ROKKO Holdings 2010 Annual Report

2010
Strategised for Growth

R O K K O H O L D I N G S LT D .
ANNUAL REPORT
CORPORATE INFORMATION
BOARD OF DIRECTORS
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
SHARE REGISTRAR
Boardroom Corporate & Advisory Services Pte. Ltd. 50 Raffles Place #32-01 Singapore Land Tower Singapore 048623 Tel : 65 6536 5355 Fax : 65 6536 1360
INDEPENDENT AUDITORS
Mazars LLP Certified Public Accountants 133 Cecil Street #15-02 Keck Seng Tower Singapore 069535 Tel : 65 6224 4022 Fax : 65 6225 3974 Partner in-charge : Chang Fook Kay (Date of appointment : since FY ended 31 December 2007)
AUDIT COMMITTEE
Lee Sen Choon (Chairman) Tey Kim Hwee Wai Chee Leong
NOMINATING COMMITTEE
Wai Chee Leong (Chairman) Tey Kim Hwee Lee Sen Choon
REMUNERATION COMMITTEE
Wai Chee Leong (Chairman) Tey Kim Hwee Lee Sen Choon
PRINCIPAL BANKERS AND FINANCIAL INSTITUTION

United Overseas Bank Limited 80 Raffles Place, UOB Plaza 1 Singapore 048624 ORIX Leasing Singapore Limited 331 North Bridge Road #19-01/06 Odeon Towers Singapore 188720
COMPANY SECRETARY
Vincent Lim Bock Hui
REGISTERED OFFICE
61 Kaki Bukit Road 2 Singapore 417869 Tel : 65 6749 5885 Fax : 65 6747 5979 Website : www.rokkogroup.com
ROKKO HOLDINGS LTD | ANNUAL REPORT 2010
01
ABOUT ROKKO GROUP
stablished in 1994, Rokko Holdings Ltd. (Rokko) and together with 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. Rokkos business is divided into three (3) segments Equipment, Stamping and Tooling. The Equipment Division designs, develops and manufactures customised automated equipment specific to customer requirements under the Rokko and Finix brands. The Stamping Division provides connector stamping and plating services to manufacturers in the electronics industry. The Tooling Division designs, develops and manufactures precision tools used in the front and back-end semiconductor manufacturing processes. Rokkos customers include established worldwide names such as the Texas Instruments group of companies, United Test and Assembly Center Ltd, Formosa Advanced Technologies Co., Ltd, Molex Singapore Pte Ltd, STATS ChipPAC Ltd, Singapore Daiichi Pte Ltd, the Unisem group of companies, Semiconductor Manufacturing International Corporation, Kulicke and Soffa, the Infineon group of companies, the Panasonic group of companies and Micron Semiconductor Asia Pte Ltd. Rokko had over 370 employees as at 1 March 2011.
CONTENTS
01 02 04 06 08 09 10 12
About Us Message to Shareholders Operations Review Board of Directors Key Management Staff Corporate Structure Financial Highlights Financial Contents
02
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) 2010. Following the wrenching global financial crisis triggered by the U.S. sub-prime crisis, the latest financial year under review has been successful and eventful on several counts. We recorded our highest profit growth as a listed company, rolled out new products which we developed in-house, relocated our headquarters, embarked on regional expansion and initiated our largest-ever acquisition. Financial Scorecard FY2010 was a year when the global semiconductor industry raced to make up for the downturn in the previous two (2) years. The sector as a whole experienced worldwide surge in demand which came on the back of the introduction of new smartphones and the hugely successful tablet personal computers such as iPads. Semiconductor companies ramped up operations to meet the increasing demand for new electronic devices. The Semiconductor Industry Association (SIA) reported that worldwide semiconductor sales for 2010 reached a record US$298.3 billion, a year-onyear increase of 31.8% from US$226.3 billion recorded in 2009. Against this backdrop, our net profit after tax for FY2010 soared by 142.0% to a record high of S$4.3 million from S$1.7 million in FY2009, as demand for our products across the three (3) business divisions increased with significant higher gross profit contributions from our Stamping and Tooling Divisions. Turnover for FY2010 was S$42.6 million, 44.3% higher than S$29.5 million in FY2009. Earnings per share (based on a weighted average of 154,225,203 shares) rose to 2.76 cents in FY2010 from 1.20 cents in FY2009 (based on a weighted average of 146,477,510 shares). Net asset value per share increased to 16.10 cents as at 31 December 2010 (based on 160,000,000 shares) from 13.33 cents as at 31 December 2009 (based on 145,645,000 shares). Our financial position remained strong with cash and cash equivalents of S$12.8 million and net gearing of 0.38 times at the end of FY2010, in comparison with S$9.0 million and 0.50 times, respectively, at the end of FY2009. Dividends To reward our shareholders, the Board proposed a final dividend of 0.5 cent per share, on top of the 0.5 cent interim dividend per share paid earlier in September 2010, bringing the total dividend for FY2010 to 1.0 cent per share, representing 37.5% of net profit for FY2010 and a yield of 7.1% based on its closing share price of S$0.140 on 14 March 2011.
03
Commitment to Research and Development (R&D) and Customer Recognition Our financial performance underscores the importance of continuous investment in R&D, even during the downturn. As a result of our efforts, our RS8000 series sawing singulation systems saw increased orders in FY2010. During the financial year under review, we began selling the FX300 Ball Mounter system under the Finix brand. The Group has also introduced the RS5000 pick-and-place system which has started to see traction among customers that supply the automotive industry. R&D will continue to be a cornerstone of our strategy. By continually developing and introducing new cutting-edge products, we are able to help our customers improve cost efficiency and time to market. As a result, we not only deepen our relationship with our customers but also strengthen our position in the market for such specialised semiconductor equipment. Reflecting the success of our R&D efforts, our wholly-owned subsidiary, Rokko Systems Pte. Ltd., which designs, develops and manufactures customised automated equipment specific to customer requirements under the Rokko and Finix brands, won the prestigious 2009 Supplier Excellence Award from the semiconductor giant, Texas Instruments (TI). Winning this accolade for the second time is a testament to the high level of customers satisfaction that Rokko has achieved. Significant Corporate Developments In May 2010, the Group placed out 15 million new shares at 14.0 cents each to private investors, raising net proceeds of S$2.0 million. The proceeds have been allocated for R&D purposes and the expansion of Rokkos business in the Peoples Republic of China (PRC). The Group has also initiated a series of presentations to the investment community to raise its investor profile. During the financial year under review, we relocated our corporate headquarters to 61 Kaki Bukit Road 2, a new building that we acquired to house the expansion and consolidation of our Equipment Division. On 31 December 2010, the Group announced that it had entered into a sales and purchase agreement to acquire 100% equity interest of Jade Precision Engineering Pte Ltd (JPE), a specialist in lead frames manufacturing in the semiconductor industry, for a purchase consideration of S$8.0 million in cash (the Acquisition). On 15 February 2011, our shareholders approved the Acquisition at the extraordinary general meeting and the Acquisition was completed on 28 February 2011. The Road Ahead Outlook and Future Direction According to the SIA, worldwide semiconductor sales in 2011 is expected to grow by 6.0% to US$318.7 billion, followed by a growth rate of 3.4% to US$329.7 billion in 2012. The sectors performance in the Asia Pacific region will continue to be underpinned by the growth in demand for smartphones, new mobile devices as well as personal computers. Rokkos strategy combines continuous cost and operational improvements, R&D, geographical expansion and reaping synergies from our recent Acquisition. In financial year ending 31 December 2011, we will continue to aggressively market our RS8000 series sawing singulation systems, RS5000 pick-and-place system and the FX300 Ball Mounter system, both in Southeast Asia and the PRC. We have begun efforts to develop business opportunities in the PRC, especially Chengdu and Shanghai where most of the semiconductor activity takes place. The responses have been encouraging with more than 20.0% of our revenue in FY2010 derived from the PRC and Taiwan, as compared to less than 4.0% in FY2009. Having relocated to the new corporate headquarters, the Group is reviewing the most optimal use of its various facilities, including possible disposals of some non-core properties. The factory located at Nusa Cemerlang Industrial Park in Iskandar, Malaysia (purchased in March 2010), which will house the expansion of the Groups Stamping and Tooling Divisions, is expected to be ready by the second half of 2011 and to commence operations by early 2012. With the addition of the new capacity, we will review our expansion plans in the PRC. Rokko Leadframes Our Recent Acquisition At this juncture, allow me to share our plans behind the Acquisition (JPE has now been renamed to Rokko Leadframes Pte. Ltd. (Rokko Leadframes)). Despite our growth through the years and continued investments in R&D, we lacked several areas of competency needed to offer a more compelling value proposition to our customers. Through Rokko Leadframes, Rokko is now able to include semiconductor lead frames manufacturing and electroplating businesses to its existing range of semiconductor equipment, consumable tooling and connector stamping businesses. We have a more complete product offering of semiconductor base materials and consumable tools required for a cost-efficient back-end semiconductor assembly. At the same time, Rokko will be able to balance the growing cyclical semiconductor capital equipment business with the more stable business in consumable tooling, connectors stamping and semiconductor base material products. The Group will focus on streamlining and improving the operations and performance of Rokko Leadframes and the Group. While the Group strives to pursue cost efficiencies, we do not expect Rokko Leadframes to be profitable in financial year ending 31 December 2011 due to the potential costs incurred to upgrade and modernise its existing machinery and its operations. Appreciation FY2010 has been a year of growth and one of strategic importance. I wish to thank all our management and staff for their dedication, our directors for their guidance, our customers and business partners for their continuous support, and not least, our shareholders for your unrelenting faith and trust in Rokko.
Managing Director March 2011
Gary Lim
04
OPERATIONS REVIEW
Equipment Division
The Equipment Division designs, develops and manufactures customised automated equipment specific to customer requirements under the Rokko and Finix brands. Revenue from the Equipment Division increased by 30.8% mainly due to higher capital expenditure by our major customers in the first half of FY2010. The Equipment Division contributed S$26.3 million or 61.7% to the Groups revenue. Gross profit margin for the Equipment Division decreased by 4.9 percentage points from 35.7% for the financial year ended 31 December 2009 (FY2009) to 30.8% for the financial year ended 31 December FY2010 (FY2010), due to the impact of the weakening US Dollar and the discounted selling prices for older-generation equipment. The RS8000 series sawing singulation system and the FX300 Ball Mounter system were largely welcomed by customers who were seeking higher productivity with lower cost of equipment ownership. The Group has also recently introduced the RS5000 pick-and-place system with state-of-the-art technology and user friendly functions and it is beginning to see traction among customers.
Research and development (R&D) efforts remain as our focus in order to provide our customers with better products at competitive prices. Currently, we are developing advanced versions of the RS8000, RS5000 and Ball Mounter systems with higher efficiency and improved functionality.
Stamping Division
The Stamping Division provides connector stamping and plating services to manufacturers in the electronics industry. Revenue from the Stamping Division increased by 91.5% mainly due to higher demand from our major customers, and this division contributed S$10.8 million or 25.3% to the Groups revenue. Gross profit from the Stamping Division increased from 19.3% in FY2009 to 27.3% in FY2010, an increase of 8.0 percentage points. The improvement was due to cost reduction measures and better capacity utilisation rate which increased 24.7 percentage points to 61.1% in FY2010, as compared to 36.4% in FY2009. The Stamping Division also undertook plating services with minimal profit margin to satisfy the demand from our customers. Prior to the acquisition of Jade Precision
05
Engineering Pte Ltd (now known as Rokko Leadframes Pte.Ltd.) (the Acquisition), the plating services had been subcontracted to third parties. With the Acquisition, the Group is able to carry out the plating services in-house. The Group expects to reap benefits from the in-house plating services from the second half of the financial year ending 31 December 2011 (FY2011).
The Tooling Division will continue to support the growth of the Equipment and Stamping Divisions as well as provide our customers with high quality precision tools at competitive prices.
Research & Development

During FY2010, the Group spent S$1.3 million on R&D, of which S$184,000 was capitalised. Since the financial year ended 31 December 2007, the Group has spent an aggregate of S$4.8 million on R&D, of which S$1.9 million has been capitalised. R&D expenses accounted for more than 80% of the increase in total operating expenses in FY2010. It included S$263,000 for amortisation of deferred R&D expenses and S$849,000 for manpower and component costs incurred for the improvement of the Groups existing products ranges. The Group consistently commits about 5% of revenue to R&D each year and will continue to invest in R&D in FY2011, with a focus on the Equipment Division.
Tooling Division
The Tooling Division designs, develops and manufactures precision tools used in the front and back-end semiconductor manufacturing processes. The demand for products from the Tooling Division recovered to pre-crisis levels after the economic turnaround in the second half of FY2009. Revenue rose by 46.3%. The Tooling Division contributed S$5.5 million or 13.0% to the Groups revenue. With the improved capacity utilisation and benefits from cost-cutting, the Tooling Division experienced an increase in its gross profit margin by 14.6 percentage points from 24.5% in FY2009 to 39.1% in FY2010. The average capacity utilisation rate improved 34.0 percentage points to 67.7% in FY2010 as compared to 33.7% in FY2009.
06
BOARD OF DIRECTORS
Tey Kim Hwee

Non-Executive Chairman
Lim Yee Chuan

Executive Director and Financial Controller
Lee Sen Choon

Lead Independent Director
Lim Chong Chen

Managing Director
Wai Chee Leong

Independent Director
07
Lim Yee Chuan

Executive Director and Financial Controller Lim Yee Chuan is our 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 function of our Group. She has 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 nonpractising member of the Institute of Certified Public Accountants of Singapore.
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 Higher Stage Certificates in Accounting, Economics and Commercial Law from the London Chamber of Commerce and Industry.
Lee Sen Choon

Lead Independent Director Lee Sen Choon was appointed as the Lead Independent Director of our Company 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 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.
Lim Chong Chen

Managing Director 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 the Groups 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 in 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 200 staff with operations in Singapore and Malaysia as at 31 December 2010. Mr Lim holds pre-university qualifications and a Certificate in Computer Programming and Information Processing from City and Guilds of London Institute.
Wai Chee Leong

Independent Director Wai Chee Leong was appointed as an Independent Director of our Company 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.
08
KEY MANAGEMENT STAFF
Cheh Mei Lee is our Accounting Manager and her

duties include the preparation of the accounts for our Group. She has more than 14 years of experience in accounts 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.
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.
Chey Long Wan is our Operations Manager and his

duties include overseeing the production and quality management functions of our Stamping Division. 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.
Lim Yoke Mein is our Administration Manager and

is responsible for the administrative 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.
Jang Deok Chun is our Head of Assembly and

Test, Equipment Division and oversees all our existing product and new product 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 us 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.
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.
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
09
CORPORATE STRUCTURE
Rokko Materials Pte Ltd (Singapore)
Rokko Stamping Pte. Ltd. (Singapore)
Rokko Leadframes Pte. Ltd. (Singapore)
R O K K O H O L D I N G S LT D .
Rokko Ventures Pte Ltd (Singapore)
Rokko Mechatronics Pte Ltd (Singapore)
Rokko Systems Pte Ltd (Singapore)
RokkoTechnology Pte Ltd (Singapore)
Rokko Technology Sdn. Bhd. (Malaysia)
10
FINANCIAL HIGHLIGHTS
REVENUE S$ million
50 40 30 20 10 0
19.9
NET PROFIT
42.6
5 4
S$ million
CAGR
29.5
CAGR 107.4%
4.3
3
1.8
2
1.0
1 0
FY2008
FY2009
FY2010
FY2008
FY2009
FY2010
EBITBA
S$ million
8.0
CAPITAL EXPENDITIURE
S$ million
8 7 6
4.6 7.5
RESEARCH AND DEVELOPMENT EXPENSES

S$ million
1.5
1.2 1.0
8 7 6 5 4 3 2 1 0
3.5
5 4 3 2 1 0
3.0 1.9
1
0.6
0.5
FY2008
FY2009
FY2010
FY2008 FY2009
FY2010
FY2008
FY2009
FY2010
Equipment 61.7%
Stamping 25.3%
Others 6.0%
Malaysia 8.6% Singapore 33.8%
REVENUE BY BUSINESS SEGMENT
Philippines 31.5% Tooling 13.0%
REVENUE BY GEOGRAPHICAL REGION

China & Taiwan 20.1%
11
Results Of Operations For Year Ended 31 December 2010

INCOME STATEMENT S$000
Revenue Gross profit Profit before taxation Taxation Profit after taxation Other comprehensive income Attributable to: Equity holders of the company 5,956 1,699 250.6% FY2010 42,584 13,207 4,818 (556) 4,262 1,694
Group
FY2009 29,495 9,178 2,029 (268) 1,761 (62)
Increase/ (Decrease)
44.3% 43.9% 137.5% 107.5% 142.0% n.m.^
BALANCE SHEET S$000

ASSETS Non-current assets Current assets TOTAL ASSETS EQUITY AND LIABLILITIES Capital and reserves attributable to equity holder of the compay Total equity Non-current liabilities Current liabilities Total libilities TOTAL EQUITY AND LIABILITIES 25,763 25,763 9,759 20,716 30,475 56,238 23,913 23,325 56,238
Group
31-Dec-10 31-Dec-09
16,718 32,796 49,514
43.0% (1.4)% 13.6%
19,414 19,414 7,125 22,975 30,100 49,514
32.7% 32.7% 37.0% (9.8)% 1.2% 13.6%
Group
FY2010 Earnings per share (in cents) Basic Diluted Net Asset Value per share (in cents) Grearing Ratio* Dividend (in cents) 2.76 2.76 16.10 0.38 1.00 1.20 1.20 13.33 0.50 0.50 FY2009
130.0% 130.0% 20.8% (24.0%) 100.0%
The Gearing is defined as Net Debts over Total Capital
Not meaningful
12
FINANCIAL CONTENTS
13 16 17 18 19 20 21 22 67 69 80 85 86
Report of the Directors Statement by the Directors Report of the Independent Auditors Consolidated Statement of Comprehensive Income Statements of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Financial Statements Statistics of Shareholdings Corporate Governance Notice of Annual General Meeting Notice of Book Closure Appendix Proxy Form
13
Report of the Directors

We are pleased to submit this annual report to the members of the Company together with the audited nancial statements of the Company and consolidated nancial statements of the Company and its subsidiaries (the Group) for the nancial year ended 31 December 2010.
DIRECTORS The Directors of the Company in ofce at the date of this report are as follows:Tey Kim Hwee Lim Chong Chen Lim Yee Chuan Lee Sen Choon Wai Chee Leong (Non-Executive Chairman) (Managing Director) (Executive Director and Financial Controller) (Lead Independent Director) (Independent Director)
DIRECTORS INTERESTS According to the register of directors shareholdings kept by the Company for the purposes of Section 164 of the Companies Act, Chapter 50 of Singapore (the Companies Act), the Directors holding ofce at the end of the nancial 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 value At beginning of At end of At 21 January the year the year 2011 112,460,260 1,225,560 450,000 50,000 50,000 112,460,260 1,225,560 450,000 50,000 50,000 112,460,260 1,225,560 450,000 50,000 50,000
The Company Lim Chong Chen Tey Kim Hwee Lim Yee Chuan Lee Sen Choon Wai Chee Leong
By virtue of Section 7 of the Companies Act, Mr Lim Chong Chen is deemed to have interests in the whollyowned subsidiaries of Rokko Holdings Ltd. at the beginning and at the end of the nancial year, and at 21 January 2011. Since the end of the previous nancial year, no Director has received or become entitled to receive a benet 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 rm of which the director is a member, or with a company in which the Director has a substantial nancial interest, except as disclosed in note 7 to the accompanying nancial statements. Except as disclosed in this report, no Director who held ofce at the end of the nancial year had interests in shares or debentures of the Company or of related corporations either at the beginning or at the end of the nancial year. Neither at the end of nor at any time during the nancial year was the Company a party to any arrangement whose objects are, or one of whose object is to enable the directors to acquire benets by means of the acquisition of shares in or debentures of the Company or any other body corporate.
14

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 Companys shares on the Singapore Exchange Securities Trading Limited (the SGX-ST) on the ve (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 rst anniversary of the date of grant of the option if the subscription price of the option granted was at market price: and 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.
(b)
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 fth 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 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.
(ii)
The Rokko ESOS was approved on 4 September 2008 at an Extraordinary General Meeting of the Company.
SHARE OPTIONS (a) No options were granted by the Company or any of its subsidiaries during the nancial year to subscribe for unissued shares of the Company or its subsidiaries. No shares were issued during the nancial year by virtue of the exercise of options to take up unissued shares of the Company or its subsidiaries. There were no unissued shares of the Company or its subsidiaries under option at the end of the nancial year.
(b)
(c)
SHARE PURCHASE MANDATE At the Annual General Meeting of the Company, on 12 April 2010, the shareholders approved the Share Purchase Mandate to undertake the purchase or acquisition of the ordinary shares of the Company subject to statutory limitations and certain terms and conditions.
15

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 three (3) times during the nancial 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 Groups systems of internal accounting controls; the Groups nancial and operating results and accounting policies; the nancial statements of the Company and the consolidated nancial statements of the Group before their submission to the Directors and external auditors report on those nancial statements; half-yearly and annual announcements as well as the related press releases on the results and nancial position of the Company and the Group; the co-operation and assistance given by the management to the Groups external auditors; and the re-appointment of the external auditors of the Group.
(b) (c)
(d)
(e) (f)
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 ofcer 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 Certied 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 Certied Public Accountants, have expressed their willingness to accept reappointment.
On behalf of the Board of Directors
Tey Kim Hwee Director Date : 3 March 2011
Lim Chong Chen Director
16
Statement by the Directors

In the opinion of the directors of ROKKO HOLDINGS LTD.: (a) the accompanying nancial 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 2010 and of the results, changes in equity and cash ows 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 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.
(b)
The Board of Directors has, on the date of this statement, authorised these nancial statements for issue.
On behalf of the Board of Directors
Tey Kim Hwee Director Date : 3 March 2011
Lim Chong Chen Director
17
Report of the Independent Auditors

to the Members of ROKKO HOLDINGS LTD.
Report on the Financial Statements We have audited the accompanying nancial statements of ROKKO HOLDINGS LTD. (the Company) and its subsidiaries (the Group) which comprise the statement of nancial position of the Group and the Company as at 31 December 2010, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash ows of the Group for the year then ended, and a summary of signicant accounting policies and other explanatory information, as set out on pages 18 to 66. Managements Responsibility for the Financial Statements Management is responsible for the preparation of nancial 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 sufcient 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 prot and loss accounts and balance sheets and to maintain accountability of assets. Auditors Responsibility Our responsibility is to express an opinion on these nancial 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 nancial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the nancial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation of nancial 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 entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the nancial statements. We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated nancial statements of the Group and the statement of nancial 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 2010 and of the results, changes in equity and cash ows 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 Singapore: 3 March 2011
18
Consolidated Statement of Comprehensive Income

for the year ended 31 December 2010
GROUP Note 2010 S$ 42,584,498 (29,377,273) 13,207,225 716,948 (2,127,945) (4,914,887) (1,507,985) (555,388) 4,817,968 (555,907) 4,262,061 2009 S$ 29,495,246 (20,316,604) 9,178,642 339,970 (1,851,235) (3,999,296) (1,137,737) (500,835) 2,029,509 (268,279) 1,761,230
Revenue Cost of sales Gross prot Other income Distribution costs Administrative expenses Other operating expenses Finance costs Prot before taxation Income tax expense Net prot for the year Other comprehensive income: Exchange differences on translation of foreign operations, net of tax Surplus on revaluation of property, plant and equipment, net of tax Other comprehensive income for the year Total comprehensive income for the year Prot attributable to equity holders of the Company Total comprehensive income attributable to: Total comprehensive income attributable to equity holders of the Company Earnings per share for prot attributable to the equity holders of the Company (cents) - Basic
5 6 8
20
(355,798) 2,050,067 1,694,269 5,956,330 4,262,061
(62,309) (62,309) 1,698,921 1,761,230
5,956,330
1,698,921
31
2.76
1.20
The annexed notes form an integral part of and should be read in conjunction with these nancial statements.
19
Statements of Financial Position

as at 31 December 2010
Group 31/12/2010 31/12/2009 S$ S$ Company 31/12/2010 31/12/2009 S$ S$ Note
Assets Non-current assets

Property, plant and equipment Goodwill Deferred development expenditure Investment in subsidiaries 9 10 11 12 21,696,390 760,828 1,455,525 23,912,743 14,364,607 760,828 1,592,577 16,718,012 212,777 6,346,301 6,559,078 257,701 6,346,301 6,604,002
Current assets
Inventories Trade and other receivables Amount owing by subsidiaries Cash and cash equivalents Total assets 13 14 15 16 13,802,848 5,755,417 12,767,104 32,325,369 56,238,112 12,005,880 11,826,119 8,963,618 32,795,617 49,513,629 28,271 5,147,401 1,361,239 6,536,911 13,095,989 35,885 1,256,278 3,066,085 4,358,248 10,962,250
Equity Equity attributable to equity holders of the Company

Share capital Treasury shares Foreign currency translation reserves Revaluation reserve Accumulated prots 17 18 19 20 12,442,108 (525,717) (908,100) 2,050,067 12,704,531 25,762,889 10,432,808 (435,947) (552,302) 9,969,105 19,413,664 12,442,108 (525,717) 914,008 12,830,399 10,432,808 (435,947) 648,121 10,644,982
Total equity Liabilities Non-current liabilities

Interest-bearing liabilities Deferred tax liabilities 21 22
8,259,316 1,499,814 9,759,130
5,891,137 1,234,179 7,125,316
20,082 20,082
49,633 27,634 77,267
Current liabilities
Trade and other payables Amount owing to directors Interest-bearing liabilities Provision for taxation 23 24 21 9,296,390 533,629 10,620,765 265,309 20,716,093 30,475,223 56,238,112 14,954,741 522,305 7,371,531 126,072 22,974,649 30,099,965 49,513,629 173,175 49,633 22,700 245,508 265,590 13,095,989 187,664 52,177 160 240,001 317,268 10,962,250
Total liabilities Total equity and liabilities
20
Consolidated Statement of Changes in Equity

Attributable to Equity Holders of the Company Foreign Currency Treasury Translation Revaluation Accumulated Shares Reserves Reserve Prots Total Equity S$ S$ S$ S$ S$ (435,947) (89,770) (525,717) (100,218) (335,729) (435,947) (552,302) (355,798) (908,100) (489,993) (62,309) (552,302) 2,050,067 2,050,067 9,969,105 (1,526,635) 4,262,061 12,704,531 8,499,623 (291,748) 1,761,230 9,969,105 19,413,664 (89,770) 2,009,300 (1,526,635) 5,956,330 25,762,889 18,342,220 (335,729) (291,748) 1,698,921 19,413,664
GROUP
Note
Share Capital S$ 10,432,808
At 1 January 2010 Purchase of treasury shares Net proceeds from issuance of new shares Dividends paid Total comprehensive income for the year At 31 December 2010 At 1 January 2009 Purchase of treasury shares Dividends paid Total comprehensive income for the year At 31 December 2009
18 17 30
2,009,300 12,442,108 10,432,808
18 30
10,432,808
21
Consolidated Statement of Cash Flows

GROUP Note Operating activities Prot before income tax Adjustments for:Depreciation of property, plant and equipment Amortisation of research and development expenditure Write back of impairment of property, plant and equipment made previously Revaluation loss on certain property, plant and equipment Gain on disposal of property, plant and equipment (Write back)/allowance for slow moving and obsolete inventories Write back of provision for equipment warranty no longer required Obsolete inventories written off Interest income Interest expense Operating prot before working capital changes Changes in working capital:Inventories Trade and other receivables Trade and other payables Trust receipts Invoice nancing Cash generated from operations Interest received Income tax paid Cash ow from operating activities Financing activities Repayment of bank loans and overdrafts Finance lease repayments/obtained (net of repayment) Proceeds from bank loans Amount owing to a director Interest paid Dividend paid Proceeds from issue of new shares(net) Purchase of treasury shares Cash ow generated from/(used in) nancing activities Investing activities Purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Deferred development expenditure Cash ow used in investing activities Net increase in cash and cash equivalents Effect of currency translation on cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of Year 2010 S$ 4,817,968 9 11 6 6 4 6 6 6 4 5 2,329,866 262,892 (412,516) 250,090 (1,299) (80,019) (51,642) (6,156) 555,388 7,664,572 (1,716,949) 6,186,055 (6,464,698) 3,581,139 (638,159) 8,611,960 6,156 (153,174) 8,464,942 (1,263,003) (422,563) 4,360,000 (555,388) (1,526,635) 2,009,300 (89,770) 2,511,941 (6,596,613) 54,217 (125,840) (6,668,236) 4,308,647 (505,161) 8,963,618 12,767,104 2009 S$ 2,029,509 1,984,493 109,056 (33,200) 317,312 688,939 (1,568) 500,835 5,595,376 (1,565,586) (7,427,382) 9,583,866 (2,418) 1,838,667 8,022,523 1,568 (340,753) 7,683,338 (435,673) (1,612,466) 2,500,000 (41,866) (500,835) (291,748) (335,729) (718,317) (1,076,965) 27,470 (554,590) (1,604,085) 5,360,936 (30,893) 3,633,575 8,963,618
30 17 18
16
During the nancial year ended 31 December 2010, the Group acquired property, plant and equipment with an aggregate cost of approximately S$7,464,802 (2009: S$1,872,774). Payments of S$6,596,613 (2009: S$1,076,965) were made for the acquisitions, of which S$3,394,528 (2009: Nil) was nanced by bank loan and nance lease and remaining S$3,212,285 (2009: S$1,076,965) by internal cash ow. As at 31 December 2010, S$857,989 (2009: S$795,809) was owing to trade and other payables. The annexed notes form an integral part of and should be read in conjunction with these nancial statements.
22
Notes to the Financial Statements

31 December 2010
These notes form an integral part of the nancial statements. These nancial statements have been authorised for issue by the board of directors on 3 March 2011. 1. DOMICILE AND ACTIVITIES Rokko Holdings Ltd. (the Company) was incorporated in Singapore on 30 September 2003 as a public company limited by shares. The Companys registered ofce 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 nancial statements relate to the Company and its subsidiaries (herein referred to as the Group). 2. 2.1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of preparation These nancial statements have been prepared in accordance with Singapore Financial Reporting Standards (FRS). During the year, the Group and the Company adopted the new or revised FRS and Interpretation to FRSs (INT FRS) that are mandatory for application from that date. Changes to the Groups accounting policies have been made as required, in accordance with the relevant transitional provisions in the respective FRS and INT FRS. There are no signicant changes to the Financial Statements of the Group and the Company upon the adoption of these new standards, other than the Change in accounting policy for revaluation of the properties of the Group. On 1 January 2010, the Group and the Company have adopted all applicable FRS or INT FRS as follows: FRS 27 (2009) Consolidated and Separate Financial Statements which became effective for annual periods beginning on or after 1 July 2009 requires an entity to account for acquisitions and disposals that do not result in a change of control as equity transactions. Transactions resulting in a loss of control would cause a gain or loss to be recognised in prot or loss notwithstanding a residual interest remains in the acquiree after the disposal. Losses applicable to non-controlling interests, including negative other comprehensive income are allocated to non-controlling interests even if doing so causes the noncontrolling interests to have a negative balance. FRS 103 (2009) Business Combinations which became effective for annual periods beginning on or after 1 July 2009 requires the acquirer to expense all acquisition related costs in a business combination in the period as incurred, with contingent consideration acquired to be measured at fair value at acquisition date and subsequently re-measure through prot or loss. The acquirer can elect to measure any noncontrolling interest at fair value at the acquisition date, or at its proportionate interest in the fair value of the identiable assets and liabilities of the acquiree, on a transaction-by-transaction basis. When an acquisition is achieved in successive share purchases (step acquisition), the identiable assets and liabilities of the acquiree are recognised at fair value when control is obtained; and a gain or loss is recognised in prot or loss for the difference between the fair value of the previously held equity interest in the acquiree and its carrying amount. Any amount relating to previously held equity interests in the acquiree that was recognised directly in other comprehensive income is reclassied and included in the calculation of gain or loss recognised in prot or loss. Acquisitions of additional non-controlling equity interests after the business combinations are accounted for as equity transactions. Disposals of equity interests while retaining control are accounted for as equity transactions. Transactions resulting in a loss of control result in a gain or loss being recognised in prot or loss. The gain or loss includes a remeasurement to fair value of any retained equity interest in the investee. Amendments to FRS 7 Cash Flow Statements (effective for annual periods beginning on or after 1 January 2010) Under the amendment, only expenditures that result in a recognised asset in the statement of nancial position can be classied as investing activities in the statement of cash ows. Previously, such expenditure could be classied as investing activities in the statement of cash ows.The adoption of the above FRS did not have any signicant impact on the Groups accounting policy and nancial statements.
23

31 December 2010
2. 2.1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) Basis of preparation (Contd) Changes in accounting policy for Property, Plant and Equipment On 31 December 2010, the Group has changed its accounting policy to revalue its leasehold buildings at their fair values in accordance with FRS 16 - Property, Plant and Equipment and under that standard, the revaluation has been accounted for prospectively. The fair value has been determined by an independent professional valuer on 23 November 2010 and the Group intends to revalue its leasehold buildings every three to ve years. The accumulated depreciation at the date of revaluation was eliminated against the gross carrying amount of the asset and the net amount restated to the revalued amount of the asset resulting in a revaluation surplus of S$2,050,067 being recognised as Other Comprehensive Income during the nancial year ended 31 December 2010. No deferred tax was recognised on the revaluation gain as these properties are used for the production of income and no capital gains taxes are levied upon the sale of such properties as the Group does not engage in the trading of properties. If an assets carrying amount is increased as a result of a revaluation, the increase shall be recognised in other comprehensive income and accumulated in equity under the heading of revaluation reserve. However, the increase shall be recognised in prot or loss to the extent that it reverses a revaluation decrease of the same asset previously recognised in prot or loss. If an assets carrying amount is decreased as a result of a revaluation, the decrease shall be recognised in prot or loss. However, the decrease shall be recognised in other comprehensive income to the extent of any credit balance existing in the revaluation reserve in respect of that asset. The decrease recognised in other comprehensive income reduces the amount accumulated in equity under the heading of revaluation reserve. The effect of the change in accounting policy on revaluation of the Groups factory buildings for the year ended 31 December 2010 is as follows: Year Ended 31 Dec 2010 Charge/(Credit) to prot or loss S$ (412,516) 250,090
Description
Write back of impairment loss in respect of a leasehold building previously recognised in prot and loss in prior years upon revaluation during the year Revaluation loss in respect of another leasehold building upon revaluation during the year 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 nancial statements, the following summarises estimates and assumptions that have a signicant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next nancial year and signicant judgements made in the process of applying the Groups 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 identication 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 nancial 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 nancial statements.
24

31 December 2010
2. 2.1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) Basis of preparation (Contd) Critical accounting estimates and judgements (contd) (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 ows 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 nancial statements. (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 signicantly 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 nancial statements. (v) Income taxes The Group is subject to income taxes in different jurisdictions. Signicant judgment 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 nal 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 nancial 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 nancial assets. This assessment requires signicant 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 nancial health of and near-term business outlook for the asset, including factors such as industry and sector performance, changes in technology and operational and nancing cash ow.
25

31 December 2010
2. 2.2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) Basis of consolidation Subsidiary companies A subsidiary is an entity over which the Group, has the power to govern the nancial and operating policies so as to obtain benets from its activities. In the Companys separate nancial 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 nancial statements of the subsidiaries used in the preparation of the consolidated nancial 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. Identiable 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. When the group acquires a business, it assesses the nancial assets and liabilities assumed for appropriate classication 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 prot or loss or as change to other comprehensive income. If the contingent consideration is classied as equity, it is not be remeasured until it is nally 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 prot 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 interests proportionate share of the acquiree identiable net assets. Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in the acquiree (if any), and the fair value of the Groups previously held equity interest in the acquiree (if any), over the net fair value of the acquirees identiable 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 bargain purchase in prot or loss on the acquisition date.
26

31 December 2010
2. 2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) Functional and presentation currency The individual nancial 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 nancial statements of the Group and the statement of nancial 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 prot 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 prot or loss, except for differences arising on the retranslation of monetary items that in substance form part of the Groups net investment in a foreign operation. 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 prot or loss. 2.6 Net investment in foreign operations Exchange differences arising from monetary items that in substance form part of the Companys net investment in foreign operations are recognised in the Companys prot or loss. Such exchange differences are reclassied to the foreign currency translation reserves in the consolidated nancial statements. When the hedged net investment is disposed of, the cumulative amount in the foreign currency translation reserves is transferred to prot or loss. 2.7 Revenue recognition Revenue is recognised to the extent that it is probable that the economic benets will ow 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 Groups 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.
27

31 December 2010
2. 2.7 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) Revenue recognition (contd) (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 prot 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. 2.8 Employee benets Contributions to dened contribution plans including Central Provident Fund (CPF) contributions are recognised as an expense in the prot and loss as incurred. (i) Short term benets Salaries, wages, allowances, bonuses and social security contributions are recognised as an expense in the nancial 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 benets such as medical care and other staff related expenses are recognised as an expense in the period when incurred. (ii) Dened 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 nancial year to which they relate. (iii) Termination benets Employee termination benets 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 specic terms. (iv) Share based payments The Rokko Employee Share Option Scheme (Rokko 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.
28

31 December 2010
2. 2.9 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) Operating leases Where the Group has the use of assets under operating leases, payments made under the leases are recognised in prot or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in prot or loss as an integral part of the total lease payments made. Contingent rentals are charged to prot or loss in the accounting period in which they are incurred. 2.10 Impairment
Impairment of nancial assets

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

The carrying amounts of the Groups non-nancial 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 identiable asset group that generates cash ows that largely are independent from other assets and groups. Impairment losses are recognised in prot 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 prot and loss up to the amount previous revaluation. Impairment losses recognised in respect of cashgenerating units are allocated rst 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 ows are discounted to their present value using a pre-tax discount rate that reects current market assessments of the time value of money and the risks specic to the asset. For an asset that does not generate largely independent cash inows, 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.
29

31 December 2010
2. 2.11 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) Finance costs Interest expense and similar charges are expensed to prot 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 prot or loss using the effective interest method. 2.12 Income taxes Income tax on the results for the year comprises current and deferred tax. Income tax is recognised in prot or loss except to the extent that it relates to a business combination, or items recognised directly in the statement of comprehensive income. Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is provided in full on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the nancial statements. Deferred tax is, however, not recognised on temporary differences arising from the initial recognition of goodwill or assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable prot or loss and differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future and the timing of reversal of the temporary differences can be controlled by the Group. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the reporting date. A deferred tax asset is recognised to the extent that it is virtually certain that future taxable prot will be available against which the temporary differences and tax losses can be utilised. 2.13 Financial instruments Financial assets within the scope of FRS 39 are classied as either nancial assets at fair value through prot or loss, loans and receivables, held-to-maturity investments, or available-for-sale nancial assets, as appropriate. Financial assets are recognised on the statement of nancial position when, and only when, the Group becomes a party to the contractual provisions of the nancial instrument. The Group does not hold nancial assets at fair value through prot or loss or held-to-maturity nancial assets or available-forsale nancial assets. When nancial assets are recognised initially, they are measured at fair value, plus, in the case of nancial assets not at fair value through prot or loss, directly attributable transaction costs. The Group determines the classication of its nancial assets after initial recognition and, where allowed and appropriate, reevaluates this designation at each year-end. Financial assets are derecognised if the Groups contractual rights to the cash ows from the nancial assets expire or if the Group transfers the nancial 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 nancial 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 nancial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned.
30

31 December 2010
2. 2.13 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) Financial instruments (Contd)
Loans and receivables

Non-derivative nancial assets with xed or determinable payments that are not quoted in an active market are classied as loans and receivables. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in prot 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 classied as loans and receivables.
Financial liabilities
Financial liabilities within the scope of FRS 39 are classied as either nancial liabilities measured at amortised costs such as trade and other payables, amount owing to a director and interest-bearing liabilities. Financial liabilities are derecognised if the Groups obligations specied 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 nancial 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 nancial instruments or where appropriate, a shorter period. Income and expense is recognised on an effective interest basis for debt instruments other than those nancial instruments at fair value through prot or loss. 2.14 Derecognition of nancial assets and liabilities (a) Financial assets Financial assets are derecognised from the statement of nancial position when the Group has transferred substantially all risks and rewards of ownership. (b) Financial liabilities A nancial liability is derecognised from the statement of nancial position when the obligation under the liability is discharge, cancelled or expired. 2.15 Intra-group nancial guarantees Intra-group nancial guarantees are nancial instruments issued by the Group that requires the issuer to make specied payments to reimburse the holder for the loss it incurs because a specied debtor fails to meet payment when due in accordance with the original or modied terms of a debt instrument. Financial guarantees are recognised initially at fair value and classied as nancial liabilities. Subsequent to initial measurement, the nancial 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 nancial guarantees are terminated before their original expiry date, the carrying amount of the nancial guarantees is transferred to prot or loss. Intra group transactions are eliminated on consolidation.
31

31 December 2010
2. 2.16 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) 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 nance 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 nance 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 prot 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 xtures Factory renovation Ofce equipment Motor vehicles Plant and machinery Tool and equipment Leasehold buildings 10 331/3% 5 331/3% 10 331/3% 121/2 20% 10 25% 331/3% 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 benets embodied within the part will ow 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 prot or loss. Fully depreciated assets are retained in the consolidated nancial 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 prot or loss is the difference between the net sale proceeds and the carrying amount of the relevant asset.
32

31 December 2010
2. 2.16 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) Property, plant and equipment (Contd) (e) Subsequent measurement Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. When signicant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specic 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 satised. All other repair and maintenance costs are recognised in prot 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 ve 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 prot or loss, in which case the increase is recognised in prot or loss. A revaluation decit is recognised in prot 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 identiable assets acquired and liabilities assumed. When the excess is negative, a bargain purchase gain is recognised immediately in prot or loss. Goodwill is measured at cost less accumulated impairment losses. For the purpose of impairment testing, goodwill is allocated to each of the Groups cash-generating units expected to benet 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 rst 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 prot or loss.
33

31 December 2010
2. 2.18 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) 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 benets are expected from the sale of the products; the availability of adequate technical, nancial 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 benets, 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 weighted average formula 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 nished 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 prot 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 outow of economic benets that can be reasonably estimated. Provisions are reviewed at each reporting date and adjusted to reect its current best estimates. If it is no longer probable that an outow of economic resources embodying economic benets 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 nancial institutions. For the purpose of the consolidated statement of cash ows, cash and cash equivalents are presented net of bank overdrafts which are repayable on demand and which form an integral part of the Groups cash management.
34

31 December 2010
2. 2.23 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) Share capital Ordinary shares are classied 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 Companys ordinary shares (treasury shares), the consideration paid including any directly attributable incremental cost is presented as a component within equity attributable to the Companys 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 prots 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 classied as nancial 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 prot or loss over the period of the borrowings on effective interest basis. 2.26 Related parties A party is related to the Group if: (a) directly, or indirectly through one or more intermediaries, the party controls, is controlled by, or is under common control with, the Group; or has an interest in the Group that gives it signicant inuence over the Group; or has joint control over the Group; the party is an associate of the Group; the party is a joint venture in which the Group is a venturer; the party is a member of the key management personnel of the Group or its parent; the party is a close member of the family of any individual referred to in (a) or (d); and the party is an entity that is controlled, jointly controlled or signicantly inuence by or for which signicant voting power is such entity resides with, directly or indirectly, any individual referred to in (d) or (e).
(b) (c) (d) (e) (f)
Key management personnel

Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of the entity.
35

31 December 2010
2. 2.27 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) 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 FRS The Group has not adopted the following standards and interpretations that have been issued but not yet effective: Effective for annual periods beginning on or after 1 February 2010
Description Amendment to FRS 32 Financial Instruments: Presentation Classication of Rights Issues INT FRS 119 Extinguishing Financial Liabilities with Equity Instruments 2 Revised FRS 24 Related Party Disclosures Amendments to INT FRS 114 Prepayments of a Minimum Funding Requirement INT FRS 115 Agreements for the Construction of Real Estate The Conceptual Framework for Financial Reporting 2010 (Chapters 1 and 3) Amendments to FRS 101 Severe Hyperination and Removal of Fixed Dates for First-time Adopters Amendments to FRS 107 Disclosures - Transfers of Financial Assets
1 July 2010 1 January 2011 1 January 2011 1 January 2011 1 March 2011 1 July 2011
1 July 2011
Except for the revised FRS 24, the directors expect that the adoption of the other standards and interpretations above will have no material impact on the nancial statements in the period of initial application. The nature of the impending changes in accounting policy on adoption of the revised FRS 24 is described below. Revised FRS 24 Related Party Disclosures The revised FRS 24 claries the denition of a related party to simplify the identication of such relationships and to eliminate inconsistencies in its application. The revised FRS 24 expands the denition of a related party and would treat two entities as related to each other whenever a person (or a close member of that persons family) or a third party has control or joint control over the entity, or has signicant inuence over the entity. The revised standard also introduces a partial exemption of disclosure requirements for government-related entities. The Group is currently determining the impact of the changes to the denition of a related party has on the disclosure of related party transaction. As this is a disclosure standard, it will have no impact on the nancial position or nancial performance of the Group or the Company when implemented in 2011.
36

31 December 2010
3. REVENUE Group 2010 S$ 2009 S$
Sale of goods
42,584,498
29,495,246
4.
OTHER INCOME Group 2010 S$ Interest income on bank deposits Grant income Write back of impairment of property, plant and equipment made previously Write back of provision for slow moving and obsolete inventories no longer required Gain on disposal of property, plant and equipment Rental income Others 6,156 209,593 412,516 80,019 1,299 7,365 716,948 2009 S$ 1,568 247,947 33,200 51,150 6,105 339,970
5.
FINANCE COSTS Group 2010 S$ Interest Interest Interest Interest on on on on nance leases term loans trust receipts working capital loan and invoice nancing 101,967 203,903 80,126 169,392 555,388 2009 S$ 114,162 247,451 31,355 107,867 500,835
37

31 December 2010
6. PROFIT BEFORE TAXATION The following items have been charged/(credited) in arriving at prot before taxation: Group Note Cost of inventories and consumables recognised as expenses Depreciation of property, plant and equipment Exchange loss (net) Gain on disposal of property, plant and equipment Directors fees Directors remuneration (Write back)/allowance for slow moving and obsolete inventories Obsolete inventories written off Loss on revaluation of certain property, plant and equipment Write back of impairment of property, plant and equipment made previously Research and development expenses Write back of provision for equipment warranty no longer required Operating leases Staff costs 13 9 2010 S$ 24,809,340 2,329,866 1,257,895 (1,299) 105,000 449,359 (80,019) 250,090 (412,516) 1,112,486 (51,642) 153,881 5,239,065 2009 S$ 15,138,493 1,984,493 131,485 (33,200) 110,000 465,349 317,312 688,939 357,144 161,441 4,370,989
7 7
Research and development expenses include salaries and wages of S$817,209 (2009: S$219,355). 7. SALARIES AND WAGES Group 2010 S$ Staff costs Salaries and bonus Dened contribution plans - CPF contribution Direct labour Rental for staff and workers Foreign workers levy Staff welfare Other staff related expense 2009 S$
1,071,096 105,175 3,633,409 163,363 102,599 63,876 99,547 5,239,065
1,022,849 107,904 2,769,031 230,293 70,906 112,628 57,378 4,370,989
Included in direct labour are EPF contributions amounting to S$35,371 (2009: S$29,805).
38

31 December 2010
7. SALARIES AND WAGES (CONTD) Group 2010 S$ Directors remuneration - Directors of the Company - Salaries and bonuses - Dened contribution plans - Directors of subsidiaries - Salaries and bonuses - Dened contribution plans 2009 S$
354,822 17,420 372,242 69,363 7,754 77,117 449,359
293,195 20,832 314,027 135,974 15,348 151,322 465,349
Directors fee - Directors of the Company - Directors of subsidiaries
90,000 15,000 105,000
90,000 20,000 110,000
The key management personnel consist of the directors of the Company and their subsidiaries and their remuneration is disclosed above.
39

31 December 2010
8. INCOME TAX EXPENSE Group 2010 S$ Current tax expense Current year Under-provision of income tax in prior years 2009 S$
238,833 53,578 292,411
112,290 48,232 160,522
Deferred taxation Origination and reversal of temporary differences Under-provision in prior years Total tax expense
263,496 263,496 555,907 Group 2010 S$
96,331 11,426 107,757 268,279
2009 S$ 2,029,509 345,017 (10,674) 5,288 (62,667) 11,426 (47,338) 48,232 (21,005) 268,279
Prot before taxation Tax at the applicable rate of 17% Tax effect of: different tax rate in other countries non-deductible expenses non-taxable income changes in tax rates under provision of deferred tax expense in prior years income exempt from tax enhanced allowance under provision of income tax in prior years others Total tax expense
4,817,968 819,054 (13,984) 9,396 (114,983) (75,400) (83,339) 53,578 (38,415) 555,907
The Singapore government has announced on 22 January 2009 that the corporate income tax rate will be changed from 18% to 17% with effect from year of assessment 2010 (year ended 31 December 2009). Enhanced allowance relates to productivity and innovation credit which was introduced in the Singapore Budget 2010 to provide enhanced tax deductions, for investments in a broad range of activities along the innovation value chain, for which the Group has claimed 150% tax deduction mainly for its investment in automated equipment incurred during the year ended 31 December 2010.
40
9.
PROPERTY, PLANT AND EQUIPMENT
31 December 2010
Group
At valuation Leasehold Furniture Factory buildings and xtures renovation S$ S$ S$ Ofce equipment S$ Total S$ Motor vehicles S$ Tool and equipment S$ Freehold land S$ Construction in progress S$
At cost Plant and machinery S$
At cost or at valuation At 1 January 2010 Additions Disposals Revaluation adjustment Exchange realignment At 31 December 2010 1,094,687 636,182 (76,116) (7,912) 1,646,841 1,242,338 230,119 (5,065) (25,768) 1,441,624 328,643 49,500 (403) 377,740 16,756,702 1,273,161 (22,073) 23,303 18,031,093 610,323 182,905 (55,685) (16,010) 721,533 311,487 6,753 318,240 1,051,495 1,051,495
5,223,550 3,970,710 1,226,899 10,495 10,431,654
212,209 70,730 (12,114) (2,191) 268,634
25,779,939 7,464,802 (171,053) 1,226,899 (11,733) 34,288,854
At cost At 1 January 2009 Additions Disposals Exchange realignment At 31 December 2009 1,083,501 32,952 (25,110) 3,344 1,094,687 849,217 309,557 (22,684) 106,248 1,242,338 505,161 8,500 (100,580) (84,438) 328,643 15,775,295 1,235,932 (173,722) (80,803) 16,756,702 336,931 278,809 (2,767) (2,650) 610,323 314,902 (3,415) 311,487
5,239,409 (15,859) 5,223,550
240,245 7,024 (35,060) 212,209
24,344,661 1,872,774 (324,863) (112,633) 25,779,939
Accumulated depreciation At 1 January 2010 Depreciation charge Disposals Revaluation adjustment Exchange realignment At 31 December 2010 951,072 200,367 (67,268) (13,880) 1,070,291 817,410 147,511 (5,343) (8,506) 951,072 696,973 155,711 (13,773) 17,972 856,883 308,878 51,765 (81,797) (25,386) 253,460 6,829,705 1,376,871 (51,979) (53,381) 8,101,216 856,883 197,350 (11,495) (25,078) 1,017,660 253,460 40,249 (960) 292,749 8,101,216 1,449,865 (10,378) 12,799 9,553,502
766,244 274,400 (985,593) (7,275) 47,776
149,336 45,273 (10,856) (2,738) 181,015
337,121 122,362 (16,184) (13,828) 429,471 256,950 85,508 (1,998) (3,339) 337,121
11,415,332 2,329,866 (116,181) (985,593) (50,960) 12,592,464 9,683,633 1,984,493 (154,890) (97,904) 11,415,332
At 1 January 2009 Depreciation charge Disposals Exchange realignment At 31 December 2009
642,232 124,394 (382) 766,244
131,485 42,733 (24,882) 149,336
Net book value At 31 December 2010 At 31 December 2009 576,550 143,615
10,383,878 4,457,306
87,619 62,873
423,964 385,455
84,991 75,183
8,477,591 8,655,486
292,062 273,202
318,240 311,487
1,051,495
21,696,390 14,364,607
41

31 December 2010
9. PROPERTY, PLANT AND EQUIPMENT (CONTD) The net book value of plant and machinery, ofce equipment and motor vehicles of the Group includes an amount of S$2,773,565 (2009: S$3,254,711) held under nance leases. The net book value of leasehold buildings, freehold land and plant and machinery of the Group includes an amount of S$10,702,118 (2009: S$4,694,916) nanced by term loans. Leasehold building with a net book value of S$6,642,097 (2009: S$1,722,750) is subject to a legal mortgage to secure trust receipts facilities as disclosed in Note 21 to the nancial statements. Ofce Equipment S$ Furniture and tting S$
Company
Renovation S$
Total S$
At Cost At 1 January 2010 Additions At 31 December 2010 At 1 January 2009 Additions At 31 December 2009 Accumulated depreciation At 1 January 2010 Charge for the year At 31 December 2010 At 1 January 2009 Charge for the year At 31 December 2009 Net book value At 31 December 2010 At 31 December 2009
300,693 31,464 332,157 51,780 248,913 300,693
18,892 18,892
8,688 8,688
300,693 59,044 359,737 51,780 248,913 300,693
42,992 101,640 144,632 11,576 31,416 42,992
1,734 1,734
594 594
42,992 103,968 146,960 11,576 31,416 42,992
187,525 257,701
17,158
8,094
212,777 257,701
The carrying amount of property, plant and equipment that would have been recognised had the assets been carried under the cost model: Leasehold Building At At cost revaluation model S$ S$ 10,431,654 (47,776) 10,383,878 9,204,755 (1,033,369) 8,171,386
Group At 31 December 2010
Cost Accumulated depreciation Net book value
42

31 December 2010
10. GOODWILL Group S$
Goodwill on consolidation Cost At 1 January 2010 and 31 December 2010 At 1 January 2009 and 31 December 2009 Carrying amount At 31 December 2010 and 31 December 2009
760,828 760,828
760,828
Impairment tests for cash-generating units containing goodwill

Goodwill is allocated to the Groups cash generating units (CGU) identied according to country of operation and business segment as follows: Equipment 2010 2009 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 ow projections based on nancial 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 reect specic risks relating to the relevant segments. Equipment 2010 2009 S$ S$ Gross margin Growth rate (Years 2010 to 2014) Discount rate 30% 10% 6% 30% 10% 6%
43

31 December 2010
11. DEFERRED DEVELOPMENT EXPENDITURE Group S$ Cost At 1 January 2010 Additions At 31 December 2010 At 1 January 2009 Additions At 31 December 2009 Amortisation At 1 January 2010 Addition At 31 December 2010 At 1 January 2009 Addition At 31 December 2009 Carrying amount At 31 December 2010 At 31 December 2009
1,701,633 125,840 1,827,473 747,075 954,558 1,701,633
109,056 262,892 371,948 109,056 109,056
1,455,525 1,592,577
Total salaries and wages capitalised into deferred development expenditure were S$125,840 (2009: S$390,020).
12.
INVESTMENT IN SUBSIDIARIES (a) Investment in subsidiaries:Company 2010 2009 S$ S$ Unquoted shares, at cost 6,346,301 6,346,301
44

31 December 2010
12. INVESTMENT IN SUBSIDIARIES (CONTD) (b) The following information relates to the subsidiaries:Place of business/ Country of Percentage of Incorporation equity held 2010 2009 % % Singapore 100 100
Name of company
Principal activities
Cost of investment 2010 2009 S$ S$ 3,633,221 3,633,221
Rokko Technology Pte. Ltd. and its subsidiary:

- Rokko Technology Sdn Bhd *
Dealing in and manufacturing of precision tools. Supply precision tools and related services. Investment holding.
Malaysia Singapore
100 100
100 100
Rokko Ventures Pte. Ltd. and its subsidiaries:

- Rokko Systems Pte. Ltd. **
2,361,660 2,361,660
Design and manufacture of semiconductor assembly and testing equipment. Design and advanced semiconductor equipment. Trading and assembly of equipment, materials and tools. Dealing in metal stamping and tools and dies fabrication. Dealing in metal works and manufacturing of precision tools.
Singapore
100
100
- Rokko Mechatronics Pte. Ltd.
Singapore
100
100
Rokko Materials Pte. Ltd. Rokko Stamping Pte. Ltd. PT. Rokko Sakti Indonesia ***
Singapore
100
100
100,000
100,000
Singapore
100
100
100,000
100,000
Indonesia
100
100
151,420
151,420
6,346,301 6,346,301
All the subsidiaries of the Group incorporated in Singapore are audited by Mazars LLP, Public Accountants and Certied Public Accountants.
* ** Audited by other members of Mazars LLP. 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. No statutory audit is required as the company is going through liquidation.
***
45

31 December 2010
13. INVENTORIES Group 2010 S$ Finished goods Less: Allowance for slow moving and obsolete inventories 1,860,333 (186,184) 1,674,149 1,029,655 (180,609) 849,046 11,279,653 13,802,848 2009 S$ 2,858,299 (597,631) 2,260,668 1,022,297 (102,152) 920,145 8,825,067 12,005,880
Raw materials and consumables Less: Allowance for slow moving and obsolete inventories Work-in-progress Total
Included in inventories are salaries and wages amounting to S$741,865 (2009: S$429,606). The cost of inventories recognised as an expense and included in the cost of sales amounted to S$24,809,340 (2009: S$15,138,493).
14.
TRADE AND OTHER RECEIVABLES Group 2010 S$ Trade receivables Other receivables Deposits Prepayments Staff loans 5,276,945 174,043 101,317 130,097 73,015 5,755,417 2009 S$ 10,613,824 203,916 561,299 390,148 56,932 11,826,119 Company 2010 2009 S$ S$ 4,400 23,871 28,271 35,885 35,885
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 2010 S$ Malaysian Ringgit Indonesian Rupiah United States dollar 162,571 1,735 3,429,559 2009 S$ 162,571 7,946,668 Company 2010 2009 S$ S$
46

31 December 2010
15. AMOUNTS OWING BY SUBSIDIARIES Company 2010 2009 S$ S$ Trade Non-trade 512,830 4,634,571 5,147,401 607,358 648,920 1,256,278
The non-trade amounts owing by subsidiaries are unsecured, interest-free and are repayable on demand.
16.
CASH AND CASH EQUIVALENTS Group 2010 S$ Cash on hand Cash with banks 17,454 12,749,650 12,767,104 2009 S$ 14,261 8,949,357 8,963,618 Company 2010 2009 S$ S$ 1,361,239 1,361,239 3,066,085 3,066,085
Cash and bank balances denominated in foreign currencies at the end of the reporting date are as follows: Group 2010 S$ United States dollar Malaysian Ringgit Japanese Yen Indonesian Rupiah 8,524,804 69,525 1,640,397 2009 S$ 6,576,359 119,525 664,820 495 2010 S$ Company 2009 S$ 3,009,899
1,261,650
17.
SHARE CAPITAL Group and Company 2010 No. of shares Issued and fully paid-up with no par value: At 1 January and 31 December S$ 2009 No. of shares S$
165,000,000
12,442,108
150,000,000
10,432,808
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. During the year, 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.
47

31 December 2010
18. TREASURY SHARES Group and Company Number of shares Amount 2010 2009 2010 2009 S$ S$ Balance at 1 January Purchase of treasury shares Balance at 31 December 4,355,000 645,000 5,000,000 771,000 3,584,000 4,355,000 435,947 89,770 525,717 100,218 335,729 435,947
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 12 April 2010, the Company purchased 645,000 (2009: 3,584,000) shares by way of on-market purchase at share prices ranging from S$0.125 to S$0.155 (2009: S$0.075 to S$0.12). The total amount paid to purchase the shares was S$89,770 (2009: S$335,729).
19.
FOREIGN CURRENCY TRANSLATION RESERVES The foreign currency translation reserves comprise: (a) foreign exchange differences arising from the translation of the nancial statements of foreign operations whose functional currencies are different from the functional currency of the Company; and the exchange differences on monetary items which form part of the Groups net investment in foreign operations.
(b)
20.
REVALUATION RESERVE The revaluation reserve relates to the revaluation of the leasehold buildings of the Group (Refer to Note 2.1). There is no restriction on the distribution of the balance of the revaluation reserves to shareholders.
21.
INTEREST-BEARING LIABILITIES Group 2010 S$ Current Obligations under nance lease (secured) (a) Interest-bearing term loans (secured) (b) Bridging loans (c) Trust receipts (secured) (d) Invoice nancing (e) 2009 S$ Company 2010 2009 S$ S$
779,247 313,695 885,160 5,755,200 2,887,463 10,620,765
904,219 151,589 616,039 2,174,062 3,525,622 7,371,531
49,633 49,633
52,177 52,177
48

31 December 2010
21. INTEREST-BEARING LIABILITIES Group 2010 S$ Non-current Obligations under nance lease (secured) (a) Interest-bearing term loans (secured) (b) Bridging loans (c) 2009 S$ Company 2010 2009 S$ S$
608,903 6,054,145 1,596,268 8,259,316
906,492 3,389,575 1,595,070 5,891,137
49,633 49,633
(a)
Obligations under nance leases (secured)

Group Payments Interest 2010 2010 S$ S$ Within 1 year After 1 year but within 5 years 835,292 643,189 1,478,481 Company Payments Interest Principal 2010 2010 2010 S$ S$ S$ 50,599 50,599 966 966 49,633 49,633
Principal 2010 S$
56,045 779,247 34,286 608,903 90,331 1,388,150
Group Payments Interest 2009 2009 S$ S$ Within 1 year After 1 year but within 5 years 991,048 955,434 1,946,482
Principal 2009 S$
Company Payments Interest Principal 2009 2009 2009 S$ S$ S$ 55,199 50,598 105,797 3,022 965 3,987 52,177 49,633 101,810
86,829 904,219 48,942 906,492 135,771 1,810,711
The effective interest rate for the nance lease ranges from 3.87% - 7.37% (2009: 3.87% - 7.37%) per annum. The nance leases are secured against property, plant and equipment with a net book value amounting to S$2,773,565 (2009: S$3,254,711), and corporate guarantee by Rokko Holdings Ltd. Finance lease denominated in foreign currencies at the end of the reporting date are as follows: Group 2010 S$ Malaysian Ringgit 26,659 2009 S$ Company 2010 2009 S$ S$
49

31 December 2010
21. INTEREST-BEARING LIABILITIES (CONTD) (b) Interest-bearing term loans (secured) The effective interest rate for the term loans ranges from 1.37% - 6.25% (2009: 3.75% - 4.75%) 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$10,702,118 (2009: S$4,694,916). Corporate guarantee by Rokko Holdings Ltd. except for Rokko Technology Sdn Bhd where the loans are secured by personal guarantees of directors of the Company.
(ii)
Term loans denominated in foreign currencies at the end of the reporting date are as follows: Group 2010 S$ 2009 S$ Company 2010 2009 S$ S$
Malaysian Ringgit
(c) Bridging loans
629,308
648,930
Group Payments Interest 2010 2010 S$ S$ Within 1 year After 1 year but within 5 years 989,102 103,942 1,674,626 78,357 2,663,728 182,299 Group Payments Interest 2009 2009 S$ S$ Within 1 year After 1 year but within 5 years 712,608 96,569
Principal 2010 S$ 885,160 1,596,269 2,481,429
Company Payments Interest Principal 2010 2010 2010 S$ S$ S$
Principal 2009 S$ 616,039 1,595,070 2,211,109
Company Payments Interest Principal 2009 2009 2009 S$ S$ S$
2,270,400 675,330 2,983,008 771,899
The effective interest rate for the bridging loans is 5% (2009: 5%) per annum. The bridging loans are secured by Corporate guarantee by Rokko Holdings Ltd. Bridging loans are denominated in Singapore dollars.
50

31 December 2010
21. INTEREST-BEARING LIABILITIES (CONTD) (d) Trust receipts The trust receipts are secured by: (i) Legal mortgage over certain leasehold building with a net book value of S$6,642,097 (2009: S$1,722,750); and Corporate guarantee by Rokko Holdings Ltd. The effective interest rate for trust receipts ranges from 1.58% - 5.50% (2009: 1.65% 5.0%) per annum. Trust receipts denominated in foreign currencies at the end of the reporting date are as follows: Group 2010 S$ United States dollar Japanese Yen (e) Invoice nancing The invoice nancings are secured by Corporate guarantee by Rokko Holdings Ltd. The effective interest rate for invoice nancing ranges from 2.18% - 2.52% (2009: 2.17% - 2.45%) per annum. Invoice nancing denominated in foreign currencies at the end of the reporting date is as follows: Group 2010 S$ United States Dollar 2,887,463 2009 S$ 3,000,666 Company 2010 2009 S$ S$ 2,427,916 2,724,480 2009 S$ 230,821 1,717,552 Company 2010 2009 S$ S$
(ii)
51

31 December 2010
22. DEFERRED TAXATION The movement in the Groups deferred tax liabilities for the nancial years ended 31 December 2010 and 2009 is as follows: Deferred tax liabilities are attributable to the following: (Charged)/credited to prot or loss Movements Changes in in temporary tax rates differences S$ S$
GROUP
At 1 January 2010 S$
Exchange translation differences S$
At 31 December 2010 S$
Deferred tax liabilities Property, plant and equipment
(1,234,179) (1,234,179) At 1 January 2009 S$
(2,139) (2,139) Exchange translation differences S$
(263,496) (263,496)
(1,499,814) (1,499,814) At 31 December 2009 S$
Movements Changes in in temporary tax rates differences S$ S$
(1,128,014) (1,128,014)
1,592 1,592
(62,667) (62,667)
(45,090) (45,090)
(1,234,179) (1,234,179)
COMPANY Deferred tax liabilities Property, plant and equipment
At 1 January 2010
Exchange translation differences
(Charged)/credited to prot or loss Movements Changes in in temporary tax rates differences
At 31 December 2010
(27,634) (27,634) At 1 January 2009 S$
Exchange translation differences S$
7,552 7,552
(20,082) (20,082) At 31 December 2009 S$
Movements Changes in in temporary tax rates differences S$ S$
(27,634) (27,634)
(27,634) (27,634)
52

31 December 2010
23. TRADE AND OTHER PAYABLES Group 2010 S$ Trade payables Accrued operating expenses Other payables 7,694,090 1,314,657 287,643 9,296,390 2009 S$ 11,158,937 3,475,094 320,710 14,954,741 Company 2010 2009 S$ S$ 129,095 44,080 173,175 8,300 171,754 7,610 187,664
Trade payables are non-interest bearing and are normally settled on 30 to 90 days credit term. Trade payables denominated in foreign currencies at the end of the reporting date are as follows: Group 2010 S$ Korean Won Malaysian Ringgit Japanese Yen United States dollar 5,449 50,863 4,269,869 1,449,750 2009 S$ 309,643 4,693,151 3,493,907 Company 2010 2009 S$ S$
24.
AMOUNT OWING TO DIRECTORS The amount owing to directors is unsecured, interest free and is repayable with a monthly payment of S$100,000 subject to the Group having sufcient funds to meet the Groups funding requirements and subject to the review and approval of the Audit Committee.
25.
SIGNIFICANT RELATED PARTY TRANSACTIONS For the purposes of these nancial 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 signicant inuence over the party in making nancial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common signicant inuence. Related parties may be individuals or other entities.
53

31 December 2010
25. SIGNIFICANT RELATED PARTY TRANSACTIONS (CONT) Except as disclosed elsewhere in these nancial statements, during the period under review, the Group had the following signicant transactions with related parties on terms agreed between the parties as follows: Group 2010 S$ Income Sales to a related party Maintenance fee income on equipment Expenses Subcontractor fees Sales and marketing services Ofce rental Accounting services Legal fees Repayment of amount owing to a director Aggregate repayments 2009 S$
14,709 51,150
18,555 19,001
133,887 84,316 1,100 18,625 11,540
41,866
26.
CAPITAL COMMITMENTS Group 2010 S$ Capital expenditure contracted but not provided for in the nancial statements - In respect of the purchase of property, plant and equipment 2009 S$ Company 2010 2009 S$ S$
3,780,000
In November 2009, a wholly-owned subsidiary of the Company accepted the option to purchase a property at 61 Kaki Bukit Road 2 and a deposit of S$420,000, being 10% of total purchase price of S$4.2 million, has been paid. The sale and purchase of said property has been completed in January 2010.
54

31 December 2010
27. OPERATING LEASE COMMITMENTS The Group and the Company have commitments for future minimum lease payments under noncancellable operating lease as follows: Group 2010 S$ 2009 S$ Company 2010 2009 S$ S$
Within 1 year Within 2 to 5 years
27,200 27,200
The operating lease was entered into for a period of three years and is renewable for a further period of two years at prevailing rate upon expiry.
28.
SEGMENT INFORMATION For management purposes, the Group is organised into business units based on their products and services, and has three reportable operating segments as follows: I. The Equipment segment designs, develops and manufactures customised automated equipment specic to customer requirements. The Tooling segment designs, develops and manufactures precision tools used in the front and back end semiconductor manufacturing processes. The Stamping segment provides connector stamping plating services to manufacturers in the electronics industry.
II.
III.
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 prot or loss which in certain respects, as explained in the table below is measured differently from operating prot or loss in the consolidated nancial statements. Group nancing (including nance 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 arms length basis in a manner similar to transactions with third parties.
28.
SEGMENT INFORMATION (CONTD)
Business segments
Tooling 2010 S$ 5,543,400 1,349,609 68,455 363,978 1,723,135 270,589 1,452,546 490,612 2,954,640 42,257 (2,501,875) (54,388) 35,683 11,846 362,857 436,224 2,990,323 54,103 (2,501,875) 362,857 D 363,909 124,856 52,308 (26,246) (26,246) C 2,329,866 262,892 4,817,968 555,907 4,262,061 73,521 35,972 34,662 (157,453) (235,000) B 555,388 3,070 681 (157,453) (235,000) B 6,156 517,394 4,100,000 1,144,000 (18,978,962) (13,744,346) A 1,568 500,835 1,984,493 109,056 2,029,509 268,279 1,761,230 3,789,668 10,782,930 5,630,494 42,584,498 29,495,246 2009 S$ Note
OPERATING SEGMENT
Equipment 2010 2009 S$ S$
Stamping 2010 2009 S$ S$
Trading and Others 2010 2009 S$ S$
Elimination 2010 2009 S$ S$
Consolidated Total 2010 2009 S$ S$
Total external revenue
26,258,168 20,075,084
Inter-segment revenue 157,453 318,913 1,412,230 1,876,979 157,636 1,719,343 396,174 147,619 543,793 1,396,451 325,591 235,004
1,905,728
419,388 11,623,625 11,663,564
Interest income
3,086
883
Interest expense
289,501
302,061
Depreciation
455,048
198,071
Amortisation of deferred development expenditure
262,892
109,056
Reportable segment prot before tax
729,406
632,532
Income tax expense
91,999
163,202
Reportable segment prot after tax
637,407
469,330
Other material non-cash items: (80,019) (412,516) 250,090 7,370,212 841,067 4,015,101 4,526,623 1,146,546 64,340 E 59,044 3,073,976 248,914 3,246,244 (12,877,996) (16,209,724) F G (80,019) (412,516) 250,090 317,312 688,939 56,238,112 49,513,629 7,464,802 125,840 1,872,774 554,590 30,475,223 30,099,965
Allowance of slow moving and obsolete inventories
252,972
Obsolete inventories written off
688,939
Write back impairment of property
Impairment of property
Reportable segment assets 1,581,253 365,897
27,271,384 21,918,594 25,019,868 31,190,325
6,584,612 19,389,262 16,083,098 (22,812,614) (26,263,000)
Capital expenditure
4,983,438
111,417
Deferred development expenditure
125,840
554,590
31 December 2010
Reportable segment liabilities 23,522,821 17,678,873 12,741,321 20,857,949
55
56

31 December 2010
28. SEGMENT INFORMATION (CONTD) Business segments (Contd) 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 B Interest charges by inter-company are eliminated on consolidation. Note C Depreciation adjustment on assets purchased from inter-company from FY2003 to FY2006 : 2010 & 2009 S$ Sales of xed assets to inter-company Cost of xed assets Prot on inter-intercompany sales of xed assets Inter-company prot included in depreciation charges per year Note D The following are items derived from inter-segment transaction, and were added to/(deducted from) Segment Prot Before Tax : 2010 S$ 1) 2) 3) 4) Inter-segment revenue Cost of sales on inter-segment charges Inter-segment charges classied as operating expenses Depreciation adjustments on assets purchased from inter-company (18,978,963) 15,212,982 1,237,860 26,246 (2,501,875) 2009 S$ (14,096,346) 13,133,681 1,299,276 26,246 362,857 1,194,316 (931,860) 262,456 26,246
57

31 December 2010
28. SEGMENT INFORMATION (CONTD) Business segments (Contd) Note E The following items are (eliminated from)/added to total assets on consolidation : 2010 S$ 1) 2) 3) 4) 5) 6) Amounts owing by inter-companies Investments in subsidiaries Goodwill on acquisition of minority interest Prot on inter-company sales of xed assets net off depreciation adjustments Prot on inter-company sales included in deferred development expenditure Prot on inter-company sales included in inventory (12,875,694) (10,537,823) 760,828 (85,675) (74,250) (22,812,614) 2009 S$ (16,152,263) (10,537,823) 760,828 (111,921) (221,821) (26,263,000)
Note F Prot element on inter-company sales included in deferred development expenditure are eliminated on consolidation. 2010 S$ Deferred development expenditure - opening balance Deferred development expenditure for reportable segments for the year Amortisation for reportable segment Inventories reclassied as deferred development expenditure Deferred development expenditure closing balance Amount owing to inter-companies are eliminated on consolidation. Note G Amount owing to inter-companies are eliminated on consolidation. 1,592,577 125,840 (262,892) 1,455,525 2009 S$ 747,075 554,590 (109,056) 399,968 1,592,577
58
28.
SEGMENT INFORMATION (CONTD)
Geographical segments
China and Taiwan 2009 S$ S$ S$ S$ S$ S$ S$ S$ S$ 2010 2009 2010 2009 2010 2009 2010 2009 Others Elimination TOTAL
ASEAN
Group
2010
31 December 2010
S$
SEGMENT REVENUE 8,544,700 8,544,700 (10,537,823) (10,537,823) 1,117,383 1,081,191 300,000 (18,978,962) (13,744,346) 1,117,383 1,081,191 197,078 42,584,498 29,495,246
Sales to external customers
32,958,607 28,180,785
Intersegment sales
18,978,962 13,444,346
Total
51,937,569 41,625,131
497,078 (18,978,962) (13,744,346) 42,584,498 29,495,246 (10,572,205) (15,725,176) 56,238,112 49,513,629 (21,110,028) (26,262,999) 56,238,112 49,513,629 7,464,802 125,840 1,872,774 554,590
Segment assets
66,810,317 65,238,805
Unallocated assets
10,537,823 10,537,823
Total assets 1,872,774 554,590
77,348,140 75,776,628
Capital expenditure
7,464,802
Deferred development expenditure
125,840
Revenues of approximately $33.8 million are derived from ve external customers (FY2009: $22.5 million from two external customers). These revenues are attributable to the Equipment, Tooling and Stamping segments.
59

31 December 2010
29. 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 Groups 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 nance the Groups operations and to mitigate the effects of uctuations in cash ows. The Group prepares cash ows projections on a regular basis for its core operations to ensure as far as possible, that it will always have sufcient liquidity to meet its liabilities when due. In addition, the Group has access to lines of credit from nancial institutions as follows: The following are the contractual maturities of nancial liabilities:
Carrying amount GROUP 2010 Trade and other payables Amount owing to directors Finance leases Term loans Bridging loans Trust receipts Invoice nancing S$ Contractual cashows S$ 6 months or less 612 months 12 years S$ S$ S$ More than 5 years S$
2 5 years S$
9,296,390 533,629 1,388,150 6,367,840 2,481,429 5,755,200 2,887,463 28,710,101 Carrying amount
9,296,390 533,629 1,478,481 8,466,774 2,663,728 5,781,400 2,890,514 31,110,916 Contractual cashows S$
9,296,390 533,629 507,458 246,819 494,551 5,781,400 2,890,514 19,750,761
327,834 246,289 494,551 1,068,674
338,815 492,568 989,106 1,820,489
304,374 1,485,342 685,520 2,475,236
5,995,756 5,995,756 More than 5 years S$
6 months or less 612 months 12 years S$ S$ S$
2 5 years S$
GROUP
S$
2009 Trade and other payables 14,954,741 Amount owing to directors 522,305 Finance leases 1,810,711 Term loans 3,541,164 Bridging loans 2,211,109 Trust receipts 2,174,062 Invoice nancing 3,525,622 28,739,714
14,954,741 522,305 1,946,482 5,157,381 2,408,168 2,190,771 3,771,203 30,951,051
14,954,741 522,305 546,518 151,161 356,304 2,190,771 3,771,203 22,493,003
444,530 152,921 356,304 953,755
678,285 305,841 712,608 1,696,734
277,149 917,528 982,952 2,177,629
3,629,930 3,629,930
Contractual cashows include the interest element. The amount owing to directors is payable subject to review and approval of the Audit Committee.
Unutilised credit facilities

Group and Company 2010 2009 S$ S$ Bank overdraft facilities Trade facilities 700,000 5,524,122 700,000 5,500,316
60

31 December 2010
29. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD)
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 xed deposits are placed with banks and nancial institutions which are regulated. At 31 December 2010, trade receivables from ve customers (2009: four) accounted for approximately 83.7% (2009: 85.2%) of total trade receivables of the Group. The Groups primary exposure to credit risk arises relating to trade receivables is limited due to the Groups 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 2010 S$ By geographical areas Singapore Malaysia Philippines China and Taiwan Others 1,829,636 88,952 898,534 1,969,400 490,423 5,276,945 2009 S$ 2,617,081 1,724,063 4,268,623 1,225,316 778,741 10,613,824 2010 S$ Company 2009 S$
By type of customers Non-related parties
5,276,945
10,613,824
Exposure to credit risk

The carrying amount of nancial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was: Group 2010 S$ Trade and other receivables Cash and cash equivalents 5,755,417 12,767,104 18,522,521 2009 S$ 11,826,119 8,963,618 20,789,737
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 specic loss component that relates to individually signicant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identied. The collective loss allowance is determined based on historical data of payment statistics for similar nancial assets. No allowance for individually signicant 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 nancial assets that is past due and/or impaired except for the other receivables.
61

31 December 2010
Credit risk (Contd) Financial assets that are past due and/or impaired (Contd)
The age analysis of trade receivables and the impairment is as follows: Gross 2010 S$ 2,655,272 702,564 653,922 3,537 1,260,650 5,275,945 Impairment 2010 S$ Gross 2009 S$ 4,842,989 4,239,605 446,601 22,257 1,062,372 10,613,824 Impairment 2009 S$
Group Not past due Past due 0 30 days Past due 31 60 days Past due 61 90 days More than 90 days Total
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. The allowance for impairment in respect of staff loans during the year are as follows: 2010 S$ Balance at 1 January Balance at 31 December The doubtful staff loans have been written off in 2009 as they are irrecoverable. 2009 S$ 42,814
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 2010, if the foreign currencies weakened 10% against the Singapore dollars with all other variables held constant, the Groups post-tax prot and equity for the year would have been S$51,000 higher (2009: S$114,000 lower) and S$226,000 lower (2009: S$21,000 higher) respectively, mainly as a result of foreign exchange gains/losses on translation of foreign currency denominated nancial instruments such as trade receivables, trade payables and cash and bank balances into Singapore dollars. The Companys post-tax prot and equity for the year would have been S$105,000 lower (2009: S$250,000 lower), mainly as a result of foreign exchange losses on translation of foreign currency denominated bank balances. A 10% strengthening against Singapore dollars would have had the equal but opposite effect.
62

31 December 2010
Fair values
The carrying amounts of the nancial assets and liabilities other than term loans and obligations under nance lease approximate their fair values as at reporting dates due to the short period to maturity. The Group does not hold nancial 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. The carrying amounts and fair values of nancial assets and liabilities are as follows: Carrying amounts 2010 2009 S$ S$ 5,755,417 12,767,104 9,296,390 6,367,840 1,388,150 2,481,428 5,755,200 2,887,463 533,629 11,826,119 8,963,618 14,954,741 3,541,164 1,810,711 2,211,109 2,174,062 3,525,622 522,305 Fair values 2010 2009 S$ S$ 5,755,417 12,767,104 9,296,390 6,207,829 1,388,150 2,373,207 5,755,200 2,887,463 533,629 11,826,119 8,963,618 14,954,741 3,522,938 1,810,711 2,009,076 2,174,062 3,525,622 522,305
Group
Trade and other receivables Cash and bank balances Trade and other payables Term loans Obligations under nance lease Bridging loans Trust receipts Invoice nancing Amount owing to directors
Company
Carrying amounts 2010 2009 S$ S$ 28,271 5,147,401 1,361,239 49,633 173,175 35,885 1,256,278 3,066,085 101,810 187,664
Fair values 2010 2009 S$ S$ 28,271 5,147,401 1,361,239 49,633 173,175 35,885 1,256,278 3,066,085 101,810 187,664
Trade and other receivables Amount owing by subsidiaries Cash and bank balances Obligations under nance lease Trade and other payables
Basis for determining fair value

The following summarises the signicant methods and assumptions used in estimating the fair values of nancial instruments reected in the table above. The carrying value of trade and other receivables, cash and bank balances, trade and other payables, amounts owing by a related party, trust receipts, and amount owing to directors approximates their fair values due to the short period to maturity. All other nancial assets and liabilities are discounted to determine their fair values.
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31 December 2010
Fair values (Contd) Interest rates used for determining fair value
The interest rates used to discount estimated cash ows are based on the market rate of interest at the reporting date, and were as follows: Group and Company 2010 2009 Term loans Finance lease liabilities 6.00% 3.87% - 7.37% 6.00% 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 nancial 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 Groups interest rate risk mainly arises from the bank borrowings. The Groups policy is to obtain the most favourable interest rates available without increasing its interest rate exposure. Information relating to the Groups interest rate exposure is also disclosed in the notes on the Groups borrowings, including nance lease arrangement (Note 21). At 31 December 2010, if interest rates on all variable rate borrowings has been 0.5% higher with all other variables held constant, the Groups post-tax prot and equity for the year would have been S$88,000 (2009: S$63,000) lower respectively, mainly as a result of higher interest expense on variable rate borrowings net of applicable income taxes. A 0.5% lower in interest rate would have had the equal but opposite effect. The following table sets out the carrying amount, by maturity, of the Groups nancial instruments that are exposed to interest rate risk.
Within 1 year S$ 2010 Fixed rate Finance lease obligations Bridging loan Trust receipts Invoice nancing 12 years S$ 23 years S$ 34 years S$ 4 5 years S$ More than 5 years S$
Total S$
779,247 885,160 5,755,200 2,887,463 313,692
314,034 930,447 313,558
235,314 529,547 302,448
59,555 136,274 306,993
1,388,150 2,481,428 5,755,200 2,887,463
Variable rate Term loans

2009 Fixed rate Finance lease obligations Bridging loan Trust receipts Invoice nancing
314,782 4,816,367 6,367,840
904,219 616,039 2,174,062 3,525,622 151,589
642,799 647,556 149,102
170,596 680,687 156,176
93,097 266,827 163,592
1,810,711 2,211,109 2,174,062 3,525,622
Variable rate Term loans
170,831 2,749,874 3,541,164
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31 December 2010
Interest rate risk (Contd)

Interest rate for certain term loans is xed in the range of 4% to 5% per annum. Interest rate for bridging loans is xed at 5% per annum. The other nancial instruments of the Group are not subjected to interest rate risks.
Capital management
The Groups objectives when managing capital are to safeguard the Groups ability to continue as a going concern in order to provide returns for shareholders and benets for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. 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 nancial position) less cash and cash equivalents. Total capital is calculated as total equity including minority interests, if any, as shown in the statement of nancial position, plus net debts During the year ended 31 December 2010, the Groups strategy, which was unchanged from 31 December 2009, was to maintain a gearing ratio of less than one. The gearing ratios at 31 December 2010 and 31 December 2009 were as follows: Group 2010 S$ Total borrowings Less: cash and cash equivalents Net debt Total equity Total capital Gearing ratio 28,710,100 (12,767,104) 15,942,996 25,762,889 41,705,885 0.38 2009 S$ 28,739,714 (8,963,618) 19,776,096 19,413,664 39,189,760 0.50
The Group and the Company are not subject to any externally imposed capital requirements.
30.
DIVIDENDS PAID Group and Company 2010 2009 S$ S$ First and nal dividend paid in respect of the previous nancial year of 0.5 cent (2009: 0.20 cent) per ordinary share, tax exempt one-tier Interim dividend paid in respect of the current nancial year of 0.5 cent (2009: Nil) per ordinary share, tax exempt one-tier 726,635 291,748
800,000
The Directors have proposed a nal dividend for the nancial year ended 31 December 2010 of 0.50 cent per ordinary share (excluding Treasury Shares), tax exempt one-tier amounting to S$800,000. These nancial statements do not reect the dividend payable, which will be accounted for in the shareholders equity as an appropriation of retained earnings for the nancial year ending 31 December 2011.
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31 December 2010
31. EARNINGS PER SHARE Group 2010 S$ Basic earnings per share is based on: Net prot attributable to ordinary shareholders of the Company 2009 S$
4,262,061 Group 2010 No. of shares
1,761,230
2009 No. of shares 146,477,510
Weighted average number of ordinary shares
154,225,203
The basic earnings per share is calculated by dividing the prot 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 nancial year ended 31 December 2010, no diluted earnings per share are presented.
32.
CONTINGENT LIABILITY The Group and the Company did not have any signicant contingent liabilities as at 31 December 2010.
33.
DIRECTORS REMUNERATION Companys directors receiving remuneration from the Group: Number of director 2010 2009 Remuneration of: S$500,000 and above S$250,000 to below S$500,000 Below S$250,000
5 5
5 5
34.
SUBSEQUENT EVENT On 31 December 2010, the Company entered into a sale and purchase agreement to acquire the entire interest in the issued capital of a Singapore-registered company, Jade Precision Engineering Pte Ltd (JPE) for a consideration of S$8.0 million to be settled in cash on completion of the acquisition. The said acquisition was completed on 28 February 2011. Subsequent to the aforesaid completion, JPE has become a wholly-owned subsidiary of the Company and its name has been changed to Rokko Leadframes Pte. Ltd.
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31 December 2010
35. LAND AND BUILDINGS The Groups properties are as follows:Address Description Tenure
28 Kaki Bukit Industrial Terrace Singapore 416108 18 Kaki Bukit Road #02-01 Singapore 415978 25 Kaki Bukit Industrial Terrace Singapore 416105 30 Kaki Bukit Industrial Terrace Singapore 416110 73 Loyang Way Singapore 508763 61 Kaki Bukit Road 2 Singapore 417869 Lot No.15, Jalan Bukit 7, Kawasan MIEL Bandar Seri Alam Phase III, 81750 Masai Johor, Malaysia Lot No.17, Jalan Bukit 7, Kawasan MIEL Bandar Seri Alam Phase III, 81750 Masai Johor, Malaysia
Factory cum ofce
60 year lease commencing from 9 January 1995 60 year lease commencing from 9 January 1995 60 year lease commencing from 9 January 1995 60 year lease commencing from 9 January 1995 30 year leasehold from 1 February 2006 30 year leasehold from 7 November 2007 Freehold
Design, sales and service centre cum ofce Factory
Factory
Factory cum ofce
Factory cum ofce
Factory
Factory
Freehold
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Statistics of Shareholdings
As at 3 March 2011
Issued and fully paid-up capital Number of shares Class of shares Voting rights : : : : S$12,442,108 165,000,000 Ordinary shares One vote per ordinary share
The Company held 5,000,000 treasury shares, constituting 3.13% of the total number of issued shares (excluding treasury shares).
DISTRIBUTION OF SHAREHOLDINGS NO. OF SHAREHOLDERS 4 470 390 10 874
SIZE OF SHAREHOLDINGS 1 1,000 10,001 1,000,001 and Total 999 10,000 1,000,000 above
% 0.46 53.78 44.62 1.14 100.00
NO. OF SHARES 1,940 1,620,440 29,936,920 128,440,700 160,000,000
% 0.00 1.01 18.71 80.28 100.00
TWENTY LARGEST SHAREHOLDERS No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. NAME Lim Chong Chen Lee Sun Lim Kim Eng Securities Pte. Ltd. OCBC Securities Private Ltd Tan Keat Seang Philip Securities Pte Ltd UOB Kay Hian Pte Ltd Tey Kim Hwee Lim Yoke Mein Baek Seung Ho Lau Kok Yin Chey Long Wan DMG & Partners Securities Pte Ltd Low Chai Chong Law Jow Yuan Shy Dayanghirang Manolo Dimayuga Zhang Jing Khoo Poi Lan Lim Yee Chuan Hoong Lai Sim Total NO. OF SHARES 112,460,260 3,785,920 2,667,000 1,741,000 1,531,000 1,420,000 1,379,000 1,225,560 1,160,960 1,070,000 1,000,000 902,000 788,000 774,000 625,000 600,000 545,000 515,000 450,000 444,000 135,083,700 % 70.29 2.37 1.67 1.09 0.96 0.89 0.86 0.77 0.73 0.67 0.63 0.56 0.49 0.48 0.39 0.38 0.34 0.32 0.28 0.28 84.45
68
Statistics of Shareholdings
As at 3 March 2011
SHARES HELD BY PUBLIC Based on the information provided to the Company as at 3 March 2011, approximately 27.59% of the issued ordinary shares of the Company was 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 SHAREHOLDERS Direct Interest Number of Shares % Lim Chong Chen 112,460,260 70.29 Deemed Interest Number of Shares %
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Corporate Governance
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 Companys corporate governance processes and activities for the nancial year ended 31 December 2010 (FY2010) with specic reference to the Code.
BOARDS 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 (Executive Director) Lim Yee Chuan (Executive Director) Lee Sen Choon (Lead Independent Director) Wai Chee Leong (Independent Director) The Boards 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 signicant 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 Companys articles of association 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 Committee meetings held in FY2010, as well as the attendance of each Board member thereof, is set out below:Board Audit Number of meetings held Board Members Tey Kim Hwee Lim Chong Chen Lim Yee Chuan Lee Sen Choon Wai Chee Leong 2 2 2 2 2 2 3 Board Committees Nominating Remuneration 1 1
Number of meetings attended 3 3 3 1 1 1 1 1 1
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The Company has adopted internal guidelines setting forth matters which specically require the Boards approval such as, amongst others, new investments, divestments and commitments to term loans and lines of credit from nancial institutions. Every Director of the Board has received the appropriate training, including his/her duties as a director and how to discharge those duties. 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 Directors from time to time. The Board ensures that incoming and newly appointed Directors will be given an orientation and brieng on the Groups 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 Boards 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 Codes denition of what constitutes an independent director in its review. The Independent Directors have conrmed that they do not have any relationship with the Company, its related companies or its ofcers 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 nance, business and management experience, industry knowledge, strategic planning and customer-based experience and knowledge. Where necessary or appropriate, the Non-Executive Directors of the Board will meet without the presence of the Management. The proles of our Directors are set out on pages 6 and 7 of this Annual Report.
71
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 companys 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 Hwees 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 Groups business. Although our Non-Executive Chairman, Mr Tey Kim Hwee is the brother-in-law of our Managing Director, Mr Lim Chong Chen, the Board is of the view that there are sufcient 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 inuence. 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 Managing Director, the Executive Director or Financial Controller has failed to resolve or where such communication is considered inappropriate. The Board collectively ensures the following, in consultation with the Management:the scheduling of meetings to enable the Board to perform its duties responsibly, while not interfering with the ow of the Groups operations; the preparation of the agenda for Board meetings; the exercise of control over the quality, quantity and timeliness of the ow of information between the Management and the Board, and between the Company and its Shareholders; and compliance with the Companys 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. Identication and selection of new Directors will be made by the NC which comprises three (3) Non-Executive Directors, Messrs Tey Kim Hwee, Lee Sen Choon and Wai Chee Leong. Messrs Lee Sen Choon and Wai Chee Leong are the Independent Directors. The Chairman of the NC is Mr Wai Chee Leong who is not directly associated (as dened under the Code) with any substantial Shareholders. 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 Directors contribution and performance; ensuring that all Directors submit themselves for re-nomination and re-election at regular intervals and at least once every three (3) years; determining annually whether a Director is independent; 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
(b)
(c) (d)
72
(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 Messrs Lee Sen Choon and 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 qualied and experienced persons for appointment to the Board. Information required in respect of each Directors academic and professional qualication is set out in the Board of Directors section of the Annual Report. Information on shareholdings in the Company held by each Director is set out in the Directors Report section of the Annual Report. According to the Companys Articles of Association (the Articles), one-third (1/3) of the Directors are required to retire from ofce 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 Messrs Lim Chong Chen and Wai Chee Leong be nominated for re-election at the forthcoming AGM. In making the recommendation, 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:Current directorships in listed companies KyodoAllied Industries Ltd Best World International Limited Hor Kew Corporation Limited Soon Lian Holdings Limited Mr Wai Chee Leong 7 September 2007 28 March 2008 Past directorships in listed companies
Director Mr Lim Chong Chen Mr Tey Kim Hwee Ms Lim Yee Chuan Mr Lee Sen Choon
Date of initial appointment 30 September 2003 30 September 2003 30 May 2007 7 September 2007
Date of last re-election 23 April 2009 23 April 2009 12 April 2010 12 April 2010
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 Companys share price performance over a ve (5) year period vis-a-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.
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The criteria for the evaluation of the performance of individual Directors include qualitative and quantitative factors such as performance of principal functions and duciary duties, level of participation at meetings, guidance provided to the Management and attendance record. The NC has assessed the current Boards performance to-date and is of the view that the performance of the Board as a whole was satisfactory. Although some of the Board members have multiple board representations, the NC is satised that sufcient time and attention has been given by the Directors to the Group. The Board and the NC have endeavoured to ensure that Directors appointed to the Board possess the background, experience, business knowledge, nance and management skills critical to the Groups 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 full 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 fulll their responsibilities efciently. 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. Directors have separate and independent access to the Companys 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 Companys 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/she 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 SGX-STs Listing Manual Section B: Rules of Catalist (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 xing the remuneration packages of individual directors. No director should be involved in deciding his own remuneration. The RC comprises three (3) Non-Executive Directors, Messrs Tey Kim Hwee, Lee Sen Choon and Wai Chee Leong. Messrs Lee Sen Choon and 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; the determination of the specic remuneration packages for each Executive Director;
(b)
74
(c) the determination of the appropriateness of the remuneration of Non-Executive Directors, taking into consideration the level of their contribution; and the review and recommendation to the Board of the terms of renewal of the service agreements of Executive Directors.
(d)
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 RCs 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 signicant proportion of executive directors remuneration should be structured so as to link rewards to corporate an individual performance. In setting remuneration packages, the RC takes into consideration the employment conditions within the industry and the Groups performance, as well as the performance of individual Directors and key executives. The Company has a staff remuneration policy which comprises a xed component and a variable component. The xed 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 the effort, time spent and responsibilities of 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 companys 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 sufciently disclosed in this Corporate Governance Report and in the nancial statements of the Company.
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A breakdown, showing the level and mix of each Directors remuneration for FY2010 in terms of percentage, is as follows:Fixed Salary and Benets -in-Kind Variable or Performance Related Income/Bonus
Remuneration Band and Name of Directors Below S$250,000 Lim Chong Chen Lim Yee Chuan Tey Kim Hwee Lee Sen Choon Wai Chee Leong
Directors Fees
Total
81% 80% 38%
62% 100% 100%
19% 20%
100% 100% 100% 100% 100%
A breakdown, showing the level and mix of each of the top four (4) key executives remuneration for FY2010 in terms of percentage, is as follows:Variable or Performance Related Income/Bonus
Remuneration Band and Name of Key Executives Below S$250,000 Cheh Mei Lee Seng Kwong Seng Chey Long Wan Jang Deok Chun
Fixed Salary
Total
85% 88% 78% 85%
15% 12% 22% 15%
100% 100% 100% 100%
No employee who is an immediate family member (as dened in the Rules of Catalist) of a Director was paid more than S$150,000 during FY2010. No grants have been made under the Companys Employee Share Option Scheme and Performance Share Scheme (the Schemes) since the dates of the adoption of the Schemes up to the end of FY2010. The committee administering the Schemes comprises the RC members, Messrs Wai Chee Leong, Tey Kim Hwee and Lee Sen Choon.
ACCOUNTABILITY PRINCIPLE 10 : The Board should present a balanced and understandable assessment of the companys performance, position and prospects. The Management provides the Board with adequate and timely management accounts of the Groups performance on a regular basis in order to assist the Board in understanding the nancial status and performance of the Group and for the Board to effectively discharge its duties. It is the Boards responsibility to provide Shareholders with a detailed and balanced explanation and analysis of the Companys performance, position and prospects on a halfyearly basis.
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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 Company 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, Messrs Tey Kim Hwee, Lee Sen Choon and Wai Chee Leong. Messrs Lee Sen Choon and 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) (b) (c) reviewing the audit plan of the external auditors, their management letter and the Managements response; reviewing the external auditors reports; reviewing the internal control and procedures and approval of arrangements for all interested person transactions; 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; reviewing and ensuring the integrity of the nancial statements of the Company and its subsidiaries before submission to the Board for approval; 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 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.
(d)
(e)
(f)
(g)
Mr Tey Kim Hwee is a businessman. Mr Lee Sen Choon is a partner at a certied public accounting rm in Singapore and Mr Wai Chee Leong is a director of a law rm. The Board is of the view that the AC has the requisite nancial 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 ofcer 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 Companys external auditors at its forthcoming AGM. During FY2010, the amount of non-audit fees paid to Mazars LLP and its afliates was S$16,900, representing 17.4% of total fees paid. The AC has reviewed the non-audit services provided by the auditors and is of the opinion that they would not affect the independence of the 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.
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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 condence, raise concerns about possible improprieties in matters of nancial 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 companys assets. The Groups internal controls and systems are designed to provide reasonable assurance as to the integrity and reliability of the nancial information and to safeguard and maintain accountability of assets. Procedures are in place to identify major business risks and evaluate potential nancial 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 nancial misstatements or loss, safeguarding of assets, the maintenance of proper accounting records, reliability of nancial information, compliance with legislation, regulations and best practices and the identication and management of business risks. The Board is therefore of the view that the system of internal controls and risk management maintained by the Group is adequate to meet the needs of the Group in its current business environment as well as to safeguard shareholders investments and the Groups 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 Group suffered the effects of the global nancial crisis in the rst half of FY2009. As such, the Company decided to discontinue the outsourcing of its internal audit function in order to reduce its expenses. An in-house internal audit team was then formed to perform the internal audit function. The internal audit team reports primarily to the AC and plans its internal audit schedules in consultation with the Management. The internal audit plan is submitted to the AC for approval prior to the commencement of the internal audit and the AC oversees and monitors the implementation of improvements required on any internal control weaknesses identied. The AC has reviewed the internal audit plan for FY2010 and is satised that the internal audit is adequately resourced and has the appropriate standing within the Group. Whilst the AC is satised that the internal audit functions had been adequately carried out, the Company intends to outsource its internal audit function to an external professional rm in FY2011.
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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 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 nancial results on a half-yearly basis and informs its Shareholders of any major developments that impact the Group promptly through SGXNET, press releases and the Companys website. The Articles of the Company allow 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(18) of the Rules of Catalist, the Company has adopted policies on dealings in the Companys securities and made them known to its Directors and ofcers 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 Companys securities on short term considerations and not to trade in the Companys securities during the blackout period of one (1) month prior to the Groups full year or half year results announcements. Directors and employees are also advised to refrain from trading in the Companys 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 Groups business and operational activities to identify areas of signicant business risks as well as appropriate measures to control and mitigate these risks. The Management reviews all signicant control policies and procedures and highlights all signicant matters to the Board and the AC.
MATERIAL CONTRACTS Save for the service agreements entered into between the Executive Directors and the Company, there were no material contracts of the Company or its subsidiaries involving the interest of any Director or controlling shareholder subsisting during FY2010.
79
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 arms 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 during FY2010. The aggregate values of the interested person transactions between the Group and the interested persons during FY2010 are as follows:Kawanlama Majujaya Sdn Bhd S$
Dominion LLC S$ Expenses Professional fees Accounting services and miscellaneous expenses
19,001 19,001
18,555 18,555
USE OF PROCEEDS FROM THE PLACEMENT OF 15 MILLION NEW SHARES AT S$0.14 EACH Intended use as per Offer Information Statement dated 20 May 2010 S$ Expansion of business in the Peoples Republic of China, including the setting up of a manufacturing plant Research and Development Total Utilised as at 23 March 2011 S$
Balance S$
1,000,000 1,000,000 2,000,000
1,000,000 1,000,000 2,000,000
NON-AUDIT FEES During FY2010, the non-audit services rendered by the Companys auditors, Mazars LLP and its afliates, to the Group comprised tax compliance services for which the fees amounted to S$16,900.
NON-SPONSOR FEES No non-sponsor fees were paid to our Sponsor, PrimePartners Corporate Finance Pte. Ltd. during FY2010.
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Notice of Annual General Meeting

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 Friday, 8 April 2011 at 10.00 a.m. for the following purposes:-
ORDINARY BUSINESS Resolution 1 1. To receive and adopt the audited accounts for the nancial year ended 31 December 2010 (FY2010), together with the Reports of the Directors and the Independent Auditors and the Statement by the Directors. Resolution 2 2. To declare a one-tier (tax exempt) nal dividend of S$0.005 per ordinary share for FY2010. Resolution 3 3. To re-elect Mr Wai Chee Leong who is retiring by rotation pursuant to Article 104 of the Companys Articles of Association (the Articles) and who, being eligible, offers himself for re-election as a Director. Mr Wai Chee Leong will, upon re-election, remain as Chairman of the Nominating and Remuneration Committees, and a member of the Audit Committee. He will be considered independent for the purposes of Rule 704(7) of the Listing Manual Section B: Rules of Catalist of the Singapore Exchange Securities Trading Limited. Resolution 4 4. To re-elect Mr Lim Chong Chen who is retiring by rotation pursuant to Article 104 of the Articles and who, being eligible, offers himself for re-election as a Director. Resolution 5 5. To approve the payment of Directors fees of S$90,000 for FY2010 (FY2009: S$90,000). Resolution 6 6. To re-appoint Messrs Mazars LLP as the Companys auditors and to authorise the Directors to x 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 t, pass the following resolutions as ordinary resolutions, with or without any modications:Resolution 7 8. General authority to issue and allot 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 to:(A) (i) issue and allot shares in the capital of the Company (Shares) whether by way of rights, bonus or otherwise; and/or 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,
(ii)
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 t; and
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(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 fty per cent (50%) of the total number of issued Shares (excluding treasury shares) (as calculated in accordance with sub-paragraph (2) below):(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) (ii) new Shares arising from the conversion or exercise of convertible securities; 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 any subsequent bonus issue, consolidation or sub-division of Shares;
(2)
(iii) (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 (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]
(4)
Resolution 8 9. Authority to issue and allot shares pursuant to the Rokko Employee Share Option Scheme That pursuant to Section 161 of the Companies Act, Chapter 50 of Singapore, the Directors be authorised and empowered to issue and allot 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 Scheme) upon the exercise of such options and in accordance with the terms and conditions of the Scheme, provided always that the aggregate number of new Shares to be issued and allotted pursuant to the Scheme (including options granted under the Scheme and any other scheme or plan for the time being of the Company), shall not exceed fteen 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]
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Resolution 9 10. Authority to issue and allot shares pursuant to the Rokko Performance Share Scheme That pursuant to Section 161 of the Companies Act, Chapter 50 of Singapore, the Directors be authorised and empowered to grant awards in accordance with the Rokko Performance Share Scheme (the Performance Scheme) and to issue and allot 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 sharebased incentive schemes of the Company for the time being in force, shall not exceed fteen 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 10 11. 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 (Shares) in the issued share capital of the Company not exceeding in aggregate the Prescribed Limit (as hereafter dened), at such price or prices as may be determined by the Directors from time to time up to the Maximum Price (as hereafter dened), whether by way of:(i) market purchases (each a Market Purchase) on the Singapore Exchange Securities Trading Limited (the SGX-ST) transacted through the Central Limit Order Book (CLOB) trading system, through one or more duly licensed stockbrokers appointed by the Company for the purpose; and/or 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 t, such scheme shall satisfy all the conditions prescribed by the Companies Act,
(ii)
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; the date on which Share purchases have been carried out to the full extent of the Share Purchase Mandate; or 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;
(ii)
(iii)
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(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 ve (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 veday 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 HUI COMPANY SECRETARY Singapore 23 March 2011
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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 one hundred per cent (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 fty per cent (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 exibility 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 issue and allot 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 issue and allot under this Resolution, shall not exceed one hundred per cent (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 fty per cent (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 Rokko Employee Share Option Scheme and to issue and allot Shares up to a number not exceeding fteen per cent 15% of the total number of issued Shares (excluding treasury shares) from time to time. Ordinary Resolution 9, if passed, will empower the Directors to grant awards under the Performance Scheme and to issue and allot Shares pursuant to the vesting of the awards under the Performance Scheme, provided that the aggregate number of Shares to 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. 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 Companys Annual Report, as an Appendix.
(iii)
(iv)
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/her. Where a member appoints two (2) proxies, he/she 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. If the member is a corporation, the instrument appointing the proxy must be under seal or the hand of an ofcer or attorney duly authorised. The instrument appointing a proxy must be deposited at the Companys registered ofce at 61 Kaki Bukit Road 2, Singapore 417869 not less than 48 hours before the time appointed for holding the AGM.
(2)
(3)
(4)
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Notice of Book Closure

NOTICE IS HEREBY GIVEN that the share transfer book and register of members of Rokko Holdings Ltd. (the Company) will be closed on 26 April 2011 for the purpose of determining members entitlements to the proposed one-tier (tax exempt) nal dividend of S$0.005 per ordinary share for the nancial year ended 31 December 2010 (the Proposed Dividend). Duly completed registrable transfers received by the Companys share registrar, Boardroom Corporate & Advisory Services Pte. Ltd. at 50 Rafes Place, #32-01 Singapore Land Tower, Singapore 048623 up to 5.00 p.m. on 25 April 2011 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 25 April 2011 will be entitled to the Proposed Dividend. The Proposed Dividend, if approved at the Companys Annual General Meeting to be held on 8 April 2011, will be paid on or about 6 May 2011.
BY ORDER OF THE BOARD
VINCENT LIM BOCK HUI COMPANY SECRETARY Singapore 23 March 2011
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Appendix
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 (the Shares). The Share Purchase Mandate is subject to annual renewal and was last renewed at the annual general meeting held on 12 April 2010. 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 8 April 2011 (AGM2011). 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 (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 exibility 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-efcient manner. The renewed Share Purchase Mandate will also allow the Directors to exercise greater control over the Companys 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 benet 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 ten per cent. (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 AGM2011, 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 is limited to that number of Shares representing not more than ten per cent. (10%) of the issued Shares as at the date of the AGM2011 on which the resolution renewing the Share Purchase Mandate is passed (the Approval Date). Shares, which are held as treasury shares, will be disregarded for purposes of computing the ten per cent. (10%) limit. For illustrative purpose, as at 3 March 2011 (the Latest Practicable Date), the Company had 160,000,000 issued Shares (excluding treasury shares) and thus up to 16,000,000 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 AGM2011.
(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;
87
Appendix
(ii) the date on which Share purchases have been carried out to the full extent of the renewed Share Purchase Mandate; or 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.
(iii)
(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 dened in Section 76C(6) of the Companies Act, Chapter 50 of Singapore (the Companies Act). Market Purchases refer to purchases of Shares by the Company effected on the SGX-ST through the Central Limit Order Book (CLOB) trading system, through one (1) 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 t 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; all of those persons shall be given a reasonable opportunity to accept the offers made; and 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; (if applicable) differences in consideration attributable to the fact that offers relate to shares with different amounts remaining unpaid; and differences in the offers introduced solely to ensure that each person is left with a whole number of shares.
(ii) (iii)
(bb)
(cc)
In addition, the SGX-ST Listing Manual Section B: Rules of Catalist (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) (ii) (iii) (iv) the terms and conditions of the offer; the period and procedures for acceptances; the reasons for the proposed share purchase; 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; whether the share purchase, if made, would have any effect on the listing of the Shares on the SGX-ST; and
(v)
88
Appendix
(vi) details of any share purchases made by the Company in the previous twelve (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.
(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 dened below); and in the case of an Off-Market Purchase pursuant to an equal access scheme, 120% of the Highest Last Dealt Price (as dened below),
(ii)
(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 ve (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 veday 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; 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 ten per cent. (10%) of the total number of issued Shares.
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Appendix
(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) (ii) selling the treasury shares for cash; transferring the treasury shares for the purposes of or pursuant to an employees share scheme; transferring the treasury shares as consideration for the acquisition of shares in or assets of another company or assets of a person; cancelling the treasury shares; or selling, transferring or otherwise using the treasury shares for such other purposes as may be prescribed by the Minister for Finance.
(iii)
(iv) (v)
5.
Source of Funds Any purchase of Shares may be made out of the Companys distributable prots 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 twelve (12) months immediately following the purchase; and the value of the Companys 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).
(b)
The Company will use internal sources of funds, or a combination of internal resources and external borrowings, to nance 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 prots, such purchase (including costs incidental to the purchase) will correspondingly reduce the amount available for the distribution of cash dividends by the Company.
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Appendix
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 nanced 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 nanced through external borrowings or nancing, 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. For illustrative purposes only and on the basis of the following assumptions:(a) that the purchase by the Company of up to 11,000,000 Shares, representing ten per cent. (10%) of its 160,000,000 issued Shares (excluding treasury shares) minus 5,000,000 treasury shares as at 31 December 2010, was made on 31 December 2010; that the Company purchased Shares via Market Purchases at the Maximum Price of $0.1617 for each Share (being 105% of the Average Closing Price as at 31 December 2010); and that the purchase of Shares by the Company, which required funds amounting to $1,779,000 was nanced entirely using its internal sources of funds,
(b)
(c)
the nancial effects of Share purchases by the Company pursuant to the renewed Share Purchase Mandate on the audited consolidated nancial statements of the Group for the nancial year ended 31 December 2010 (FY2010), are set out below.
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Appendix
Scenario 1 Purchase of 11,000,000 Shares by the Company pursuant to the renewed Share Purchase Mandate made entirely out of capital and held as treasury shares Group Before Share After Share Purchase Purchase S$000 S$000 12,442 12,705 (908) 2,050 (526) 25,763 23,546 32,325 20,716 11,609 30,475 12,767 165,000 12,442 12,705 (908) 2,050 (2,305) 23,984 21,767 30,546 20,716 9,830 30,475 10,988 165,000 Company Before Share After Share Purchase Purchase S$000 S$000 12,442 916 (526) 12,832 12,832 6,537 236 6,301 264 1,361 165,000 12,442 916 (2,305) 11,053 11,053 4,758 236 4,522 264 (418) 165,000
As at 31 December 2010 Share capital Revenue reserves (distributable)(1) Statutory reserves Revaluation surplus Treasury shares(1) Shareholders funds Net tangible assets(2) Current assets Current liabilities Working capital Total liabilities Cash and cash equivalents Number of Shares (000) Financial Ratios Net tangible assets per Share(2) (cents) Earnings per Share(3) (cents) Gearing ratio(4) (times) Current ratio(5) (times)
Notes:(1)
14.27 2.76 0.73 1.56
13.19 2.76 0.79 1.47
7.78 N.A. N.A. 27.70
6.70 N.A. N.A. 20.16
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. Net tangible assets equal total net assets less deferred expenditure and other intangible assets. For the earnings per Share computation, treasury Shares and Shares cancelled 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 Company Before Share After Share Purchase Purchase Weighted average number of Shares (000) 154,225,203 154,195,066
(2) (3)
(4) (5)
Gearing ratio equals total borrowings divided by shareholders funds. Current ratio equals current assets divided by current liabilities.
92
Appendix
Scenario 2 Purchase of 11,000,000 Shares by the Company pursuant to the renewed Share Purchase Mandate made entirely out of prots and held as treasury shares Group Before Share After Share Purchase Purchase $000 $000 12,442 12,705 (908) 2,050 (526) 25,763 23,546 32,325 20,716 11,609 30,475 12,767 165,000 12,442 12,705 (908) 2,050 (2,305) 23,984 21,767 30,546 20,716 9,830 30,475 10,988 165,000 Company Before Share After Share Purchase Purchase $000 $000 12,442 916 (526) 12,832 12,832 6,537 236 6,301 264 1,361 165,000 12,442 916 (2,305) 11,053 11,053 4,758 236 4,522 264 (418) 165,000
As at 31 December 2010 Share capital Revenue reserves (distributable)(1) Statutory reserves Revaluation surplus Treasury shares(1) Shareholders funds Net tangible assets(2) Current assets Current liabilities Working capital Total liabilities Cash and cash equivalents Number of Shares (000) Financial Ratios Net tangible assets per Share(2) (cents) Earnings per Share(3) (cents) Gearing ratio(4) (times) Current ratio(5) (times)
Notes:(1) (a)
14.27 2.76 0.73 1.56
13.19 2.76 0.79 1.47
7.78 N.A. N.A. 27.70
6.70 N.A. N.A. 20.16
For Share purchases made out of prots, the amount of revenue reserve that is available for distribution as dividends after the Share purchases is $10,926,000 and ($863,000) at the Group and Company levels, respectively, which are arrived at after deducting $1,779,000 being the cost of the Share purchases made out of prots and held as treasury shares. Prior to the Share purchases made out of prots and held as treasury shares, the Company will endeavour that sufcient dividends are declared and paid by its subsidiaries to the Company to enable the Company to purchase its shares out of prots.
(b)
(2) (3)
Net tangible assets equal total net assets less deferred expenditure and other intangible assets. For the earnings per Share computation, treasury Shares and Shares cancelled 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 Company Before Share After Share Purchase Purchase Weighted average number of Shares (000) 154,225,203 154,195,066
(4) (5)
Gearing ratio equals total borrowings divided by shareholders funds. Current ratio equals current assets divided by current liabilities.
93
Appendix
Shareholders should note that the nancial 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 FY2010 numbers and are in no way indicative of the Companys real nancial position or a forecast of the Companys nancial gures. The Company will take into account both nancial and non-nancial 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 ve per cent. (5%) above the average of the closing market prices of the shares over the last ve (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 ve-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 one (1) month immediately preceding the announcement of the Companys 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 ten per cent. (10%) of its issued Shares (excluding treasury shares) are in the hands of the public. The public, as dened in the Catalist Rules, are persons other than the Directors, Chief Executive Ofcer (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 dened in the Catalist Rules) of such persons. As at the Latest Practicable Date, there were approximately 44,107,220 issued Shares in the hands of the public (as dened above), representing 27.57% of the total number of issued Shares (excluding treasury shares) of the Company. Assuming that the Company purchases its Shares through Market Purchases up to the full ten per cent. (10%) limit pursuant to the renewed Share Purchase Mandate and holds 16,000,000 of such Shares as treasury shares, the number of issued Shares in the hands of the public would be reduced to 33,107,220 Shares, representing 20.69% of the total number of issued Shares (excluding treasury shares) of the Company. As at the Latest Practicable Date, the Company held 5,000,000 treasury shares.
94
Appendix
In view of the foregoing, the Company is of the view that there is, at present, a sufcient 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 ten per cent. (10%) limit pursuant to the renewed Share Purchase Mandate without:(a) (b) (c) 9. affecting adversely the listing status of the Shares on the SGX-ST; causing market illiquidity; or affecting adversely the orderly trading of Shares.
Tax Implications
Where the Company uses its Distributable Prots 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 prots 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 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 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 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 by the Company of its Shares, a Shareholders 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 takeover offer under Rule 14 of the Take-over Code.
95
Appendix
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 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 thirty per cent. (30%) or more; or if they together hold between thirty per cent. (30%) and fty per cent. (50%) of the Companys voting rights, their voting rights increase by more than one per cent. (1%) in any period of six (6) months.
(b)
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 thirty per cent. (30%) or more, or, if such Shareholder holds between thirty per cent. (30%) and fty per cent. (50%) of the Companys voting rights, the voting rights of such Shareholder would increase by more than one per cent (1%) in any period of six (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 twenty per cent. (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 70.29% 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 takeover 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. 11. Reporting Requirements under the Companies Act Within thirty (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 thirty (30) days of a Share purchase. Such notication 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 Companys 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 thirty (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.
96
Appendix
12. Share Purchases in the Previous 12 Months 645,000 Shares had been purchased by the Company in the twelve (12) months preceding the Latest Practicable Date by way of Market Purchases at prices per Share ranging from $0.125 to $0.155, and the total consideration paid for the purchases (including brokerage and other charges) amounted to approximately $90,000. These 645,000 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 Number of Shares Directors Tey Kim Hwee Lim Chong Chen Lim Yee Chuan Lee Sen Choon Wai Chee Leong Substantial Shareholders (other than Directors) 14. Approval and Resolution Shareholders approval for the proposed renewal of the Share Purchase Mandate is to be sought at the forthcoming AGM2011. The resolution relating to the proposed renewal of the Share Purchase Mandate is set out in the Notice of AGM as 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 Board of Directors recommend that Shareholders vote in favour of Resolution 10. to renew the Share Purchase Mandate to be proposed at the forthcoming AGM2011. 16. Directors Responsibility Statement This Letter has been seen and approved by all Directors who collectively and individually accept responsibility for this Letter and conrm, after having made all reasonable enquiries, that to the best of their knowledge and belief, the facts stated and opinions expressed in this Letter are fair and accurate in all material respects as at the Latest Practicable Date and that there are no material facts the omission of which would make any statement in this Letter misleading in any material aspect. 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 adviser immediately. 1,225,560 112,460,260 450,000 50,000 50,000 0.77 70.29 0.28 0.03 0.03 Deemed Interest Number of Shares %
ROKKO HOLDINGS LTD.

(Incorporated in the Republic of Singapore) (Company Registration No. 200309694C)
IMPORTANT 1. 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. 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.
2.
ANNUAL GENERAL MEETING PROXY FORM

I/We of
(Name) (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 Friday, 8 April 2011 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 specic 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:Ordinary Business 1. Audited Accounts for nancial year ended 31 December 2010 (FY2010) together with Reports of Directors and Independent Auditors and Statement by Directors 2. Final dividend of S$0.005 per ordinary share for FY2010 3. Re-election of Mr Wai Chee Leong as a Director 4. Re-election of Mr Lim Chong Chen as a Director 5. Payment of Directors fees of S$90,000 for FY2010 6. Re-appointment of Mazars LLP as Auditors of the Company Special Business 7. General authority to issue and allot shares 8. Authority to issue and allot shares pursuant to the Rokko Employee Share Option Scheme 9. Authority to issue and allot shares pursuant to the Rokko Performance Share Scheme 10. Renewal of share purchase mandate For Against
(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
2011
Total number of Shares in: (a) CDP Register (b) Register of Members
No. of Shares
Signature(s) of Member(s) or Common Seal IMPORTANT: PLEASE READ NOTES OVERLEAF
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 dened 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. 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. Where a member appoints two proxies, the proportion of the shareholding to be represented by each proxy shall be specied in this proxy form. If no proportion is specied, the Company shall be entitled to treat the rst named proxy as representing the entire shareholding and any second named proxy as an alternate to the rst named or at the Companys option to treat this proxy form as invalid. This proxy form must be deposited at the registered ofce of the Company at 61 Kaki Bukit Road 2, Singapore 417869 not less than 48 hours before the time set for the AGM. 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 ofcer or attorney duly authorised. Where this proxy form is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certied 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. 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 specied 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 certied by The Central Depository (Pte) Limited to the Company.
2.
3.
4.
5.
6.
7.
This Annual Report has been prepared by the Company and its contents have been reviewed by the Companys 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 veried 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.
This page has been intentionally left blank.
ROKKO HOLDINGS LTD. (Reg. No. 200309694) 61 Kaki Bukit Road 2 Singapore 417869 Tel: 65 - 6749 5885 Fax: 65 - 6747 5979 Website : www.rokkogroup.com

ROKKO Holdings 2010 Annual Report

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ROKKO Holdings 2010 Annual Report

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2010

Strategised for Growth

PRINCIPAL BANKERS AND FINANCIAL INSTITUTION

ROKKO HOLDINGS LTD | ANNUAL REPORT 2010

ABOUT ROKKO GROUP

ROKKO HOLDINGS LTD | ANNUAL REPORT 2010

ROKKO HOLDINGS LTD | ANNUAL REPORT 2010

Managing Director March 2011

ROKKO HOLDINGS LTD | ANNUAL REPORT 2010

ROKKO HOLDINGS LTD | ANNUAL REPORT 2010

Research & Development

ROKKO HOLDINGS LTD | ANNUAL REPORT 2010

Tey Kim Hwee

Lim Yee Chuan

Lee Sen Choon

Lim Chong Chen

Wai Chee Leong

ROKKO HOLDINGS LTD | ANNUAL REPORT 2010

Lim Yee Chuan

Tey Kim Hwee

Lee Sen Choon

Lim Chong Chen

Wai Chee Leong

ROKKO HOLDINGS LTD | ANNUAL REPORT 2010

KEY MANAGEMENT STAFF

Cheh Mei Lee is our Accounting Manager and her

Chey Long Wan is our Operations Manager and his

Lim Yoke Mein is our Administration Manager and

Jang Deok Chun is our Head of Assembly and

Seng Kwong Seng is our Toolroom Manager and

ROKKO HOLDINGS LTD | ANNUAL REPORT 2010

Rokko Materials Pte Ltd (Singapore)

Rokko Stamping Pte. Ltd. (Singapore)

Rokko Leadframes Pte. Ltd. (Singapore)

Rokko Ventures Pte Ltd (Singapore)

Rokko Mechatronics Pte Ltd (Singapore)

Rokko Systems Pte Ltd (Singapore)

RokkoTechnology Pte Ltd (Singapore)

Rokko Technology Sdn. Bhd. (Malaysia)

ROKKO HOLDINGS LTD | ANNUAL REPORT 2010

RESEARCH AND DEVELOPMENT EXPENSES

Malaysia 8.6% Singapore 33.8%

REVENUE BY BUSINESS SEGMENT

Philippines 31.5% Tooling 13.0%

REVENUE BY GEOGRAPHICAL REGION

ROKKO HOLDINGS LTD | ANNUAL REPORT 2010

Results Of Operations For Year Ended 31 December 2010

BALANCE SHEET S$000

16,718 32,796 49,514

43.0% (1.4)% 13.6%

19,414 19,414 7,125 22,975 30,100 49,514

32.7% 32.7% 37.0% (9.8)% 1.2% 13.6%

The Gearing is defined as Net Debts over Total Capital

ROKKO HOLDINGS LTD | ANNUAL REPORT 2010

ROKKO HOLDINGS LTD | ANNUAL REPORT 2010

Report of the Directors

ROKKO HOLDINGS LTD | ANNUAL REPORT 2010

Report of the Directors

ROKKO HOLDINGS LTD | ANNUAL REPORT 2010

Report of the Directors

On behalf of the Board of Directors

Tey Kim Hwee Director Date : 3 March 2011

Lim Chong Chen Director