as loans and receivables.




2.13 Financial instruments (Cont’d)

Financial liabilities

Financial liabilities within the scope of FRS 39 are classified as either financial liabilities measured at amortised costs such as trade and other payables, amount owing to directors and interest-bearing liabilities.

Financial liabilities are derecognised if the Group’s obligations specified in the contract expire or are discharged or cancelled.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts and payments (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial instruments or where appropriate, a shorter period. Income and expense is recognised on an effective interest basis for debt instruments other than those financial instruments “at fair value through profit or loss.”

2.14 Derecognition of financial assets and liabilities

(a) Financial assets

Financial assets are derecognised from the statement of financial position when the Group has transferred substantially all risks and rewards of ownership.

(b) Financial liabilities

A financial liability is derecognised from the statement of financial position when the obligation under the liability is discharge, cancelled or expired.

2.15 Intra-group financial guarantees

Intra-group financial guarantees are financial instruments issued by the Group that requires 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 and classified as financial liabilities. Subsequent to initial measurement, the financial guarantee is stated at 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 financial guarantees are terminated before their original expiry date, the carrying amount of the financial guarantees is transferred to profit or loss.

The Company has issued corporate guarantees to its subsidiaries under certain banking facilities from certain banking institutions. These guarantees are financial guarantee contracts as they require the Company to reimburse the bank of the subsidiaries fails to make principal or interest payments when due in accordance with the expected amount payable to the bank. In this case, the financial guarantee contacts shall be carried at the expected amount payable to bank.




2.16 Property, plant and equipment

(a) Owned assets

Items of property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.

(b) Leased assets

Property, plant and equipment acquired through finance leases are capitalised at the lower of its fair value and the present value of the minimum lease payments at the inception of the lease, less accumulated depreciation and impairment losses. Lease payments are apportioned between finance charges and reductions of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against the profit or loss account. Capitalised leased assets are depreciated over the shorter of the economic useful life of the asset and the lease terms.

(c) Depreciation

Freehold land is not depreciated. Depreciation is provided on the straight-line basis so as to write-off the cost of property, plant and equipment over their estimated useful rates as follows:

Furniture and fixtures 10 – 331/3%Factory renovation 5 – 331/3%Office equipment 10 – 331/3%Motor vehicles 121/2 – 20%Plant and machinery 10 – 25%Tool and equipment 331/3%Leasehold buildings 2% or over the remaining lease period, whichever is shorter

(d) Cost

Cost includes expenditure that is directly attributable to the acquisition of the asset. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the profit or loss.

Fully depreciated assets are retained in the consolidated financial statements until they are no longer in use. The gain or loss on disposal or retirement of an item of property, plant and equipment recognised in profit or loss is the difference between the net sale proceeds and the carrying amount of the relevant asset.




2.16 Property, plant and equipment (Cont’d)

(e) Subsequent measurement

Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.

Leasehold buildings are measured at fair value less accumulated depreciation and impairment losses recognised after the date of the revaluation. Valuations are performed every three to five years to ensure that the carrying amount does not differ materially from the fair value of the leasehold buildings at the end of the reporting period.

Any revaluation surplus is recognised in other comprehensive income and accumulated in equity under the revaluation reserve, except to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss, in which case the increase is recognised in profit or loss. A revaluation deficit is recognised in profit or loss, except to the extent that it offsets an existing surplus on the same asset carried in the revaluation reserve. Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. The revaluation surplus included in the asset revaluation reserve in respect of an asset is transferred directly to retained earnings on retirement or disposal of the asset.

2.17 Goodwill

Goodwill 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 gain on acquisition of a subsidiary is recognised immediately in profit or loss.

Goodwill is measured at cost less accumulated impairment losses.

For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.

On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the gain or loss on disposal in profit or loss.




2.18 Deferred development expenditure

Expenditure incurred on product development projects before their full-scale productions are recognised as an intangible asset from the date when all of the following criteria are met:

– technical feasibility of completing the product development for use or sale;– intention to complete the product development and sell the product;– ability to sell the product;– probable future economic benefits are expected from the sale of the products;– the availability of adequate technical, financial and other resources to complete the product

development and to sell the product; and– the development cost of the asset can measured reliably.

The expenditure capitalised includes cost of material, direct labour and related expenses. Such development costs are amortised commencing from commercial production or when it is available for use, whichever is earlier, on a straight-line basis over the period of its expected benefits, which normally does not exceed 3 years. Development costs that do not meet the above criteria are expensed as incurred.

2.19 Inventories

Inventories are carried at the lower of cost and net realisable value. Cost is determined on the first in first out basis for finished goods and weighted average formula on spare parts and material and comprises all cost of purchases, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. In the case of design and manufacture of work-in-progress and finished goods, cost includes an appropriate share of overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated cost necessary to make the sale.

When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, is recognised in profit or loss in the period in which the reversal occurs.

2.20 Trade and other receivables

Trade and other receivables are recognised initially at fair value and subsequently at amortised cost using the effective interest method, less any accumulated impairment losses.

2.21 Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event where it is probable that it will result in an outflow of economic benefits that can be reasonably estimated. Provisions are reviewed at each reporting date and adjusted to reflect its current best estimates. If it is no longer probable that an outflow of economic resources embodying economic benefits will be required to settle the obligation, the provisions are reversed.




2.22 Cash and cash equivalents

Cash and cash equivalents include cash on hand and deposits with financial institutions. For the purpose of the consolidated statement of cash flows, cash and cash equivalents are presented net of bank overdrafts which are repayable on demand and which form an integral part of the Group’s cash management.

2.23 Share capital

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

2.24 Treasury shares

When any entity within the Group purchases the Company’s ordinary shares (“treasury shares”), the consideration paid including any directly attributable incremental cost is presented as a component within equity attributable to the Company’s equity holders, until they are cancelled, sold or re-issued.

When treasury shares are subsequently cancelled, the cost of treasury shares are deducted against the share capital account if the shares are purchased out of capital of the Company, or against the retained profits of the Company if the shares are purchased out of earnings of the Company.

When treasury shares are subsequently sold or re-issued pursuant to the employee share option scheme, the cost of treasury shares is reversed from the treasury share account and the realised gain or loss on sale or re-issue, net of any directly attributable incremental transaction costs and related income tax, is recognised in the capital reserve.

2.25 Liabilities and interest-bearing liabilities

Trade and other payables are classified as financial liabilities measured at amortised cost, and are recognised initially at fair value and subsequently at amortised cost using the effective interest method. Interest-bearing liabilities are recognised initially at cost less attributable transaction costs. Subsequent to initial recognition, interest-bearing liabilities are stated at amortised cost with any difference between cost and redemption value being recognised in profit or loss over the period of the borrowings on effective interest basis.

2.26 Related parties

A related party is defined as follows:

(a) A person or a close member of that person’s family is related to the Group and the Company if that person:

(i) Has control or joint control over the Company;(ii) Has significant influence over the Company; or(iii) Is a member of the key management personnel of the Company or of a parent of the

Company.




2.26 Related parties (Cont’d)

(b) An entity is affiliated to the Group and the Company if any of the following conditions applies:

(i) The entity and the Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others);

(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member);

(iii) Both entities are joint ventures of the same third party;(iv) One entity is a joint venture of a third entity and the other entity is an associate of the

third entity;(v) The entity is a post-employment benefit plan for the benefit of employees of either the

Company or an entity related to the Company. If the Company is itself such a plan, the sponsoring employers are also related to the Company;

(vi) The entity is controlled or jointly controlled by a person identified in (a);(vii) A person identified in (a) (i) has significant influence over the entity or is a member of the

key management personnel of the entity (or of a parent of the entity).

Key Management personnel

Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of the entity.

2.27 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the executive committee whose members are responsible for allocating resources and assessing performance of the operating segments.

2.28 Future changes in FRSs

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

Descriptions Effective date for the

periodbeginning on or after

The Conceptual Framework for Financial Reporting 2010 (Chapters 1 and 3)

1 March 2011 / 1 July 2011

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

1 July 2011

FRS 19 Employee Benefits 1 January 2013FRS 27 Separate Financial Statements 1 January 2013FRS 28 Investments in Associates and Joint Ventures 1 January 2013FRS 107 Amendments to FRS 107 Disclosures – Transfers of Financial Assets 1 July 2011

The Directors of the Company anticipate that the application of these Standards or Interpretations will have no material impact on the financial statements of the Group and the Company.



3. REVENUE

Group2011 2010

S$ S$

Sale of goods 58,048,630 42,584,498

4. OTHER INCOME

Group2011 2010

S$ S$

Gain on disposal of property, plant and equipment 213,984 1,299Gain on acquisition of a subsidiary 3,285,956 -Grant income 27,250 209,593Insurance claims 46,193 -Interest income on bank deposits 13,733 6,156Write-back provision for bad debts 7,404 -Write-back of impairment of property, plant and equipment

made previously - 412,516Write-back of provision for slow moving and obsolete

inventories no longer required - 80,019Others 12,481 7,365

3,607,001 716,948

5. FINANCE COSTS

Group2011 2010

S$ S$

Interest on finance leases 94,331 101,967Interest on term loans 235,073 203,903Interest on trust receipts 260,431 80,126Interest on working capital loan and invoice financing 251,542 169,392

841,377 555,388



6. PROFIT BEFORE TAXATION

The following items have been charged/(credited) in arriving at profit before taxation:

GroupNote 2011 2010

S$ S$

Cost of inventories and consumables recognised in cost of sales 13 33,112,229 24,809,340

Depreciation of property, plant and equipment 9 3,092,472 2,329,866Exchange loss (net) 453,949 1,257,895Gain on disposal of property, plant and equipment 4 (213,984) (1,299)Directors’ fees 7 110,000 105,000Directors’ remuneration 7 587,508 449,359Allowance/(write-back) for slow moving and obsolete inventories 13 378,966 (80,019)Write-down of inventories to their net realisable value 13 258,615 -Loss on revaluation of certain property, plant and equipment - 250,090Write-back of impairment of property, plant and equipment made previously - (412,516)Research and development expenses 1,350,938 1,112,486Provision for /(write-back of) provision for equipment warranty-net 23 11,083 (51,642)Operating leases 5,152 153,881Staff costs 7 9,490,722 5,239,065

Research and development expenses include salaries and wages of S$745,118 (2010: S$817,209).

7. SALARIES AND WAGES

Group2011 2010

S$ S$Staff costsSalaries and bonus 1,579,517 1,071,096Defined contribution plans- CPF contribution 164,414 105,175Direct labour 7,277,647 3,633,409Rental for staff and workers 177,907 163,363Foreign workers’ levy 136,965 102,599Staff welfare 50,084 63,876Other staff related expense 104,188 99,547

9,490,722 5,239,065



7. SALARIES AND WAGES (CONT’D)

The amount of salaries and wages recognised under “cost of sales” and “administrative expenses” amounted to S$7,277,647 and S$2,213,073, respectively (2010: S$3,633,409 and S$1,605,656, respectively). Included in direct labour are Employees Provident Fund (“EPF”) contributions amounting to S$53,679 (2010: S$35,371).

Group2011 2010

S$ S$Directors’ remuneration- Directors of the Company - Salaries and bonuses 353,517 354,822 - Defined contribution plans 24,420 17,420

377,937 372,242- Directors of subsidiaries - Salaries and bonuses 189,487 69,363 - Defined contribution plans 20,084 7,754

209,571 77,117

587,508 449,359

Directors’ fee- Directors of the Company 90,000 90,000- Directors of subsidiaries 20,000 15,000

110,000 105,000

The key management personnel consist of the Directors of the Company and their subsidiaries and their remunerations are disclosed above.

8. INCOME TAX EXPENSE

GroupNote 2011 2010

S$ S$Current tax expenseCurrent year 522,597 238,833(Over)/under-provision of income tax in prior years (183,548) 53,578

339,049 292,411

Deferred taxationOrigination and reversal of temporary differences (1,331,178) 263,496Under-provision in prior years 28,238 -

22 (1,302,940) 263,496

Total tax (credit)/expense (963,891) 555,907



8. INCOME TAX EXPENSE (CONT’D)

Group2011 2010

S$ S$

Profit before taxation 2,433,806 4,817,968

Tax at the applicable rate of 17% 413,747 819,054Tax effect of: - different tax rate in other countries (9,156) (13,984)- non-deductible expenses 115,184 9,396- non-taxable income (725,824) (114,983)- under-provision of deferred income tax expense in prior years 28,238 -- income exempt from tax (77,775) (75,400)- enhanced allowance (291,712) (83,339)- (over)/under-provision of current income tax in prior years (183,548) 53,578- utilisation of deferred tax asset previously not recognised (6,021) -- deferred tax asset not recognised 529,988 -- deferred tax benefit arising from acquisition of a subsidiary (732,169) -- others (23,843) (38,415)Total tax expense (963,891) 555,907

The Singapore Government has announced on 17 February 2012 that companies will receive a cash grant of 5% for non-taxable companies on total revenue subject to a cap of S$5,000 for year of assessment 2012 (year ended 31 December 2011).

Enhanced allowance relates to productivity and innovation credit which was introduced in the Singapore Budget 2011 to provide enhanced tax deductions, for investments in a broad range of activities along the innovation value chain, for which the Group has claimed 300% (2010: 150%) tax deduction mainly for its investment in automated equipment incurred during the year ended 31 December 2011.



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,390



9. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

The net book value of plant and machinery, office equipment and motor vehicles of the Group includes an amount of S$3,529,119 (2010: S$2,773,565) held under finance leases.

The net book value of leasehold buildings, freehold land and plant and machinery of the Group includes an amount of S$16,039,814 (2010: S$10,702,118) financed by term loans.

Leasehold building with a net book value of S$10,791,997 (2010: S$6,642,097) is subject to a legal mortgage to secure trust receipts facilities as disclosed in Note 21 to the financial statements.

Company Office FurnitureEquipment and fitting Renovation Total

S$ S$ S$ S$At Cost

At 1 January 2011 332,157 18,892 8,688 359,737Additions 1,036 7,291 - 8,327At 31 December 2011 333,193 26,183 8,688 368,064

At 1 January 2010 300,693 - - 300,693Additions 31,464 18,892 8,688 59,044At 31 December 2010 332,157 18,892 8,688 359,737

Accumulated depreciation

At 1 January 2011 144,632 1,734 594 146,960Charge for the year 99,230 7,506 2,896 109,632At 31 December 2011 243,862 9,240 3,490 256,592

At 1 January 2010 42,992 - - 42,992Charge for the year 101,640 1,734 594 103,968At 31 December 2010 144,632 1,734 594 146,960

Net book value

At 31 December 2011 89,331 16,943 5,198 111,472

At 31 December 2010 187,525 17,158 8,094 212,777



9. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

The Group engaged an independent valuer, Knight Frank Pte Ltd, to determine the fair value of the leasehold buildings. Fair value is determined by reference to market based evidence. This means that valuations performed by the valuer are based on active market prices, adjusted for any difference on the nature, location or condition of the specific property. The latest revaluation was on 23 November 2010.

The carrying amount of property, plant and equipment that would have been recognised had the assets been carried under the cost model:

Group Leasehold BuildingAt 31 December 2011 At revaluation At cost model

S$ S$

Cost 8,037,097 7,874,691Accumulated depreciation (269,622) (1,097,031)Net book value 7,767,475 6,677,660

At 31 December 2010 At revaluation At cost modelS$ S$

Cost 9,937,097 8,872,599Accumulated depreciation - (985,569)Net book value 9,937,097 7,887,030

10. GOODWILL

Goodwill on consolidation GroupS$

Cost

At 1 January 2011 and 31 December 2011 760,828

At 1 January 2010 and 31 December 2010 760,828

Carrying amount

At 31 December 2011 and 31 December 2010 760,828



10. GOODWILL (CONT’D)

Impairment tests for cash-generating units containing goodwill

Goodwill is allocated to the Group’s cash generating units (“CGU”) identified according to country of operation and business segment as follows:

Equipment2011 2010

S$ S$

Singapore 760,828 760,828

The recoverable amount of a CGU is determined based on value-in-use calculations. These calculation use cash flow projections based on financial budgets provided by management covering a 5-year period.

Key assumptions used for value-in-use calculations

The key assumptions for the value-in-use calculations are those regarding the discount rate, growth rate and gross margin. Management determined the budgeted gross margin based on past performance and its expectation for market development. The discount rates used are pre-tax and reflect specific risks relating to the relevant segments.

Equipment2011 2010

Gross margin 23% 30%Growth rate 10% 10%Discount rate 5% 6%



11. DEFERRED DEVELOPMENT EXPENDITURE

GroupCost S$

At 1 January 2011 1,827,473Additions 98,377Write-off during the year (1,084,971)At 31 December 2011 840,879

At 1 January 2010 1,701,633Additions 125,840At 31 December 2010 1,827,473

Accumulated amortisation

At 1 January 2011 371,948Amortisation 283,906Write-off during the year (241,977)At 31 December 2011 413,877

At 1 January 2010 109,056Addition during the year 262,892At 31 December 2010 371,948

Carrying amountAt 31 December 2011 427,002

At 31 December 2010 1,455,525

Total salaries and wages capitalised into deferred development expenditure were S$98,377 (2010: S$125,840).

During the year, the Group has written-off S$842,994 (2010: S$ Nil) net of accumulated amortisation as the Group channelled its resources on existing product development and improvement.

12. INVESTMENT IN SUBSIDIARIES

(a) Investment in subsidiaries:-

Company2011 2010

S$ S$

Unquoted shares, at cost 6,994,881 6,346,301



12. INVESTMENT IN SUBSIDIARIES (CONT’D)

(b) The following information relates to the subsidiaries:-

Name of company Principal activities

Place of business/Country of

IncorporationPercentage of

equity heldCost of

investment2011 2010 2011 2010

% % S$ S$

Rokko Technology Pte. Ltd. and its subsidiary:

Dealing in and manufacturing of precision tools.

Singapore 100 100 3,633,221 3,633,221

- Rokko Technology Sdn Bhd (i)

Supply precision tools and related services.

Malaysia 100 100 - -

Rokko Ventures Pte. Ltd. and its subsidiaries:

Investment holding. Singapore 100 100 2,361,660 2,361,660

- Rokko Systems Pte. Ltd.(ii)

Design and manufacture of semiconductor assembly and testing equipment.

Singapore 100 100 - -

- Rokko Mechatronics

Pte. Ltd.

Design and advanced semiconductor equipment.

Singapore 100 100 - -

Rokko MaterialsPte. Ltd. and its subsidiaries

Trading and assembly of equipment, materials and tools.

Singapore 100 100 1,000,000 100,000

- Rokko Stamping Pte. Ltd. (iv)

Dealing in metal stamping and tools and dies fabrication.

Singapore 100 100 - 100,000

- Rokko Leadframes

Pte. Ltd. (v)

Dealing in manufacturing and sale of lead frames.

Singapore 100 - - -

PT. Rokko Sakti Indonesia (iii)

Dealing in metal works and manufacturing of precision tools.

Indonesia - 100 - 151,420

6,994,881 6,346,301

All the subsidiaries of the Group incorporated in Singapore are audited by Mazars LLP, Public Accountants and Certified Public Accountants.



12. INVESTMENT IN SUBSIDIARIES (CONT’D)

i Audited by other members of Mazars LLP.

ii As at 31 December 2010, Rokko Systems Pte. Ltd. (“Rokko Systems”) and Finix Technology Pte. Ltd. “Finix” was amalgamated with Rokko Systems as the surviving entity. As at 31 December 2009, Finix is a wholly-owned subsidiary of Rokko Ventures Pte. Ltd.

iii On 9 December 2011, PT Rokko Sakti, a subsidiary of the Company, has been liquidated from Indonesia Register of Companies and has been deconsolidated in the financial statements of the with effect from that date.

iv On 21 March 2011, the Company transferred its entire equity interests from its wholly-owned subsidiary, Rokko Stamping Pte. Ltd. to another wholly-owned subsidiary, Rokko Materials Pte. Ltd. for a consideration of S$100,000.

v On 28 February 2011, the acquisition of 100% equity interests of Rokko Leadframes Pte. Ltd. (formerly known as “Jade Precision Engineering Pte. Ltd.”) for a total consideration of S$8 million has been completed.

The acquisition has resulted a negative goodwill of S$3.8 million and was included as part of the other income in the consolidated financial statements of the Group.

vi On 14 March 2011, Rokko Materials Pte. Ltd., a wholly-owned subsidiary of the Company, has increased its share capital from S$100,000 (comprising 100,000 ordinary shares) to S$1,000,000 (comprising 1,000,000 ordinary shares). The additional capital was contributed by Rokko Holdings.

13. INVENTORIES

Group2011 2010

S$ S$

Finished goods 2,977,753 1,860,333Less: Allowance for slow moving and obsolete inventories (304,341) (186,184)

2,673,412 1,674,149

Raw materials and consumables 2,519,105 1,029,655Less: Allowance for slow moving and obsolete inventories (193,819) (180,609)

2,325,286 849,046

Work-in-progress 8,921,179 11,279,653

Total 13,919,877 13,802,848



13. INVENTORIES (CONT’D)

Movements in allowance for slow moving and obsolete inventories are as follows:-

Group2011 2010

S$ S$

Balance at beginning of year 366,793 699,783Charged/(written-back) for the year 378,966 (80,019)Written-off (247,599) (252,971)Balance at end of year 498,160 366,793

The cost of inventories recognised as expense and included in “cost of sales” amounted to S$33,112,229 (2010: S$24,809,340).

During the financial year ended 31 December 2011, S$258,615 (2010: S$Nil) of inventories has been written down to its net realisable value and has been included in the other operating expenses.

14. TRADE AND OTHER RECEIVABLES

Group Company2011 2010 2011 2010

S$ S$ S$ S$

Trade receivables 9,446,839 5,276,945 - -Other receivables 286,714 174,043 - -Deposits 152,077 101,317 11,535 4,400Prepayments 571,408 130,097 200,225 23,871Staff loans 34,280 73,015 - -

10,491,318 5,755,417 211,760 28,271

Trade receivables are non-interest bearing and are generally on 30 to 90 days credit term.

Trade and other receivables denominated in foreign currencies at the end of the reporting date are as follows:

Group Company2011 2010 2011 2010

S$ S$ S$ S$

Malaysian Ringgit 68,937 162,571 - -Indonesian Rupiah - 1,735 - -United States dollar 7,285,674 3,429,559 - -



15. AMOUNTS OWING BY SUBSIDIARIES

Company2011 2010

S$ S$

Trade 288,527 512,830Non-trade 4,868,777 4,634,571

5,157,304 5,147,401

The non-trade amounts owing by subsidiaries are unsecured, interest-free, repayable on demand and is denominated in Singapore dollars.

16. CASH AND CASH EQUIVALENTS

Group Company2011 2010 2011 2010

S$ S$ S$ S$

Cash on hand 24,627 17,454 - -Cash with banks 9,604,603 12,749,650 636,013 1,361,239

9,629,230 12,767,104 636,013 1,361,239Cash pledged to the bank (500,000) -Cash and cash equivalents as stated in consolidated statements of cash flows 9,129,230 12,767,104

Cash and cash equivalents denominated in foreign currencies at the end of the reporting date are as follows:

Group Company2011 2010 2011 2010

S$ S$ S$ S$

United States dollar 4,228,400 8,524,804 7,386 1,261,650Malaysian Ringgit 1,411,194 69,525 - -Japanese Yen 2,628 1,640,397 - -



17. SHARE CAPITAL

Group and Company2011 2010

No. of shares S$ No. of shares S$Issued and fully paid up with no par value:At 1 January 165,000,000 12,442,108 150,000,000 10,432,808Issuance of new shares - - 15,000,000 2,009,300At 31 December 165,000,000 12,442,108 165,000,000 12,442,108

The holders of ordinary 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 issued shares are fully paid.

In 2010, the Company issued 15,000,000 new shares at S$0.14 each pursuant to a private placement, raising net proceeds of S$2,009,300. The cost of issuing the shares was approximately S$90,700.

2011 2010

Net asset value in S$ of the Group 27,916,491 25,762,889Number of shares issued as at 31 December in the Company 158,286,000 160,000,000Net asset value per share in cents 17.64 16.10

18. TREASURY SHARES

Group and CompanyNumber of shares Amount

2011 2010 2011 2010S$ S$

Balance at 1 January 5,000,000 4,355,000 525,717 435,947Purchase of treasury shares 1,714,000 645,000 186,913 89,770Balance at 31 December 6,714,000 5,000,000 712,630 525,717

Treasury shares relate to ordinary shares of the Company that are purchased and held by the Company. Pursuant to the share buy back mandate approved by shareholders at the AGM held on 8 April 2011, the Company purchased 1,714,000 (2010: 645,000) shares by way of on-market purchase at share prices ranging from S$0.101 to S$0.136 (2010: S$0.125 to S$0.155). The total amount paid to purchase the shares was S$186,913 (2010: S$89,770).



19. FOREIGN CURRENCY TRANSLATION RESERVES

The foreign currency translation reserves comprise:

(a) foreign exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from the functional currency of the Company; and

(b) the exchange differences on monetary items which form part of the Group’s net investment in foreign operations.

20. REVALUATION RESERVE

The revaluation reserve relates to the revaluation of the leasehold buildings of the Group. There is no restriction on the distribution of the balance of the revaluation reserves to shareholders.

During the current year, revaluation surplus amounting to S$902,093 (2010: S$ Nil) has been realised to accumulated profits upon the disposals of two leasehold buildings previously held by its subsidiaries through statement of changes in equity.

21. INTEREST-BEARING LIABILITIES

Group Company 2011 2010 2011 2010

S$ S$ S$ S$Current

Obligations under finance lease (secured) (a) 792,978 779,247 - 49,633Interest-bearing term loans (secured) (b) 604,989 313,695 - -Bridging loans (c) 1,347,140 885,160 - -Trust receipts (secured) (d) 9,928,482 5,755,200 - -Invoice financing (e) 2,904,419 2,887,463 - -

15,578,008 10,620,765 - 49,633

Non-current

Obligations under finance lease (secured) (a) 1,269,223 608,903 - -Interest-bearing term loans (secured) (b) 10,613,029 6,054,145 - -Bridging loans (c) 665,786 1,596,268 - -

12,548,038 8,259,316 - -



21. INTEREST-BEARING LIABILITIES (CONT’D)

(a) Obligations under finance leases (secured)

Group CompanyPayments Interest Principal Payments Interest Principal

2011 2011 2011 2011 2011 2011S$ S$ S$ S$ S$ S$

Within 1 year 873,277 80,299 792,978 - - -

After 1 year but within 5 years 1,338,977 69,754 1,269,223 - - -

2,212,254 150,053 2,062,201 - - -


2010 2010 2010 2010 2010 2010S$ S$ S$ S$ S$ S$

Within 1 year 835,292 56,045 779,247 50,599 966 49,633

After 1 year but within 5 years 643,189 34,286 608,903 - - -

1,478,481 90,331 1,388,150 50,599 966 49,633

The effective interest rate for the finance lease ranges from 3.60% - 7.99% (2010: 3.87% - 7.37%) per annum.

The finance leases are secured against property, plant and equipment with a net book value amounting to S$3,529,119 (2010: S$2,773,565), and corporate guarantee by Rokko Holdings Ltd.

Finance lease denominated in foreign currencies at the end of the reporting date are as follows:

Group Company2011 2010 2011 2010

S$ S$ S$ S$

Malaysian Ringgit 48,448 26,659 - -




(b) Interest-bearing term loans (secured)

The effective interest rate for the term loans ranges from 1.70% - 6.80% (2010: 1.37% - 6.25%) per annum.

The term loans are secured by:

(i) Freehold and leasehold building and certain plant and equipment with an aggregate net book value amounting to S$16,039,814 (2010: S$10,702,118).

(ii) Corporate guarantee by Rokko Holdings Ltd. except for the loan amount of S$580,154 (2010: S$629,308) whereby the loans are secured by personal guarantees of directors of the Company.

(iii) Subordination of the amount owing to directors through a Subordination Agreement (see Note 24).

Term loans denominated in foreign currencies at the end of the reporting date are as follows:

Group Company2011 2010 2011 2010

S$ S$ S$ S$

United States dollar 4,344,451 2,960,250 - -Malaysian Ringgit 580,154 629,308 - -

(c) Bridging loans


2011 2011 2011 2011 2011 2011S$ S$ S$ S$ S$ S$

Within 1 year 1,406,789 59,649 1,347,140 - - -After 1 year but within

5 years 686,066 20,280 665,786 - - -2,092,855 79,929 2,012,926 - - -


2010 2010 2010 2010 2010 2010S$ S$ S$ S$ S$ S$

Within 1 year 989,102 103,942 885,160 - - -After 1 year but

within 5 years 1,674,626 78,357 1,596,269 - - -2,663,728 182,299 2,481,429 - - -




(c) Bridging loans (Cont’d)

The effective interest rate for the bridging loans is 2.94% - 5% (2010: 5%) per annum.

The bridging loans are secured by Corporate guarantee by Rokko Holdings Ltd.

Bridging loans are denominated in Singapore dollars.

(d) Trust receipts

The trust receipts are secured by Corporate guarantee by Rokko Holdings Ltd. Certain trust receipts are secured by a legal mortgage over certain leasehold building with a net book value of S$10,791,997 (2010: S$6,642,097).

The effective interest rate for trust receipts ranges from 1.25% - 5.50% (2010: 1.58% - 5.5%) per annum.

Trust receipts denominated in foreign currencies at the end of the reporting date are as follows:

Group Company2011 2010 2011 2010

S$ S$ S$ S$

United States dollar 4,993,720 2,427,916 - -Japanese Yen 4,028,564 2,724,480 - -Euro 680,780 - - -

(e) Invoice financing

The invoice financings are secured by Corporate guarantee by Rokko Holdings Ltd.

The effective interest rate for invoice financing ranges from 2.54% - 3.25% (2010: 2.18% - 2.52%) per annum.

Invoice financing denominated in foreign currencies at the end of the reporting date are as follows:

Group Company2011 2010 2011 2010

S$ S$ S$ S$

United States Dollar 2,904,419 2,887,463 - -



22. DEFERRED TAX LIABILITIES

The movement in the Group’s deferred tax liabilities for the financial years ended 31 December 2011 and 2010 is as follows:

Deferred tax liabilities are attributable to the following:

GROUPAt 1

January2011

Exchange translation differences

Acquisition of a

subsidiaryCharged to equity

Charged to profit or loss

At 31December

2011S$ S$ S$ S$ S$ S$

Deferred tax liabilities Property, plant and (1,499,814) (17,563) (546,251) - 1,274,161 (789,467) equipment Revaluation reserves - - - (195,157) 28,779 (166,378)

(1,499,814) (17,563) (546,251) (195,157) 1,302,940 (955,845)

GROUPAt 1

January2010

Exchange translation differences

Acquisition of a

subsidiaryCharged to equity

Charged to profit or loss

At 31December

2010S$ S$ S$ S$ S$

Deferred tax liabilities Property, plant and equipment (1,234,179) (2,139) - - (263,496) (1,499,814)

(1,234,179) (2,139) - - (263,496) (1,499,814)

COMPANY At 1 January

2011

Charged toprofit or loss

At 31 December

2011S$ S$ S$

Deferred tax liabilitiesProperty, plant and equipment (20,082) - (20,082)

(20,082) - (20,082)

COMPANY At 1 January

2010

Charged toprofit or loss

At 31 December

2010S$ S$ S$

Deferred tax liabilitiesProperty, plant and equipment (27,634) 7,552 (20,082)

(27,634) 7,552 (20,082)



23. TRADE AND OTHER PAYABLES

Group Company2011 2010 2011 2010

S$ S$ S$ S$

Trade payables 6,357,548 7,694,090 14,129 -Accrued operating expenses 2,686,092 1,314,657 124,794 129,095Other payables 576,942 287,643 29,302 44,080

9,620,582 9,296,390 168,225 173,175

Trade and other payables are non-interest bearing and are normally settled on 30 to 90 days credit term.

Trade and other payables denominated in foreign currencies at the end of the reporting date are as follows:

Group Company2011 2010 2011 2010

S$ S$ S$ S$

Korean Won - 5,449 - -Malaysian Ringgit 329,164 50,863 - -Japanese Yen 3,097,094 4,269,869 - -United States dollar 2,848,768 1,449,750 - -Others 83,291 - - -

Included in the accrued operating expenses is the provision for warranties. The Group provides one-year warranty on equipment and undertake to repair or replace items that fail to perform satisfactorily. A provision is recognised at the reporting date for expected warranty claims based on past experience of the level of repairs and returns as well as management best estimation of the possible outcome on an individual case basis.

Movements in provision for warranties are as follows:-

2011 2010S$ S$

Balance at beginning of the year 183,627 235,722Effect of exchange rate changes 507 (453)Provisions for/(write-back) made during the year-net 11,083 (51,642)Balance at end of the year 195,217 183,627



24. AMOUNT OWING TO DIRECTORS

The amount owing to directors is non-trade in nature, unsecured and interest free.

In 2010, it has been classified as current liability as it was intended to be repaid within the next twelve months after 31 December 2010.

In 2011, the Group has no intention to repay the loan within the next 12 months after 31 December 2011 and hence was classified as non-current liability as at 31 December 2011. It is carried at cost because its fair value cannot be measured reliably.

25. SIGNIFICANT RELATED PARTY TRANSACTIONS

For the purposes of these financial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

Except as disclosed elsewhere in these financial statements, during the period under review, the Group had the following significant transactions with related parties on terms agreed between the parties as follows:

a) Sales and purchase of goods and services

Group2011 2010

S$ S$ExpensesAccounting services 18,070 18,555Legal fees 30,456 19,001

b) Compensation of key management personnel

The key management personnel comprise of the directors of the Company and its subsidiaries and their remuneration are disclosed in Note 7.



26. CAPITAL COMMITMENTS

Group Company2011 2010 2011 2010

S$ S$ S$ S$

Capital expenditure contracted but not provided for in the financial statements- In respect of the purchase of property, plant and equipment 131,000 - - -

The capital commitments are pertaining to implementation of ERP software and upgrading of services for the Group which are on-going as at 31 December 2011.

27. SEGMENT INFORMATION

For management purposes, the Group is organised into business units based on their products and services, and has five reportable operating segments as follows:

I. The Equipment segment designs, develops and manufactures customised automated equipment specific to customer requirements.

II. The Leadframes segment manufactures lead frames for semiconductor industry.

III. The Stamping segment provides connector stamping plating services to manufacturers in the electronics industry.

IV. The Tooling segment designs, develops and manufactures precision tools used in the front and back end semiconductor manufacturing processes.

V. The Trading and others segment is an investment arm which derived revenue from provision of corporate services and renting out premises to subsidiaries.

Except as indicated above, no operating segments have been aggregated to form the above reportable operating segments.

Management monitors the operating results of its business unit separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which in certain respects, as explained in the table below is measured differently from operating profit or loss in the consolidated financial statements. Group financing (including finance costs) and income taxes are managed on a group basis and are not allocating to operating segments.

Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.



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27.

SEG

MEN

T IN

FORM

ATIO

N (C

ON

T’D)

Bu

sines

s se

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ts (C

ont’d

)

OPE

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ENT

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l El

imin

atio

nC

onso

lidat

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tal

S$S$

S$S$

S$S$

Tota

l ext

erna

l rev

enue

58,0

48,6

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42

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--

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48,6

3042

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r-seg

men

t rev

enue

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(18,

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st in

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e95

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(157

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rest

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ense

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712,

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reci

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n 3,

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23



27. SEGMENT INFORMATION (CONT’D)

Business segments (Cont’d)

Nature of adjustments and eliminations to arrive at amounts reported in the Consolidated Financial Statements.

Note A Inter-segment revenues are eliminated on consolidation.

Note BInterest charges by inter-company are eliminated on consolidation.

Note C(i) Depreciation adjustment on assets purchased from inter-company from FY2003 to FY2006:

2011 & 2010S$

Sales of fixed assets to inter-company 1,194,316Cost of fixed assets (931,860)Profit on inter-company sales of fixed assets 262,456

Inter-company profit included in depreciation charges per year 26,246

(ii) Depreciation adjustment arising from revaluation reserves of Rokko Leadframes Pte Ltd:

Depreciation charges attributable to revaluation reserves was reversed by debiting revaluation reserves in equity at Rokko Leadframes Pte Ltd company level. At consolidation, this amount was restated as the revaluation reserves have been recognised as gain on acquisition.

Depreciation on revaluation reserves 133,885Deferred tax attributable to revaluation reserves (22,760)Profit on inter-company sales of fixed assets 111,125

Net depreciation charges added at consolidation 84,879



27. SEGMENT INFORMATION (CONT’D)

Business segments (Cont’d)

Note DThe following are items derived from inter-segment transaction, and were added to/(deducted from) segment profit before tax:

2011 2010S$ S$

1) Inter-segment revenue (16,001,931) (18,978,962)2) Cost of sales on inter-segment charges 13,394,648 15,212,9823) Inter-segment charges classified as operating expenses 1,322,043 1,237,8594) Depreciation adjustments on assets purchased from 26,246 26,246 inter-company.5) Gain on acquisition of a subsidiary 3,285,956 -

2,026,962 (2,501,875)

Note EThe following items are (eliminated from)/added to total assets on consolidation :

2011 2010S$ S$

1) Amounts owing by inter-companies (28,681,407) (12,875,694)2) Investments in subsidiaries (19,286,403) (10,537,823)3) Goodwill on acquisition of minority interest 760,828 760,8284) Profit on inter-company sales of fixed assets net off depreciation adjustments (59,429) (85,675)5) Profit on inter-company sales included in inventory (331,009) (74,250)

(47,597,420) (22,812,614)

Note FMovements in deferred development expenditure:

2011 2010S$ S$

Deferred development expenditure as at 1 January 1,455,525 1,592,577Deferred development expenditure for reportable segments 98,377 125,840 for the yearAmortisation for reportable segment (283,906) (262,892)Deferred development expenditure written off (842,994) -Deferred development expenditure as at 31 December 427,002 1,455,525

Note GAmount owing to inter-companies are eliminated on consolidation.



27.

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MEN

T IN

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N (C

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ther

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2011

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2011

2010

2011

2010

2011

2010

S$S$

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S$S$

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ent r

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les t

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28. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Risk management is integral to the whole business of the Group. The Group has a system of controls in place to create an acceptable balance between the cost of risks occurring and the cost of managing the risks. The management continually monitors the Group’s risk management process to ensure that an appropriate balance between risk and control is achieved.

Liquidity risk

The Group monitors its liquidity risk and maintains 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.

The Group prepares cash flows projections on a regular basis for its core operations to ensure as far as possible, that it will always have sufficient liquidity to meet its liabilities when due. In addition, the Group has access to lines of credit from financial institutions as follows:

The following are the undiscounted contractual maturities of financial liabilities:

GROUPCarrying amount

Contractual cashflows

6 months or less

6-12 months

1-2 years

2 – 5 years

More than 5 years

S$ S$ S$ S$ S$ S$ S$2011Trade and other

payables 9,620,582 9,620,582 9,620,582 - - - -Amount owing to

directors 521,160 521,160 - - - 521,160 -Finance leases 2,062,201 2,212,254 514,754 358,522 646,068 692,910 -Term loans 11,218,018 13,570,602 429,103 428,143 865,074 2,554,752 9,293,530Bridging loans 2,012,926 2,092,855 912,157 494,632 547,621 138,445 -Trust receipts 9,928,482 9,984,988 9,984,988 - - - -Invoice financing 2,904,419 2,919,937 2,919,937 - - - -

38,267,788 40,922,378 24,381,521 1,281,297 2,058,703 3,907,267 9,293,530

GROUPCarrying amount

Contractual cashflows

6 months or less

6-12 months

1-2 years

2 – 5 years

More than 5 years

S$ S$ S$ S$ S$ S$ S$2010Trade and other

payables 9,296,390 9,296,390 9,296,390 - - - -Amount owing to

directors 533,629 533,629 533,629 - - - -Finance leases 1,388,150 1,478,481 507,458 327,834 338,815 304,374 -Term loans 6,367,840 8,466,774 246,819 246,289 492,568 1,485,342 5,995,756Bridging loans 2,481,429 2,663,728 494,551 494,551 989,106 685,520 -Trust receipts 5,755,200 5,781,400 5,781,400 - - - -Invoice financing 2,887,463 2,890,514 2,890,514 - - - -

28,710,101 31,110,916 19,750,761 1,068,674 1,820,489 2,475,236 5,995,756

Contractual cashflows include the interest element. The amount owing to directors is payable subject to review and approval of the Audit Committee.



28. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)

Liquidity risk (Cont’d)

Unutilised credit facilities


S$ S$

Bank overdraft facilities 700,000 700,000Trade facilities 9,167,099 5,524,122

Credit risk

The Group has a credit policy in place which establishes credit limits for customers and monitors their balances on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount. Cash and fixed deposits are placed with banks and financial institutions which are regulated.

At 31 December 2011, trade receivables from five customers (2010: five) accounted for approximately 55.3% (2010: 83.7%) of total trade receivables of the Group. The Group’s primary exposure to credit risk arises relating to trade receivables is limited due to the Group’s many varied customers. These customers are internationally dispersed, engaged in a wide spectrum of distribution and manufacturing activities, and sell in a variety of end markets.

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

Group Company2011 2010 2011 2010

S$ S$ S$ S$

By geographical areasSingapore 2,033,417 1,829,636 - -Malaysia 2,423,397 88,952 - -Philippines 304,167 898,534 - -China and Taiwan 2,447,528 1,969,400 - -Thailand 1,199,293 - -Others 212,914 490,423 - -

8,620,716 5,276,945 - -

By type of customersNon-related parties 8,620,716 5,276,945 - -




Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

Group2011 2010

S$ S$

Trade and other receivables 9,919,910 5,625,320Cash and cash equivalents 9,629,230 12,767,104

19,549,140 18,392,424

The Group establishes an allowance for impairment that represents its estimate 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. No allowance for individually significant exposures and collective impairment was made based on past experience.

Financial assets that are past due and/or impaired

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

The aged analysis of trade receivables and the impairment are as follows:

Gross Impairment Gross Impairment2011 2011 2010 2010

Group S$ S$ S$ S$

Not past due 4,810,432 - 2,655,272 -Past due 0 – 30 days 2,133,384 - 702,564 -Past due 31 – 60 days 374,534 - 653,922 -Past due 61 – 90 days 422,794 - 3,537 -More than 90 days 879,572 - 1,260,650 -Total 8,620,716 - 5,275,945 -

Based on past experience, the Company believes that no impairment allowance is necessary in respect of trade receivables due to the good payment track records of its customers.




Foreign currency risk

The Group incurs foreign currency risk on revenue and costs that are denominated in a currency other than Singapore dollars. The currencies giving rise to these risks are primarily United States dollar, Malaysia Ringgit, Indonesian Rupiah and Japanese Yen.

The Group does not hedge its foreign currency exposures; the Group ensures that the net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates, where necessary, to address short term imbalances.

Sensitivity analysis

At 31 December 2011, if the foreign currencies weakened 10% against the Singapore dollars with all other variables held constant, the Group’s post-tax profit and equity for the year would have been S$908,000 (2010: S$51,000) higher and S$573,000 (2010: S$226,000) lower respectively, mainly as a result of foreign exchange gains/losses on translation of foreign currency denominated financial instruments such as trade receivables, trade payables, interest-bearing liabilities and cash and bank balances into Singapore dollars. A 10% strengthening against Singapore dollars would have had the equal but opposite effect.

Fair values

The carrying amounts of the financial assets and liabilities, other than the amount owing to directors approximate their fair values.

The Group does not hold financial assets nor derivative asset or liability carried at fair value or at valuation. Accordingly, the disclosure requirement of the fair value hierarchy (levels 1,2 & 3) under FRS 107 Financial Instruments Disclosures does not apply.

Basis for determining fair value

The following summarises the significant methods and assumptions used in estimating the fair values of financial instruments.

The carrying value of trade and other receivables, cash and cash equivalents, trade and other payables, amounts owing by a related party, trust receipts, approximates their fair values due to the short period to maturity. All other financial assets and liabilities, except for amount owing to directors, are discounted to determine their fair values.




Fair values (Cont’d)

Interest rates used for determining fair value

The interest rates used to discount estimated cash flows are based on the market rate of interest at the reporting date, and were as follows:


Bridging loans 6.00% 6.00%Term loans 6.00% 6.00%Finance lease liabilities 3.60% - 7.99% 3.87% - 7.37%

Interest rate risk

The Group is exposed to interest rate risk through the impact of interest rate changes on interest-bearing financial liabilities. Interest rate risk is managed by the Group on an on-going basis with the primary objective of limiting the extent to which net interest expense could be affected by an adverse movement in rates.

The Group’s interest rate risk mainly arises from the bank borrowings. The Group’s policy is to obtain the most favourable interest rates available without increasing its interest rate exposure.

Information relating to the Group’s interest rate exposure is also disclosed in the notes on the Group’s borrowings, including finance lease arrangement (Note 21).

At 31 December 2011, if interest rates on all variable rate borrowings has been 0.5% higher with all other variables held constant, the Group’s post-tax profit and equity for the year would have been S$141,000 (2010: S$88,000) lower respectively, mainly as a result of higher interest expense on variable rate borrowings net of applicable income taxes. A 0.5% lower in interest rate would have had the equal but opposite effect.




Interest rate risk (Cont’d)

The following table sets out the carrying amount, by maturity, of the Group’s financial instruments that are exposed to interest rate risk:

Within1 year

1 – 2years

2 – 3years

3 – 4years

4– 5years

More than5 years Total

S$ S$ S$ S$ S$ S$ S$2011Fixed rateFinance lease obligations 792,978 601,248 427,907 240,068 - - 2,062,201Bridging loan 1,347,140 529,330 136,456 - - - 2,012,926Trust receipts 9,928,482 - - - - - 9,928,482Invoice financing 2,904,419 - - - - - 2,904,419

Variable rateTerm loans 604,989 614,851 622,390 631,012 639,960 8,104,816 11,218,018

2010Fixed rateFinance lease obligations 779,247 314,034 235,314 59,555 - - 1,388,150Bridging loan 885,160 930,447 529,547 136,275 - - 2,481,429Trust receipts 5,755,200 - - - - - 5,755,200Invoice financing 2,887,463 - - - - - 2,887,463

Variable rateTerm loans 313,695 313,558 302,448 306,993 314,782 4,816,364 6,367,840

Interest rate for certain term loans is fixed in the range of 4% to 6.25% per annum. Interest rate for bridging loans is fixed at 5% per annum. The other financial instruments of the Group are not subjected to interest rate risks.

Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.




Capital management (Cont’d)

The Company monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including borrowings and trade and other payables, excluding provisions for income tax and deferred tax liabilities as shown in the statement of financial position) less cash and cash equivalents. Total capital is calculated as total equity including minority interests, if any, as shown in the statement of financial position, plus net debts.

During the year ended 31 December 2011, the Group’s strategy, which was unchanged from 31 December 2010, was to maintain a gearing ratio of less than one. The gearing ratios at 31 December 2011 and 31 December 2010 were as follows:

Group2011 2010

S$ S$

Total borrowings 38,267,788 28,710,100Less: cash and cash equivalents (9,629,230) (12,767,104)Net debt 28,638,558 15,942,996Total equity 27,916,491 25,762,889Total capital 56,555,049 41,705,885Gearing ratio 0.51 0.38

The Group and the Company are not subject to any externally imposed capital requirements.

29. DIVIDENDS PAID


S$ S$First and final dividend paid in respect of the previous financial year of 0.5 cent (2010: 0.05 cent) per ordinary share, tax exempt one-tier 799,265 726,635

Interim dividend paid in respect of the current financial year - Nil (2010: 0.05 cent) per ordinary share, tax exempt one-tier - 800,000

The Directors have proposed a final dividend for the financial year ended 31 December 2011 of 0.25 cent per ordinary share (excluding Treasury Shares), tax exempt one-tier amounting to S$400,000.

These financial statements do not reflect the dividend payable, which will be accounted for in the shareholders’ equity as an appropriation of retained earnings for the financial year ending 31 December 2012.



30. EARNINGS PER SHARE

Group2011 2010

S$ S$Basic earnings per share is based on:

Net profit attributable to ordinary shareholders of the Company 3,397,697 4,262,061

Group2011 2010

No. of shares No. of shares

Weighted average number of ordinary shares 159,314,562 154,225,203

The basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year excluding ordinary shares purchased by the Company and held as treasury shares.

As there are no dilutive potential ordinary shares as at the end of the financial year ended 31 December 2011, no diluted earnings per share are presented.

31. CONTINGENT LIABILITY

The Group and the Company did not have any significant contingent liabilities as at 31 December 2011.

32. DIRECTORS’ REMUNERATION

Company’s directors receiving remuneration from the Group:

Number of director2011 2010

Remuneration of:

S$250,000 to below S$500,000 - -Below S$250,000 5 5

5 5



33. SUBSEQUENT EVENT

In February 2012, the Group announced the disposal of two properties – terrace factories located at Kaki Bukit Industrial Terrace. The disposal provides the Group with the opportunity to consolidate its Tooling Division and re-organise its manufacturing facilities in Singapore to achieve better factory space utilisation and reduce energy cost with facilities sharing.

34. LAND AND BUILDINGS

The Group’s properties are as follows:-

Address Description Tenure

28 Kaki Bukit Industrial TerraceSingapore 416108

Factory cum office 60-year lease commencing from 9 January 1995

30 Kaki Bukit Industrial TerraceSingapore 416110

Factory 60 year lease commencing from 9 January 1995

73 Loyang Way Singapore 508763

Factory cum office 30-year leasehold from 1 February 2006

61 Kaki Bukit Road 2 Singapore 417869

Factory cum office 30-year leasehold from 7 November 2007

Lot No.15, Jalan Bukit 7, Kawasan MIEL Bandar Seri Alam Phase III, 81750 Masai Johor, Malaysia

Factory Freehold

Lot No.17, Jalan Bukit 7, Kawasan MIEL Bandar Seri Alam Phase III, 81750 Masai Johor, Malaysia

Factory Freehold

27 Tuas Avenue 2, Singapore 639458

Factory cum office 30-year leasehold from 16 October 2011

17 Tuas Road, Singapore 638487 Factory cum office 30-year leasehold from 7 March 2008

No. 8 Lot 205, Jalan Mega 1/10, Taman Perindustrian Nusa Cemerlang, 79200 Bandar Nusa Jaya, Johor, Malaysia

Factory cum office Freehold


Issued and fully paid-up capital : S$12,442,108Number of shares : 165,000,000 Class of shares : Ordinary shares Voting rights : One vote per ordinary share

The Company held 6,714,000 treasury shares, constituting 4.24% of the total number of issued shares (excluding treasury shares).

DISTRIBUTION OF SHAREHOLDINGS

SIZE OF SHAREHOLDINGSNO. OF

SHAREHOLDERS % NO. OF SHARES %

1 - 999 6 0.71 3,560 0.001,000 - 10,000 458 53.88 1,545,440 0.9810,001 - 1,000,000 378 44.47 30,808,300 19.461,000,001 and above 8 0.94 125,928,700 79.56Total 850 100.00 158,286,000 100.00

TWENTY LARGEST SHAREHOLDERS

No. NAME NO. OF SHARES %

1. Lim Chong Chen 112,460,260 71.052. Lee Sun Lim 3,785,920 2.393. Maybank Kim Eng Securities Pte. Ltd. 2,694,000 1.704. OCBC Securities Private Ltd 1,741,000 1.105. Tan Keat Seang 1,482,000 0.946. UOB Kay Hian Pte Ltd 1,379,000 0.877. Tey Kim Hwee 1,225,560 0.778. Lim Yoke Mein 1,160,960 0.739. Lau Kok Yin 1,000,000 0.6310. Chey Long Wan 902,000 0.5711. Baek Seung Ho 890,000 0.5612. DMG & Partners Securities Pte Ltd 821,000 0.5213. Low Chai Chong 774,000 0.4914. Phillip Securities Pte Ltd 669,000 0.4215. Law Jow Yuan Shy 625,000 0.3916. Dayanghirang Manolo Dimayuga 600,000 0.3817. Zhang Jing 545,000 0.3418. Khoo Poi Lan 514,000 0.3219. Chan Tuck Sing 500,000 0.3220. Lim Yee Chuan 450,000 0.28

TOTAL 134,218,700 84.77

Statistics of Shareholdingsas at 15 March 2012


Statistics of Shareholdingsas at 15 March 2012

SHARES HELD BY PUBLIC

Based on the information provided to the Company as at 15 March 2012, 26.81% of the issued ordinary shares of the Company were held by the public. Accordingly, Rule 723 of the Listing Manual (Section B: Rules of Catalist) of the Singapore Exchange Securities Trading Limited has been complied with.

SUBSTANTIAL SHAREHOLDER

Direct Interest Deemed InterestNumber of

Shares% Number of

Shares%

Lim Chong Chen 112,460,260 71.05 - -


The Board of Directors (the “Board”) and the management of the Company (the “Management”) are committed to maintaining high standards of corporate governance and ensuring the recommendations of the Code of Corporate Governance 2005 (the “Code”) have been complied with in order to protect the interests of shareholders of the Company (the “Shareholders”).

The following describes the Company’s corporate governance processes and activities for the financial year ended 31 December 2011 (“FY2011”) with specific reference to the Code.

BOARD’S CONDUCT OF AFFAIRS

PRINCIPLE 1 : Every company should be headed by an effective Board to lead and control the company. The Board is collectively responsible for the success of the company. The Board works with Management to achieve this and the Management remains accountable to the Board.

The Board comprises the following members:-

Tey Kim Hwee (Non-Executive Chairman)Lim Chong Chen (Managing Director)Lim Yee Chuan (Executive Director)Lee Sen Choon (Lead Independent Director)Wai Chee Leong (Independent Director)

The Board’s principal role is to enhance and protect the interests of Shareholders. The Board oversees the overall management of the Company and its subsidiaries (the “Group”), approves significant policies and sets overall corporate strategies and directions of the Group.

More than one-third (1/3) of the Board is made up of Independent Directors. The Directors have the right core competencies and diversity of experience to enable them, in their collective wisdom, to contribute effectively. Every Director is expected to act in good faith and to consider at all times, the interests of the Company.

The Board meets regularly on a half-yearly basis and ad-hoc Board meetings are convened when they are deemed necessary. The Company’s articles of association (“Articles”) provide for telephonic meetings.

The Board has established three (3) Board committees to assist in the execution of its responsibilities. They are the Audit Committee (“AC”), the Nominating Committee (“NC”) and the Remuneration Committee (“RC”), all of which are chaired by Independent Directors.

The number of Board and Board committee meetings held in FY2011, as well as the attendance of each Board member thereof, is set out below:-

Corporate Governance



Board Board CommitteesAudit Nominating Remuneration

Number of meetings held 2 2 1 1

Board Members Number of meetings attended

Tey Kim Hwee 2 2 1 1Lim Chong Chen 2 - - -Lim Yee Chuan 2 - - -Lee Sen Choon 2 2 1 1Wai Chee Leong 2 2 1 1

The Company has adopted internal guidelines setting forth matters which specifically require the Board’s approval such as, amongst others, new investments, divestments and commitments to term loans and lines of credit from financial institutions.

Every Director of the Board has received the appropriate training, including his/her duties as a director and how to discharge those duties. The Directors have also been briefed on the business and governance practices of the Group. The Company provides further relevant training on matters, including relevant new laws, regulations and changing commercial risks, to the Directors from time to time.

The Board ensures that incoming and newly appointed Directors will be given an orientation and briefing on the Group’s business strategies, operations and governance practices to facilitate the effective discharge of their duties. Newly appointed Directors will also be provided a formal letter setting out their duties and obligations.

BOARD COMPOSITION AND BALANCE

PRINCIPLE 2 : There should be a strong and independent element on the Board, which is able to exercise objective judgment on corporate affairs independently, in particular, from Management. No individual or small group of individuals should be allowed to dominate the Board’s decision making.

The Board comprises two (2) Executive Directors and three (3) Non-Executive Directors, with relevant and diverse experience to contribute effectively to the Group. Of the three (3) Non-Executive Directors, two (2) are independent within the meaning of the Code. The Independent Directors make up at least one-third (1/3) of the Board, and thus meet the requirement of the Code. There is therefore a strong and independent element on the Board. The independence of each Director has been and will be reviewed annually by the NC. The NC adopts the Code’s definition of what constitutes an independent director in its review.

The Independent Directors have confirmed that they do not have any relationship with the Company, its related companies or its officers that could interfere, or be reasonably perceived to interfere, with the exercise of the Directors’ independent business judgment with a view to the best interests of the Company.

The NC has reviewed and determined that the Independent Directors are independent.

The Board has examined its size and is of the view that it is an appropriate size for effective decision-making, taking into account the scope and nature of the operations of the Group.


The composition of the Board is reviewed on an annual basis by the NC, and the NC is of the view that the current Board has the appropriate mix of expertise and experience, and collectively possesses the necessary core competencies for effective functioning and informed decision-making. The Board as a group comprises members with core competencies in accounting and finance, business and management experience, industry knowledge, strategic planning and customer-based experience and knowledge.

Where necessary or appropriate, the Non-Executive Directors will meet without the presence of the Management.

The profiles of the Directors are set out on pages 6 and 7 of this Annual Report.

CHAIRMAN AND MANAGING DIRECTOR

PRINCIPLE 3 : There should be a clear division of responsibilities at the top of the company – the working of the Board and the executive responsibility of the company’s business – which will ensure a balance of power and authority, such that no one individual represents a considerable concentration of power.

As the Non-Executive Chairman, Mr Tey Kim Hwee’s role is to advise the Board on overall business strategies and future direction of the Group. Mr Lim Chong Chen is the Managing Director of the Company and oversees the business and operational decisions made in running the Group’s business.

Although the Non-Executive Chairman, Mr Tey Kim Hwee, is the brother-in-law of the Managing Director, Mr Lim Chong Chen, the Board is of the view that there are sufficient safeguards and checks to ensure that the process of decision-making by the Board is independent and based on collective decisions without any individual or group of individuals exercising any considerable concentration of power or influence. All major decisions are made in consultation with the Board.

In addition, the Company had appointed a Lead Independent Director, Mr Lee Sen Choon. As the Lead Independent Director, Mr Lee Sen Choon is the contact person for Shareholders in situations where there are concerns or issues which communication with the Non-Executive Chairman, Managing Director, or Financial Controller has failed to resolve or where such communication is considered inappropriate.

The Board collectively ensures the followings, in consultation with the Management:-• the effective scheduling of meetings to enable the Board to perform its duties responsibly, while not

interfering with the flow of the Group’s operations;

• the effective preparation of the agenda for Board meetings;

• the exercise of control over the quality, quantity and timeliness of the flow of information between the Management and the Board, and between the Company and its Shareholders; and

• compliance with the Company’s guidelines on corporate governance.



BOARD MEMBERSHIP

PRINCIPLE 4 : There should be a formal and transparent process for the appointment of new directors to the Board.

Identification and selection of new Directors will be made by the NC which comprises three (3) Non-Executive Directors, Mr Tey Kim Hwee, Mr Lee Sen Choon and Mr Wai Chee Leong. Mr Lee Sen Choon and Mr Wai Chee Leong are Independent Directors. The Chairman of the NC is Mr Wai Chee Leong who is not directly associated (as defined under the Code) with any substantial Shareholders of the Company.

The NC has written terms of reference and its responsibilities include:-

(a) making recommendations to the Board on all board appointments and re-nominations having regard to the Director’s contribution and performance;

(b) ensuring that all Directors submit themselves for re-nomination and re-election at regular intervals and at least once every three (3) years;

(c) determining annually whether a Director is independent;

(d) deciding whether a Director is able to and has adequately carried out his/her duties as a Director of the Company, in particular, where the Director concerned has multiple board representations; and

(e) assessing the effectiveness of the Board as a whole and the contribution by each Director to the effectiveness of the Board.

The NC is of the view that Mr Lee Sen Choon and Mr Wai Chee Leong are independent.

The Company does not have a formal process for the selection and appointment of new Directors to the Board. However, if required, the Company has or is able to procure search services, contacts and recommendations for the purposes of identifying suitably qualified and experienced persons for appointment to the Board.

Information required in respect of each Director’s academic and professional qualification is set out in the “Board of Directors” section of this Annual Report. Information on shareholdings in the Company held by each Director is set out in the “Directors’ Report” section of this Annual Report.

According to the Company’s Articles, one-third (1/3) of the Directors are required to retire from office and subject themselves to re-election at every Annual General Meeting (“AGM”). Every Director must retire at least once every three (3) years.

The NC has recommended to the Board that Mr Tey Kim Hwee and Mr Lee Sen Choon be nominated for re-election at the forthcoming AGM. In making the recommendations, the NC had considered the Directors’ overall contributions and performance.



The year of initial appointment and last re-election of each Director are set out below:-

Director Date of initial appointment

Date of last re-election

Current directorships in listed companies

Past directorships in listed companies (preceding three years)

Lim Chong Chen 30 September 2003

8 April 2011 - -

Tey Kim Hwee 30 September 2003

23 April 2009 - -

Lim Yee Chuan 30 May 2007 12 April 2010 - -

Lee Sen Choon 7 September 2007 12 April 2010 Best World International Limited

Hor Kew Corporation Limited

Soon Lian Holdings Limited

Kyodo-Allied Industries Ltd

Wai Chee Leong 7 September 2007 8 April 2011 - -

BOARD PERFORMANCE

PRINCIPLE 5 : There should be a formal assessment of the effectiveness of the Board as a whole and the contribution by each Director to the effectiveness of the Board.

Board performance is linked to the overall performance of the Group. The Board complies with the applicable laws and members of the Board are required to act in good faith, with due diligence and care in the best interests of the Company and its Shareholders.

The NC is responsible for assessing the effectiveness of the Board as a whole and for assessing the contribution of each Director annually. The performance criteria include comparison with industry peers, addressing how the Board has enhanced long-term Shareholders’ value and consideration of the Company’s share price performance over a five (5) year period vis-à-vis the Singapore Straits Times Index and a benchmark index of its industry peers (as appropriate). Other performance criteria that may be used include return on assets, return on equity, return on investment and economic value added over a longer-term period.

The criteria for the evaluation of the performance of individual Directors include qualitative and quantitative factors such as performance of principal functions and fiduciary duties, level of participation at meetings, guidance provided to the Management and attendance record.

The NC has assessed the current Board’s performance to-date and is of the view that the performance of the Board as a whole was satisfactory. Although one of the Board members have multiple board representations, the NC is satisfied that sufficient time and attention has been given by the Directors to the Group.



The Board and the NC have endeavoured to ensure that the Directors appointed to the Board possess the background, experience, business knowledge, finance and management skills critical to the Group’s business. They have also ensured that each Director, with his/her special contributions, brings to the Board an independent and objective perspective to enable balanced and well-considered decisions to be made.

ACCESS TO INFORMATION

PRINCIPLE 6 : In order to fulfil their responsibilities, Board members should be provided with complete, adequate and timely information prior to board meetings and on an on-going basis.

Board members are able to obtain complete, adequate and timely information and have direct access to the Management for this purpose. This is to enable them to fulfill their responsibilities efficiently. Board members are also provided with detailed board papers prior to each Board meeting so that the members may better understand the relevant issues beforehand, thereby allowing for more time at such meetings for questions that members may have.

The Directors have separate and independent access to the Company’s senior management and the Company Secretary. The Directors may also, either individually or as a group, in the furtherance of their duties, take independent professional advice, if necessary, at the Company’s expense.

The Company Secretary attends all Board meetings and ensures that all Board procedures are followed. Where the Company Secretary is unable to attend any Board meeting, he ensures that a suitable replacement is arranged and that proper minutes of the same are taken and kept. The Company Secretary also ensures that the Company complies with the requirements of the Companies Act, Chapter 50 of Singapore, and the Listing Manual (Section B: Rules of Catalist) of the Singapore Exchange Securities Trading Limited (the “SGX-ST”) (“Rules of Catalist”). The appointment and removal of the Company Secretary are subject to the approval of the Board as a whole.

PROCEDURES FOR DEVELOPING REMUNERATION POLICIES

PRINCIPLE 7 : There should be a formal and transparent procedure for developing policies on executive remuneration and for fixing the remuneration packages of individual directors. No director should be involved in deciding his own remuneration.

The RC comprises three (3) Non-Executive Directors, Mr Tey Kim Hwee, Mr Lee Sen Choon and Mr Wai Chee Leong. Mr Lee Sen Choon and Mr Wai Chee Leong are Independent Directors. The Chairman of the RC is Mr Wai Chee Leong.

The RC has written terms of reference and its responsibilities include:-

(a) the recommendation to the Board of a framework of remuneration for Board members and senior management;

(b) the determination of the specific remuneration packages for each Executive Director;

(c) the determination of the appropriateness of the remuneration of Non-Executive Directors, taking into consideration the level of their contribution; and

(d) the review and recommendation to the Board of the terms of renewal of the service agreements of Executive Directors.



The RC members are familiar with executive compensation matters as they each manage their own business and/or are holding directorships on the boards of other listed companies. The RC has access to advice regarding executive compensation matters, if required.

The RC’s recommendations are submitted for endorsement by the Board. No Director is involved in deciding his/her own remuneration.

LEVEL AND MIX OF REMUNERATION

PRINCIPLE 8 : The level of remuneration should be appropriate to attract, retain and motivate the directors needed to run the company successfully but companies should avoid paying more than is necessary for this purpose. A significant proportion of executive directors’ remuneration should be structured so as to link rewards to corporate and individual performance.

In setting remuneration packages, the RC takes into consideration the employment conditions within the industry and the Group’s performance, as well as the performance of individual Directors and key executives.

The Company has a staff remuneration policy which comprises a fixed component and a variable component. The fixed and variable components are in the form of a base salary and variable bonus, respectively, and are linked to the performance of the Company and the individual.

The Non-Executive Directors do not have service agreements with the Company. They are paid Directors’ fees, which are determined by the Board based on their effort, time spent and responsibilities as the Non-Executive Directors. The fees are subject to approval by the Shareholders at each AGM. Except as disclosed, the Independent Directors and Non-Executive Director do not receive any remuneration from the Company.

DISCLOSURE ON REMUNERATION

PRINCIPLE 9 : Each company should provide clear disclosure of its remuneration policy, level and mix of remuneration, and the procedure for setting remuneration in the company’s annual report. It should provide disclosure in relation to its remuneration policies to enable investors to understand the link between remuneration paid to directors and key executives, and performance.

The Board has not included a separate annual remuneration report to Shareholders in this Annual Report on the remuneration of Directors and the key executives (who are not Directors of the Company) as the Board is of the view that the matters which are required to be disclosed in such annual remuneration report have been sufficiently disclosed in this Corporate Governance Report and in the financial statements of the Company.

A breakdown, showing the level and mix of each Director’s remuneration for FY2011 in terms of percentage, is as follows:-



Remuneration Band and Name of Directors

Fixed Salary and

Benefits-in-Kind OthersDirectors’

Fees

Variable or Performance

Related Income/Bonus Total

Below S$250,000Lim Chong Chen 85% - 15% 100%Lim Yee Chuan 78% - 22% 100%Tey Kim Hwee - 38% 62% - 100%Lee Sen Choon - 100% - 100%Wai Chee Leong - 100% - 100%

A breakdown, showing the level and mix of each of the top four (4) key executive’s remuneration for FY2011 in terms of percentage, is as follows:-

Remuneration Band and Name of Key Executives Fixed Salary

Variable or Performance Related

Income/Bonus Total

Below S$250,000Cheh Mei Lee 88% 12% 100%Seng Kwong Seng 94% 4% 100%Chey Long Wan 78% 22% 100%Jang Deok Chun 92% 8% 100%

No employee who is an immediate family member (as defined in the Rules of Catalist) of a Director or the Managing Director was paid more than S$150,000 during FY2011.

ROKKO EMPLOYEE SHARE OPTION SCHEME (“ROKKO ESOS”)

The Rokko ESOS is administered by a Committee (the “Committee”) comprising Mr Tey Kim Hwee, Mr Wai Chee Leong and Mr Lee Sen Choon. The Rokko ESOS is summarised as follows:

• The Committee shall have the absolute discretion to grant the options with a subscription price at no discount, or at a discount of up to a maximum of 20% of the market price, being the average of the last dealt price of the Company’s shares on the Singapore Exchange Securities Trading Limited (“SGX-ST”) on the five (5) market days immediately preceding the date of grant of such options.

• Subject to the rules and such other conditions as may be imposed by the Committee from time to time, the options granted are exercisable in whole or in part at any time:-

(a) after the first anniversary of the date of grant of the option if the subscription price of the option

granted was at market price: and

(b) after the second anniversary of the date of grant of the option if the subscription price of the option granted was at a discount to the market price.



Provided always that an option that is granted to an eligible employee shall be exercised before the tenth anniversary of the date of grant of the option and an option which is granted to a Non-Executive Director (including Independent Director) of the Company or its subsidiaries shall be exercised before the fifth anniversary of the date of grant of that option.

The total number of shares issued and issuable in respect of all options pursuant to Rokko ESOS shall not exceed 15% of the total issued share capital of the Company on the day preceding the relevant date of the option, provided that in relation to controlling shareholder(s) and/or associate(s) of controlling shareholder(s):-

(i) the aggregate number of shares which may be offered by way of grant of options to participants who are controlling shareholder(s) and/or associate(s) of controlling shareholder(s) under the Rokko ESOS shall not exceed 25% of the total number of shares available under the Rokko ESOS; and

(ii) the aggregate number of shares which may be offered by way of grant of options to each participant who is a controlling shareholder or his Associate under the Rokko ESOS shall not exceed 10% of the total number of shares available under the Rokko ESOS.

The Rokko ESOS was approved on 4 September 2008 at an Extraordinary General Meeting of the Company.

ROKKO PERFORMANCE SHARE SCHEME (“ROKKO PSS”)

The Rokko PSS is administered by a committee (the “PSS Committee”) comprising Mr Tey Kim Hwee, Mr Lim Chong Chen, Mr Wai Chee Leong and Mr Lee Sen Choon. The Rokko PSS is summarised as follows:

• The PSS Committee may grant awards which represent the right of a participant to receive fully paid shares free of charge, upon the participant achieving prescribed performance targets and/or when due recognition should be given to any good work performance and/or significant contribution to the Company and/or when the Company decides to pay part of an employee’s annual cash bonus payment in the form of shares.

• The PSS Committee will take into account various factors when determining the method to arrive at the exact number of shares comprised in an award. Such factors include, but are not limited to, the current price of the shares, the total issued share capital of the Company and the pre-determined dollar amount which the PSS Committee decides that a participant deserves for meeting his performance targets. The PSS Committee shall monitor the grant of awards carefully to ensure that the size of the Rokko PSS will comply with the relevant rules of the SGX-ST.

• The total number of shares which may be delivered pursuant to awards granted under the Rokko PSS, when added to the number of shares issued and/or issuable under other share-based incentive schemes of the Company (including the Rokko ESOS), shall not exceed 15% of the issued shares excluding treasury shares of the Company on the day preceding the relevant date of award.

• The aggregate number of shares available to controlling shareholders and their associates (including adjustments made in accordance with the rules of the Rokko PSS) must not exceed 25% of the shares available under the Rokko PSS. The number of shares available to each controlling shareholder or his associate (including adjustments made in accordance with the rules of the Rokko PSS) must also not exceed 10% of the shares available under the Rokko PSS.

The Rokko PSS was approved on 12 April 2010 at an Extraordinary General Meeting of the Company.

No grants have been made under the Rokko ESOS and Rokko PSS (the “Schemes”) since the respective dates of adoption of the Schemes up to the end of FY2011.



ACCOUNTABILITY

PRINCIPLE 10 : The Board should present a balanced and understandable assessment of the company’s performance, position and prospects.

The Management provides the Board with adequate and timely management accounts of the Group’s performance on a regular basis in order to assist the Board in understanding the financial status and performance of the Group and for the Board to effectively discharge its duties. It is the Board’s responsibility to provide Shareholders with a detailed and balanced explanation and analysis of the Company’s performance, position and prospects on a half-yearly basis.

AUDIT COMMITTEE

PRINCIPLE 11 : The Board should establish an Audit Committee with written terms of reference which clearly set out its authority and duties.

Whilst the responsibility for the management and performance of the Group rests with the Board, the AC serves to enhance the corporate governance of the Company. It serves by providing independent input to the Board, as well as by facilitating communication between the Board and the external auditors.

The AC comprises three (3) Non-Executive Directors, Mr Tey Kim Hwee, Mr Lee Sen Choon and Mr Wai Chee Leong. Mr Lee Sen Choon and Mr Wai Chee Leong are Independent Directors. The Chairman of the AC is Mr Lee Sen Choon.

The AC has written terms of reference and its responsibilities include:-

(a) reviewing the audit plan of the external auditors, their management letter and the Management’s response;

(b) reviewing the external auditors’ reports;

(c) reviewing the internal control and procedures and approval of arrangements for all interested person transactions;

(d) ensuring that the internal audit function is adequate, and that review of the effectiveness of material internal controls and risk management is conducted at least annually by the internal and/or external auditors;

(e) reviewing and ensuring the integrity of the financial statements of the Company and its subsidiaries before submission to the Board for approval;

(f) commissioning, reviewing and discussing with the external auditors, any suspected fraud or irregularity, or suspected failure of internal controls, or suspected infringement of any relevant laws, rules or regulations; and

(g) reviewing the independence of the external auditors annually, and recommending to the Board the appointment, re-appointment or removal of the external auditors and approving the remuneration and terms of engagement of the external auditors.

Mr Tey Kim Hwee is a businessman. Mr Lee Sen Choon is a partner at a certified public accounting firm in Singapore and Mr Wai Chee Leong is a director of a law firm. The Board is of the view that the AC has the requisite financial management expertise and experience to discharge its responsibilities.



The AC has explicit authority to investigate any matter within its terms of reference, full access to and co-operation by the Management and discretion to invite any Director or executive officer to attend its meetings, and reasonable resources to enable it to discharge its functions properly.

The AC has recommended to the Board the re-appointment of Mazars LLP as the Company’s external auditors at its forthcoming AGM.

During FY2011, the fees paid by the Company to Mazars LLP and its affiliates for audit and non-audit services amounted to $142,500 and $19,086 respectively. The non-audit services comprised tax compliance services. The AC has reviewed the non-audit services provided by the external auditors and is of the opinion that they would not affect the independence of the external auditors.

The Company has complied with Rules 712 and 715 of the Rules of Catalist in relation to its external auditors.

The AC meets with the external auditors and with the internal auditors (where engaged) at least annually, and without the presence of the Management, if deemed necessary. The AC has reasonable resources to enable it to discharge its function properly.

The AC undertakes such further functions as may be agreed to by the AC and the Board from time to time.

The AC has reviewed arrangements by which the staff of the Company may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters, with the objective of ensuring that arrangements are in place for the independent investigation of such matters for appropriate follow-up action.

INTERNAL CONTROLS

PRINCIPLE 12 : The Board should ensure that the Management maintains a sound system of internal controls to safeguard the shareholders’ investments and the company’s assets.

The Group’s internal controls and systems are designed to provide reasonable assurance as to the integrity and reliability of the financial information and to safeguard and maintain accountability of assets. Procedures are in place to identify major business risks and evaluate potential financial effects, as well as for the authorisation of capital expenditure and investments.

The Board believes that, in the absence of any evidence to the contrary, the system of internal controls maintained by the Management provides reasonable assurance against material financial misstatements or loss, safeguarding of assets, the maintenance of proper accounting records, reliability of financial information, compliance with legislation, regulations and best practices and the identification and management of business risks. The Board, with the concurrence of the AC, is therefore of the view that the system of internal controls and risk management maintained by the Group is adequate to address financial, operational and financial risks of the Group and meet the needs of the Group in its current business environment as well as to safeguard Shareholders’ investments and the Group’s assets.

In addition, the AC reviews the effectiveness of internal and operational controls and risk management on an annual basis. Based on the information provided to the AC, nothing has come to its attention to cause it to believe that the system of internal controls and risk management is inadequate.

The Board notes that no system of internal control can provide absolute assurance against the occurrence of material errors, poor judgment in decision-making, human error, fraud or other irregularities.



INTERNAL AUDIT

PRINCIPLE 13 : The Company should establish an internal audit function that is independent of the activities it audits.

The Company has outsourced the internal audit function to an external professional firm, AT ADLER, to perform the review and test of controls of the Group’s processes. The internal auditors report directly to the chairman of the AC. The AC reviews and approves the annual internal audit plans and reviews the scope and results of the internal audit performed by the internal auditors. The AC will ensure the adequacy of the internal audit function at least annually.

The internal audit was conducted in accordance with the International Standards for the Professional Practice of Internal Auditing set by The Institute of Internal Auditors.

COMMUNICATION WITH SHAREHOLDER

PRINCIPLE 14 : Companies should engage in regular, effective and fair communication with shareholders.

The Company recognises that effective communication leads to transparency and enhances accountability. The Company regularly conveys pertinent information, gathers views or input, and addresses Shareholders’ concerns. In this regard, the Company provides timely information to its Shareholders via the SGXNET announcements and press releases and ensures that price-sensitive information is publicly released where required under the Rules of Catalist, and is announced within the mandatory period. The Company does not practise selective disclosure.

GREATER SHAREHOLDERS PARTICIPATION

PRINCIPLE 15 : Companies should encourage greater shareholder participation at AGMs, and allow shareholders the opportunity to communicate theirs view on various matters affecting the company.

The Company reports its financial results on a half-yearly basis and informs its Shareholders of any major developments that impact the Group promptly through the SGXNET, press releases and the Company’s website.

The Articles of the Company allows a Shareholder to appoint up to two (2) proxies to attend and vote in a shareholders’ meeting. Shareholders are given the opportunity at general meetings to air their views and ask the Directors and the Management questions regarding the Company. The external auditors and members of the AC, NC and RC will be available at such general meetings to address any questions raised by the Shareholders. The Company also ensures that there are separate resolutions at general meetings on each distinct issue.

DEALING IN SECURITIES

In line with Rule 1204(19) of the Rules of Catalist, the Company has adopted policies on dealings in the Company’s securities and made them known to its Directors and officers of the Group, in compliance with the best practices promulgated by the SGX-ST.



All Directors and employees are advised in writing not to deal in the Company’s securities on short term considerations and not to trade in the Company’s securities during the blackout period of one (1) month prior to the Group’s full year or half year results announcements. The Directors and employees are also advised to refrain from trading in the Company’s securities when they are in possession of price-sensitive information which is not available to the public.

RISK MANAGEMENT

The Company does not have a risk management committee. However, the Management regularly reviews the Group’s business and operational activities to identify areas of significant business risks as well as appropriate measures to control and mitigate these risks. The Management reviews all significant control policies and procedures and highlights all significant matters to the Board and the AC.

MATERIAL CONTRACTS

There were no material contracts of the Company or its subsidiaries involving the interest of any Director or controlling Shareholder, either still subsisting at the end of FY2011 or if not then subsisting, entered into since the end of the previous financial year.

INTERESTED PERSON TRANSACTIONS

All interested person transactions are documented and submitted periodically to the AC for review and approval, to ensure such transactions are carried out at arm’s length basis and on normal commercial terms and are not prejudicial to the Company and its minority Shareholders.

The Board will ensure all disclosure, approval and other requirements on interested person transactions, including those required by prevailing legislation, Rules of Catalist and accounting standards are complied with.

The AC has reviewed the interest person transactions entered into during FY2011 and none of these interested person transactions was S$100,000 and more in value. The Company does not have a Shareholders’ mandate for interested person transactions.

USE OF PROCEEDS FROM THE PLACEMENT OF 15 MILLION NEW SHARES AT S$0.14 EACH

Of the S$2.0 million net proceeds raised from the 15 million new shares issued pursuant to a private placement in May 2010, S$1.0 million which was intended to be used for expansion of business in the People’s Republic of China has been re-allocated for use in the expansion of the manufacturing facility in Malaysia.

There is no change in the use of the remaining net proceeds of S$1.0 million for research and development of new products.



The following table shows the net proceeds utilised and unutilised as at 15 March 2012:-

Amount allocated Amount utilised Amount unutilisedS$ S$ S$

Expansion of the manufacturing facility in Malaysia

1,000,000 364,000 636,000

Research and development of new products

1,000,000 1,000,000 Nil

Total 2,000,000 1,364,000 636,000

NON-SPONSOR FEES

No non-sponsor fees were paid to the Company’s sponsor, PrimePartners Corporate Finance Pte. Ltd. during FY2011.



Notice Of Annual General Meeting

ROKKO HOLDINGS LTD.(Incorporated in Singapore)(Company Registration No.: 200309694C)

NOTICE IS HEREBY GIVEN that the Annual General Meeting (“AGM”) of the Company will be held at 61 Kaki Bukit Road 2, Singapore 417869, on Wednesday, 18 April 2012 at 10.00 a.m. for the following purposes:-

ORDINARY BUSINESS

Resolution 11. To receive and adopt the audited accounts for the financial year ended 31 December 2011 (“FY2011”),

together with the Reports of the Directors and the Independent Auditors and the Statement by the Directors.

Resolution 22. To declare a one-tier (tax exempt) first and final dividend of S$0.0025 per ordinary share for FY2011.

Resolution 33. To re-elect Mr Tey Kim Hwee who is retiring by rotation pursuant to Article 104 of the Company’s Articles

of Association (the “Articles”) and who, being eligible, offers himself for re-election as a Director.

Mr Tey Kim Hwee will, upon re-election, remain as a member of the Audit Committee, the Nominating Committee and the Remuneration Committee. He will not be considered Independent for the purposes of Rule 704(7) of the Listing Manual (Section B: Rules of Cantalist of the Singapore Exchange Securities Trading Limited (the “Rules of Catalist”)

Resolution 4 4. To re-elect Mr Lee Sen Choon who is retiring by rotation pursuant to Article 104 of the Articles and

who, being eligible, offers himself for re-election as a Director.

Mr Lee Sen Choon will, upon re-election, remain as the Chairman of the Audit Committee, and a member of the Nominating Committee and the Remuneration Committee. He will be considered independent for the purposes of Rule 704(7) of the Rules of Catalist.

Resolution 55. To approve the payment of Directors’ fees of S$90,000 for FY2011 (FY2010: S$90,000). Resolution 66. To re-appoint Mazars LLP as the Company’s auditors and to authorise the Directors to fix their

remuneration.

7. To transact any other ordinary business that may be properly transacted at an annual general meeting.


SPECIAL BUSINESS

To consider and if thought fit, pass the following resolutions as ordinary resolutions, with or without any modifications:-

Resolution 78. General authority to allot and issue shares

“That pursuant to Section 161 of the Companies Act, Chapter 50 of Singapore, and the Listing Manual (Section B: Rules of Catalist) (the “Rules of Catalist”) of the Singapore Exchange Securities Trading Limited (the “SGX-ST”), authority be and is hereby given to the directors of the Company (the “Directors”) to:-

(A) (i) allot and issue shares in the capital of 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) 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 may in their absolute discretion deem fit; and

(B) (notwithstanding that this authority may have ceased to be in force) issue Shares in pursuance of any Instrument made or granted by the Directors while this authority was in force,

provided that:-

(1) the aggregate number of Shares to be issued pursuant to this authority (including Shares to be issued in pursuance of Instruments made or granted pursuant to this authority) does not exceed one hundred per cent (100%) of the total number of issued Shares (excluding treasury shares) (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of Shares to be issued other than on a pro-rata basis to the existing shareholders of the Company (including Shares to be issued in pursuance of Instruments made or granted pursuant to this authority) does not exceed fifty per cent (50%) of the total number of issued Shares (excluding treasury shares) (as calculated in accordance with sub-paragraph (2) below):-

(2) (subject to such manner of calculation as may be prescribed by the SGX-ST) for the purpose of determining the aggregate number of Shares that may be issued under sub-paragraph (1) above, the percentage of issued Shares shall be based on the total number of issued Shares (excluding treasury shares) at the time this authority is given, after adjusting for:-

(i) new Shares arising from the conversion or exercise of convertible securities;

(ii) new Shares arising from exercising share options or vesting of share awards outstanding or subsisting at the time this authority is given, provided the options or awards were granted in compliance with Part Vlll of Chapter 8 of the Rules of Catalist; and

(iii) any subsequent bonus issue, consolidation or sub-division of Shares;



(3) in exercising the authority conferred by this Resolution, the Directors shall comply with the provisions of the Rules of Catalist for the time being in force (unless such compliance has been waived by the SGX-ST) and the Articles of Association for the time being of the Company; and

(4) (unless revoked or varied by the Company in general meeting) this authority shall continue in force until the conclusion of the next annual general meeting of the Company or the date by which the next annual general meeting of the Company is required by law to be held, whichever is the earlier.”

[See explanatory note (i) below]

Resolution 89. Authority to allot and issue shares pursuant to the Rokko Employee Share Option Scheme

“That pursuant to Section 161 of the Companies Act, Chapter 50 of Singapore, the directors of the Company (the “Directors”) be authorised and empowered to allot and issue shares in the capital of the Company (“Shares”) to all the holders of options granted by the Company, whether granted during the subsistence of this authority or otherwise, under the Rokko Employee Share Option Scheme (the “Option Scheme”) upon the exercise of such options and in accordance with the terms and conditions of the Option Scheme, provided always that the aggregate number of new Shares to be allotted and issued pursuant to the Option Scheme (including options granted under the Option Scheme and any other scheme or plan for the time being of the Company), shall not exceed fifteen per cent (15%) of the total number of issued Shares (excluding treasury shares) from time to time and such authority shall, unless revoked or varied by the Company in general meeting, continue in force until the conclusion of the next annual general meeting or the expiration of the period within which the next annual general meeting is required by law to be held, whichever is earlier.”

[See explanatory note (ii) below]

Resolution 910. Authority to allot and issue shares pursuant to the Rokko Performance Share Scheme

“That pursuant to Section 161 of the Companies Act, Chapter 50 of Singapore, the directors of the Company (the “Directors”) be authorised and empowered to grant awards in accordance with the Rokko Performance Share Scheme (the “Performance Scheme”) and to allot and issue from time to time such number of shares in the capital of the Company (“Shares”) as may be required to be issued pursuant to the vesting of the awards under the Performance Scheme, provided that the aggregate number of Shares to be delivered under the Performance Scheme, when added to the number of Shares issued and issuable in respect of all awards granted under the Performance Scheme and all other Shares issued and issuable under any other share-based incentive schemes of the Company for the time being in force, shall not exceed fifteen per cent (15%) of the total number of issued Shares (excluding treasury shares) from time to time and such authority shall, unless revoked or varied by the Company in general meeting, continue in force until the conclusion of the next annual general meeting or the expiration of the period within which the next annual general meeting is required by law to be held, whichever is earlier.”

[See explanatory note (iii) below]



Resolution 1011. Renewal of share purchase mandate

“That:-(a) for the purposes of Sections 76C and 76E of the Companies Act, Chapter 50 of Singapore (the

“Companies Act”), the exercise by the directors of the Company (the “Directors”) of all the powers of the Company to purchase or otherwise acquire ordinary shares in the issued capital of the Company (“Shares”) not exceeding in aggregate the Prescribed Limit (as hereafter defined), at such price or prices as may be determined by the Directors from time to time up to the Maximum Price (as hereafter defined), whether by way of:-

(i) market purchases (each a “Market Purchase”) on the Singapore Exchange Securities Trading Limited (the “SGX-ST”) transacted through the Quotation and Execution System for Trading (QUEST-ST) (the trading system that has replaced the Central Limit Order Book (CLOB) trading system), through one or more duly licensed stockbrokers appointed by the Company for the purpose; and/or

(ii) off-market purchases (each an “Off-Market Purchase”) effected otherwise than on the SGX-ST in accordance with any equal access scheme as may be determined or formulated by the Directors as they consider fit, such scheme shall satisfy all the conditions prescribed by the Companies Act,

and otherwise in accordance with all other laws, regulations and rules of the SGX-ST as may for the time being be applicable, be and is hereby authorised and approved generally and unconditionally (the “Share Purchase Mandate”);

(b) the authority conferred on the Directors pursuant to the Share Purchase Mandate may be exercised by the Directors at any time and from time to time during the period commencing from the passing of this Resolution and expiring on the earliest of:-

(i) the date on which the next annual general meeting of the Company is held or required by law to be held;

(ii) the date on which Share purchases have been carried out to the full extent of the Share Purchase Mandate; or

(iii) the date on which the authority contained in the Share Purchase Mandate is varied or revoked by an ordinary resolution of shareholders of the Company in general meeting;

(c) in this Resolution:-

“Prescribed Limit” means ten per cent (10%) of the issued Shares as at the date of the passing of this Resolution; and

“Maximum Price” in relation to a Share to be purchased, means an amount (excluding brokerage, commissions, stamp duties, applicable goods and services tax and other related expenses) not exceeding:-

(i) in the case of a Market Purchase: 105 per cent (105%) of the Average Closing Price; and

(ii) in the case of an Off-Market Purchase: 120 per cent (120%) of the Highest Last Dealt Price,



where:-

“Average Closing Price” is the average of the closing market prices of a Share over the last five (5) Market Days, on which transactions in the Shares were recorded, preceding the day of the Market Purchase, and deemed to be adjusted for any corporate action that occurs after such five-day market period;

“Highest Last Dealt Price” means the highest price transacted for a Share as recorded on the Market Day on which there were trades in the Shares immediately preceding the day of the making of the offer pursuant to the Off-Market Purchase;

“day of the making of the offer” means the day on which the Company announces its intention to make an offer for the purchase of Shares from shareholders of the Company stating the purchase price (which shall not be more than the Maximum Price calculated on the foregoing basis) for each Share and the relevant terms of the equal access scheme for effecting the Off-Market Purchase;

“Market Day” means a day on which the SGX-ST is open for trading in securities; and

(d) the Directors be and are hereby authorised to complete and do all such acts and things (including executing such documents as may be required) as they may consider expedient or necessary to give effect to the transactions contemplated by this Resolution.

[See explanatory note (iv) below]

BY ORDER OF THE BOARD

VINCENT LIM BOCK HUICOMPANY SECRETARY

Singapore2 April 2012

Explanatory Notes:-

(i) Under the Rules of Catalist, a share issue mandate approved by shareholders as a ordinary resolution will enable directors of an issuer to issue an aggregate number of new shares and convertible securities of the issuer of up to 100% of the issued share capital of the issuer (excluding treasury shares) as at the time of passing of the resolution approving the share issue mandate, of which the aggregate number of new shares and convertibles securities issued other than on a pro-rata basis to existing shareholders must be not more than 50% of the issued share capital of the issuer (excluding treasury shares).

The Directors are of the opinion that the proposed share issue mandate will enable the Company to respond faster to business opportunities and to have greater flexibility and scope in negotiating with third parties in potential fund raising exercises or other arrangements or transactions involving the capital of the Company.

Ordinary Resolution 7, if passed, will empower the Directors from the date of the above AGM until the date of the next annual general meeting, to allot and issue Shares and/or Instruments. The aggregate number of Shares (including Shares to be issued in pursuance of Instruments made or granted) which



the Directors may allot and issue under this Resolution, shall not exceed 100% of the total number of issued Shares (excluding treasury shares). For issues of Shares and convertible securities other than on a pro-rata basis to all shareholders, the aggregate number of Shares and convertible securities to be issued shall not exceed 50% of the total number of issued Shares (excluding treasury shares). This authority will, unless previously revoked or varied at a general meeting, expire at the next annual general meeting of the Company or the date by which the next annual general meeting of the Company is required by law to be held, whichever is earlier. However, notwithstanding the cessation of this authority, the Directors are empowered to issue Shares pursuant to any convertible securities issued under this authority.

(ii) Ordinary Resolution 8, if passed, will authorise the Directors to offer and grant options in accordance with the provisions of the Option Scheme and to allot and issue Shares up to a number not exceeding 15% of the total number of issued Shares (excluding treasury shares) from time to time.

(iii) Ordinary Resolution 9, if passed, will empower the Directors to grant awards under the Performance Scheme and to allot and issue Shares pursuant to the vesting of the awards under the Performance Scheme, provided that the aggregate number of Shares to be delivered under the Performance Scheme, when added to the number of Shares issued and issuable in respect of all awards granted under the Performance Scheme and all other Shares issued and issuable under any other share-based incentive schemes of the Company for the time being in force, shall not exceed 15% of the total number of issued Shares (excluding treasury shares) from time to time.

(iv) Ordinary Resolution 10, if passed, will renew the mandate to permit the Company to purchase or

otherwise acquire its issued Shares on the terms and subject to the conditions of the Resolution. Further details are set out in the letter to shareholders which is enclosed with the Company’s Annual Report, as an Appendix.

Notes:-

(1) A member of the Company entitled to attend and vote at the AGM may appoint not more than two (2) proxies to attend and vote instead of him.

(2) Where a member appoints two (2) proxies, he shall specify the proportion of his shareholding to be represented by each proxy in the instrument appointing the proxies. A proxy need not be a member of the Company.

(3) If the member is a corporation, the instrument appointing the proxy must be under seal or the hand of an officer or attorney duly authorised.

(4) The instrument appointing a proxy must be deposited at the Company’s registered office at 61 Kaki Bukit Road 2, Singapore 417869 not less than 48 hours before the time appointed for holding the AGM.



NOTICE IS HEREBY GIVEN that the share transfer book and register of members of Rokko Holdings Ltd. (the “Company”) will be closed on 9 May 2012 for the purpose of determining members’ entitlements to the proposed one-tier (tax exempt) first and final dividend of S$0.0025 per ordinary share for the financial year ended 31 December 2011 (the “Proposed Dividend”).

Duly completed registrable transfers received by the Company’s share registrar, Boardroom Corporate & Advisory Services Pte. Ltd. at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore 048623 up to 5.00 p.m. on 8 May 2012 will be registered to determine members’ entitlements to the Proposed Dividend.

Members (being depositors) whose securities accounts with The Central Depository (Pte) Limited are credited with shares as at 5.00 p.m. on 8 May 2012 will be entitled to the Proposed Dividend.

The Proposed Dividend, if approved at the Company’s Annual General Meeting to be held on 18 April 2012, will be paid on or about 29 May 2012.

By Order of the Board

VINCENT LIM BOCK HUICOMPANY SECRETARY

Singapore2 April 2012

Notice of Book Closure


PROPOSED RENEWAL OF THE SHARE PURCHASE MANDATE

1. Introduction

Shareholders had approved a mandate (the “Share Purchase Mandate”) at the extraordinary general meeting held on 21 November 2008 to enable the Company to purchase or otherwise acquire issued ordinary shares in the capital of the Company (“Shares”). The Share Purchase Mandate is subject to annual renewal and was last renewed at the annual general meeting held on 8 April 2011. The authority conferred on the directors of the Company (the “Directors”) under the current Share Purchase Mandate will expire at the forthcoming annual general meeting to be held on 18 April 2012 (“AGM2012”).

Accordingly, the Directors propose to seek the approval of shareholders of the Company (“Shareholders”) for the further renewal of the Share Purchase Mandate. The purpose of this letter (the “Letter”) is to provide Shareholders with information in relation to the renewal of the Share Purchase Mandate.

2. Rationale for the Renewal of Share Purchase Mandate

The rationale for the Company to undertake the renewal of the Share Purchase Mandate is that it would give the Company the flexibility to undertake purchases of its Shares at any time, subject to market conditions, during the period when the Share Purchase Mandate is in force. Share purchases provide the Company with a mechanism to facilitate the return of surplus cash over and above its ordinary capital requirements, in an expedient and cost-efficient manner. The renewed Share Purchase Mandate will also allow the Directors to exercise greater control over the Company’s share capital structure, dividend payout and cash reserves, with a view to enhancing the net tangible assets and/or earnings per Share.

The purchase of Shares will only be undertaken if the Directors believe that it can benefit the Company and Shareholders. Shareholders should note that purchases of Shares pursuant to the renewed Share Purchase Mandate may not be carried out to the full 10% limit as authorised. No purchase of Shares will be made in circumstances, which would have or may have a material adverse effect on the liquidity and capital of the Company and the Group.

3. Authority and Limits of the Renewed Share Purchase Mandate

The authority and limitations placed on purchases of Shares by the Company under the renewed Share Purchase Mandate, if renewed at the AGM2012, are summarised below:-

(a) Maximum Number of Shares

The Company may purchase only Shares, which are issued and fully paid-up. The total number of Shares that may be purchased or acquired is limited to that number of Shares representing not more than 10% of the issued Shares as at the date of the AGM2012 at which the resolution renewing the Share Purchase Mandate is proposed to be passed (the “Approval Date”). Shares, which are held as treasury shares, will be disregarded for purposes of computing the 10% limit. For illustrative purpose, as at 15 March 2012 (the “Latest Practicable Date”), the Company had 158,286,000 issued Shares (excluding 6,714,000 treasury shares) and thus up to 15,828,600 issued Shares may be purchased by the Company, assuming that the number of issued Shares (excluding treasury shares) of the Company remains unchanged up to the date of the AGM2012.

Appendix


Appendix

(b) Duration of Authority

Purchases of Shares may be made, at any time and from time to time, from the Approval Date up to the earliest of:-

(i) the date on which the next annual general meeting of the Company is held or required by law to be held;

(ii) the date on which Share purchases have been carried out to the full extent of the renewed Share Purchase Mandate; or

(iii) the date on which the authority contained in the renewed Share Purchase Mandate is varied or revoked by an ordinary resolution of Shareholders in a general meeting.

(c) Manner of Purchase

Purchases of Shares may be made on the Singapore Exchange Securities Trading Limited (the “SGX-ST”) (“Market Purchases”) and/or otherwise than on the SGX-ST, in accordance with an equal access scheme (“Off-Market Purchases”) as defined in Section 76C(6) of the Companies Act, Chapter 50 of Singapore (“Companies Act”).

Market Purchases refer to purchases of Shares by the Company effected on the SGX-ST through the Quotation and Execution System for Trading (Quest-ST), the trading system that has replaced Central Limit Order Book (CLOB) trading system, through one or more duly licensed stockbrokers appointed by the Company for the purpose.

Off-Market Purchases refer to purchases of Shares by the Company made under an equal access scheme or schemes for the purchase of Shares from Shareholders. The Directors may impose such terms and conditions, which are not inconsistent with the renewed Share Purchase Mandate and the Companies Act, as they consider fit in the interests of the Company in connection with or in relation to an equal access scheme or schemes. Under the Companies Act, an equal access scheme must satisfy all the following conditions:-

(i) offers for the purchase of issued shares shall be made to every person who holds issued shares to purchase the same percentage of their issued shares;

(ii) all of those persons shall be given a reasonable opportunity to accept the offers made; and

(iii) the terms of all the offers are the same, except that there shall be disregarded:-

(aa) differences in consideration attributable to the fact that offers may relate to shares with different accrued dividend entitlements;

(bb) (if applicable) differences in consideration attributable to the fact that offers relate to shares with different amounts remaining unpaid; and

(cc) differences in the offers introduced solely to ensure that each person is left with a whole number of shares.


In addition, the Listing Manual (Section B: Rules of Catalist) of the SGX-ST (“Catalist Rules”), provides that, in making an Off-Market Purchase, the Company must issue an offer document to all Shareholders, which must contain at least the following information:-

(i) the terms and conditions of the offer;

(ii) the period and procedures for acceptances;

(iii) the reasons for the proposed share purchase;

(iv) the consequences, if any, of share purchases by the Company that will arise under the Singapore Code on Take-overs and Mergers (the “Take-over Code”) or other applicable take-over rules;

(v) whether the share purchase, if made, would have any effect on the listing of the Shares on the SGX-ST;

(vi) details of any share purchases made by the Company in the previous 12 months (whether Market Purchases or Off-Market Purchases), giving the total number of Shares purchased, the purchase price per Share or the highest and lowest prices paid for the purchases, where relevant, and the total consideration paid for the purchases; and

(v) whether the Shares purchased by the Company will be cancelled or kept as treasury shares.

(d) Maximum Purchase Price

The purchase price (excluding brokerage, stamp duties, commissions, applicable goods and services tax and other related expenses) to be paid for the Shares will be determined by the Directors.

However, the purchase price must not exceed:-

(i) in the case of a Market Purchase, 105% of the Average Closing Price (as defined below); and

(ii) in the case of an Off-Market Purchase pursuant to an equal access scheme, 120% of the Highest Last Dealt Price (as defined below),

(the “Maximum Price”) in either case, excluding related expenses of the purchase.

For the above purposes:-

“Average Closing Price” means the average of the closing market prices of a Share over the last 5 Market Days on which transactions in Shares were recorded, preceding the day of the Market Purchase, and deemed to be adjusted for any corporate action that occurs after such five-day market period;

“Highest Last Dealt Price” means the highest price transacted for a Share as recorded on the Market Day on which there were trades in Shares immediately preceding the day of the making of the offer pursuant to the Off-Market Purchase;

Appendix


“day of the making of the offer” means the day on which the Company announces its intention to make an offer for the purchase of Shares from Shareholders, stating the purchase price (which shall not be more than the Maximum Price calculated on the foregoing basis) for each Share and the relevant terms of the equal access scheme for effecting the Off-Market Purchase; and

“Market Day” means a day on which the SGX-ST is open for trading in securities. 4. Status of Purchased Shares

Any Share which is purchased by the Company is deemed cancelled immediately on purchase (and all rights and privileges attached to that Share will expire on cancellation) unless such Share is held by the Company as a treasury share. Accordingly, the total number of issued Shares will be diminished by the number of Shares purchased by the Company and which are not held as treasury shares.

Under the Companies Act, Shares purchased by the Company may be held or dealt with as treasury shares. According to the key provisions on treasury shares under the Companies Act:-

(a) Maximum Holdings

The number of Shares held as treasury shares cannot at any time exceed 10% of the total number of issued Shares.

(b) Voting and other Rights

The Company will not have the right to attend or vote at meetings and/or to receive any dividends in respect of treasury shares. However, the allotment of treasury shares as fully paid bonus shares is allowed. Also, a subdivision or consolidation of any treasury share into treasury shares of a smaller amount is allowed so long as the total value of the treasury shares after the subdivision or consolidation is the same as before.

(c) Disposal and Cancellation

The Company may dispose of treasury shares at any time in the following ways:-

(i) selling the treasury shares for cash;

(ii) transferring the treasury shares for the purposes of or pursuant to an employees’ share scheme;

(iii) transferring the treasury shares as consideration for the acquisition of shares in or assets of another company or assets of a person;

(iv) cancelling the treasury shares; or

(v) selling, transferring or otherwise using the treasury shares for such other purposes as may be prescribed by the Minister for Finance.

At the time of each purchase of Shares by the Company, the Directors will decide whether the Shares purchased will be cancelled or kept as treasury shares, or partly cancelled and partly kept as treasury shares, depending on the needs of the Company at that time.

Appendix


5. Source of Funds

Any purchase of Shares may be made out of the Company’s distributable profits that are available for payment as dividends. The Companies Act also permits the Company to purchase its Shares out of capital, provided that:-

(a) the Company is able to pay its debts in full at the time it purchases the Shares and will be able to pay its debts as they fall due in the normal course of business in the 12 months immediately following the purchase; and

(b) the value of the Company’s assets is not less than the value of its liabilities (including contingent liabilities) and will not after the purchase of Shares become less than the value of its liabilities (including contingent liabilities).

The Company will use internal sources of funds, or a combination of internal resources and external borrowings, to finance purchases of its Shares.

6. Financial Effects

It is not possible for the Company to realistically calculate or quantify the impact of purchases that may be made pursuant to the renewed Share Purchase Mandate on the net tangible asset value and earnings per Share as the resultant effect would depend on factors such as the aggregate numbers of Shares purchased, the purchase prices paid at the relevant times, whether the Shares purchased are held in treasury or immediately cancelled on purchase, how the Shares held in treasury are subsequently dealt with by the Company in accordance with Section 76K of the Companies Act, and the amounts (if any) borrowed by the Company to fund the purchases.

Where the purchase of Shares is made out of distributable profits, such purchase (including costs incidental to the purchase) will correspondingly reduce the amount available for the distribution of cash dividends by the Company.

Where the purchase of Shares is made out of capital, the amount available for the distribution of cash dividends by the Company will not be reduced.

Where the purchase of Shares is financed through internal resources, it will reduce the cash reserves of the Group and the Company, and thus the current assets and shareholders’ funds of the Group and the Company. This will result in an increase in the gearing ratios of the Group and the Company and a decline in the current ratios of the Group and the Company. The actual impact on the gearing and current ratios will depend on the number of Shares purchased and the prices at which the Shares are purchased.

Where the purchase of Shares is financed through external borrowings or financing, there would be an increase in the gearing ratios of the Group and the Company, and a decline in the current ratios and shareholders’ funds of the Group and the Company, with the actual impact dependent on the number of Shares purchased and the prices at which the Shares are purchased.

Appendix


For illustrative purposes only and on the basis of the following assumptions:-

(a) that the purchase by the Company of 9,786,000 Shares, being the number of Shares which the Company may purchase and hold as additional treasury shares, was made on 31 December 2011;

(b) that the Company purchased the Shares via Market Purchases at the Maximum Price of $0.0935 for each Share (being 105% of the Average Closing Price as at 31 December 2011); and

(c) that the purchase of the Shares by the Company, which required funds amounting to $915,000, was financed entirely using its internal sources of funds,

the financial effects of Share purchases by the Company pursuant to the renewed Share Purchase Mandate on the audited consolidated financial statements of the Group for the financial year ended 31 December 2011 (“FY2011”), are set out below.

Appendix


Scenario 1

Purchase of 9,786,000 Shares by the Company pursuant to the renewed Share Purchase Mandate made entirely out of capital and held as treasury shares

Group CompanyBefore Share

PurchaseAfter Share Purchase

Before Share Purchase

After Share Purchase

As at 31 December 2011 S$’000 S$’000 S$’000 S$’000

Share capital 12,442 12,442 12,442 12,442Revenue reserves (distributable)(1) 16,206 16,206 1,160 1,160Statutory reserves (942) (942) - -Revaluation surplus 923 923 - -Treasury shares(1) (712) (1,627) (712) (1,627)Shareholders’ funds 27,917 27,002 12,890 11,975Net tangible assets(2) 26,729 25,814 12,890 11,975Current assets 34,041 33,126 6,005 5,090Current liabilities 25,687 25,687 201 201Working capital 8,354 7,439 5,804 4,889Total liabilities 39,712 39,712 221 221Cash and cash equivalents 9,629 8,714 636 (279)Number of Shares (‘000) 165,000 165,000 165,000 165,000

Financial RatiosNet tangible assets per Share(2) (cents) 16.20 15.64 7.81 7.26Earnings per Share(3) (cents) 2.13 2.13 N.A. N.A.Gearing ratio(4) (times) 1.01 1.04 N.A. N.A.Current ratio(5) (times) 1.33 1.29 29.88 25.32

Notes:-

(1) Treasury shares arising from Share purchases made out of capital are presented as a debit balance in equity. For Share purchases made out of capital and held as treasury shares, the revenue reserve balance that is distributable after the Share purchases is not affected.

(2) Net tangible assets equal total net assets less deferred expenditure and other intangible assets.

(3) For the earnings per Share computation, treasury shares are excluded from the weighted average number of Shares in issue. The weighted average number of Shares used in the computation of earnings per Share is as follows:-

Group and CompanyBefore Share Purchase After Share Purchase

Weighted average number of Shares 159,314,562 159,289,590

(4) Gearing ratio equals total borrowings divided by shareholders’ funds.

(5) Current ratio equals current assets divided by current liabilities.

Appendix


Scenario 2

Purchase of 9,786,000 Shares by the Company pursuant to the renewed Share Purchase Mandate made entirely out of profits and held as treasury shares

Group CompanyBefore Share

PurchaseAfter Share Purchase

Before Share Purchase

After Share Purchase

As at 31 December 2011 $’000 $’000 $’000 $’000

Share capital 12,442 12,442 12,442 12,442Revenue reserves (distributable)(1) 16,206 16,206 1,160 1,160Statutory reserves (942) (942) - -Revaluation surplus 923 923 - -Treasury shares(1) (712) (1,627) (712) (1,627)Shareholders’ funds 27,917 27,002 12,890 11,975Net tangible assets(2) 26,729 25,814 12,890 11,975Current assets 34,041 33,126 6,005 5,090Current liabilities 25,687 25,687 201 201Working capital 8,354 7,439 5,804 4,889Total liabilities 39,712 39,712 221 221Cash and cash equivalents 9,629 8,714 636 (279)Number of Shares (‘000) 165,000 165,000 165,000 165,000

Financial RatiosNet tangible assets per Share(2) (cents) 16.20 15.64 7.81 7.26Earnings per Share(3) (cents) 2.13 2.13 N.A. N.A.Gearing ratio(4) (times) 1.01 1.04 N.A. N.A.Current ratio(5) (times) 1.33 1.29 29.88 25.32

Notes:-

(1) (a) For Share purchases made out of profits, the amount of revenue reserve that is available for distribution as dividends after the Share purchases is $15,291,000 and $245,000 at the Group and Company levels, respectively, which are arrived at after deducting $915,000 being the cost of the Share purchases made out of profits and held as treasury shares.

(b) Prior to the Share purchases made out of profits and held as treasury shares, the Company will endeavour that sufficient dividends are declared and paid by its subsidiaries to the Company to enable the Company to purchase its shares out of profits.

(2) Net tangible assets equal total net assets less deferred expenditure and other intangible assets.

(3) For the earnings per Share computation, treasury shares are excluded from the weighted average number of Shares in issue. The weighted average number of Shares used in the computation of earnings per Share is as follows:-

Group and CompanyBefore Share Purchase After Share Purchase

Weighted average number of Shares 159,314,562 159,289,590

(4) Gearing ratio equals total borrowings divided by shareholders’ funds.

(3) Current ratio equals current assets divided by current liabilities.

Appendix


Shareholders should note that the financial effects set out in this Section 6 are purely for illustrative purposes only. In particular, it is important to note that the above analysis is based on historical FY2011 numbers and are in no way indicative of the Company’s real financial position or a forecast of the Company’s financial figures.

The Company will take into account both financial and non-financial factors (for example, share market conditions and the performance of the Shares) in assessing the relative impact of a Share purchase before execution.

7. Catalist Rules

Under the Catalist Rules, a listed company may purchase shares by way of Market Purchases at a price per share which is not more than 5% above the average of the closing market prices of the shares over the last 5 Market Days, on which transactions in the shares were recorded, before the day on which the purchases were made and deemed to be adjusted for any corporate action that occurs after the relevant 5-day period. The Maximum Price for a Share in relation to Market Purchases by the Company, referred to in Section 3(d) above, conforms to this restriction.

The Catalist Rules specify that a listed company shall report all purchases or acquisitions of its shares to the SGX-ST not later than 9.00 a.m. (a) in the case of a Market Purchase, on the Market Day following the day of purchase or acquisition of any of its shares and (b) in the case of an Off-Market Purchase under an equal access scheme, on the second Market Day after the close of acceptances of the offer. Such announcement must include details of the date of the purchases of the shares, the total number of shares purchased, the number of shares cancelled, the number of shares held as treasury shares, the purchase price per share or the highest and lowest prices paid for such shares (as applicable), the total consideration (including stamp duties and clearing charges) paid or payable for the shares, and the cumulative number of shares purchased. Such announcement will be made in the form prescribed by the Catalist Rules.

While the Catalist Rules do not expressly prohibit any purchase of shares by a listed company during any particular time or times, because the listed company would be regarded as an “insider” in relation to any proposed purchase of its issued shares, the Company will not undertake any purchase of Shares pursuant to the renewed Share Purchase Mandate at any time after a price sensitive development has occurred or has been the subject of a decision until the price sensitive information has been publicly announced. In particular, in observing the best practices recommended in the Catalist Rules on securities dealings, the Company will not purchase any Shares through Market Purchases during the period of 1 month immediately preceding the announcement of the Company’s half year and full year results, as the case may be, and ending on the date of announcement of the relevant results.

8. Listing Status on the SGX-ST

The Company is required under Rule 723 of the Catalist Rules to ensure that at least 10% of its issued Shares (excluding treasury shares) are in the hands of the public. The “public”, as defined in the Catalist Rules, are persons other than the Directors, Chief Executive Officer (or, in the case of the Company, the Managing Director), substantial Shareholders and controlling Shareholders of the Company and its subsidiaries, as well as the associates (as defined in the Catalist Rules) of such persons.

As at the Latest Practicable Date, there were approximately 42,429,220 issued Shares in the hands of the public (as defined above), representing 26.81% of the total number of issued Shares (excluding treasury shares) of the Company. Assuming that the Company purchases 15,828,600 Shares, which represents the full 10% limit pursuant to the renewed Share Purchase Mandate, through Market Purchases and holds 9,786,000 of such Shares as treasury shares while cancelling the remaining 6,042,600 Shares, the number of issued Shares in the hands of the public would be reduced to

Appendix


26,600,620 Shares, representing 18.67% of the total number of issued Shares (excluding treasury shares) of the Company. As at the Latest Practicable Date, the Company held 6,714,000 treasury shares.

Under the Companies Act, in the event that the number of Shares held as treasury shares by the Company at any time exceeds 10% of the total number of issued Shares at that time, the Company shall dispose of or cancel the excess treasury shares within 6 months.

In view of the foregoing, the Company is of the view that there is, at present, a sufficient number of Shares in public hands that would permit the Company to potentially undertake purchases of its Shares through Market Purchases up to the full 10% limit pursuant to the renewed Share Purchase Mandate without:-

(a) affecting adversely the listing status of the Shares on the SGX-ST;

(b) causing market illiquidity; or

(c) affecting adversely the orderly trading of Shares.

9. Tax Implications

Where the Company uses its Distributable Profits for Share Purchases

Under Section 10J of the Income Tax Act, Chapter 134 (the “Income Tax Act”), a company which purchases its own shares using its distributable profits is deemed to have paid a dividend to the shareholders from whom the shares are acquired.

As the Company is under the one-tier corporate tax system, the provisions under Section 44 of the Income Tax Act do not apply to the Company. That is, the Company does not need to provide for the franking of dividends for any Share purchase made.

The tax treatment of the receipt from a Share purchase in the hands of the Shareholders will depend on whether the disposal arises from a Market Purchase or an Off-Market Purchase. Proceeds received by Shareholders who sell their Shares to the Company in Market Purchases will be treated for income tax purposes like any other disposal of shares made on the SGX-ST and not as dividends. Whether or not such proceeds are taxable in the hands of such Shareholders will depend on whether such proceeds are receipts of an income or capital nature. Proceeds received by Shareholders who sell their Shares to the Company in an Off-Market Purchase effected by way of an equal access scheme will be treated for income tax purposes as receipts of dividends.

Where the Company uses its Contributed Capital for the Share Purchases

Under Section 10J of the Income Tax Act, a company which purchases its own shares using its contributed capital is not deemed to have paid a dividend to its shareholders from whom the shares are acquired.

Proceeds received by Shareholders who sell their Shares to the Company for which the purchases were made out of contributed capital will be treated for income tax purposes like any other disposal of shares made on the SGX-ST and not as dividends. Whether or not such proceeds are taxable in the hands of such Shareholders will depend on whether such proceeds are receipts of an income or capital nature.

Shareholders should note that the foregoing is not to be regarded as advice on the tax position of any Shareholder. Shareholders who are in doubt as to their respective tax positions or the tax implications

Appendix


of Share purchases by the Company, or, who may be subject to tax whether in or outside Singapore, should consult their own professional advisers.

10. Implications of Take-over Code

If as a result of any purchase or acquisition by the Company of its Shares, a Shareholder’s proportionate interest in the voting capital of the Company increases, such increase will be treated as an acquisition for the purposes of the Take-over Code. If such increase results in a change in control, or as a result of such increase a Shareholder or group of Shareholders acting in concert obtain or consolidate control, it may in certain circumstances give rise to an obligation on the part of such Shareholder or Shareholders to make a take-over offer under Rule 14 of the Take-over Code.

The circumstances under which Shareholders, including Directors and persons acting in concert with them respectively will incur an obligation to make a take-over offer under Rule 14 after a purchase of Shares by the Company are set out in Appendix 2 (“TOC Appendix 2”) of the Take-over Code.

In relation to the Directors and persons acting in concert with them, Rule 14 of the Take-over Code provides that unless exempted (or if exempted, such exemption is subsequently revoked), Directors and persons acting in concert with them will incur an obligation to make a take-over offer if, as a result of a purchase of Shares by the Company:-

(a) the percentage of voting rights held by such Directors and their concert parties in the Company increases to 30% or more; or

(b) if they together hold between 30% and 50% of the Company’s voting rights, their voting rights increase by more than 1% in any period of 6 months.

Under TOC Appendix 2, a Shareholder not acting in concert with the Directors will not be required to make a take-over offer under Rule 14 of the Take-over Code if, as a result of the Company purchasing its Shares, the voting rights of such Shareholder would increase to 30% or more, or, if such Shareholder holds between 30% and 50% of the Company’s voting rights, the voting rights of such Shareholder would increase by more than 1% in any period of 6 months. Such Shareholder need not abstain from voting in respect of the resolution authorising the renewed Share Purchase Mandate.

Under the Take-over Code, persons acting in concert comprise individuals or companies who, pursuant to an agreement or understanding (whether formal or informal) co-operate, through the acquisition by any of them of shares in a company to obtain or consolidate control of that company. Unless the contrary is established, the following persons, inter alia, will be presumed to be acting in concert: (i) a company with any of its directors; and (ii) a company, its parent, subsidiaries and fellow subsidiaries, and their associated companies, and companies of which such companies are associated companies, all with each other. For this purpose, ownership or control of 20% or more of the equity share capital of a company will be regarded as the test of associated company status.

As at the Latest Practicable Date, Mr Lim Chong Chen, the Managing Director and controlling Shareholder of the Company, held 71.05% of the voting rights of the Company and therefore would not be obliged to make a take-over offer under Rule 14 of the Take-over Code as a result of any purchase of Shares by the Company under the renewed Share Purchase Mandate.

Shareholders who are in doubt as to whether they would incur any obligation to make a take-over offer as a result of any purchase of Shares by the Company pursuant to the renewed Share Purchase Mandate are advised to consult their professional advisers and/or the Securities Industry Council and/or other relevant authorities at the earliest opportunity.

Appendix


11. Reporting Requirements under the Companies Act

Within 30 days of the passing of the Shareholders’ resolution to renew the Share Purchase Mandate, the Directors shall lodge a copy of such resolution with the Registrar of Companies (the “Registrar”).

The Directors shall lodge with the Registrar a notice of Share purchase within 30 days of a Share purchase. Such notification shall include the date of the purchase, the number of Shares purchased by the Company, the number of Shares cancelled, the number of Shares held as treasury shares, the Company’s issued share capital before and after the purchase, the amount of consideration paid by the Company for the purchase and such other particulars as may be required in the prescribed form.

Within 30 days of the cancellation or disposal of treasury shares in accordance with the provisions of the Companies Act, the Directors shall lodge with the Registrar the notice of cancellation or disposal of treasury shares in the prescribed form.

12. Share Purchases in the Previous 12 Months

1,714,000 Shares had been purchased by the Company in the 12 months preceding the Latest Practicable Date by way of Market Purchases at prices per Share ranging from $0.10 to $0.135, and the total consideration paid for the purchases (including brokerage and other charges) amounted to approximately $186,913. These 1,714,000 Shares are held as treasury shares of the Company.

13. Directors’ and Substantial Shareholders’ Interests

The interests of the Directors and substantial Shareholders in the share capital of the Company as at the Latest Practicable Date are, as follows:-

Direct Deemed InterestNumber of Shares % Number of Shares %

DirectorsTey Kim Hwee 1,225,560 0.77 - -Lim Chong Chen 112,460,260 71.05 - -Lim Yee Chuan 450,000 0.28 - -Lee Sen Choon 50,000 0.03 - -Wai Chee Leong 50,000 0.03 - -

Substantial Shareholders (other than Directors)- - - - -

14. Approval and Resolution

Shareholders’ approval for the proposed renewal of the Share Purchase Mandate is sought at the AGM2012. The resolution relating to the proposed renewal of the Share Purchase Mandate is set out in the Notice of AGM as Ordinary Resolution 10.

15. Directors’ Recommendations

Having fully considered the rationale for the renewal of the Share Purchase Mandate set out in this Letter, the Directors believe that the renewal of the Share Purchase Mandate is in the best interests of the Company. The Directors recommend that Shareholders vote in favour of Ordinary Resolution 10 to renew the Share Purchase Mandate to be proposed at the AGM2012.

Appendix


16. Directors’ Responsibility Statement

This Letter has been seen and approved by all Directors who collectively and individually accept full responsibility for the accuracy of the information given in this Letter and confirm, after having made all reasonable enquiries, that to the best of their knowledge and belief, this Letter constitutes full and true disclosure of all material facts about the proposed renewal of Share Purchase Mandate, the Company and its subsidiaries, and the Directors are not aware of any facts the omission of which would make any statement in this Letter misleading. Where information in the Letter has been extracted from published or otherwise publicly available sources or obtained from a named source, the sole responsibility of the Directors has been to ensure that such information has been accurately and correctly extracted from those sources and/or reproduced in the Letter in its proper form and context.

17. Advice to Shareholders

Shareholders, who are in doubt as to the action they should take should consult their stockbroker, bank manager, solicitor, accountant or other professional advisers immediately.

Appendix


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ROKKO HOLDINGS LTD.(Incorporated in the Republic of Singapore) (Company Registration No. 200309694C)

ANNUAL GENERAL MEETINGPROXY FORM

I/We ___________________________________________________________________________________________ (Name)

of ___________________________________________________________________________________________ (Address)

being a member/members of ROKKO HOLDINGS LTD. (the “Company”) hereby appoint:-

Name Address NRIC / Passport Number

Proportion of Shareholdings (%)

and/or (delete as appropriate)

Name Address NRIC / Passport Number

Proportion of Shareholdings (%)

as my/our proxy/proxies to attend and to vote for me/us on my/our behalf, at the Annual General Meeting (“AGM”) of the Company to be held at 61 Kaki Bukit Road 2, Singapore 417869 on Wednesday, 18 April 2012 at 10.00 am and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the resolutions to be proposed at the AGM as indicated hereunder. If no specific direction as to voting is given, the proxy/proxies will vote or abstain from voting at his/her/their discretion, as he/she/they will on any other matter arising at the AGM and at any adjournment thereof.

No. Resolutions relating to:- For AgainstOrdinary Business

1. Audited Accounts for the financial year ended 31 December 2011 (“FY2011”) together with Reports of Directors and Independent Auditors and Statement by the Directors

2. First and final dividend of S$0.0025 per ordinary share for FY20113. Re-election of Mr Tey Kim Hwee as a Director of the Company 4. Re-election of Mr Lee Sen Choon as a Director of the Company5. Payment of Directors’ fees of S$90,000 for FY20116. Re-appointment of Mazars LLP as Auditors of the Company

Special Business7. General authority to allot and issue shares8. Authority to allot and issue shares pursuant to the Rokko Employee Share

Option Scheme9. Authority to allot and issue shares pursuant to the Rokko Performance

Share Scheme10. Renewal of share purchase mandate

(Please indicate with a cross [X] in the space provided whether you wish your vote to be cast for or against the resolution as set out in the Notice of the AGM.)

Dated this ________ day of ________________ 2012 Total number of Shares in: No. of Shares(a) CDP Register(b) Register of Members

______________________________________________________Signature(s) of Member(s) or Common SealIMPORTANT: PLEASE READ NOTES OVERLEAF

IMPORTANT1. This Annual Report is also forwarded to investors who have

used their CPF moneys to buy shares in the Company at the request of their CPF Approved Nominees, and is sent solely for their information only.

2. This Proxy Form is therefore not valid for use by such CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them.

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, this proxy form shall be deemed to relate to all the shares held by you.

2. A member of the Company entitled to attend and vote at the AGM is entitled to appoint not more than two proxies to attend and vote on his behalf. A proxy need not be a member of the Company.

3. Where a member appoints two proxies, the proportion of the shareholding to be represented by each proxy shall be specified in this proxy form. If no proportion is specified, the Company shall be entitled to treat the first named proxy as representing the entire shareholding and any second named proxy as an alternate to the first named or at the Company’s option to treat this proxy form as invalid.

4. This proxy form must be deposited at the registered office of the Company at 61 Kaki Bukit Road 2, Singapore 417869 not less than 48 hours before the time set for the AGM.

5. This proxy form must be under the hand of the appointor or of his attorney duly authorised in writing. Where this proxy form is executed by a corporation, it must be executed either under its seal or under the hand of an officer or attorney duly authorised.

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

7. The Company shall be entitled to reject a proxy form which 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 proxy form. In addition, in the case of shares entered in the Depository Register, the Company may reject a proxy form 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 AGM, as certified by The Central Depository (Pte) Limited to the Company.

ROKKO HOLDINGS LTD.(Reg. No. 200309694C)

61 Kaki Bukit Road 2, Singapore 417869 Tel:65-67495885•Fax:65-67475979

Website: www.rokkogroup.com

This Annual Report has been prepared by the Company and its contents have been reviewed by the Company’s sponsor, PrimePartners Corporate Finance Pte. Ltd. (the “Sponsor”) for compliance with

the relevant rules of the Singapore Exchange Securities Trading Limited (the “SGX-ST”). The Sponsor has not independently verified the contents of this Annual Report.

This Annual Report has not been examined or approved by the SGX-ST and the SGX-ST assumes no responsibility for the contents of this Annual Report, including the correctness of any of the statements

or opinions made or reports contained in this Annual Report.

The contact person for the Sponsor is Mr Mark Liew, Managing Director, Corporate Finance, at 20 Cecil Street, #21-02 Equity Plaza, Singapore 049705, telephone (65) 6229-8088.

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ROKKO Holdings 2011 Annual Report

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Transcript of ROKKO Holdings 2011 Annual Report