Enhancing Value Through Quality - Europtronic Group Report/Annual Report...- Brought in new welding machines that can perform four processes (Voltage Cleaning, Welding, Taping, Oiling)

Annual Report 2013

Through QualityEnhancing Value

conTEnTs

1 Corporate Profile

2 Chairman’s Statement

4 Operations Review

8 Financial Review

10 Financial Highlights

12 Group Structure

13 Corporate Organisational Structure

14 Board of Directors

16 Senior Management Team

18 Global Network

19 Corporate Directory

20 Corporate Information

21 Corporate Governance Report

35 Directors’ Report

39 Statements by Directors

40 Independent Auditor’s Report

42 Financial Statements

47 Notes to Financial Statements

102 Supplementary Information

103 Statistics of Shareholdings

105 Notice of Annual General Meeting

109 Appendix I - Properties Disposal

125 Appendix II - Share Buy-Back

Proxy Form

Europtronic AnnuAl rEport / 2013 01

coRPoRATE PRoFILE

With beginnings dating back to 1977, Europtronic Group has evolved from a trading company into one of Asia’s premier manufacturers and distributors of electronic components. With factories in Shenzhen and Suzhou, China, the Group manufactures its own brand of film capacitors including general purpose film capacitors, interference suppression capacitors (X2), snubber capacitors, DC Link capacitors and AC capacitors. Europtronic Group also sells chip inductors and chip beads via its subsidiary, Housing Technology Corp., in Hsinchu, Taiwan. In recognition of its quality products, Europtronic has built up a strong portfolio of key customers, including Schneider Electric, Delta, Eaton, TPV, Chicony, LG, TCL, Sharp, Panasonic and GE.

As an established distributor of electronic components, Europtronic Group represents renowned international brands, including AVX, Sharp, Micro Crystal, Semikron, AEM, River, Suzuki and Samsung. In addition to its in-house brand of film capacitors, the Group also distributes other active and passive components such as fuses, resistors, capacitors, inductors, crystals, opto-devices, LCD panels, EEPROMs and power modules.

Europtronic Group is geographically diversified in Asia, with offices in Singapore, Hong Kong, Shanghai, Beijing, Suzhou, Shenzhen, Taipei, Hsinchu and London.

Listed on the singapore Exchange since 2002, Europtronic Group has a strategic focus on two core businesses of electronic components manufacturing and distribution.


Europtronic AnnuAl rEport / 201302

chAIRmAn’s sTATEmEnT

Dear shareholders,

On behalf of the Board of Directors (the “Board”) of Europtronic Group, I am pleased to present the results of the Company and the Group for the year ended 31 December 2013 (“FY2013”).

huang shih-AnChairman


Year in Review

FY2013 was a pivotal and challenging year for the

Group. The trends for design-specific and bigger-

sized high performance capacitors continue to drive

the Group.

Although the Group’s revenue decreased by 11.2%

to US$37.9 million, the Group has successfully

narrowed its loss after tax by 45% from US$20.8

million in FY2012 to US$11.5 million in FY2013.

Business Transform and Product Innovation

The Group’s cost reduction efforts continued in

FY2013, during which some unprofitable businesses

had been divested. This not only reduced the Group’s

inventory levels, it also enables the Group to deploy

its resources to focus on developing its business in

the industrial segment instead of the traditional “3C”

industries.

In FY2013, the Group’s manufacturing business

continued to develop and produce bigger-sized high

performance capacitors.

The bigger-sized high performance capacitors

are widely used in industrial inverters and UPS

(Uninterruptible Power Supply). Along with these

new series of capacitors, the Group has obtained

product safety approvals from the authorities such

as UL, VDE and CQC. The Group believes that its

new range of products will undoubtedly open up new

business opportunities in the industrial market.

The Group will continue to review its investment and

assets portfolio and make the appropriate decision

when the right opportunity arises.

Laying the foundations for future growth

In line with the Group’s continued focus on its

core businesses of manufacturing and distribution

segments, and to improve its profitability, the Group

remains committed to invest and strengthen its R&D

efforts in energy saving capacitors and new industrial

product applications. The Group will continue to look

out for investment opportunities in the electronics

component sector or beyond to expand the Group’s

business, with a view to enhance the Group’s

competitiveness and its shareholders’ value.

Acknowledgements and Appreciation

On behalf of the Board of Directors, I would like to take

this opportunity to express my sincere appreciation

to all our customers, suppliers and business partners

for their continuous trust and support. I would also

like to express my gratitude to our fellow Directors

for their valuable advices and our employees for

their hard work and contribution. Last but not least, I

would like to extend my gratitude to our shareholders

for their continued support and belief in the Group.

We look forward to your support as we strive to take

the Group to a higher level of growth.

Yours Sincerely,

Huang Shih-AnChairman


oPERATIons REVIEw

FY2013 was another challenging year for the fast-moving electronics business, as consumer demand did not pick up as expected.

The Group registered a decline in revenue by 11.2% to US$37.9 million from US$42.7 million in FY2012, as we continue to experience weak demand in most of our markets - the US, EU and the PRC. In addition, the Chinese government’s tightening economic measures have caused uncertainties across all business sectors in the domestic market, which we see lowering factory activities as output and orders fell.

As a result, the Group took a prudent approach in managing its factory production, as well as to buffer less inventory materials, work-in-progress and finished products.

Despite the above, there are new business developments in both our manufacturing and distribution segment.


Components Distribution Business Unit (CDBU)

FY2013 was a challenging year for CDBU as we divested a major product line, which allowed us to offload some unprofitable businesses. However, this move had short-term effect in decreasing CDBU revenue.

Revenue generated from CDBU dropped by 15.5% from US$22.2 million in FY2012 to US$18.7 million in FY2013.

Other factors affecting CDBU’s earnings in FY2013 were:

- Transparency in pricing in the supply chain that resulted in slimmer profit margins.

- Rising minimum wage levels and low capacity utilization in the PRC, which we see our business partners relocating parts of their production to countries in South East Asia. This move had affected our distribution channels and logistic costs in the PRC and South East Asia.

In the year ahead, CDBU is set to increase its revenue and profit margins by:

- Selecting and securing new orders from customers such as Foxconn, Lenovo, Flextronic, Celestica, and Hengqiang.

- Expanding into Smart Watch market, which we see significant demand potential for our distributed products.

- Continuing our efforts in increasing market share in the white goods and industrial markets.

- Working closely with CMBU to promote in-house products through our own distribution channels. This has the advantage of piggyback the in-house product with the distributed products to our customers.


CMBU successfully achieved product innovation, business transformation while maintaining a low cost base and improved productivity.

The key products in FY2013 were DC Link and AC Filter capacitors, which are widely used in Solar Power, Windmill, UPS and Industrial Inverters. To gain market share and increase profit margins, CMBU focused on developing these products with enhanced electrical performance, such as higher withstanding voltage and lower ESR.

In FY2013, CMBU has achievements as follow:

- Developed new AC filter capacitor, which is widely used in Industrial Inverter and UPS.

- Obtained UL, VDE and CQC safety approvals for safety capacitor (X2) with capacitance up to 46uF. Prior to that, the capacitance for our X2 products was up to 10uf. With the new range of capacitance, we are able to cover most of the industrial applications in the market.

- Our business in the industrial segment increased by 50% as compared to FY2012.

Components Manufacturing Business Unit (CMBU)

In FY2013, CMBU has completed five major process automation projects, which reduced the usage of manpower and resulted in improved productivity. These projects are:

- Brought in new welding machines that can perform four processes (Voltage Cleaning, Welding, Taping, Oiling). Prior to that, four different types of machines were required to perform these processes.

- Combined three processes (Printing, Appearance Checking, Tape Removing) into one line process.

- Combined three processes (Pitch Forming, Box Arranging, Packaging) into one line process.

- Fine-tuned the existing hot pressing machines, which increased output by almost threefold.

- Modified capacitor assembly machines, which reduced manpower from two operators to one operator per machine.


Components Manufacturing Business Unit (CMBU)

In FY2013, the capacity utilization for consumer and industrial segment was 80% and 30% respectively. Revenue generated from CMBU decreased by 6.7% from US$20.5 million in FY2012 to US$19.2 million in FY2013. In the year ahead, CMBU targets to achieve revenue of US$24 million by improving productivity to 90% capacity utilization for consumer products, and 60% capacity utilization for industrial products.

Going forward, CMBU will sustain the business growth by:

- Continuing our efforts in researching and developing new products for industrial applications.

- Sourcing and developing new materials to lower material costs per capacitor without compromising on product quality and electrical performance.

- Increasing capacity utilization for both consumer and industrial products, which the economies of scale will kick in to effectively lower the factory overheads cost per capacitor.

- Stepping up efforts in process automation and production yield improvement.

- Expanding OEM businesses by securing orders from both new and existing OEM customers.

- Partnering with established distributors to increase marketing channels and sales opportunities for our industrial products.

Schneider Electric, Chicony, TCL and Sharp have been our strategic partners in the past years. With our proactive marketing efforts, we are pleased to have Goldwind, CVTE, CHNT, Inovance and INVT as our new partners in the industrial segment. With the ongoing business development and market trend, we are confident that the demand for our products will strengthen in the coming years.

FInAncIAL REVIEw

Comprehensive Income Statement(FY2013 vs FY2012)

Group revenue decreased by 11.2% or US$4.8 million from US$42.7 million to US$37.9 million due mainly to a weaker demand in the electronic components market. Gross profit decreased by US$0.05 million and became gross loss amounting to US$0.04 million due mainly to disposal of obsolete inventories and lower selling price of components in China. Other income increased by 40.2% or US$0.1 million to US$0.4 million due mainly to rental income generated from the Group’s properties in Shanghai.

Other losses decreased by 71.4% or US$6.0 million to US$2.4 million due mainly to liquidation of the Group’s subsidiaries and intangible assets written off from the investment in subsidiaries in FY2012. Distribution and marketing expenses decreased by 57.9% or US$2.4 million to US$1.8 million due mainly to reduction in provision for bad debts and reversal of obsolete inventories following the disposal in FY2013.

Administrative expenses decreased by 21.4% or US$1.3 million to US$4.9 million due mainly to further reductions in staff headcount resulting from a cost cutting exercise undertaken by the Group. Finance expenses increased by 35.2% or US$0.6 million to US$2.5 million due mainly to higher bank interest on foreign currency borrowings. Income tax expense decreased by 45.8% or US$0.3 million to US$0.3 million due mainly to operational losses in the Group.

Overall, the Group reported a loss after tax and before minority interests of US$11.5 million in FY2013, compared to a loss after tax and before minority interests of US$20.8 million in FY2012.

Europtronic AnnuAl rEport / 201308 Europtronic AnnuAl rEport / 201308


FInAncIAL REVIEw

Balance Sheet

Cash and cash equivalents decreased by US$7.8 million to US$6.3 million in FY2013 due mainly to repayment of bank loans.

Available-for-sale financial assets decreased by US$0.1 million to US$0.001 million in FY2013 due mainly to the disposal of the Group’s investment shares in Singapore.

Trade and other receivables decreased by US$2.0 million to US$17.1 million in FY2013 due mainly to lower sales generated.

Inventory decreased by US$2.9 million to U$6.1 million in FY2013 due mainly to disposal of obsolete inventories and provision for obsolete inventories. Available-for-sale financial assets decreased by US$1.0 million to US$2.2 million in FY2013 due mainly to the investments written off in China and fair value loss on investment in Taiwan.

Investment properties increased by US$3.1 million to US$3.3 million in FY2013 as a result of re-classification of the Group’s properties in Shanghai as these properties were rented out.

Property, plant and equipment increased by US$23.1 million to US$54.4 million in FY2013 due mainly to revaluation of properties held in Suzhou and Taiwan.

Trade and other payables increased by US$9.7 million to US$22.0 million in FY2013 due mainly to longer credit terms extended by suppliers.

Current and non-current borrowing decreased by US$13.0 million to US$36.0 million in FY2013 due mainly to repayment of bank loans.

Deferred income tax liabilities decreased by US$2.1 million to US$1.0 million in FY2013 due mainly to the tax adjustment on the Group’s properties revaluation in Suzhou.

Cash Flow Statement Cash flow from operations increased from US$6.8 million deficit in FY2012 to US$2.2 million surplus in FY2013 due mainly to better accounts receivable collection and longer credit terms extended by suppliers.

Cash flow from investing was reduced from US$5.0 million surplus in FY2012 to US$1.4 million deficit in FY2013 due mainly to purchase of machinery in FY2013 and disposal of office premises in Singapore in FY2012.

Cash flow use in financing was reduced from US$1.0 million in FY2012 to US$0.1 million in FY2013 due mainly to loan from directors and decrease in bank deposit. Overall, the Group recorded a net increase in cash and cash equivalent of US$0.9 million in FY2013 compared to FY2012.


Europtronic AnnuAl rEport / 2013Europtronic AnnuAl rEport / 201310 11

FInAncIAL hIGhLIGhTs

Profit After Tax (US$m)

Net Tangible Assets Per Share (Cents)

(0.03)

(0.96)

(2.74)

(1.46)

(4.46)

-5

-4

-3

-2

-1

0

5

2013 2012 2011 2010 2009

Turn over (US$m)

Earnings Per Share (Cents)

2013 2012 2011 2010 2009

45.5

71.1

42.7

37.9

90.9

0

20

40

60

80

100

2.6

(6.7)

(20.8)

(11.5)(13.8)

-25

-20

-15

-10

-5

0

5

2013 2012 2011 2010 2009

4.87

3.50

1.57

3.83

5.75

2013 2012 2011 2010 2009

0

2

4

6

8

10


Exploring OpportunitiesGroup is actively looking for opportunities beyond our core Electronic Component business. The targets would have to bring long term value to stakeholders and be sustainable business operations.


GRouP sTRucTuRE

Europtronic Group Ltd 100%

UPT Component(Singapore) Pte Ltd

Europtronic (H.K.)Company Limited

Europtronic InvestmentPte Ltd

Europtronic (Singapore)Pte Ltd

Europtronic (Suzhou)Co., Ltd

Europtronic (Taiwan)Ind. Corp.

Europtronic Electronic(Shenzhen) Co., Ltd

Europtronic Technology(Suzhou) Co., Ltd

Europtronic GreenEnergy Pte Ltd

Crypson Electronics (Singapore) Pte Ltd

UPT Crypson Component(Shanghai) Co., Ltd

Housing Technology Corp.


coRPoRATE oRGAnIsATIonAL sTRucTuRE

* CDBU - Components Distribution Business Unit

** CMBU - Components Manufacturing Business Unit

Chairman’s OfficeCDBU*

GroupInvestment

Group HR

CMBU**

Group Finance

Group IT

CEO’s Office


BoARD oF DIREcToRs


huang chuang shueh-ou / Vice Chairman

Mrs. Huang was appointed to the Board on 18 November 2000 and was last re-elected on 26 April 2012. One of the Group’s co-founders, she is responsible for the Group's operational and administrative matters as well as investment policies and financial issues.

In 1999, Mrs. Huang received the "Model of Overseas Entrepreneur Award" from the China Youth Career Development Association Headquarters, Republic of China.

She holds a Diploma in Management from the Singapore Institute of Management.

huang shih-An / Chairman

One of the Group's co-founders, Mr. Huang was appointed as the Chairman of Europtronic Group on 18 November 2000 and was last re-elected on 26 April 2013. His primary responsibilities include charting and reviewing of the Group’s corporate developments, strategic initiatives, marketing operations, and overseas businesses.

Mr. Huang has over 30 years of management experience in the electronic components industry. He holds a Bachelor Degree in International Trade and Finance from the Chinese Culture University and an Executive MBA from the National University of Singapore.

huang chien-hung / Executive Director & Chief Executive Officer

Huang Chien-Hung is the Chief Executive Officer of Europtronic Group. He was appointed to the Board on 3 August 2009 and was last re-elected on 26 April 2013. Mr. Huang is responsible for the Group's day-to-day operations and undertakes management oversight for financial, operational, administrative and legal functions.

Mr. Huang started his career with the Group's distribution business unit focused on expanding its regional presence. He has been instrumental in developing the unit to be one of the leading distributors for electronic components in Asia.

Mr. Huang holds a Degree in Electronic and Electrical Engineering from the University College of London, United Kingdom.

Europtronic AnnuAl rEport / 2013Europtronic AnnuAl rEport / 201314 15Europtronic AnnuAl rEport / 2013 15

ho Toon Bah / Independent Director

Mr. Ho was appointed to the Board on 2 June 2011 as an Independent Director and was last re-elected on 26 April 2012. He is the Chairman of the Company’s Audit Committee, and a member of the Nominating and Remuneration Committees.

Mr. Ho has over 20 years of professional experience in the banking industry, and has held senior management positions in Standard Chartered Bank and United Overseas Bank. His last appointment was Head of Consumer Banking of Standard Chartered Bank, Malaysia. Mr. Ho is also an Executive Director of Soilbuild Construction Group Ltd.

Mr. Ho is a Chartered Financial Analyst (CFA) and holds a Bachelor Degree of Business Administration from the National University of Singapore.

Tan sek Khee / Independent Director

Mr. Tan was appointed to the Board in 30 June 2011 as an Independent Director and was re-elected on 26 April 2012. He is the Chairman of the Remuneration Committee, and a member of the Company’s Audit and Nominating Committees. Mr. Tan is also an Independent Director of SGX listed company, Ying Li International Real Estate Limited. He holds executive directorships at several private companies in Singapore, Indonesia, China and Thailand.

Mr. Tan holds a Bachelor Degree of Commerce from Nanyang University, and is a registered member of the Singapore Institute of Directors.

Lin chien / Independent Director

Mr. Lin was appointed to the Board in 26 April 2012 as an Independent Director and was last re-appointed on 26 April 2013. He is the Chairman of the Nominating Committee, and a member of the Company’s Audit and Remuneration Committees. Mr. Lin was previously the Executive Vice President and President of Solectron’s Asia Pacific region. Prior to joining Solectron, he was the Chief Executive Officer of NatSteel Electronics from 1993 to 2001. Previously, Mr Lin also worked with SCI Systems, General Electric and General Instruments (Taiwan). Mr. Lin holds a Bachelor Degree of Electrical Engineering from the Taipei Institute of Technology.


Justin Huang Chien-Hung

Justin Huang Chien-Hung is Chief Executive Officer of Europtronic Group. He is responsible for the Group’s day-to-day operations, and undertakes management oversight for financial, operational, administrative and legal functions.

Prior to this current role, Mr. Huang started his career with the Group’s distribution business unit focusing on expanding its regional presence, developing the unit to be one of the leading distributors for electronic components in Asia.

Mr. Huang holds a Degree in Electronic and Electrical Engineering from the University College of London, United Kingdom.

Leong Mei Theng

Leong Mei Theng was appointed Group Financial Controller of Europtronic Group on 18 November 2010. She has been with the Group since 2004 and was promoted to the Group’s Finance Manager in 2006.

Ms. Leong is responsible for directing financial activities for the Group and its subsidiaries, managing cash flow and funds for business operations, ensuring corporate governance, and overseeing investor relations.

Ms. Leong holds a Bachelor of Commerce Degree, majoring in Accounting and Finance from Curtin University of Technology, Western Australia and an MBA from the University of Hong Kong. She is also a member of CPA Australia.

Tan Chee Kong

Tan Chee Kong is General Manager of the Components Manufacturing Business Unit. He is responsible for the overall day-to-day operations of the Group’s manufacturing facilities in Suzhou and Shenzhen.

Prior to his current role, Mr. Tan was Group Information Technology Director, where he was responsible for planning, designing and implementing IT infrastructure and systems.

Mr. Tan holds a Bachelor Degree in Commerce, Information Technology and Systems from Curtin University in Australia.

Hsieh Min-Tsun

Hsieh Min-Tsun is Deputy General Manager of Sales, Components Manufacturing Business Unit. An industry veteran with over 25 years experience in the electronic components industry, his responsibilities include developing growth and sales strategies for the Greater China region, as well as grooming and retaining sales talents.

Prior to joining Europtronic Group in 1997, he was with Camel Electronic Ind., Corp from 1984 to 1989, where his last appointment was Assistant General Manager.

sEnIoR mAnAGEmEnT


Uchita Masami

Uchita Masami is R&D and Engineering Director, Components Manufacturing Business Unit. His responsibilities include product research and development, as well as product engineering.

Mr. Uchita has over 20 years of experience in the electronic components industry, and is a licensed electrical engineer for low voltage products in Japan.

Prior to joining Europtronic Group in April 2003, Mr. Uchita was with Taitsu Corporation in Japan from 1987 to 2003, where he was promoted to Senior Chief of the Engineering Division in March 2002.

Timothy Tan Joo Kwang

Timothy Tan Joo Kwang is Deputy General Manager of Sales and Marketing, Component Distribution Business Unit. His responsibilities include driving the overall marketing activities of CDBU’s product lines in China and the South East Asian region.

Mr. Tan has over 20 years of experience in product marketing, channel management and business development in the electronic components industry. Prior to joining Europtronic Group in 2001, he worked with SGS Thomson Microelectronic, and served with the Republic of Singapore Air Force for six years.

Mr. Tan holds a Diploma in Electronics and Communication Engineering from Singapore Polytechnic.

Donna Huang Yun Ju

Donna Huang Yun Ju is Group Human Resource Director. She guides and manages the overall provision of human resource services, policies and programmes for the Group.

Ms. Huang works with the management in providing a high performance culture that emphasises empowerment, quality, productivity and the ongoing development of a talent pool.

Ms. Huang graduated from Lancaster University, UK, with a BSc (Hons) in Management, and is a certified GRP and CCP with Worldatwork. Ms. Huang holds a Washington-Fudan Executive MBA from the Olin School of Business at Washington University, United States.


GLoBAL nETwoRK

ShanghaiBeijing Suzhou ShenzhenLondon

Hong KongSingapore Hsinchu Taipei


coRPoRATE DIREcToRy

SINGAPORE (Corporate Headquarters)Europtronic Group LtdEuroptronic (Singapore) Pte LtdCrypson Electronics (Singapore) Pte LtdUPT Component (Singapore) Pte LtdEuroptronic Investment Pte LtdEuroptronic Green Energy Pte Ltd

60 Kaki Bukit PlaceEunos Techpark #01-10Singapore 415979Tel: (65) 64472037Fax: (65) 64471582

Europtronic Green Energy – Floral ArchitectJoo Chiat RoadSoho Life #03-18 Singapore 427483Tel: (65) 68845797

PEOPLE’S REPUBLIC OF CHINAShanghaiUPT Crypson Component (Shanghai) Co. Ltd. No. 65, 7th floor, Block C, 421 Hongcao Road, Caohejing Development Zone,Shanghai, PRC 200233 Tel: (86) 21-64162909Fax: (86) 21-64167138

Beijing Europtronic Beijing Representative OfficeNo.17 Huayuan Road, Room 451, West Building 7,Haidian District, Beijing, PRC 100088Tel: (86) 138-10120745

ShenzhenEuroptronic Electronic (Shenzhen) Co., LtdBlock 17, 3/F Shatoujiao Free Trade ZoneShenzhen,Guangdong Province, PRC 518081Tel : (86) 755-25260670Fax : (86) 755-25260672

SuzhouEuroptronic (Suzhou) Co., LtdNo. 1618 Yundongdadao,Wujiang Economic Development Zone,Suzhou, Jiangsu Province, PRC 215200Tel: (86) 512-63401650/1/2/3 Fax: (86) 512-63401648

HONG KONGEuroptronic (H.K.) Company LimitedUnit 11A, Phase 1, Goodman Shatin Logistics Centre,6 Wong Chuk Yeung Street, Fotan, Shatin, N.T. Hong Kong Tel: (852) 27564786Fax: (852) 27564876

TAIWANEuroptronic (Taiwan) Ind. Corp. 10F-4, No.2, Lane 258, Rueiguang Road., Neihu District, Taipei City 114, Taiwan (R.O.C.)Tel: (886) 2-87523118Fax: (886) 2-87523116

Housing Technology Corp. 12F., No.255, Dong Sec. 1, Guangming 6th Rd., Zhubei City, Hsinchu County 302, Taiwan (R.O.C)Tel: (886) 3-6681010Fax: (886) 3-6681013

UNITED KINGDOMEuroptronic London Representative Office5 Kerry Avenue, Stanmore, Middlesex, HA7 4NJ, United KingdomTel: (44) 208-9549798Fax: (44) 208-9548918

Europtronic AnnuAl rEport / 2013Europtronic AnnuAl rEport / 201320 pB

coRPoRATE InFoRmATIon

Board of DirectorsExecutive:Huang Shih-An (Chairman)Huang Chuang Shueh-Ou (Vice Chairman) Huang Chien-Hung (Chief Executive Officer)

Non-Executive:Ho Toon Bah (Independent)Tan Sek Khee (Independent)Lin Chien (Independent)

Audit CommitteeHo Toon Bah (Chairman) Tan Sek KheeLin Chien

Nominating Committee Lin Chien (Chairman) Ho Toon BahTan Sek Khee

Remuneration Committee Tan Sek Khee (Chairman) Ho Toon BahLin Chien

AuditorsPricewaterhouseCoopers LLP 8 Cross Street #17-00 PwC Building Singapore 048424 Tel : (65) 62363388 Fax : (65) 62363300

Marcus LamPartner-in-charge(Appointed since financial year ended 31 December 2012)

Share RegistrarBoardroom Corporate & Advisory Services Pte. Ltd.50 Raffles Place #32-01 Singapore Land TowerSingapore 048623Tel : (65) 65365355Fax : (65) 65361360

Company Secretaries Busarakham Kohsikaporn, FCISToh Lei Mui, ACIS

Registered Office60 Kaki Bukit Place Eunos Techpark #01-10 Singapore 415979Tel : (65) 64472037Fax : (65) 64471582

Business Address60 Kaki Bukit Place Eunos Techpark #01-10 Singapore 415979Tel : (65) 64472037Fax : (65) 64471582

Investor Relations ConsultantMr. Michael TanTel : (65) 96878783Email : [email protected]

CORPORATE

GOVERNANCE REPORT

EUROPTRONIC ANNUAL REPORT / 2013 21

The Board of Directors (the “Board”) and Management of Europtronic Group Ltd (the “Company” or together with its

subsidiaries, referred as the “Group”) are committed to high standards of corporate governance by complying with the

principles and guidelines set out in the Code of Corporate Governance 2012 (the “Code”).

The Company has complied with the principles and guidelines set out in the Code where applicable, feasible and practical and

explanations in cases of non-compliance are provided.

(A) BOARD MATTERS

Board’s Conduct of its Affairs

The Board is collectively responsible for the long-term success of the Group. The Board works with Management to

achieve this objective and Management remains accountable to the Board.

Role of the Board of Directors

The Board’s primary role is to protect and enhance long-term shareholder’s value. It sets the overall strategy for the

Group and supervises Management. To fulfill this role, the Board is responsible for setting values & standards, the

overall corporate governance of the Group, strategic direction, establishing goals for Management and monitoring the

achievement of these goals.

The Board approves corporate strategies and policies on key areas of operations to ensure that the necessary

fi nancial & human resources are in place for the Group to achieve its objectives. The Board reviews the adequacy and

effectiveness of the Group’s risk management, internal control systems at least annually, including fi nancial, operational,

compliance and information technology controls.

Matters Requiring Board Approval

Board’s approval is required for, inter alia, the following matters:

acquisitions and disposals of assets/investments;

release of the Group’s quarterly and full-year results announcements & timely announcements of transactions;

the Group’s annual report and audited fi nancial statements;

annual budget and major funding proposals of the Group;

all Board appointments, re-appointments/ re-elections as well as appointments of key management;

declaration of interim and proposal of final dividends;

interested person transactions of a material nature;

convening of shareholders’ meetings; and

corporate or fi nancial restructuring.

The approval of the Board is also required for any matters which is likely to have a material impact on the Group’s

operating units and/or fi nancial position as well as matters other than in the ordinary course of business.

The Board believes that when taking decisions, all Directors of the Board act objectively in good faith and exercise

independent judgement in the best interests of the Group. To facilitate effective management and assist the Board,

certain functions of the Board are delegated to Board committees namely the Audit Committee ("AC"), Nominating

Committee ("NC") and Remuneration Committee ("RC"). Each Board Committee has the authority to examine

particular issues and their actions and recommendations are reported to and effectiveness monitored by the Board.

These Board Committees are regulated by their own terms of reference and operating procedures.

CORPORATE

GOVERNANCE REPORT

EUROPTRONIC ANNUAL REPORT / 201322

Each Board Committee is chaired by an Independent Director and the respective members are independent. The

Board accepts that while these Board Committees have the power to make decisions, execute actions or make

recommendations in their specific areas and will report to the Board with their decisions and/or recommendations, the

ultimate responsibility rests with the Board.

Board Processes

The Board meets at least four times a year and as and when deemed necessary. These meetings are scheduled in

advance to facilitate Directors’ individual arrangements in view of their on-going commitments. The Company’s Articles

of Association provide for meetings to be held via telephone conference, video conference or other similar means of

communications.

Directors may request for further explanations, briefi ngs by or discussions with Management on any aspect of the

Group’s operations or business. When circumstances require, Board members exchange views outside the formal

environment of Board meetings.

Details of the AC, NC and RC are set out on pages 30, 23 and 27 of this Annual Report respectively.

Training of Directors

Directors (including new Directors) are provided with background information about the Group’s history, mission, and

values. The Directors also visit the Group’s operational facilities in China and meet with Management to gain a better

understanding of its business operations, as and when deemed necessary.

The Group has a training budget for its Directors to attend industry conferences and seminars whenever necessary.

This budget may be utilised by each Director subject to approval by the Board Chairman. Newly appointed Directors

would be briefed on the business activities and the strategic direction and policies of the Group. Directors who do

not have prior experience or are not familiar with the duties and obligations required of a Director of a listed company

in Singapore will undergo the necessary training and briefing. Directors are provided with updates of the relevant new

laws and regulations, from time to time where appropriate, to enable them to make well-informed decisions and to

discharge their duties and responsibilities. Relevant news releases issued by SGX-ST are also circulated to the Board

for information.

Board Composition and Balance

As at the date of this report, the Board comprises six Directors.

Executive Directors:

Huang Shih-An (Chairman)

Huang Chuang Shueh-Ou (Vice Chairman)

Huang Chien-Hung (Chief Executive Officer)

Independent Directors:

Ho Toon Bah

Tan Sek Khee

Lin Chien

The NC reviews the composition of the Board to ensure that the Board has the appropriate mix of expertise and

experience, and collectively possess the necessary core competencies for effective functioning and informed

decision-making.

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The NC also strives to ensure that the size of the Board is conducive to discussions and facilitates decision-making.

The Board and NC are of the view that the current size of the Board is appropriate taking into account the nature and

scope of the Group’s operations. As a Group, the Directors bring with them a broad range of expertise in areas such

as accounting, finance, management experience, industry knowledge, customer-based knowledge as well as familiarity

with applicable regulatory requirements. The diversity of the Directors’ experience allows the useful exchange of ideas

and views to be brought to the Board deliberations.

The Independent Directors’ views and opinions provide alternative perspectives to the Group’s business. When

challenging Management proposals or, decisions, they bring independent judgement to bear on business activities and

transactions involving conflicts of interest and other complexities.

The profiles of the Directors are set out on page 14 of this Annual Report.

Chairman and Chief Executive Officer (“CEO”)

The roles of the Chairman and CEO are separate in line with good corporate practices, and held by Mr Huang Shih-An

and Mr Huang Chien-Hung respectively. They each perform separate functions to ensure appropriate balance of power,

increased accountability and provide the Board with greater capacity for independent decision-making. There is a clear

division of responsibilities between the Chairman and CEO.

Mr Huang Shih-An, Executive Chairman of the Group, leads the Board and ensures that its members work together

with Management in a constructive manner to address strategies, business operations and enterprise issues. He also

ensures Board meetings are held when necessary. The Executive Chairman also ensures the integrity and effectiveness

of the governance process of the Board.

The Company Secretary prepares agenda papers for the Board and Board Committees meeting in consultation with

the CEO and Group Financial Controller.

Mr Huang Chien-Hung, the CEO, oversees the day-to-day running of the Group and he undertakes management

oversight of the Group’s financial, operational, administrative and legal functions.

All major decisions made by the Executive Chairman and CEO have to be endorsed by the Board. Their performances

are reviewed by the NC and their remuneration packages are reviewed by the RC. As at the date of this report, the NC

and RC comprise all Independent Directors. The Board believes that the Independent Directors have demonstrated

high commitment in their role as Directors and have ensured that there is a good balance of power and authority.

There is an independent element on the Board with three Independent Directors out of six Directors of the Company

to enable independent exercise of objective judgement in the affairs of the Group. As such, the Board believes that

there are adequate safeguards and checks in place to ensure that the process of decision-making by the Board is

independent and based on collective decision-making, without any one person being able to exercise considerable

concentration of power or infl uence.

Mr Huang Chien-Hung, CEO, is the son of Mr Huang Shih-An (Executive Chairman and substantial shareholder of

the Company), and Mrs Huang Chuang Shueh-Ou (Vice Chairman and substantial shareholder of the Company). The

Board has discussed the need for succession planning for the Chairman and the CEO, and as such, will review the

need to appoint a lead Independent Director in compliance with Guideline 3.3 of the Code in the current fi nancial year

ending 31 December 2014.

Nominating Committee (“NC”)

As at the date of this report, the NC comprises three members, namely, Mr Lin Chien (Chairman), Mr Ho Toon Bah and

Mr Tan Sek Khee, all of whom are Independent Directors.

The responsibilities of the NC are to develop and maintain a transparent and formal process for the appointment of

new Directors, to review and recommend Directors retiring by rotation for re-election at annual general meeting as well

as to review and evaluate the Board’s performance.

Newly appointed Non-Executive Directors are provided with a formal letter of appointment setting out the Directors’

duties & obligations and term of appointment whereas Executive Directors are provided with a Service Agreement

setting out the Executive Directors’ term of office and terms and conditions of appointment.

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In addition, the NC also performs the following functions:

(a) review and recommend to the Board the structure, size and composition of the Board and the Board

committees;

(b) determine the process for search, nomination, selection and appointment of new board members and

assessing nominees or candidates for appointment, re-appointment and re-election to the Board;

(c) review and determine annually the independence of each Director pursuant to the guidelines set out under the

Code and whether there are relationships or circumstances which are likely to affect the independence or could

appear to affect, the Director’s judgements;

(d) ensure all Directors submit themselves for re-election at regular intervals;

(e) determine whether or not a Director is able to and has been adequately carrying out his/her duties as a Director

of the Company, particularly when he/she has multiple board representations;

(f) assess the effectiveness of the Board as a whole, after taking into consideration the contributions of each

Director to the effectiveness of the Board;

(g) review succession plans, in particular, the Chairman and CEO;

(h) review and make recommendations to the Board on all Board appointments and re-election, having regard to

the Directors’ contribution and performance;

(i) make recommendations to the Board for the re-appointment (or not) of services of any Director who has

reached the age of seventy (70) years, where appropriate;

(j) oversee the induction, orientation and training for any new and existing Directors;

(k) undertake such other functions and duties as may be delegated by the Board.

The NC has adopted a process for the selection and appointment of new Directors. In selecting potential new

Directors, the NC will seek to identify the competencies required to enable the Board to fulfi ll its responsibilities. The

curriculum vitae and other particulars/documents of the nominee or candidate will be given to the NC for consideration.

The NC will evaluate the suitability of the nominee or candidate based on his qualifi cations, business and related

experience, commitment, ability to contribute to the Board process and such qualities and attributes that may be

required by the Board. The NC will also meet with the potential candidate before making the nomination to the Board

for appointment as Director.

Whilst each Independent Director is required to refl ect on and sign a declaration of independence based on the

substantive requirements of the Code, the NC will review the declaration, to satisfy itself that the substantive principles

in the Code on independence are indeed fulfi lled.

For FY2013, the NC had reviewed the independence of Mr Ho Toon Bah, Mr Tan Sek Khee and Mr Lin Chien and, had

considered them independent. The Board concurred with the NC’s views.

Pursuant to its Terms of Reference, the NC is required to determine if a Director has been adequately carrying out

his duties as a Director of the Company, particularly if he has multiple Board representations. A Director with multiple

Board representations is expected to ensure that suffi cient time and attention is given to the affairs of the Group. All

Directors are required to declare their board representations. The NC is also satisfi ed that suffi cient time and attention

has been accorded by these Directors to the affairs of the Company. The Board concurred with the NC's views.

In consultation with the NC, the Board has adopted a general guideline to address time commitment, that its

Independent Directors may not hold more than 5 directorships in other public listed companies. A Director who wishes

to hold more than 5 directorships in other public listed companies may consult with the Board Chairman before

accepting new appointment(s).

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The Directors who are retiring and who, being eligible, will offer themselves for re-election at the forthcoming Annual

General Meeting (“AGM”) are named below:

Name of DirectorDate of first appointment

Date of last re-election/re-appointment

Director due for re-election/ re-appointment

Huang Shih-An 18 November 2000 26 April 2013 –

Huang Chuang Shueh-Ou 18 November 2000 26 April 2012 Retiring under Article 89

Huang Chien-Hung 3 August 2009 26 April 2013 –

Ho Toon Bah 2 June 2011 26 April 2012 –

Tan Sek Khee 30 June 2011 26 April 2012 Retiring under Article 89

Lin Chien 26 April 2012 26 April 2013 Re-appointing pursuant to

Section 153(6) of the Company

Act, Cap.50

The Directors submit themselves for nomination and re-election at least once in every three years in accordance with

the Company’s Articles of Association. Each Director is required to retire from office at least once every three years

by rotation (Article 89) and all newly appointed Directors will have to retire (Article 88) at the next AGM following their

appointments. The retiring Directors are eligible to offer themselves for re-election.

Pursuant to Article 89, Mrs Huang Chuang Shueh-Ou and Mr Tan Sek Khee will be retiring by rotation and being

eligible, will be offering themselves for re-election.

Pursuant to Section 153(6) of the Companies Act, Cap. 50, Mr Lin Chien, who is over the age of 70 years, will seek

re-appointment as a Director of the Company at the forthcoming AGM.

The NC, having considered the attendance and participation of the following Directors at Board and Board

Committees’ meetings, in particular, their contributions to the Company, had recommended the following Directors for

re-election at the forthcoming AGM:

(i) Mrs Huang Chuang Shueh-Ou

(ii) Mr Tan Sek Khee

(iii) Mr Lin Chien

It is an established practice that each member of the NC abtains from voting on any resolutions in respect of his/her

re-nomination as a Director. Accordingly, each of Mr Tan Sek Khee and Mr Lin Chien have abstained from all

deliberations and decisions in respect of his own re-election.

Board and Board Committees’ Performances

The NC has adopted a formal process to assess the effectiveness of the Board as a whole. The NC believes it is

more appropriate to assess the Board as a whole, rather than assessing individual directors, bearing in mind that each

member of the Board contributes in different ways to the effectiveness of the Board.

A Board performance evaluation was carried out in FY2013 to assess and evaluate the Board’s size, composition and

expertise, the Board’s access to information, as well as Board accountability and processes.

As part of the process, all Directors are required to complete the Board Evaluation Questionnaire which is then collated

by the Company Secretary and presented to the NC. The results of the performance evaluation were reviewed by

the Chairman of the NC and discussed at the NC meeting, with comparatives from the previous year's results. For

FY2013, the NC was generally satisfied with the results of the Board Performance evaluation, which indicated areas of

strengths. The overall score was rated “consistently good”. No significant issues were identified. The NC had discussed

the results with Board members who agreed to work on areas that could be improved further.

The NC was of the view that given the small Board size and the cohesiveness of the Board members and that

the same Independent Directors sit on the various Board Committees, there would not be any value add in having

evaluations of Board committees.

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Directors’ Attendance at Board and Board Committees Meetings in FY2013

Board Audit CommitteeNominatingCommittee

RemunerationCommittee

Name of Directors

No of meetings

held

No of meetings attended

No of meetings

held


No of meetings

held


No of meetings

held


Huang Shih-An 6 6 – – – – – –

Huang Chuang Shueh-Ou 6 6 – – – – – –

Huang Chien-Hung 6 6 – – – – – –

Ho Toon Bah 6 6 4 4 1 1 1 1

Tan Sek Khee 6 4 4 3 1 0 1 0

Lin Chien 6 6 4 4 1 1 1 1

Access to Information

The Directors are from time to time furnished with detailed information concerning the Group to enable them to be

fully aware and understand the decisions and actions of Management. They have unrestricted access to the Group’s

records and information.

Board papers are prepared for each Board meeting and are normally circulated in advance prior to each meeting. The

Board papers include sufficient information from Management on financial, business and corporate issues to enable the

Directors to be properly briefed on issues to be considered at Board meetings. Analysts’ reports on the Group are also

forwarded to the Directors on an on-going basis as and when received by Management. Management are invited to

attend meetings of the Board and Board Committees to provide input and insight into matters being discussed and to

respond to any queries that the Directors may have.

The Directors have independent access to the Company Secretaries and senior management of the Group at all times.

The Directors may seek independent legal and other professional advice, as required, to fulfill their duties and

responsibilities as Directors and such costs will be borne by the Company.

At least one of the Company Secretaries and/or her representative attends all Board and Board Committees meetings.

The Company Secretaries also assist the Chairman to ensure that Board procedures are followed and regularly

reviewed to ensure effective functioning of the Board and compliance with relevant rules and regulations applicable to

the Company.

The appointment and removal of the Company Secretary is a reserved matter of the Board.

The Directors may seek independent legal and other professional advice, as required, to fulfill their duties and

responsibilities as Directors and such costs will be borne by the Company. The appointment of such independent

professional advisors is subject to approval by the Board.

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(B) REMUNERATION MATTERS

Procedures for Developing Remuneration Policies

Remuneration Committee (“RC”)

The RC comprises three members, namely, Mr Tan Sek Khee (Chairman), Mr Ho Toon Bah and Mr Lin Chien all of

whom are independent Directors.

The principal functions of the RC are as follows :

(a) review and recommend to the Board a general framework of remuneration for the Board and key management

personnel and to recommend to the Board the specifi c remuneration packages and terms of employment for :

(i) each Director and key management personnel of the Group;

(ii) employees related to Directors, CEO, or Controlling Shareholders of the Group;

In the event of termination of the Executive Directors and key management personnel’s service

contracts, to ensure that such contracts of service contain fair and reasonable termination clauses which

are not overly generous.

(iii) the Directors’ fees, which are subject to shareholders’ approval at the AGM; and

(iv) the service contracts of the CEO and Executive Directors (if any).

(b) review and recommend to the Board long-term incentive schemes which may be set up from time to time.

(c) undertake such other functions and duties as may be delegated by the Board.

The RC reviews the framework of remuneration policies and packages for Directors, the CEO and key management

personnel of the Group. The review covers all aspects of remuneration, including Directors’ fees, salaries, allowances,

bonuses, performance shares and options and benefits-in-kind. The review of the remuneration packages takes into

consideration industry standards, performance-related elements, the job scopes and levels of responsibility of the

individuals. The RC’s recommendations are submitted for endorsement by the Board.

The members of the RC have many years of corporate experience and are knowledgeable in the field of executive

compensation. However, the RC has access to external professional advice on remuneration and human resource

related matters, if required.

Performance Share Scheme (the “Scheme”)

The purpose of adopting the Scheme is to give the Group greater flexibility to align the interests of employees,

especially key management personnel, with those of shareholders as well as to reward, retain and motivate employees

to achieve superior performance.

Under the Scheme, participants receive fully paid ordinary shares in the Company (“Shares”) free of charge, upon the

achievement of pre-determined performance targets.

The selection of a Participant and the number of Shares which are the subject of each award to be granted to a

Participant in accordance with the Scheme shall be determined at the absolute discretion of the RC, which shall take

into account criteria such as his rank, job performance, years of service and potential for future development, his

contribution to the success and development of the Group and the extent of effort required to achieve the performance

target within the performance period.

Details of the Scheme are set out under page 37 of this Annual Report under the Report of the Directors.

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Level and Mix of Remuneration

In setting remuneration packages, the Group takes into account pay and employment conditions within the same

industry and in comparable companies, as well as the Group’s relative performance and the performance of individuals.

Directors’ fees payable to the Independent Directors are set within a remuneration framework and takes into

consideration the contribution, effort and time incurred and responsibilities of the Independent Directors. The RC had

recommended to the Board an amount of S$100,000 (equivalent to US$80,000) as Directors' fees for the financial

year ended 31 December 2013. This recommendation has been endorsed by the Board and would be tabled at the

forthcoming AGM for shareholders’ approval.

No Director is involved in deciding his own remuneration. Each of Mr Lin Chien, Mr Ho Toon Bah and Mr Tan Sek

Khee being RC members, abstained from deliberation and voting in respect of their own remuneration.

The remuneration for the Executive Directors, the CEO and the key management personnel comprise a basic salary

component and a variable annual bonus, which based on the Group’s performance and the individual performance.

Executive Directors do not receive Directors’ fees but are remunerated as members of Management. The annual

reviews of the compensation of Directors are carried out by the RC to ensure that the remuneration of the Executive

Directors, the CEO and the key management personnel are commensurated with their individual performance, giving

due regard to the financial and commercial health and business needs of the Group. The performance of the CEO

together with other key management personnel are reviewed yearly by the RC and the Board.

Disclosure of Remuneration

Their remuneration package comprises a basic salary component and a variable component which is the annual

bonus, based on the performance of the Group as a whole and their individual performance.

In the service agreements of the Executive Directors, there is a termination/resignation notice period of six months

or less and do not contain onerous removal clauses. The service agreements may also be terminated if any of the

Executive Directors commits a breach of the service agreements, such as being convicted of an offence involving fraud

or dishonesty or being an adjudicated bankrupt.

The bands of remuneration in FY2013 are disclosed in the compensation table below:

Directors’ Remuneration

Name Fees Salary1 Bonus Others2 Total% % % % %

Between S$250,001 to S$500,000Huang Shih-An 100 100

Huang Chuang Shueh-Ou 100 100

Below S$250,000Ho Toon Bah 100 100

Tan Sek Khee 100 100

Lin Chien 100 100

Huang Chien-Hung 98.7 1.3 100

Notes:

1 Includes Employers’ CPF contribution

2 Includes Transport, medical and insurance

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Remuneration of Employees Related to a Director or the CEO and Top 6 Key Executives

As at 31 December 2013, there were 5 employees who are related to the Executive Directors. These 5 employees are:

Mr Huang Hsuan-Chin(1), Ms Huang Chung-Huei(2), Ms Huang Yun Ju(3), Mr Tan Chee Kong(4) and Mr Yang Hungi(5). All

of them are executive officers. The basis of determining the remuneration of these related employees is the same as

the basis of determining the remuneration of other unrelated employees.

Name Salary1 Bonus Commission Others2 Total% % % % %

Between S$150,001 to S$200,000Tan Chee Kong 100 100

Between S$100,001 to S$150,000Nil

Between S$50,001 to S$100,000Huang Yun Ju 100 100

Huang Hsuan-Chin 87.3 7.4 5.3 100

Huang Chung-Huei 93.9 6.1 100

Yang Hungi 85.1 1.0 13.9 100

Notes:

1 Includes Employers’ CPF contribution 2 Includes Transport, medical and insurance

(1) Mr Huang Hsuan-Chin is a relative of Mr Huang Shih-An, Executive Chairman, Mrs Huang Chuang Shueh-Ou, Vice Chairman, and Mr Huang Chien-Hung, CEO/Executive Director.

(2) Ms Huang Chung-Huei is a relative of Mr Huang Shih-An, Executive Chairman, Mrs Huang Chuang Shueh-Ou, Vice Chairman, and Mr Huang Chien-Hung, CEO/Executive Director.

(3) Ms Huang Yun Ju is an immediate family member of Mr Huang Shih-An, Executive Chairman, Mrs Huang Chuang Shueh-Ou, Vice Chairman, and Mr Huang Chien-Hung, CEO/Executive Director.

(4) Mr Tan Chee Kong is a relative of Mr Huang Shih-An, Executive Chairman, Mrs Huang Chuang Shueh-Ou, Vice Chairman, and Mr Huang Chien-Hung, CEO/Executive Director.

(5) Mr Yang Hungi is a relative of Mr Huang Shih-An, Executive Chairman, Mrs Huang Chuang Shueh-Ou, Vice Chairman, and Mr Huang Chien-Hung, CEO/Executive Director.

Adjustments to the remuneration packages for the related employees are reviewed annually by the RC to ensure that

they are in line with the Group’s staff remuneration guidelines and commensurate with their job scope and level of

responsibility. In the event that a member of the RC is related to the employee under review, that member will abstain

from the review accordingly.

As at 31 December 2013, the Group’s top 6 key executives (who are not Directors of the Company) were: Ms Leong

Mei Theng, Ms Huang Yun Ju, Mr Tan Chee Kong, Mr Timothy Tan Joo Kwang, Mr Hsieh Min Tsun and Mr Uchita

Masami.

The table below sets out the band of gross remuneration received by the top 6 key management personnel (who are

not Directors) of the Group in FY2013:

Remuneration band FY2013 FY2012

S$250,000 - S$500,000 – –

Below S$250,000 6 6

The aggregate remuneration paid to the top 6 key management personnel was S$770,050 (equivalent to US$616,737).

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(C) ACCOUNTABILITY AND AUDIT

Accountability

In presenting the quarterly, full-year announcements and annual financial statements to shareholders, the Board aims

to provide the shareholders with a detailed analysis, explanation and assessment of the Group’s financial position and

prospects. In addition, Management provides to the Executive Directors monthly management accounts, which show

the Group’s performance, position and prospects.

In line with the requirements of the SGX-ST, negative assurance statements were issued by the Board to accompany

the Group’s quarterly financial results announcements confirming to the best of the Board’s knowledge that nothing had

come to the Board’s attention which could render the Company’s results announcements to be false and misleading.

The Company is not required to issue negative assurance statement for its full year results announcement.

Audit Committee (“AC”)

The AC comprises three members, namely Mr Ho Toon Bah (Chairman), Mr Lin Chien and Mr Tan Sek Khee, all of

whom are Independent Directors.

The Board is of the view that the AC members have adequate accounting or related financial management expertise

and experience to discharge their function.

The AC meets at least 4 times a year and as and when deemed necessary to discuss and review with the external

auditors and Management, the Group’s accounting, auditing and financial reporting matters so as to ensure that an

effective control environment is maintained.

The AC monitors proposed changes in accounting policies, reviews the internal audit functions and discusses the

accounting implications of major transactions.

Specifically, the AC is guided by its terms of reference which includes:

reviewing the annual audit plans (including the nature and scope of the audit before the audit commences) and

evaluating their overall effectiveness through regular meetings with the internal and external auditors;

reviewing and recommending to the Board the re-appointment of internal and external auditors and matters

relating to resignation and dismissal of the auditors;

reviewing the scope and results of the internal audit procedures including the effectiveness of the internal audit

functions including fi nancial, operational and compliance controls and coordination between the internal and

external auditors and risk management;

evaluating the adequacy of the internal control systems of the Group by reviewing the audit reports from the

internal and external auditors, and the Management’s responses and actions taken to correct any deficiencies,

including cooperation and assistance given by the Management to the internal and external auditors;

reviewing the quarterly and full year fi nancial statements of the Company before submission to the Board for

approval, focusing in particular, on changes in accounting policies and practices, major risk areas, signifi cant

adjustments resulting from the audit, the going concern statement, compliance with accounting standards as

well as compliance with statutory and regulatory requirements;

reviewing interested person transactions;

reviewing the cost effectiveness of the audit, independence and objectivity of the external auditors including all

non-audit service provided by the external auditors to determine if the provision of such service would affect the

independence and objectivity of the external auditors before confi rming their re-nomination;

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ensuring that arrangements are in place by which staff of the Group and any other persons may in confi dence,

raise concerns about possible improprieties in fi nancial reporting or other matters; and

undertakes such other functions and duties as may be required by the Statute or the Listing Manual of the

SGX-ST.

The AC is authorised to investigate any matter within its terms of reference and has full access to Management and

resources, which are necessary to enable it to discharge its functions properly.

The Company has in place a whistle-blowing programme where employees of the Group and any other persons may,

in confidence, report possible improprieties which may cause financial loss or non financial loss to the Company. The

objective is to ensure that arrangements are in place for the independent investigations of such concerns and for

appropriate follow-up action. There were no incidents of whistle blowing in FY2013.

For FY2013, the AC has:

(1) held four meetings in a year with Management.

(2) reviewed the annual audit plan, including the nature and scope of the internal and external audits before

commencement of these audits.

(3) reviewed and approved the consolidated statement of comprehensive income, balance sheets, statement of

changes in equity and consolidated statement of cash fl ow.

(4) met with the external auditors and internal auditors during the year (without the presence of Management) to

obtain feedback on Management's cooperation during the audit and on other matters, or, concerns that warrant

the AC's attention.

(5) reviewed the adequacy of audit arrangements, with particular emphasis on the observations of the auditors, the

scope and quality of their audits and the independence and objectivity of the auditors. Both the internal and

external auditors have confi rmed that they had access to and received full cooperation and assistance from

Management and no restriction were placed on the scope of auditors.

(6) reviewed the non-audit services provided by the external auditors to ensure that provision of such services

will not affect the independence of the external auditors. The external auditors did not provide any non-audit

services to the Group and there were no non-audit fees paid to the external auditors. The external auditors

had also confirmed their independence in this respect. Audit fees amounting to US$230,000 (S$290,000) were

approved.

(7) recommended the re-appointment of PricewaterhouseCoopers LLP (“PwC”), Public Accountants and Chartered

Accountants at the forthcoming AGM.

(8) confi rmed that the Company has complied with Rules 712 and 715 of the Listing Rules of the SGX-ST. The

AC was satisfi ed that the resources and experience of PricewaterhouseCoopers LLP ("PwC"), the audit

engagement partner and his team assigned to the audit of the Group were adequate to meet their audit

obligations, given the size, nature and operations of the Group. The fi nancial information of the Company and

its Singapore subsidiaries are audited by PwC Singapore. All foreign subsidiaries are audited by network of

member fi rms of PricewaterhouseCoopers International Limited outside Singapore.

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Risk Management and Internal Controls

The Board acknowledges that it is responsible for the governance of risks, including maintaining a sound system of risk

management and internal controls. The Board recognises that no cost effective internal control system will preclude all

errors and irregularities, as a system is designed to manage rather than eliminate the risk of failure to achieve business

objectives, and can provide only reasonable and not absolute assurance against material misstatement or loss.

The Company currently does not have a separate risk management committee. However, Management reviews the

Group’s business and operational activities on a regular basis to identify areas of significant business risks as well as

appropriate measure to control and mitigate these risks.

The Group’s risk management is described under Note 28 of the Notes to the Financial Statements on page 87 of this

Annual Report.

Risk assessment and evaluation take place as an integral part of the annual strategic planning cycle. Each business

unit is required to document the management and mitigating actions in respect of the identifi ed risks. Management

reviews all control policies and procedures, and prepares a risk management checklist highlighting the signifi cant risks

and mitigation controls to the AC and the Board.

The internal and external auditors have, during the course of their respective audits, carried out a review of

the effectiveness of key internal controls within the scope of their respective audits. Non-compliance and

recommendations for implementation are reported to the AC. The AC will review the internal and external auditors’

comments and ensure that there are adequate internal controls in the Group and follow up actions are implemented.

During the financial year under review, the AC, has reviewed the adequacy, effectiveness and integrity of the Group’s

internal controls and risk management systems. Based on the reviews conducted and work performed by the internal

and external auditors, the Board, with the concurrence of the AC, is of the opinion that the internal controls in place are

adequate and effective in addressing the Group’s financial, operational, compliance and information technology risks.

As required under the Code, the Board had received written assurance from the Group’s CEO and Group Financial

Controller:

(a) that the Company’s fi nancial records have been properly maintained and the fi nancial statements give a true

and fair view of its operations and fi nances; and

(b) regarding the effectiveness of the Company’s risk management and internal control systems.

Internal Audit

The Board recognizes that it is responsible for maintaining a system of internal control processes to safeguard

shareholders’ interests and the Group’s business and assets. The systems that are in place are intended to provide

reasonable but not absolute assurance against the occurrence of material errors, human error, losses, fraud or other

irregularities, and include the safeguarding of assets, the maintenance of proper accounting records, the reliability of

financial information, compliance with appropriate legislation and best practices, and the containment of business risks.

The effectiveness of the internal financial control systems and procedures are monitored by Management and the

internal audit function is out-sourced to Baker Tilly Consultancy (Singapore) Pte Ltd (“Baker Tilly”).

The internal auditors report directly to the Chairman of the AC and present their reports, findings and recommendations

to the AC. The Group’s internal audit activities are guided by the International Standards for the Professional Practice

of Internal Auditing set by The Institute of Internal Auditors. The role of the internal auditors is to support the AC in

ensuring that the Group maintains a sound system of internal controls by monitoring and assessing the effectiveness

of key controls and procedures, conducting in-depth audits of high risk areas on a regular basis and undertaking

investigations as directed by the AC. The AC assesses the adequacy of the internal audit function on an annual basis.

For FY2013, the AC is satisfied with the adequacy and effectiveness of the internal audit function.

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(D) SHAREHOLDERS’ RIGHTS AND RESPONSIBILITIES

The Company does not practice selective disclosure. In line with the continuous disclosure obligations of the Company

pursuant to the SGX-ST’s Listing Rules and the Companies Act, Cap. 50, the Board’s policy is that all shareholders are

informed of all major developments within the Group. Information is communicated to shareholders on a timely basis

through:

annual reports or circulars that are prepared and issued to all shareholders;

quarterly and full year results announcements containing a summary of the financial information and affairs of

the Group for the period are published through SGXNET and news releases, as appropriate;

notices of and explanatory notes for AGM and extraordinary general meetings;

announcements and press releases made through SGXNET on major developments of the Group; and

the Group’s website at www.europtronicgroup.com at which shareholders can access information on the Group.

The Company does not see the need for analyst briefi ngs, investor roadshows or Investors’ Day briefi ngs currently and

will review such need when the Group’s performance improves.

The Company’s website provides, inter alia, corporate announcements, press releases, annual reports, and profiles of

the Group. In addition, shareholders are encouraged to attend the AGM to ensure a high level of accountability and

to stay informed of the Group’s strategy and goals. The AGM is the principal forum for dialogue with shareholders.

The notice of the AGM is dispatched to shareholders, together with explanatory notes or a circular on items of special

business.

At the AGM, shareholders are given opportunities to communicate their views on matters pertaining to the Group raise

issues or seek clarification and to participate in the meeting. Issues seeking approval of shareholders, if any, are tabled

as separate resolutions.

The notice of AGM is dispatched to shareholders, together with explanatory notes or a circular on items of special

business at least 14 days before the meeting for ordinary resolutions and 21 days before the meeting for special

resolutions. Each item of special business included in the notice of the meeting is accompanied, where appropriate, by

an explanation for the proposed resolution.

The Chairmen of the AC, RC and NC are normally available at the Company’s AGM to address any queries raised by

shareholders. The external auditors of the Company are also invited to attend the AGM and are available to assist the

Directors in addressing shareholders’ concerns relating to the conduct of audit, the preparation and content of the

auditors’ report.

No dividend is proposed for FY2013 due to the Company’s loss position and the need to conserve cash for the

Company’s working capital and operational use.

(E) DEALING IN THE COMPANY’S SECURITIES

The Group has in place policy and procedures governing dealings in the Company’s shares by the Company, its

Directors and key officers of the Company and its subsidiaries.

All Directors and key officers of the Company and its subsidiaries have been informed not to deal in the Company’s

shares at all times whilst in possession of unpublished price sensitive information and during the periods commencing

two weeks prior to the announcement of the Company’s results for each of the first three quarters of its financial

year and one month before the announcement of the Company’s full year results, and ending on the date of the

announcement of the relevant results.

CORPORATE

GOVERNANCE REPORT


The Company, the Directors and key officers are also expected to observe insider-trading laws at all times even when

dealing in securities within the permitted trading period. Where a potential conflict of interest arises, the Director

concerned does not participate in discussions and refrains from exercising any influence over other members of the

Board.

Directors and key officers are also encouraged not to deal in the Company’s securities on short-term considerations.

The Company confi rmed that it has adhered to its policy for securities transactions for FY2013 pursuant to Rule

1207(19) of the Listing Manual of the SGX-ST.

(F) INTERESTED PERSON TRANSACTIONS

The Company has adopted an internal policy in respect of any transaction with interested person and has set out the

procedures for review and approval of the Company’s interested person transactions. All interested person transactions

are subject to review by the AC. During the financial year under review, there were no interested person transactions

entered into by the Company which were more than 3% of the Group’s latest audited NTA.

The Company does not have a shareholders’ mandate for interested person transactions.

(G) MATERIAL CONTRACTS

Save for the service agreements entered into with the Executive Directors, the Group did not enter into any material

contracts in which the CEO, directors or controlling shareholders has any interests and no such material contracts

subsist at FY2013.

(H) PLACEMENT PROCEEDS

The net placement proceeds of US$1.9 million raised from the placement of 108,835,000 shares had been utilized as

at 31 December 2013, mainly for the repayment of bank loan.

DIRECTORS’

REPORTFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2013


The directors present their report to the members together with the audited fi nancial statements of the Group for the fi nancial

year ended 31 December 2013 and the balance sheet of the Company as at 31 December 2013.

Directors

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

Huang Shih-An (Chairman)

Huang Chuang Shueh-Ou (Vice Chairman)

Huang Chien-Hung (Chief Executive Offi cer)

Ho Toon Bah

Tan Sek Khee

Lin Chien

Arrangements to enable directors to acquire shares and debentures

Neither at the end of nor at any time during the fi nancial year was the Company a party to any arrangement whose object

was to enable the directors of the Company to acquire benefi ts by means of the acquisition of shares in, or debentures of, the

Company or any other body corporate, other than as disclosed under “Share Options Scheme” and “Performance Share” on

pages 36 to 37 of this report.

Directors’ interests in shares and debentures

According to the register of directors’ shareholdings, none of the directors holding offi ce at the end of the fi nancial year had

any interest in the shares or debentures of the Company or its related corporations, except as follows:

Holdings registered in name of director

Holdings in which director is deemed to have an interest

At31.12.2013

At1.1.2013

At31.12.2013

At1.1.2013

Company(No. of ordinary shares)

Huang Shih-An 161,620,193 161,620,193 92,124,465 148,594,465

Huang Chuang Shueh-Ou (1) 92,124,465 148,594,465 161,620,193 161,620,193

Huang Chien-Hung (2) 12,397,620 12,397,620 – –

(1) Huang Chuang Shueh-Ou is the spouse of Huang Shih-An.

(2) Huang Chien-Hung is the son of Huang Shih-An and Huang Chuang Shueh-Ou.

By virtue of Section 7 of the Singapore Companies Act (Cap. 50) (the “Act”), Huang Shih-An and Huang Chuang Shueh-Ou

are deemed to have interests in all the subsidiaries at the beginning and at the end of the fi nancial year.

The directors’ interests in the ordinary shares and convertible securities of the Company as at 21 January 2014 were the same

as those as at 31 December 2013.

DIRECTORS’



Directors’ contractual benefi ts

Since the end of the previous fi nancial year, no director has received or become entitled to receive a benefi t by reason of

a contract made by the Company or a related corporation with the director or with a fi rm of which he is a member or with

a company in which he has a substantial fi nancial interest, except as disclosed in the accompanying fi nancial statements

and in this report, and except that certain directors have an employment relationship with the Company, and has received

remuneration in that capacity.

Share options

(a) The Europtronic Employee Share Option Scheme (the “Share Option Scheme”) approved by the members of the

Company on 18 February 2002 is administered by the Remuneration Committee comprising 3 members, namely, Tan

Sek Khee (Chairman), Ho Toon Bah and Lin Chien.

(b) Under the Share Option Scheme, an option entitles the option holder to subscribe for a specifi c number of new

ordinary shares in the Company comprised in the option at a subscription price per share determined with reference to

the market price of the share at the time of grant of the option. The Remuneration Committee may, at its discretion, fi x

that subscription price at a discount up to 20% off market price. The consideration for the grant of an option is $1.00.

Options granted with the subscription price set at the market price shall only be exercised after the fi rst anniversary but

before the tenth anniversary (fi fth anniversary for non-executive directors) of the date of grant of that option. Options

granted with the market price set at a discount to the market price shall only be exercised after the second anniversary

but before the tenth anniversary (fi fth anniversary for non-executive directors) of the date of grant of that option. The

shares under option may be exercised in whole or in part on the payment of the relevant subscription price. Options

granted will lapse when the option holder ceases to be a full-time employee of the Company or any company within

the Group subject to certain exceptions at the discretion of the Company. The Share Option Scheme was expired on

17 February 2013.

The selection of a participant and the number of shares granted shall take into account criteria such as rank, job

performance, years of service and potential for future development, contribution to the success and development of

the Group and the extent of effort required to achieve the performance target within the performance period.

(c) Details of all the options to subscribe for ordinary shares of $0.10 each of the Company, are as follows:-

Date of grant

Balance as at

1.1.2013 Expired

Balance as at

31.12.2013Exercise

price Expiry date

23.1.2003 1,387,600 (1,387,600) – SGD 0.1375 17.2.2013

Since the commencement of the Scheme till the end of the fi nancial year:

No options have been granted to controlling shareholders of the Company or their associates (as defi ned in the

Listing Manual of Singapore Exchange Securities Trading Limited (“SGX-ST”)).

No participant other than Huang Hsuan-Chin, Hsieh Min-Tsun, Chen Lai-Fu, Tan Joo Kwang and Huang

Chung-Huei has received 5% or more of the total number of shares under option available under the Scheme.

No options were granted during the fi nancial year to subscribe for unissued shares of the Company and its subsidiaries.

No shares were issued during the fi nancial year by virtue of the exercise of options to take up unissued shares of the

Company and its subsidiaries.

No options were granted at a discount.

DIRECTORS’



Europtronic Performance Share Scheme

(a) The Europtronic Performance Share Scheme (the “Performance Share Scheme”) was approved by shareholders of the

Company at an Extraordinary General Meeting held on 26 April 2005. The Performance Share Scheme is administered

by the Remuneration Committee (“RC”), comprising Tan Sek Khee (Chairman), Ho Toon Bah and Lin Chien.

The purpose of adopting the Performance Share Scheme is to give the Group greater fl exibility to align the interests of

employees, especially key executives, with those of shareholders as well as to reward, retain and motivate employees

to achieve superior performance.

(b) Since the commencement of the Performance Share Scheme, 2,000,000 ordinary shares vested were satisfi ed by

delivery of shares and have been granted, as permitted under the Performance Share Scheme.

(c) No performance shares have been granted to controlling shareholders of the Company or their associates.

(d) No participant under the scheme has received 5% or more of the total number of shares available under the scheme.

Some information on the Performance Share Scheme is as follows:

(i) Awards over the Company’s ordinary shares may be granted to all the executive directors, non-executive directors and

executives of the Group, except those who are controlling shareholders, as may be determined by the Remuneration

Committee from time to time.

(ii) Under the Performance Share Scheme, awards represent the right of a participant to receive fully paid ordinary shares

in the Company free of charge, upon the participant achieving prescribed performance targets.

The selection of a participant and the number of shares which are the subject to each award to be granted to a

participant in accordance with the Performance Share Scheme shall be determined at the absolute discretion of the

Remuneration Committee, which shall take into account criteria such as his rank, job performance, years of service and

potential for future development, his contribution to the success and development of the Group and the extent of effort

required to achieve the performance target within the performance period.

(iii) The total number of new shares of the Company which may be issued pursuant to awards granted under the

Performance Share Scheme on any date, when added to the number of total number of new shares issued and

issuable in respect of all awards granted under the Performance Share Scheme shall not exceed 15% of the total

number of issued shares (excluding treasury shares) in the capital of the Company.

(iv) Subject to the prevailing legislation and SGX-ST guidelines, the Company will have the fl exibility to deliver ordinary

shares of the Company to participants under the Performance Share Scheme upon vesting of their awards by way of

an issue of new ordinary shares and/or the transfer of existing ordinary shares held by the Company in treasury.

DIRECTORS’



Audit Committee

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

Ho Toon Bah (Chairman)

Tan Sek Khee

Lin Chien

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

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

performing those functions, the Committee reviewed:

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

the audit plan of the Company’s independent auditor and any recommendations on internal accounting controls arising

from the statutory audit;

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

• the balance sheet of the Company and the consolidated fi nancial statements of the Group for the fi nancial year ended

31 December 2013 before their submission to the Board of Directors, as well as the Independent Auditor’s Report on

the balance sheet of the Company and the consolidated fi nancial statements of the Group.

The Audit Committee has recommended to the Board that the independent auditor, PricewaterhouseCoopers LLP, be

nominated for re-appointment at the forthcoming Annual General Meeting of the Company.

Independent Auditor

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

On behalf of the directors

Huang Shih-An Huang Chuang Shueh-Ou

Director Director

1 April 2014

STATEMENT BY

DIRECTORSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2013


In the opinion of the directors,

(a) the balance sheet of the Company and the consolidated fi nancial statements of the Group as set out on pages 42 to

101 are drawn up so as to give a true and fair view of the state of affairs of the Company and of the Group as at 31

December 2013 and of the results of the business, changes in equity and cash fl ows of the Group for the fi nancial year

then ended; and

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

and when they fall due.

On behalf of the directors

Huang Shih-An Huang Chuang Shueh-Ou

Director Director

1 April 2014

INDEPENDENT

AUDITOR’S REPORTTO THE MEMBERS OF EUROPTRONIC GROUP LTD


Report on the Financial Statements

We have audited the accompanying fi nancial statements of Europtronic Group Ltd (the “Company”) and its subsidiaries (the

“Group”) set out on pages 42 to 101, which comprise the consolidated balance sheet of the Group and the balance sheet of

the Company as at 31 December 2013, the consolidated statement of comprehensive income, statement of changes in equity

and statement of cash fl ows of the Group for the fi nancial year then ended, and a summary of signifi cant accounting policies

and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of fi nancial statements that give a true and fair view in accordance with the

provisions of the Singapore Companies Act (the “Act”) and Singapore Financial Reporting Standards, and for devising and

maintaining a system of internal accounting controls suffi cient 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 profi t and loss accounts and balance sheets and to maintain accountability

of assets.

Auditor’s Responsibility

Our responsibility is to express an opinion on these fi 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 fi nancial statements are free from material

misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial

statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material

misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor

considers internal control relevant to the entity’s preparation of fi 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used

and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the

fi nancial statements.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated fi nancial statements of the Group and the balance sheet 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 the Company as at 31 December 2013, and the results, changes in equity and cash

fl ows of the Group for the fi nancial year ended on that date.

Emphasis of Matter

We draw attention to Note 2.1 to these fi nancial statements which states that the Group has incurred a net loss of

US$11,467,000 for the fi nancial year ended 31 December 2013 and as at that date, the Group has current borrowings of

approximately US$33,753,000 due within 12 months from the balance sheet date and cash and cash equivalents of

approximately US$6,261,000. These conditions, along with other matters as described in Note 2.1, indicate the existence

of a material uncertainty which may cast signifi cant doubt about the ability of the Group to continue as a going concern. Our

opinion is not qualifi ed in respect of this matter.

INDEPENDENT

AUDITOR’S REPORTTO THE MEMBERS OF EUROPTRONIC GROUP LTD


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.

PricewaterhouseCoopers LLP

Public Accountants and Chartered Accountants

Singapore

1 April 2014

CONSOLIDATED STATEMENT OF

COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2013

The accompanying notes form an integral part of the fi nancial statements.


Group

Note

2013US$’000

2012

US$’000

Revenue 4 37,949 42,735

Cost of sales (37,991) (42,731)

Gross (loss)/profi t (42) 4

Other income 5 356 254

Other losses – net 6 (2,367) (8,270)

Expenses

- Distribution and marketing (1,754) (4,163)

- Administrative (4,906) (6,238)

- Finance 7 (2,453) (1,815)

Loss before income tax 8 (11,166) (20,228)

Income tax expense 10 (301) (555)

Net loss (11,467) (20,783)

Other comprehensive income/(losses):

Items that may be reclassifi ed subsequently to profi t or loss

Available-for-sale fi nancial assets

- Fair value gains 13 – 966

- Reclassifi cation (43) –

Currency translation differences arising from consolidation

- Gains 775 475

- Reclassifi cation – (42)

732 1,399

Item that will not be reclassifi ed subsequently to profi t or loss

Revaluation gain on property, plant and equipment 28,019 4,496

Other comprehensive income, net of tax 28,751 5,895

Total comprehensive income/(losses) 17,284 (14,888)

Loss attributable to:Equity holders of the Company (11,467) (18,966)

Non-controlling interests – (1,817)

(11,467) (20,783)

Total comprehensive income/(losses) attributable to:Equity holders of the Company 17,284 (13,071)

Non-controlling interests – (1,817)

17,284 (14,888)

Loss per share attributable to equity holders of the Company (cents per share)- Basic and diluted 11 (1.46) (2.81)

BALANCE

SHEETSAS AT 31 DECEMBER 2013



Group Company

Note

2013US$’000

2012

US$’000

2013US$’000

2012

US$’000

ASSETSCurrent assetsCash and cash equivalents 12 6,261 14,048 368 221

Available-for-sale fi nancial assets 13 1 110 1 1

Trade and other receivables 14 17,149 19,111 2,230 1,683

Inventories 15 6,073 8,924 – –

29,484 42,193 2,599 1,905

Non-current assetsAvailable-for-sale fi nancial assets 13 2,186 3,218 – –

Investments in subsidiaries 16 – – 13,800 25,122

Investment properties 17 3,303 203 – –

Property, plant and equipment 18 54,431 31,336 – –

Intangible assets 19 424 451 – –

60,344 35,208 13,800 25,122

Total assets 89,828 77,401 16,399 27,027

LIABILITIESCurrent liabilitiesTrade and other payables 20 21,994 12,294 12,884 7,754

Current income tax liabilities 195 129 – –

Borrowings 21 33,753 46,897 – –

55,942 59,320 12,884 7,754

Non-current liabilitiesBorrowings 21 2,259 2,131 – –

Deferred income tax liabilities 23 1,046 3,145 – –

3,305 5,276 – –

Total liabilities 59,247 64,596 12,884 7,754

NET ASSETS 30,581 12,805 3,515 19,273

EQUITYCapital and reserves attributable to equity holders of the CompanyShare capital 24 43,950 43,950 43,950 43,950

Treasury shares 24 – (426) – (426)

Other reserves 25 41,651 12,834 3,426 3,360

Accumulated losses 26 (54,949) (43,482) (43,861) (27,611)

30,652 12,876 3,515 19,273

Non-controlling interests (71) (71) – –

Total equity 30,581 12,805 3,515 19,273


CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2013

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43,9

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132

1,58

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132

09,

875

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482)

12,8

76(7

1)12

,805


CASH FLOWSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2013



Note 2013 2012

US$’000 US$’000

Cash fl ows from operating activitiesNet loss before tax (11,166) (20,228)

Adjustments for:

- (Write-back)/allowance for inventories obsolescence (691) 363

- Amortisation of intangible assets 11 12

- Bad debts written off 164 1,077

- Depreciation of property, plant and equipment 2,139 1,904

- Net gain on disposal of available-for-sale fi nancial assets (51) (101)

- (Gain)/loss on disposal of property, plant and equipment (41) 113

- Loss on disposal of intangible assets 9 –

- Dividend income (88) –

- Interest income (106) (184)

- Finance expenses 2,453 1,815

- Impairment of non-trade receivables arising from liquidation of subsidiaries – 980

- Impairment of non-trade receivables 1,531 –

- Loss on liquidation of subsidiaries – 3,665

- Intangible assets written off – 1,827

- Impairment loss on available-for-sale fi nancial assets 1,032 1,125

- Property, plant and equipment written off – 196

- Currency exchange differences (72) 635

(4,876) (6,801)

Change in working capital, net of effects from disposal of subsidiaries:

- Inventories 3,542 4,403

- Trade and other receivables 267 (2,340)

- Trade and other payables 3,853 (818)

Cash generated from/(used in) operations 2,786 (5,556)

Interest received 106 184

Interest paid (520) (639)

Income tax paid (235) (762)

Net cash provided by/(used in) operating activities 2,137 (6,773)

Cash fl ows from investing activitiesAdditions to property, plant and equipment (1,486) (605)

Disposal of assets held for sale under FRS 105 – 5,077

Disposal of available-for-sale fi nancial assets 117 399

Disposal of intangible assets 10 –

Disposal of property, plant and equipment 45 153

Net cash (used in)/provided by investing activities (1,314) 5,024


CASH FLOWSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2013



Note 2013 2012

US$’000 US$’000

Cash fl ows from fi nancing activitiesProceeds from re-issuance of treasury shares 492 –

Proceeds from borrowings 70,000 80,811

Repayment of borrowings (83,520) (75,082)

Proceeds from fi nance lease liabilities 1,226 –

Repayments of fi nance lease liabilities (722) (474)

Proceeds from loans from Directors 5,847 –

Interest paid (1,933) (1,176)

Proceeds from issuance of ordinary share, net – 1,963

Bank deposits released from pledged 9,635 –

Bank deposits pledged (900) (5,035)

Net cash provided by fi nancing activities 125 1,007

Net increase/(decrease) in cash and cash equivalents 948 (742)

Cash and cash equivalentsBeginning of fi nancial year 2,497 3,239

End of fi nancial year 12 3,445 2,497

NOTES TO

FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2013


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

1. General information

Europtronic Group Ltd (the “Company”) is listed on the Singapore Exchange and incorporated and domiciled in

Singapore. The address of its registered offi ce is 60 Kaki Bukit Place, Eunos Techpark #01-10, Singapore 415979.

The principal activity of the Company is that of an investment holding company. The principal activities of its

subsidiaries are disclosed in Note 33 to the fi nancial statements.

2. Signifi cant accounting policies

2.1 Basis of preparation

These fi nancial statements have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”)

under the historical cost convention, except as disclosed in the accounting policies below.

Going concern

As at 31 December 2013, the Group has current borrowings of approximately US$33,753,000 due within 12 months

from the balance sheet date and cash and cash equivalents of approximately US$6,261,000. The Group has incurred

a net loss of US$11,467,000 for the fi nancial year ended 31 December 2013 and as at that date the Group’s current

liabilities exceeded its current assets by US$26,458,000. In addition, as disclosed in Note 21, a subsidiary of the Group

has breached certain fi nancial covenants relating to credit facilities amounting to approximately US$14,539,000. The

breach of these fi nancial covenants is an event of default and may result in the banks exercising their rights under the

credit facility agreement to recall the credit facilities and to demand immediate repayment. These conditions indicate

the existence of a material uncertainty that casts signifi cant doubt on the ability of the Group to operate as a going

concern.

Notwithstanding with the above, the fi nancial statements have been prepared on a going concern basis upon

considering the following:

Expected incoming funds from potential disposal of land and factory in Wujiang, People’s Republic of China

following the Compulsory Acquisition notice from Wujiang Economic and Technological Development Zone.

The directors have evaluated all the relevant facts available to them and are of the opinion that there are good

track records or relationships with banks which enhance the Group’s ability to continue with the current credit

facilities to enable the Group to meet its fi nancial obligations as and when they fall due for the foreseeable

future.

The controlling shareholders of the Company, who are also the directors, have provided personal undertakings

to provide continuing fi nancial support to the Group.

Expected customer orders and expected positive operating activities of the Group in the next fi nancial year as

the Group expects stronger customer support from product mix transitions.

Accordingly, the fi nancial statements have been prepared on a going concern basis.

NOTES TO



2. Signifi cant accounting policies (continued)

2.1 Basis of preparation (continued)

Going concern (continued)

The validity of the going concern assumption on which these fi nancial statements are prepared depends on the

continuing favourable outcome of negotiations with Wujiang Economic and Technological Development Zone and

continuing fi nancial support from the controlling shareholders and existing banks as well as continuing favourable

outcome of operating activities and customer orders. If the Group is unable to continue in operational existence for the

foreseeable future, adjustments may have to be made to refl ect the situation that assets may need to be realised other

than in the normal course of business and at amounts which could differ signifi cantly from the amounts at which they

are currently recorded as at the balance sheet date. In addition, the Group may have to provide for further liabilities that

might arise. The effect of these adjustments has not been refl ected in the fi nancial statements.

The preparation of fi nancial statements in conformity with FRS requires management to exercise its judgement in the

process of applying the Group’s accounting policies. It also requires the use of certain critical accounting estimates

and assumptions. The areas involving a higher degree of judgement or complexity, or areas where assumptions and

estimates are signifi cant to the fi nancial statements are disclosed in Note 3.

Interpretations and amendments to published standards effective in 2013

On 1 January 2013, the Group adopted the new or amended FRS and Interpretations of FRS (“INT FRS”) that are

mandatory for application for the fi nancial year. Changes to the Group’s accounting policies have been made as

required, in accordance with the transitional provisions in the respective FRS and INT FRS.

The adoption of these new or amended FRS and INT FRS did not result in substantial changes to the accounting

policies of the Group and the Company and had no material effect on the amounts reported for the current or prior

fi nancial years except for the following:

Amendment to FRS 1 Presentation of Items of Other Comprehensive Income

The Group has also adopted the amendment to FRS 1 Presentation of Items of Other Comprehensive Income on 1

January 2013. The amendment is applicable for annual periods beginning on or after 1 July 2012 (with early adoption

permitted). It requires items presented in other comprehensive income to be separated into two groups, based on

whether or not they may be recycled to profi t or loss in the future.

FRS 113 Fair Value Measurement

FRS 113 aims to improve consistency and reduce complexity by providing a precise defi nition of fair value and a single

source of fair value measurement and disclosure requirements for use across FRSs. The requirements do not extend

the use of fair value accounting but provide guidance on how it should be applied where its use is already required or

permitted by other standards within FRSs.

The adoption of FRS 113 does not have any material impact on the accounting policies of the Group. The Group has

incorporated the additional disclosures required by FRS 113 into the fi nancial statements.

NOTES TO




2.2 Revenue recognition

Sales comprise the fair value of the consideration received or receivable for the sale of goods and rendering of services

in the ordinary course of the Group’s activities. Sales are presented, net of value-added tax, rebates and discounts,

and after eliminating sales within the Group.

The Group assesses its role as an agent or principal for each transaction and in a transaction where the Group acts as

an agent, service revenue would exclude amounts collected on behalf of the principal. The Group recognises revenue

when the amount of revenue and related cost can be reliably measured, it is probable that the collectability of the

related receivables is reasonably assured and when the specifi c criteria for each of the Group’s activities are met as

follows:

Sale of goods

Revenue from these sales is recognised when a Group entity has delivered the parts to locations specifi ed by its

customers and the customers have accepted the parts in accordance with the sales contract.

Interest income

Interest income is recognised using the effective interest method.

2.3 Group accounting

(a) Subsidiaries

(i) Consolidation

Subsidiaries are entities (including special purpose entities) over which the Group has power to govern

the fi nancial and operating policies so as to obtain benefi ts from its activities, generally accompanied by

a shareholding giving rise to a majority of the voting rights. The existence and effect of potential voting

rights that are currently exercisable or convertible are considered when assessing whether the Group

controls another entity. Subsidiaries are consolidated from the date on which control is transferred to the

Group. They are de-consolidated from the date on which control ceases.

In preparing the consolidated fi nancial statements, transactions, balances and unrealised gains on

transactions between group entities are eliminated. Unrealised losses are also eliminated but are

considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have

been changed where necessary to ensure consistency with the policies adopted by the Group.

Non-controlling interests are that part of the net results of operations and of net assets of a subsidiary

attributable to the interests which are not owned directly or indirectly by the equity holders of the

Company. They are shown separately in the consolidated statement of comprehensive income,

statement of changes in equity and balance sheet. Total comprehensive income is attributed to the

non-controlling interests based on their respective interests in a subsidiary, even if this results in the

non-controlling interests having a defi cit balance.

NOTES TO




2.3 Group accounting (continued)

(a) Subsidiaries (continued)

(ii) Acquisitions

The acquisition method of accounting is used to account for business combinations by the Group.

The consideration transferred for the acquisition of a subsidiary or business comprises the fair value

of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The

consideration transferred also includes the fair value of any contingent consideration arrangement and

the fair value of any pre-existing equity interest in the subsidiary.

Acquisition-related costs are expensed as incurred.

Identifi able assets acquired and liabilities and contingent liabilities assumed in a business combination

are, with limited exceptions, measured initially at their fair values at the acquisition date.

On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree

at the date of acquisition either at fair value or at the non-controlling interest’s proportionate share of the

acquiree’s net identifi able assets.

The excess of (i) the consideration transferred, the amount of any non-controlling interest in the acquiree

and the acquisition-date fair value of any previous equity interest in the acquiree over the (ii) fair value

of the net identifi able assets acquired is recorded as goodwill. Please refer to the paragraph “Intangible

assets - Goodwill” for the subsequent accounting policy on goodwill.

(iii) Disposals

When a change in the Group ownership interest in a subsidiary results in a loss of control over the

subsidiary, the assets and liabilities of the subsidiary including any goodwill are derecognised. Amounts

previously recognised in other comprehensive income in respect of that entity are also reclassifi ed to

profi t or loss or transferred directly to retained earnings if required by a specifi c Standard.

Any retained equity interest in the entity is remeasured at fair value. The difference between the carrying

amount of the retained interest at the date when control is lost and its fair value is recognised in profi t or

loss.

Please refer to the paragraph “Investments in subsidiaries” for the accounting policy on investments in

subsidiaries in the separate fi nancial statements of the Company.

(b) Transactions with non-controlling interests

Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control over the

subsidiary are accounted for as transactions with equity owners of the Company. Any difference between the

change in the carrying amounts of the non-controlling interest and the fair value of the consideration paid or

received is recognised within equity attributable to the equity holders of the Company.

NOTES TO




2.4 Property, plant and equipment

(a) Measurement

(i) Land and buildings

Land and buildings are initially recognised at cost. Freehold land is subsequently carried at the revalued

amount less accumulated impairment losses. Buildings and leasehold land are subsequently carried at

the revalued amounts less accumulated depreciation and accumulated impairment losses.

Land and buildings are revalued by independent professional valuers on an annual basis and/or

whenever their carrying amounts are likely to differ materially from their revalued amounts. When an

asset is revalued, any accumulated depreciation at the date of revaluation is eliminated against the gross

carrying amount of the asset. The net amount is then restated to the revalued amount of the asset.

Increases in carrying amounts arising from revaluation, including currency translation differences, are

recognised in other comprehensive income, unless they offset previous decreases in the carrying

amounts of the same asset, in which case, they are recognised in profi t or loss. Decreases in carrying

amounts that offset previous increases of the same asset are recognised in other comprehensive

income. All other decreases in carrying amounts are recognised in profi t or loss.

(ii) Other property, plant and equipment

All other items of property, plant and equipment are initially recognised at cost and subsequently carried

at cost less accumulated depreciation and accumulated impairment losses.

(iii) Components of costs

The cost of an item of property, plant and equipment initially recognised includes its purchase price and

any cost that is directly attributable to bringing the asset to the location and condition necessary for it to

be capable of operating in the manner intended by management. The projected cost of dismantlement,

removal or restoration is also recognised as part of the cost of property, plant and equipment if the

obligation for the dismantlement, removal or restoration is incurred as a consequence of either acquiring

the asset or using the asset for purpose other than to produce inventories.

(b) Depreciation

Freehold land is not depreciated. Depreciation on other items of property, plant and equipment is calculated

using the straight-line method to allocate their depreciable amounts over their estimated useful lives as follows:

Useful lives

Leasehold land, buildings and improvements 40 - 50 years

Machinery and equipment 5 - 15 years

Motor vehicles 5 years

Construction-in-progress is not depreciated until commissioned, as these assets are not available for use.

The residual values, estimated useful lives and depreciation method of property, plant and equipment are

reviewed, and adjusted as appropriate, at each balance sheet date. The effects of any revision are recognised in

profi t or loss when the changes arise.

NOTES TO




2.4 Property, plant and equipment (continued)

(c) Subsequent expenditure

Subsequent expenditure relating to property, plant and equipment that has already been recognised is added

to the carrying amount of the asset only when it is probable that future economic benefi ts associated with the

item will fl ow to the Group and the cost of the item can be measured reliably. All other repair and maintenance

expenses are recognised in profi t or loss when incurred.

(d) Disposal

On disposal of an item of property, plant and equipment, the difference between the disposal proceeds and

its carrying amount is recognised in profi t or loss within ‘Other losses – net’. Any amount in revaluation reserve

relating to that asset is transferred to retained profi ts directly.

2.5 Intangible assets

(a) Goodwill on acquisitions

Goodwill on acquisitions of subsidiaries and business on or after 1 January 2011 represents the excess of (i) the

consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair

value of any previous equity interest in the acquiree over (ii) the fair value of the net identifi able assets acquired.

Goodwill on acquisition of subsidiaries and business prior to 1 January 2011 represents the excess of the cost

of the acquisition over the fair value of the Group’s share of the net identifi able assets acquired.

Goodwill on acquisition of subsidiaries and business is recognised separately as intangible assets and carried at

cost less accumulated impairment losses.

Gains and losses on the disposal of subsidiaries and business include the carrying amount of goodwill relating

to the entity sold, except for goodwill arising from acquisitions prior to 1 January 2001. Such goodwill was

adjusted against retained profi ts in the year of acquisition and is not recognised in profi t or loss on disposal.

(b) Patent and club memberships

Patent and club memberships acquired are initially recognised at cost and are subsequently carried at cost

less accumulated amortisation and accumulated impairment losses. These costs are amortised to profi t or

loss using the straight-line method over their estimated useful lives, range from 10 to 50 years and periods of

contractual rights. Club membership with infi nite useful lives is not amortised.

(c) Customer relationship

Customer relationship acquired is initially recognised at cost and is subsequently carried at cost less

accumulated impairment losses.

NOTES TO




2.5 Intangible assets (continued)

(d) Research and development

Research expenditure is written off as incurred.

Expenditure on development activities, whereby research fi ndings are applied to a plan or design for the

production of new or substantially improved products and processes, is capitalised if this cost is identifi able

and it is probable that the cost will generate future economic benefi t and its recoverable value exceeds the

cost and can be measured reliably. The expenditure capitalised includes the cost of materials, direct labour and

an appropriate proportion of overheads. Other expenditure is recognised in the statement of comprehensive

income as an expense when incurred. Capitalised development expenditure is stated at cost less impairment

losses. The management will carry out annual assessment that the criteria for capitalisation of development

cost including technical and commercial feasibilities are met, if these criteria are not met, expenditure would be

written off.

2.6 Borrowing costs

Borrowing costs are recognised in profi t or loss using the effective interest method.

2.7 Investment properties

Investment properties comprise apartments and offi ce units that are held for long-term rental yields and/or for capital

appreciation.

Investment properties are initially recognised at cost and subsequently carried at fair value, determined annually by

independent professional valuers on the highest-and-best-use basis. Changes in fair values are recognised in profi t or

loss.

The cost of major renovations and improvements is capitalised and the carrying amounts of the replaced components

are recognised in profi t or loss. The cost of maintenance, repairs and minor improvements is recognised in profi t or loss

when incurred.

On disposal of an investment property, the difference between the disposal proceeds and the carrying amount is

recognised in profi t or loss.

2.8 Investments in subsidiaries

Investments in subsidiaries are carried at cost less accumulated impairment losses in the Company’s balance sheet.

On disposal of investments in subsidiaries, the difference between disposal proceeds and the carrying amounts of the

investments are recognised in profi t or loss.

NOTES TO




2.9 Impairment of non-fi nancial assets

(a) Goodwill

Goodwill recognised separately as an intangible asset is tested for impairment annually and whenever there is

indication that the goodwill may be impaired.

For the purpose of impairment testing of goodwill, goodwill is allocated to each of the Group’s

cash-generating-units (“CGU”) expected to benefi t from synergies arising from the business combination.

An impairment loss is recognised when the carrying amount of a CGU, including the goodwill, exceeds the

recoverable amount of the CGU. The recoverable amount of a CGU is the higher of the CGU’s fair value less

cost to sell and value-in-use.

The total impairment loss of a CGU is allocated fi rst to reduce the carrying amount of goodwill allocated to the

CGU and then to the other assets of the CGU pro-rata on the basis of the carrying amount of each asset in the

CGU.

An impairment loss on goodwill is recognised as an expenses and is not reversed in a subsequent period.

(b) Intangible assets

Property, plant and equipment

Investments in subsidiaries

Intangible assets, property, plant and equipment and investments in subsidiaries are tested for impairment

whenever there is any objective evidence or indication that these assets may be impaired.

For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell

and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash infl ows

that are largely independent of those from other assets. If this is the case, the recoverable amount is determined

for the CGU to which the asset belongs.

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

amount of the asset (or CGU) is reduced to its recoverable amount.

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

profi t or loss, unless the asset is carried at revalued amount, in which case, such impairment loss is treated as

a revaluation decrease. Please refer to the paragraph “Property, plant and equipment” for the treatment of a

revaluation decrease.

An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change in the

estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The

carrying amount of this asset is increased to its revised recoverable amount, provided that this amount does

not exceed the carrying amount that would have been determined (net of any accumulated amortisation or

depreciation) had no impairment loss been recognised for the asset in prior years.

A reversal of impairment loss for an asset other than goodwill is recognised in profi t or loss, unless the asset is

carried at revalued amount, in which case, such reversal is treated as a revaluation increase. However, to the

extent that an impairment loss on the same revalued asset was previously recognised as an expense, a reversal

of that impairment is also credited to profi t or loss.

NOTES TO




2.10 Financial assets

(a) Classifi cation

The Group classifi es its fi nancial assets in the following categories: loans and receivables and available-for-sale.

The classifi cation depends on the nature of the asset and the purpose for which the assets were acquired.

Management determines the classifi cation of its fi nancial assets at initial recognition.

(i) Loans and receivables

Loans and receivables are non-derivative fi nancial assets with fi xed or determinable payments that are

not quoted in an active market. They are presented as current assets, except for those expected to be

realised later than 12 months after the balance sheet date which are presented as non-current assets.

Loans and receivables are presented as “trade and other receivables” and “cash and cash equivalents”

on the balance sheet.

(ii) Available-for-sale fi nancial assets

Available-for-sale fi nancial assets, are non-derivatives that are either designated in this category or not

classifi ed in any of the other categories. They are presented as non-current assets unless the investment

matures or management intends to dispose of the assets within 12 months after the balance sheet date.

(b) Recognition and derecognition

Regular way purchases and sales of fi nancial assets are recognised on trade date – the date on which the

Group commits to purchase or sell the asset.

Financial assets are derecognised when the rights to receive cash fl ows from the fi nancial assets have expired

or have been transferred and the Group has transferred substantially all risks and rewards of ownership. On

disposal of a fi nancial asset, the difference between the carrying amount and the sale proceeds is recognised

in profi t or loss. Any amount previously recognised in other comprehensive income relating to that asset is

reclassifi ed to profi t or loss.

(c) Initial measurement

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

(d) Subsequent measurement

Available-for-sale fi nancial assets are subsequently carried at fair value. Loans and receivables are subsequently

carried at amortised cost using the effective interest method.

Interest and dividend income on available-for-sale fi nancial assets are recognised separately as income.

Changes in the fair values of available-for-sale equity securities (i.e. non-monetary items) are recognised in other

comprehensive income and accumulated in the fair value reserve, together with the related currency translation

differences.

NOTES TO




2.10 Financial assets (continued)

(e) Impairment

The Group assesses at each balance sheet date whether there is objective evidence that a fi nancial asset or a

group of fi nancial assets is impaired and recognises an allowance for impairment when such evidence exists.

(i) Loans and receivables

Signifi cant fi nancial diffi culties of the debtor, probability that the debtor will enter bankruptcy, and default

or signifi cant delay in payments are objective evidence that these fi nancial assets are impaired.

The carrying amount of these assets is reduced through the use of an impairment allowance

account which is calculated as the difference between the carrying amount and the present value of

estimated future cash fl ows, discounted at the original effective interest rate. When the asset becomes

uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts

previously written off are recognised against the same line item in profi t or loss.

The impairment allowance is reduced through profi t or loss in a subsequent period when the amount of

impairment loss decreases and the related decrease can be objectively measured. The carrying amount

of the asset previously impaired is increased to the extent that the new carrying amount does not

exceed the amortised cost had no impairment been recognised in prior periods.

(ii) Available-for-sale fi nancial assets

In addition to the objective evidence of impairment described in Note 2.10(e), a signifi cant or prolonged

decline in the fair value of an equity security below its cost is considered as an indicator that the

available-for-sale fi nancial asset is impaired.

If any evidence of impairment exists, the cumulative loss that was recognised in other comprehensive

income is reclassifi ed to profi t or loss. The cumulative loss is measured as the difference between the

acquisition cost (net of any principal repayments and amortisation) and the current fair value, less any

impairment loss previously recognised as an expense. The impairment losses recognised as an expense

on equity securities are not reversed through profi t or loss.

(f) Offsetting fi nancial instruments

Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally

enforceable right to offset and there is an intention to settle on a net basis or realise the asset and settle the

liability simultaneously.

2.11 Financial guarantees

The Company has issued corporate guarantees to banks for borrowings of its subsidiaries. These guarantees are

fi nancial guarantees as they require the Company to reimburse the banks if the subsidiaries fail to make principal or

interest payments when due in accordance with the terms of their borrowings.

Financial guarantees are initially recognised at their fair values plus transaction costs in the Company’s balance sheet.

Financial guarantees are subsequently amortised to profi t or loss over the period of the subsidiaries’ borrowings, unless

it is probable that the Company will reimburse the bank for an amount higher than the unamortised amount. In this

case, the fi nancial guarantees shall be carried at the expected amount payable to the bank in the Company’s balance

sheet.

Intra-group transactions are eliminated on consolidation.

NOTES TO




2.12 Borrowings

Borrowings are presented as current liabilities unless the Group has an unconditional right to defer settlement for at

least 12 months after the balance sheet date, in which case they are presented as non-current liabilities.

Borrowings are initially recognised at fair value (net of transaction costs) and subsequently carried at amortised cost.

Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profi t or loss

over the period of the borrowings using the effective interest method.

2.13 Trade and other payables

Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of the

fi nancial year which are unpaid. They are classifi ed as current liabilities if payment is due within one year or less (or in

the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Trade and other payables are initially recognised at fair value, and subsequently carried at amortised cost using

effective interest method.

2.14 Fair value estimation of fi nancial assets and liabilities

The fair values of fi nancial instruments traded in active markets (such as exchange-traded and over-the-counter

securities) are based on quoted market prices at the balance sheet date. The quoted market prices used for fi nancial

assets are the current bid prices; the appropriate quoted market prices for fi nancial liabilities are the current asking

prices.

The fair values of fi nancial instruments that are not traded in an active market are determined by using valuation

techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions

existing at each balance sheet date. The Group also estimates the fair values of the fi nancial assets by reference to the

net assets of these equity securities. Where appropriate, quoted market prices or dealer quotes for similar instruments

are used. Valuation techniques, such as discounted cash fl ow analyses, are also used to determine the fair values of

the fi nancial instruments.

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

2.15 Leases

(a) When the Group is the lessee:

The Group leases certain plant and machinery and motor vehicles under fi nance leases, factories and

warehouses under operating leases from non-related parties.

(i) Lessee - Finance leases

Leases where the Group assumes substantially all risks and rewards incidental to ownership of the

leased assets are classifi ed as fi nance leases.

The leased assets and the corresponding lease liabilities (net of fi nance charges) under fi nance leases

are recognised on the balance sheet as plant and equipment and borrowings respectively, at the

inception of the leases based on the lower of the fair value of the leased assets and the present value of

the minimum lease payments.

Each lease payment is apportioned between the fi nance expense and the reduction of the outstanding

lease liability. The fi nance expense is recognised in profi t or loss on a basis that refl ects a constant

periodic rate of interest on the fi nance lease liability.

NOTES TO




2.15 Leases (continued)

(a) When the Group is the lessee: (continued)

(ii) Lessee - Operating leases

Leases where substantially all risks and rewards incidental to ownership are retained by the lessors are

classifi ed as operating leases. Payments made under operating leases (net of any incentives received

from the lessors) are recognised in profi t or loss on a straight-line basis over the period of the lease.

Contingent rents are recognised as an expenses in profi t or loss when incurred.

(b) When the Group is the lessor:

Lessor - Operating leases

The Group leases investment properties under operating leases to non-related parties. Leases of investment

properties where the Group retains substantially all risks and rewards incidental to ownership are classifi ed as

operating leases. Rental income from operating leases (net of any incentives given to the lessees) is recognised

in profi t or loss on a straight-line basis over the lease term.

Initial direct costs incurred by the Group in negotiating and arranging operating leases are added to the carrying

amount of the leased assets and recognised as an expense in profi t or loss over the lease term on the same

basis as the lease income.

Contingent rents are recognised as income in profi t or loss when earned.

2.16 Inventories

Inventories are carried at the lower of cost and net realisable value.

Cost is determined using the fi rst-in, fi rst-out basis formula and comprises all costs of purchase, costs of conversion

and other costs incurred in bringing the inventories to their present location and condition. The cost of fi nished goods

and work-in-progress comprises raw materials, direct labour, other direct costs and related production overheads

(based on normal operating capacity) but exclude borrowing costs.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of

completion and applicable variable selling expenses.

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 as a reduction in the

amount of inventories recognised as an expense in the period in which the reversal occurs.

NOTES TO




2.17 Income taxes

Current income tax for current and prior periods is recognised at the amount expected to be paid to or recovered from

the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the balance

sheet date.

Deferred income tax is recognised for all temporary differences arising between the tax bases of assets and liabilities

and their carrying amounts in the fi nancial statements except when the deferred income tax arises from the initial

recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither

accounting nor taxable profi t or loss at the time of the transaction.

A deferred income tax liability is recognised on temporary differences arising on investments in subsidiaries and

associated companies, except where the Group is able to control the timing of the reversal of the temporary difference

and it is probable that the temporary difference will not reverse in the foreseeable future.

A deferred income tax asset is recognised to the extent that it is probable that future taxable profi t will be available

against which the deductible temporary differences and tax losses can be utilised.

Deferred income tax is measured:

(i) at the tax rates that are expected to apply when the related deferred income tax asset is realised or the

deferred income tax liability is settled, based on tax rates and tax laws that have been enacted or substantively

enacted by the balance sheet date; and

(ii) based on the tax consequence that will follow from the manner in which the Group expects, at the balance

sheet date, to recover or settle the carrying amounts of its assets and liabilities except for investment properties.

Investment property measured at fair value is presumed to be recovered entirely through sale.

Current and deferred income taxes are recognised as income or expense in profi t or loss, except to the extent that the

tax arises from a business combination or a transaction which is recognised directly in equity. Deferred tax arising from

a business combination is adjusted against goodwill on acquisition.

2.18 Provisions for other liabilities and charges

Provisions for other liabilities and charges are recognised when the Group has a present legal or constructive obligation

as a result of past events, it is more likely than not that an outfl ow of resources will be required to settle the obligation

and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

2.19 Employee compensation

Employee benefi ts are recognised as an expense, unless the cost qualifi es to be capitalised as an asset.

(a) Defi ned contribution plans

Defi ned contribution plans are post-employment benefi t plans under which the Group pays fi xed contributions

into separate entities such as the Central Provident Fund on a mandatory, contractual or voluntary basis. The

Group has no further payment obligations once the contributions have been paid.

NOTES TO




2.19 Employee compensation (continued)

(b) Employees share option scheme

The directors of the Company (including non-executive and independent directors) and employees of the

Group receive remuneration in the form of share options as consideration for services rendered (“equity-settled

transactions”).

The cost of equity-settled transactions is measured by reference to the fair value at the date on which the share

options are granted. In valuing the share options, no account is taken of any performance conditions, other than

conditions linked to the price of the shares of the Company (“market conditions”), if applicable.

The cost of equity-settled transactions is recognised, together with a corresponding increase in the share option

reserve, over the period in which the performance and/or service conditions are fulfi lled, ending on the date on

which the relevant employees become fully entitled to the award (“the vesting date”). The cumulative expense

recognised for equity-settled transactions at each reporting date until the vesting date refl ects the extent to

which the vesting period has expired and the Group’s best estimate of the number of equity instruments that

will ultimately vest. The charge or credit to the consolidated income statement for a period represents the

movement in cumulative expense recognised as at the beginning and end of that period.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional

upon a market condition, which are treated as vested irrespective of whether or not the market condition is

satisfi ed, provided that all other performance conditions are satisfi ed. The share option reserve is transferred to

revenue reserve upon expiry of the options.

(c) Performance share scheme

Employees of the Company receive remuneration in the form of fully paid shares as consideration for services

rendered. The cost of these equity settled transactions with employees is measured by reference to the fair

value of the shares at the date on which the shares are granted. This cost is recognised in profi t or loss, with a

corresponding increase in equity. There is no vesting period for these performance shares.

2.20 Currency translation

(a) Functional and presentation currency

Items included in the financial statements are measured using the currency of the primary economic

environment in which the entity operates (“functional currency”). The fi nancial statements are presented in

United States Dollars, which is the functional currency of the Company.

(b) Transactions and balances

Transactions in a currency other than the functional currency (“foreign currency”) are translated into the

functional currency using the exchange rates at the dates of the transactions. Currency translation differences

resulting from the settlement of such transactions and from the translation of monetary assets and liabilities

denominated in foreign currencies at the closing rates at the balance sheet date are recognised in profi t or loss.

However, in the consolidated fi nancial statements, currency translation differences arising from borrowings in

foreign currencies and other currency instruments designated and qualifying as net investment hedges and

net investment in foreign operations, are recognised in other comprehensive income and accumulated in the

currency translation reserve.

When a foreign operation is disposed of or any borrowings forming part of the net investment of the foreign

operation are repaid, a proportionate share of the accumulated currency translation differences is reclassifi ed to

profi t or loss, as part of the gain or loss on disposal.

NOTES TO




2.20 Currency translation (continued)

(b) Transactions and balances (continued)

Foreign exchange gains and losses that relate to borrowings are presented in the income statement within

“fi nance cost”. All other foreign exchange gains and losses impacting profi t or loss are presented in the income

statement within “Other losses – net”.

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

date when the fair values are determined.

(c) Translation of Group entities’ fi nancial statements

The results and fi nancial position of all the Group entities (none of which has the currency of a hyperinfl ationary

economy) that have a functional currency different from the presentation currency are translated into the

presentation currency as follows:

(i) Assets and liabilities are translated at the closing exchange rates at the reporting date;

(ii) Income and expenses are translated at average exchange rates (unless the average is not a reasonable

approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case

income and expenses are translated using the exchange rates at the dates of the transactions); and

(iii) All resulting currency translation differences are recognised in other comprehensive income and

accumulated in the currency translation reserve. These currency translation differences are reclassifi ed

to profi t or loss on disposal or partial disposal of the entity giving rise to such reserve.

Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and

liabilities of the foreign operations and translated at the closing rates at the reporting date.

2.21 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.

2.22 Cash and cash equivalents

For the purpose of presentation in the consolidated statement of cash fl ows, cash and cash equivalents include cash

on hand and deposits with fi nancial institutions which are subject to an insignifi cant risk of change in value.

2.23 Share capital and treasury shares

Ordinary shares are classifi ed as equity. Incremental costs directly attributable to the issuance of new ordinary shares

are deducted against the share capital account.

When any entity within the Group purchases the Company’s ordinary shares (“treasury shares”), the consideration

paid including any directly attributable incremental cost is presented as a component within equity attributable to the

Company’s equity holders, until they are cancelled, sold or reissued.

NOTES TO




2.23 Share capital and treasury shares (continued)

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 profi ts of the Company if the

shares are purchased out of earnings of the Company.

When treasury shares are subsequently sold or reissued 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 reissue, net of any

directly attributable incremental transaction costs and related income tax, is recognised in the capital reserve.

2.24 Dividends to Company’s shareholders

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

3. Critical accounting estimates, assumptions and judgements

Estimates, assumptions and judgements are continually evaluated and are based on historical experience and other

factors, including expectations of future events that are believed to be reasonable under the circumstances.

3.1 Critical accounting estimates and assumptions

(a) Impairment of property, plant and equipment

An assessment is made at each end of the reporting year whether there is any indication that the asset may

be impaired. If any such indication exists, an estimate is made of the recoverable amount of the asset. The

recoverable amounts of cash-generating units if applicable is determined based on value-in-use calculations.

These calculations require the use of estimates.

During the current fi nancial year, property, plant and equipment of Component Manufacturing CGU were

reviewed for impairment based on value-in-use calculations. The calculations use cash fl ow projections based

on fi nancial budgets approved by management covering a period of 1 year. Cash fl ows between 2 to 5 years

and beyond a 5 year period are extrapolated using the estimated growth rates of 3% and 0% respectively. If

the management’s estimated gross margin used in the value-in-use calculation is lowered by 10%, the

recoverable amount would still be marginally higher than the carrying value, assuming that the other variables

remain unchanged.

(b) Fair value of unquoted available-for-sale fi nancial assets

The unquoted available-for-sale fi nancial assets of the Group comprise equity securities that are not traded

in an active market. The fair value of the unquoted available-for-sale fi nancial assets is determined by using

valuation techniques in accordance with Note 2.14. The Group estimates the fair values of these fi nancial

assets by reference to the net assets of these unquoted equity securities, adjusting where applicable using

appropriate measures to fair value the underlying assets and liabilities. In determining these fair values,

management evaluates, among other factors, the reliability and appropriateness of the use of the underlying net

asset information provided, taking into consideration factors such as industry and sector outlook, other market

comparables and other prevailing market factors and conditions.

During the fi nancial year, the Group has recognised an impairment loss of US$550,000 to fully impair the

unquoted available-for-sale fi nancial assets due to its poor operating performance and fi nancial position.

NOTES TO



3. Critical accounting estimates, assumptions and judgements (continued)

3.1 Critical accounting estimates and assumptions (continued)

(c) Uncertain tax position

The Group is subject to income taxes in numerous jurisdictions. Signifi cant judgment is involved in determining

the Group’s and the Company’s income tax liabilities. The Group and the Company recognise liabilities for

expected tax issues based on estimates of whether additional taxes will be due. Where the fi nal tax outcome

of these matters is different from the amounts that were initially recognised, such differences will impact the

income tax liabilities and deferred income tax liabilities in the period in which such determination is made.

The carrying amounts of the Group’s income tax liabilities at the balance sheet date were US$195,000 (2012:

US$129,000). As at 31 December 2013, the carrying amount of the Group’s deferred income tax liabilities as at

31 December 2013 was US$1,046,000 (2012: US$3,145,000).

The Group provided deferred tax on temporary differences arising from revaluation of land and building, based

on manner of recovery of carrying amount of land and buildings through use in prior year as management

intended to consume substantially all of the economic benefi ts embodied in the land and buildings over time.

Deferred tax was computed based on respective local statutory income tax rate.

Following the Compulsory Acquisition notice (see details in Note (32)) from Wujiang Economic and Technological

Development Zone to acquire the Group’s land and buildings at Wujiang, management would be recovering

the carrying value of such land and building entirely through sale. Accordingly, management assessed the

corresponding deferred tax liabilities based on local capital gain tax rate. In accordance with the local tax

regulation, there would not be any capital gain tax imposed in connection with the compulsory acquisition by

the local authority for the purpose of urban planning and as such, management did not provide any deferred

tax on revaluation gains of land and buildings at Wujiang. As at 31 December 2013, the Group has recorded

a revaluation gain of US$34,191,000 on land and buildings located at Wujiang. Had capital gain tax been

imposed, the deferred tax liabilities would be increased by US$17,624,000 and the revaluation reserve and net

assets of the Group would be decreased correspondingly by US$17,624,000.

4. Revenue

Group2013 2012

US$’000 US$’000

Sale of goods 37,924 42,735

Rendering of services 25 –

37,949 42,735

NOTES TO



5. Other income

Group2013 2012

US$’000 US$’000

Interest income - bank deposits 106 184

Rental income from investment properties (Note 17) 110 –

Dividend income 88 –

Consultancy service – 13

Others 52 57

356 254

6. Other losses - net

Group2013 2012

US$’000 US$’000

Currency translation gain/(loss) - net 113 (661)

Available-for sale fi nancial assets

- Impairment loss (Note 13) (1,032) (1,125)

- Gain on disposal 8 101

- Reclassifi cation from other comprehensive income

on disposal (Note 25(a)(iv)) 43 –

Gain/(loss) on disposal of property, plant and equipment 41 (113)

Loss on liquidation of subsidiaries (Note 12) – (3,665)

Loss on disposal of intangible assets (9) –

Impairment of non-trade receivables arising from liquidation of subsidiaries – (980)

Impairment of trade and non-trade receivables (1,531) –

Impairment of intangible assets (Note 19) – (1,827)

(2,367) (8,270)

7. Finance expenses

Group2013 2012

US$’000 US$’000

Interest expense

- Bank borrowings 997 1,171

- Trust receipts 520 639

- Finance lease liabilities 49 5

- Other third parties 887 –

Finance expenses recognised in profi t or loss 2,453 1,815

NOTES TO



8. Expenses by nature

Group2013 2012

US$’000 US$’000

(Write-back of allowance)/allowance for impairment of inventory (691) 363

Amortisation of intangible assets (Note 19) 11 12

Fees on audit services paid/payable to:

- Auditor of the Company 145 119

- Other auditors* 108 151

Fees on non-audit services paid/payable to Auditor of the Company - 20

Bad debt write off 164 1,077

Bank charges 197 487

Changes in inventories 3,680 4,656

Depreciation of property, plant and equipment (Note 18) 2,139 1,904

Employee compensation (Note 9) 8,003 8,270

Entertainment 194 182

Freight and handling charges 516 423

Professional fees 196 339

Purchases of inventories 24,969 29,636

Rental expense on operating leases 680 385

Repair and maintenance 397 495

Transportation 256 368

Utilities 1,000 973

Others 2,687 3,272

Total cost of sales, distribution and marketing costs and administrative expenses 44,651 53,132

* Includes the network of member fi rms of PricewaterhouseCoopers International Limited outside Singapore.

9. Employee compensation

Group2013 2012

US$’000 US$’000

Wages, salaries and bonuses 7,414 7,436

Employer’s contribution to defi ned contribution plans including Central Provident Fund 589 834

8,003 8,270

Key management remuneration is disclosed in Note 29.

NOTES TO



10. Income tax expense

Group2013 2012

US$’000 US$’000

Tax expense attributable to loss is made up of:

Current income tax

- Singapore – 51

- Foreign 298 684

298 735

Deferred income tax – (101)

298 634

- Under/(over) provision in prior fi nancial years:

Current income tax - Singapore 3 (79)

301 555

The tax on the Group’s loss before tax differs from the theoretical amount that would arise using the Singapore

standard rate of income tax as follows:

Group2013 2012

US$’000 US$’000

Loss before income tax (11,166) (20,228)

Tax calculated at tax rate of 17% (1,898) (3,439)

Effects of:

- different tax rates in other countries (479) (440)

- expenses not deductible for tax purposes 2,295 3,180

- income not subject to tax (124) (40)

- deferred tax assets not recognised 489 1,362

- partial tax exemption – (2)

- others 15 13

Tax charge 298 634

NOTES TO



10. Income tax expense (continued)

The tax credit/(charge) relating to each component of other comprehensive income is as follows:

2013 2012

Beforetax

Tax credit

Aftertax

Before

tax

Tax

charge

After

tax

US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

Fair value gains and reclassifi cation adjustments

on available-for-sale fi nancial assets (43) – (43) 966 – 966

Revaluation gains on property,

plant and equipment 25,911 2,108 28,019 7,075 (2,579) 4,496

Currency translation differences arising from

consolidation and disposal of subsidiaries 775 – 775 433 – 433

Other comprehensive income 26,643 2,108 28,751 8,474 (2,579) 5,895

Following the Compulsory Acquisition notice (see details in Note (32)) from Wujiang Economic and Technological

Development Zone to acquire the Group's land and buildings at Wujiang, management would be recovering the

carrying value of such land and building entirely through sale. Accordingly, management assessed the corresponding

deferred tax liabilities based on local capital gain tax rate. In accordance with the local tax regulation, there would not

be any capital gain tax imposed in connection with the compulsory acquisition by local authority for the purpose of

urban planning and as such, management did not provide any deferred tax on revaluation gains of land and buildings

at Wujiang.

11. Loss per share

Basic loss per share is calculated by dividing the net loss attributable to equity holders of the Company by the

weighted average number of ordinary shares outstanding during the fi nancial year.

For the purpose of calculating diluted loss per share, loss attributable to equity holders of the Company and the

weighted average number of ordinary shares outstanding are adjusted for the effects of all dilutive potential ordinary

shares. The Company has dilutive potential ordinary shares arising from share options.

For share options, the weighted average number of shares on issue has been adjusted as if all dilutive share options

were exercised. The number of shares that could have been issued upon the exercise of all dilutive share options less

the number of shares that could have been issued at fair value (determined as the Company’s average share price

for the fi nancial year) for the same total proceeds is added to the denominator as the number of shares issued for no

consideration. No adjustment is made to the net loss.

Diluted loss per share for the fi nancial years ended 31 December 2013 and 2012 is the same as basic loss per share

as the potential conversion of the share options is anti-dilutive.

Group2013 2012

Net loss attributable to equity holders of the Company (US$’000) (11,467) (18,966)

Weighted average number of ordinary shares outstanding for basic loss

per share (’000) 786,444 674,949

Basic loss and diluted loss per share (cents per share) (1.46) (2.81)

NOTES TO



12. Cash and cash equivalents

Group Company2013 2012 2013 2012

US$’000 US$’000 US$’000 US$’000

Cash at bank and on hand 3,445 2,497 368 221

Short-term bank deposits 2,816 11,551 – –

6,261 14,048 368 221

For the purpose of presenting the consolidated statement of cash fl ows, cash and cash equivalents comprise the

following:

Group2013 2012

US$’000 US$’000

Cash and bank balances (as above) 6,261 14,048

Less: Bank deposits pledged (2,816) (11,551)

Cash and cash equivalents per consolidated statement of cash fl ows 3,445 2,497

Bank deposits are pledged in relation to the security granted for certain borrowings (Note 21).

Liquidation of subsidiaries

In 2012, the Group initiated the liquidation of Shenzhen Project Industrial Ltd and Project Industrial (H.K.) Limited, its

51% owned subsidiaries, due to their poor fi nancial performance and the parting of ways with the non-controlling

interests. The net assets relating to these subsidiaries had been fully written off as their recoverability was highly

uncertain.

The effects of the liquidation on the cash fl ows of the Group were:

Group2013 2012

US$’000 US$’000

Carrying amounts of assets and liabilities liquidated

Cash and cash equivalents – (550)

Trade and other receivables – (6,256)

Inventories – (2,445)

Property, plant and equipment – (66)

Total assets – (9,317)

Trade and other payables – 5,060

Total liabilities – 5,060

Net assets derecognised – (4,257)

Net assets liquidated (as above) – 4,257

Reclassifi cation of currency translation reserve to profi t or loss – (42)

Loss on liquidation – (3,665)

Cash proceeds from liquidation – 550

Less: Cash and cash equivalents in subsidiaries liquidated – (550)

Net cash infl ow on liquidation – –

NOTES TO



13. Available-for-sale fi nancial assets

Group Company2013 2012 2013 2012

US$’000 US$’000 US$’000 US$’000

Beginning of fi nancial year 3,328 3,742 1 1

Fair value gain recognised in

other comprehensive income – 966 – –

Impairment losses (1,032) (1,125) – –

Disposals (109) (298) – –

Currency translation differences – 43 – –

End of fi nancial year 2,187 3,328 1 1

Less: Current portion (1) (110) (1) (1)

Non-current portion 2,186 3,218 – –

Available-for-sale fi nancial assets are analysed as follows:

Group Company2013 2012 2013 2012

US$’000 US$’000 US$’000 US$’000

Quoted equity securities

- Singapore 1 110 1 1

- Taiwan* 2,186 2,668 – –

Unquoted securities

- Taiwan* – – – –

- People’s Republic of China – 550 – –

Total 2,187 3,328 1 1

* Listed in GreTai Securities Market, Taiwan during previous fi nancial year ended 31 December 2012.

The quoted investment is pledged to secure certain borrowings granted to certain subsidiaries.

During the fi nancial year, an impairment loss of US$482,000 (2012: US$nil) was recognised against a quoted

investment in Taiwan whose trade prices had been below cost for a prolonged period and an impairment loss of

US$550,000 (2012: US$1,125,000) against an unquoted investment in People’s Republic of China whose fair value at

the balance sheet date was lower than its cost of investment.

NOTES TO



14. Trade and other receivables

Group Company2013 2012 2013 2012

US$’000 US$’000 US$’000 US$’000

Trade receivables

- Non-related parties 13,131 11,808 – –

- Bill receivables 43 42 – –

13,174 11,850 – –

Less: Allowance for impairment of receivables (234) (207) – –

Trade receivables - net 12,940 11,643 – –

Other receivables

- Subsidiaries – – 7,374 6,715

- Receivables from disposal of property,

plant and equipment – 972 – –

- Receivables from disposal of subsidiary 127 153 – –

- Advances to non-related parties 1,659 2,235 – –

- Receivables from related party companies 391 1,726 – –

- Others 1,107 1,190 (7) –

3,284 6,276 7,367 6,715

Less: Allowance for impairment of receivables – – (5,406) (5,040)

Non-trade receivables - net 3,284 6,276 1,961 1,675

Deposits 110 255 – –

Prepayments 815 937 269 8

925 1,192 269 8

Total 17,149 19,111 2,230 1,683

The amount due from subsidiaries, related party companies and advances to non-related parties are non-trade in

nature, unsecured, interest-free and repayable on demand.

15. Inventories

Group2013 2012

US$’000 US$’000

Raw materials 1,073 857

Work-in-progress 1,387 1,364

Finished/trading goods 3,613 6,703

6,073 8,924

The cost of inventories recognised as an expense and included in “cost of sales” amounts to US$29,164,000 (2012:

US$34,832,000).

During the fi nancial year, the Group has recognised a write-back of allowance for inventory obsolescence, amounting to

US$691,000 (2012: an allowance for inventory obsolescence of US$363,000).

NOTES TO



16. Investments in subsidiaries

Company2013 2012

US$’000 US$’000

Equity investments at cost

Beginning of fi nancial year 37,264 35,536

Additions 4,208 1,728

End of fi nancial year 41,472 37,264

Accumulated impairment

Beginning of fi nancial year 12,142 –

Allowance made 15,530 12,142


Total 13,800 25,122

During the fi nancial year, the Company has recognised an allowance of US$15,530,000 (2012: US$12,142,000) for

impairment of certain subsidiaries as the recoverability of these investments is uncertain, due to the poor fi nancial

performance.

Details of signifi cant subsidiaries are included in Note 33.

17. Investment properties

Group2013 2012

US$’000 US$’000

Beginning of fi nancial year 203 200

Transfer from property, plant and equipment (Note 18) 3,094 –

Currency translation differences 6 3

End of fi nancial year 3,303 203

The following amounts are recognised in profi t and loss:

Group2013 2012

US$’000 US$’000

Rental income (Note 5) 110 –

Direct operating expenses arising from:

- Investment properties that generate rental income (31) –

NOTES TO



17. Investment properties (continued)

At the balance sheet date, the details of the Group investment properties are as follows:

Location DescriptionExisting

use Tenure Unexpired term of lease

Block 28 #103/104 San Xing Road Song

Ling Town (松陵镇三兴路1188号美岸青城), People’s Republic of China

Complete sets

of residential

Vacant 65 years Expiring on 7 August 2075

13F-A, D and A/D No. 333 Zhao

Jia Bang Road Shanghai City,

PRC 200032

Offi ce and

carpark lot

No.64 and 67

Offi ce

building

50 years Expiring on 5 December 2042

Fair value hierarchy

Fair value measurements at 31 December 2013 using

Quoted prices in active

markets for identical assets

(Level 1)

Signifi cant other

observable inputs

(Level 2)

Signifi cant unobservable

inputs(Level 3)

US$’000 US$’000 US$’000

Group

Recurring fair value measurements

Investment properties:

- Residential properties - People’s Republic of China – – 209- Offi ce units - People’s Republic of China – – 3,094

Properties, plant and equipment:

- Land and factory - People’s Republic of China – – 39,454- Offi ce units – Republic of China – – 4,947

Reconciliation of movements in Level 3 fair value measurement:

Residential properties

Offi ce units

US$’000 US$’000

Investment properties:

Beginning of fi nancial year 203 –Transfer from property, plant and equipment (Note 18) – 3,094End of fi nancial year 203 3,094

Change in unrealised gains or losses for the period included in profi t

or loss for assets held at the end of the fi nancial year, under “Other gains” 5 1

NOTES TO




Valuation techniques and inputs used in Level 3 fair value measurements

The following table presents the valuation techniques and key inputs that were used to determine the fair value of

investment properties and properties, plant and equipment categorised under Level 3 of the fair value hierarchy which

involve signifi cant unobservable inputs:

Description

Fair value at 31 December 2013

(U$’000)Valuation

techniques

Signifi cant unobservable

inputs1

Range of signifi cant

unobservable inputs

Relationship of signifi cant unobservable

inputs to fair value

Investment properties

Residential properties 209 Direct

Comparison

Approach

Estimated

market price

US$801 per

square meter

The higher the

adjusted valuation

per square meter, the

higher the fair value

Offi ce units 3,094 Direct

Comparison

Approach

Estimated

market price

US$5,220 per

square meter

The higher the

adjusted valuation



Properties, plant and equipment

Land and factory 39,454 Cost Approach Estimated

market price

US$651 per

square meter

The higher the

adjusted valuation



Depreciated

replacement

costs

US$4,440,000 The higher the

depreciated

replacement costs,

the higher the fair

value

Offi ce units 4,947 Direct

Comparison

Approach

Income

Capitalisation

Approach

Estimated

market price

Estimated

rental value per

square meter

per month

Capitalisation

rate

US$5,444 per

square meter

US$12 per

square metre per

month

1.7%

The higher the

estimated market

price, the higher the

fair value

The higher the

estimated rental

value per square

meter, the higher the

fair value

The higher the

capitalisation rate,

the lower the fair

value

1 There were no signifi cant inter-relationships between unobservable inputs.

NOTES TO




Valuation processes of the Group

The Group engages external, independent and qualifi ed valuers to determine the fair value of the Group’s investment

properties annually based on the properties’ highest and best use.

The Cost approach involves separately determining the values of the land and building and a summation of these

values is taken to be the fair value of land and building. The value of the land is arrived at by the comparison

approach in which it takes reference to transactions of similar lands in the surrounding with adjustments made for any

differences. The buildings are valued by reference to their depreciated replacement cost. It is determined by taking the

current replacement cost of the building as new and allowing for depreciation for obsolescence.

The Direct Comparison Approach involves analysing of recent transactions of comparable properties within the vicinity

and elsewhere in Singapore. Necessary adjustments have been made for the differences in location, tenure, size,

shape, design and layout, age and condition of buildings, date of transactions and the prevailing market and prevailing

condition amongst other factors affecting their values.

In the Income Capitalisation Approach, gross rental income is estimated at a mature maintainable occupancy level from

which total expenses have been deducted and net income capitalised at an appropriate rate.

18. Property, plant and equipment

Freeholdland

US$’000

Leasehold land, buildings and improvements

US$’000

Machinery and

equipmentUS$’000

Motor vehiclesUS$’000

Construction-in-progress

US$’000Total

US$’000

Group

2013Cost or valuation

Beginning of fi nancial year

Cost – 324 20,907 539 13 21,783

Valuation 2,261 19,064 – – – 21,325

2,261 19,388 20,907 539 13 43,108

Currency translation differences (37) 744 490 4 1 1,202

Additions – 39 1,262 185 – 1,486

Disposals and write off – – (34) (237) – (271)

Transfer to investment

properties (Note 17) (175) (2,943) – – – (3,118)

Revaluation surplus 1,414 24,497 – – – 25,911

Revaluation adjustment – (424) – – – (424)

End of fi nancial year 3,463 41,301 22,625 491 14 67,894

Representing:

Cost – 363 22,625 491 14 23,493

Valuation 3,463 40,938 – – – 44,401

3,463 41,301 22,625 491 14 67,894

NOTES TO



18. Property, plant and equipment (continued)

Freehold land

US$’000


US$’000

Machinery and

equipmentUS$’000



US$’000Total

US$’000

Accumulated depreciation

Beginning of fi nancial year – 138 11,166 468 – 11,772

Currency translation differences – – 262 4 – 266

Depreciation charge – 555 1,530 54 – 2,139


Transfer to investment

properties (Note 17) – (24) – – – (24)


End of fi nancial year – 245 12,929 289 – 13,463

Net book valueEnd of fi nancial year 3,463 41,056 9,696 202 14 54,431

Group

2012Cost or valuation

Beginning of fi nancial year

Cost – 112 21,520 565 118 22,315

Valuation 1,746 12,484 – – – 14,230

1,746 12,596 21,520 565 118 36,545

Currency translation differences 79 255 321 6 1 662

Additions – 212 367 26 – 605

Disposals and write off – – (1,427) (58) – (1,485)

Reclassifi cation – (20) 126 – (106) –

Revaluation surplus 436 6,639 – – – 7,075


End of fi nancial year 2,261 19,388 20,907 539 13 43,108

Representing:

Cost – 324 20,907 539 13 21,783

Valuation 2,261 19,064 – – – 21,325

2,261 19,388 20,907 539 13 43,108

NOTES TO



18. Property, plant and equipment (continued)

Freehold land

US$’000


US$’000

Machinery and

equipmentUS$’000



US$’000Total

US$’000


Beginning of fi nancial year – 83 10,391 471 – 10,945

Currency translation differences – – 171 3 – 174

Depreciation charge – 355 1,513 36 – 1,904


Reclassifi cation – (6) 6 – – –


End of fi nancial year – 138 11,166 468 – 11,772

Net book valueEnd of fi nancial year 2,261 19,250 9,741 71 13 31,336

Machinery and

equipmentMotor

vehicles TotalUS$’000 US$’000 US$’000

Company

2013 and 2012Cost

Beginning and end of fi nancial year 2 51 53


Beginning and end of fi nancial year 2 51 53

Net book valueEnd of fi nancial year – – –

(a) The carrying amounts of machinery and equipment and a motor vehicle held under fi nance leases are

US$438,000 (2012: US$489,000) at the balance sheet date.

(b) The freehold land, leasehold land, buildings and improvements of the Group were valued by independent

professional valuers based on the Cost Approach, Direct Market Comparison and Income method at the

balance sheet date. These are regarded as Level 3 fair values. A description of the valuation technique and the

valuation processes of the Group are provided in Note 17.

(c) If the land and buildings stated at valuation were included in the fi nancial statements at cost less accumulated

depreciation, their net book values would be:

Group2013 2012

US$’000 US$’000

Freehold land 1,316 1,341

Leasehold land, buildings and improvements 6,788 6,825

(d) Bank borrowings are secured on freehold and leasehold land, buildings and improvements of the Group with

carrying amounts of US$44,519,000 (2012: US$27,831,000) (Note 21).

NOTES TO



19. Intangible assets

Group2013 2012

US$’000 US$’000

Composition:

Goodwill arising on consolidation (Note (a)) – –

Patents (Note (b)) 6 10

Club memberships (Note (c)) 418 441

Customer relationship (Note (d)) – –

424 451

(a) Goodwill arising on consolidation

Group2013 2012

US$’000 US$’000

Cost

Beginning of fi nancial year – 1,241

Currency translation differences – 25

Impairment loss – (1,266)

End of fi nancial year – –

Impairment tests for goodwill

Goodwill is allocated to the Group’s cash-generating units (“CGUs”) identifi ed according to countries of

operation and business segments.

Group2013 2012

US$’000 US$’000

Distribution segment

People’s Republic of China (“PRC”) – 615

Singapore – 626

– 1,241

The recoverable amount of a CGU was determined based on value-in-use. Cash fl ow projections used in

the value-in-use calculations were based on fi nancial budgets approved by management covering a fi ve-year

period. Cash fl ows beyond the fi ve-year period were extrapolated using the estimated growth rates stated

below. The growth rate did not exceed the long-term average growth rate for the component parts business in

which the CGU operates.

NOTES TO



19. Intangible assets (continued)

(a) Goodwill arising on consolidation (continued)

Key assumptions used for value-in-use calculations:

Distribution segment2013 2012

% %

Gross margin 1 – 11

Growth rate 2 – 3

Discount rate 3 – 13

1 Budgeted Gross Margin

2 Weighted average growth rate used to extrapolate cash fl ows beyond the budget period

3 Pre-tax discount rate applied to the pre-tax cash fl ow projections

These assumptions were used for the analysis of each CGU. Management determined budgeted gross margin

based on past performance and its expectations of the market development. The weighted average growth

rates used were consistent with the forecasts included in industry reports. The discount rates used were pre-tax

and refl ected specifi c risks relating to the relevant segments.

In 2012, goodwill arising from consolidation was fully impaired as the carrying value of the related CGU was

lower than their recoverable amount, primarily driven by the poor fi nancial performance.

(b) Patents

Group2013 2012

US$’000 US$’000

Cost


Currency translation differences 2 –

End of fi nancial year 48 46

Accumulated amortisation


Amortisation charge 5 5

Currency translation differences 1 –


Net book value


NOTES TO



19. Intangible assets (continued)

(c) Club memberships

Group2013 2012

US$’000 US$’000

Cost


Disposal (27) –



Accumulated amortisation


Amortisation charge 6 7

Disposal (9) –

Currency translation differences 5 (2)


Net book value


(d) Customer relationship

Group2013 2012

US$’000 US$’000

Cost

Beginning of fi nancial year – 561

Impairment loss – (561)

End of fi nancial year – –

Customer relationship was fully impaired in 2012 following the liquidation of certain subsidiaries of the Group in

2012.

NOTES TO



20. Trade and other payables

Group Company2013 2012 2013 2012

US$’000 US$’000 US$’000 US$’000

Trade payables to

- Non-related parties 9,137 7,099 – –

- Bills payables 1,310 1,818 – –

10,447 8,917 – –

Non-trade payables to

- Subsidiaries – – 10,726 7,431

- Advances from directors 5,847 – 1,838 –

- Non-related parties 2,692 2,282 – 108

Accruals for operating expenses 3,008 1,095 320 215

21,994 12,294 12,884 7,754

The non-trade amounts due to subsidiaries of the Company are unsecured, bear interest at 0.225% (2012: 0.85%) per

annum and are repayable on demand.

The non-trade advances from the directors of the Company are unsecured, interest-free and repayable on demand.

The non-trade amounts due to certain non-related parties are unsecured, interest-free and repayable in demand except

for the non-trade payable of US$702,000 (2012: US$nil) which bears effective interest at 38% (2012: nil) per annum.

21. Borrowings

Group2013 2012

US$’000 US$’000

Current

Bank borrowings

- Trust receipts 11,560 18,221

- Short-term loan 21,122 28,474

- Term loan 139 138

Loan from available-for-sale investee company 682 –

33,503 46,833

Finance lease liabilities (Note 22) 250 64

33,753 46,897

Non-current

Bank borrowings

- Term loan 1,939 2,129

Finance lease liabilities (Note 22) 320 2

2,259 2,131

Total borrowings 36,012 49,028

NOTES TO



21. Borrowings (continued)

The exposure of the borrowings of the Group and of the Company to interest rate changes and the contractual

repricing dates at the balance sheet dates are as follows:

Group2013 2012

US$’000 US$’000

Not later than one year 33,503 46,833

Between one and fi ve years 2,509 2,195

36,012 49,028

(a) Security granted

Bank borrowings of the Group are secured over certain bank deposits (Note 12), certain land and buildings

(Note 18) and corporate guarantee by the Company. In addition, the controlling shareholders of the Group

have also provided personal guarantees and pledged certain personal properties to secure the credit facilities

undertaken by the Group.

Finance lease liabilities of the Group are secured by the rights to the leased plant and equipment, and motor

vehicles (Note 18), which will revert to the lessor in the event of default by the Group.

(b) Breach of loan covenants

The bank borrowing is subject to covenant clauses, whereby the Group is required to meet certain key

fi nancial ratios. During the fi nancial year, a subsidiary of the Group has breached certain fi nancial covenants,

in connection with the credit facilities of US$14,539,000 (2012: US$22,031,000). The breach of fi nancial

covenants is an event of default and may result in the banks exercising their rights under the credit facility

agreements to recall the credit facilities and to demand immediate repayment. Subsequent to the balance

sheet date, the breaches of these fi nancial covenants were remedied as the banks have agreed to waive the

breaches.

The management is cognisant of the above mentioned non-adherence of the fi nancial ratios and has taken

steps subsequent to balance sheet date to obtain the approvals of waiver from the relevant banks.

(c) Loan from an available-for-sale investee company is secured over certain unquoted shares of available-for-sale

investment by the Company (Note 13), bears interest rate of 3.35% per annum and is repayable within the next

fi nancial year.

The fair value of the borrowings is expected to approximate their carrying values as interest rate of these borrowings is

adjusted for changes in the relevant market interest rates.

NOTES TO



22. Finance lease liabilities

The Group leases certain plant and equipment, and motor vehicles from non-related parties under fi nance leases. The

lease agreements do not have renewal clauses but provide the Group with options to purchase the leased assets at

nominal values at the end of the lease term.

Group2013 2012

US$’000 US$’000

Minimum lease payments due

- Not later than one year 294 69

- Between one and fi ve years 389 2

683 71

Less: Future fi nance charges (113) (5)

Present value of fi nance lease liabilities 570 66

The present values of fi nance lease liabilities are analysed as follows:

Group2013 2012

US$’000 US$’000

Not later than one year (Note 21) 250 64

Between one and fi ve years (Note 21) 320 2

570 66

23. Deferred income taxes

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current income tax

assets against current income tax liabilities and when the deferred income taxes relate to the same fi scal authority. The

amounts, determined after appropriate offsetting, are shown on the balance sheet as follows:

Group2013 2012

US$’000 US$’000

Deferred income tax liabilities to be settled after one year 1,046 3,145

NOTES TO



23. Deferred income taxes (continued)

Movement in deferred income tax account is as follows:

Accelerated tax

depreciation

Asset revaluation gains – net Total

US$’000 US$’000 US$’000

Group

2013Beginning of fi nancial year – 3,145 3,145Currency translation differences – 9 9Tax credited to:

- equity – (2,108) (2,108)End of fi nancial year – 1,046 1,046

2012Beginning of fi nancial year 107 566 673

Currency translation differences (6) – (6)

Tax (credited)/charged to

- profi t or loss (101) – (101)

- equity – 2,579 2,579

End of fi nancial year – 3,145 3,145

Deferred income tax assets are recognised for tax losses carried forward to the extent that realisation of the related tax

benefi ts through future taxable profi ts is probable. The Group has not recognised tax losses of US$13,500,000 (2012:

US$13,064,000) at the balance sheet date which can be carried forward and used to offset against future taxable

income subject to meeting certain statutory requirements by those companies with unrecognised tax losses in their

respective countries of incorporation. The tax losses have no expiry date.

24. Share capital and treasury shares

No. of ordinary shares AmountShare

CapitalTreasury shares

Sharecapital

Treasury shares

’000 ’000 US$’000 US$’000

Group and Company

2013Beginning of fi nancial year 786,445 (12,500) 43,950 (426)Disposal – 12,500 – 426End of fi nancial year 786,445 – 43,950 –

2012Beginning of fi nancial year 677,610 (12,500) 41,987 (426)

New shares issued 108,835 – 1,963 –

End of fi nancial year 786,445 (12,500) 43,950 (426)

NOTES TO



24. Share capital and treasury shares (continued)

All issued ordinary shares are fully paid. There is no par value for these ordinary shares. Fully paid ordinary shares carry

one vote per share and carry a right to dividends as and when declared by the Company.

On 12 December 2012, the Company issued 108,835,000 ordinary shares for a total cash consideration of

US$1,963,000 to provide funding for working capital purpose. The newly issued shares rank pari passu in all respects

with the previously issued shares.

(a) Treasury shares

The Company disposed of 12,500,000 treasury shares during the fi nancial year to the open market for a cash

consideration of US$492,000 and recorded a gain on disposal of US$66,000 in the capital reserve (Note

25(a)(ii)).

(b) Share options

No. of ordinary shares under optionBeginning of fi nancial

year Expired

End of fi nancial

yearExercise

priceExpiry date

Group and Company

20132003 Options 1,387,600 (1,387,600) – SGD 0.1375 17.2.2013

20122003 Options 1,486,000 (98,400) 1,387,600 SGD 0.1375 17.2.2013

The vesting of granted options is conditional on the key management or employee holding employment with the

Group. Once the options are vested, they are exercisable for a contractual period depending on the category of

the options issued.

25. Other reserves

(a) Composition:

Group Company2013 2012 2013 2012

US$’000 US$’000 US$’000 US$’000

Share option reserve 132 132 132 132

Capital and statutory reserve 1,652 1,586 66 –

Asset revaluation reserve 37,894 9,875 – –

Fair value reserve 878 921 – –

Currency translation reserve 1,095 320 3,228 3,228

41,651 12,834 3,426 3,360

NOTES TO



25. Other reserves (continued)

(a) Composition: (continued)

Group Company2013 2012 2013 2012

US$’000 US$’000 US$’000 US$’000

(i) Share options reserve

Beginning and end of fi nancial year 132 132 132 132

(ii) Capital and statutory reserve

Beginning of fi nancial year 1,586 1,586 – –

Gain on disposal of treasury shares

(Note 24(a)) 66 – 66 –

End of fi nancial year 1,652 1,586 66 –

Subsidiaries incorporated in the People’s Republic of China are required by law to set aside 10% of their annual

net profi t after tax less prior year’s losses, if any, as statutory reserve until the accumulated reserve reaches an

amount equal to 50% of the respective subsidiaries’ paid-up capital. Such statutory reserve can be used to

offset a defi cit in the Group’s revenue reserve. This statutory reserve is not available for distribution as dividends.

Group2013 2012

US$’000 US$’000

(iii) Asset revaluation reserve


Deferred tax (Note 23) 2,108 (2,579)

Revaluation gains 25,911 7,075

Disposal – (3,219)


(iv) Fair value reserve

Beginning of fi nancial year 921 (45)


- Fair value gains (Note 13) – 966

- Reclassifi cation to profi t or loss (Note 6) (43) –


Fair value reserve records the cumulative fair value changes for available-for-sale fi nancial assets until they are

de-recognised or impaired.

NOTES TO



25. Other reserves (continued)

(a) Composition: (continued)

Group Company2013 2012 2013 2012

US$’000 US$’000 US$’000 US$’000

(v) Currency translation reserve

Beginning of fi nancial year 320 (113) 3,228 3,228

Net currency translation differences

of fi nancial statements of foreign

subsidiaries 775 433 – –

End of fi nancial year 1,095 320 3,228 3,228

Currency translation reserve is related to exchange differences arising from the translation of the fi nancial

statements of foreign operations, whose functional currencies are different from that of the Group’s presentation

currency. Such reserve is not available for distribution as dividends.

26. Accumulated losses

Movement in accumulated losses for the Company is as follows:

Company2013 2012

US$’000 US$’000


Net loss 16,250 19,474


27. Commitments

(a) Operating lease commitments - where the Group is a lessee

The Group leases warehouses and retail space from non-related parties under non-cancellable operating lease

agreements. The leases have varying terms, escalation clauses and renewal rights. The future minimum lease

payables under non-cancellable operating leases contracted for at the balance sheet date but not recognised

as liabilities, are as follows:

Group2013 2012

US$’000 US$’000

Not later than one year 558 335

Between one and fi ve years 685 267

1,243 602

NOTES TO



27. Commitments (continued)

(b) Operating lease commitments - where the Group is a lessor

The Group and Company lease out offi ce space to non-related parties under non-cancellable operating lease.

The lessees are required to pay either absolute fi xed annual increases to the lease payments or contingent rents

computed based on their sales achieved during the lease period.

The future minimum lease receivables under non-cancellable operating leases contracted for at the balance

sheet date but not recognised as receivables, are as follows:

Group2013 2012

US$’000 US$’000

Not later than one year 137 –

Between one and fi ve years 34 –

171 –

28. Financial risk management

Financial risk factors

The Group’s activities expose it to market risk (including currency risk, price risk and interest rate risk), credit risk and

liquidity risk. The Group’s overall strategies, tolerance of risks and general risk management philosophy are determined

by the Board of Directors in accordance with prevailing economic and operating conditions.

The Board of Directors is responsible for setting the objectives and underlying principles of fi nancial risk management

for the Group and establishes detailed policies such as authority levels, oversight responsibilities, risk identifi cation and

measurement and exposure limits.

(a) Market risk

Financial risk management is carried out by the fi nance department in accordance with the policies set. The

fi nance personnel identifi es and evaluates fi nancial risks in close co-operation with the Group’s operating units.

The fi nance personnel measures actual exposures against the limits set and prepares periodic reports for review

by the Group Financial Controller. Regular reports are also submitted to the Board of Directors.

(i) Currency risk

The Group operates in Asia with dominant operations in Singapore, People’s Republic of China, Hong

Kong and Taiwan. Entities in the Group regularly transact in currencies other than their respective

functional currencies (“foreign currencies”).

Currency risk arises within entities in the Group when transactions are denominated in foreign currencies

such as the Singapore Dollar (“SGD”), Chinese Renminbi (“RMB”), Hong Kong Dollar (“HKD”) and New

Taiwan Dollar (“NTD”).

In addition, the Group is also exposed to currency translation risk on the net assets in foreign operations,

including Hong Kong, People’s Republic of China and Taiwan.

The Group does not have any formal hedging policy against foreign exchange fl uctuations.

NOTES TO



28. Financial risk management (continued)

(a) Market risk (continued)

(i) Currency risk (continued)

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

SGD USD RMB NTD Others TotalUS$’000 US$’000 US$’000 US$’000 US$’000 US$’000

At 31 December 2013

Financial assetsCash and cash equivalents 123 2,707 2,013 1,407 11 6,261

Available-for-sale fi nancial assets 1 – – 2,186 – 2,187

Trade and other receivables 130 9,498 5,849 767 90 16,334

Receivables from related corporations – 71,300 11,830 979 – 84,109

254 83,505 19,692 5,339 101 108,891

Financial liabilitiesTrade and other payables (3,150) (5,040) (10,186) (3,564) (54) (21,994)

Borrowings (711) (28,675) (3,864) (2,760) (2) (36,012)

Payables to related corporations – (71,116) (11,824) (979) – (83,919)

(3,861) (104,831) (25,874) (7,303) (56) (141,925)

Net fi nancial assets/(liabilities) (3,607) (21,326) (6,182) (1,964) 45 (33,034)

Less: Net fi nancial liabilities/(assets) denominated in the respective entities functional currency – 17,637 5,165 3,746 – 26,548

Net currency exposure (3,607) (3,689) (1,017) 1,782 45 (6,486)

At 31 December 2012

Financial assetsCash and cash equivalents 5,039 2,719 5,749 466 75 14,048

Available-for-sale fi nancial assets 110 – 550 2,668 – 3,328

Trade and other receivables 305 7,869 9,412 476 112 18,174

Receivables from related corporations – 58,950 10,584 838 – 70,372

5,454 69,538 26,295 4,448 187 105,922

Financial liabilitiesTrade and other payables (525) (3,455) (7,680) (569) (65) (12,294)

Borrowings (5,680) (35,412) (5,151) (2,782) (3) (49,028)

Payables to related corporations – (58,916) (10,618) (838) – (70,372)

(6,205) (97,783) (23,449) (4,189) (68) (131,694)

Net fi nancial assets/(liabilities) (751) (28,245) 2,846 259 119 (25,772)

Less: Net fi nancial liabilities/(assets) denominated in the respective entities functional currency – 17,529 (2,007) 2,410 – 17,932

Net currency exposure (751) (10,716) 839 2,669 119 (7,840)

NOTES TO






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

SGD USD RMB TotalUS$’000 US$’000 US$’000 US$’000

2013Financial assetsCash and cash equivalents 1 367 – 368

Available-for-sale fi nancial assets 1 – – 1

Trade and other receivables – 5,399 1,968 7,367

2 5,766 1,968 7,736

Financial liabilitiesTrade and other payables (2,158) (10,726) – (12,884)

(2,158) (10,726) – (12,884)

Net fi nancial assets/(liabilities) (2,156) (4,960) 1,968 (5,148)

Less: Currency exposure of fi nancial liabilities net of those denominated in the entity’s functional currencies – (4,960) – (4,960)

Net currency exposure (2,156) – 1,968 (188)

2012Financial assetsCash and cash equivalents 19 202 – 221

Available-for-sale fi nancial assets 1 – – 1

Trade and other receivables – 408 1,267 1,675

20 610 1,267 1,897

Financial liabilitiesTrade and other payables (323) (7,431) – (7,754)

(323) (7,431) – (7,754)

Net fi nancial assets/(liabilities) (303) (6,821) 1,267 (5,857)

Less: Currency exposure of fi nancial liabilities net of those denominated in the entity’s functional currencies – 6,821 – 6,821

Net currency exposure (303) – 1,267 964

NOTES TO






The Group and Company have no other signifi cant currency exposure, except to RMB and NTD.

Currency exposure to NTD mainly arose from its available-for-sale fi nancial assets in the form of

equity investments and borrowings. If the RMB and NTD change against the USD by 5% (2012: 5%)

respectively with all other variables including tax rate being held constant, the effects arising from the net

fi nancial asset / liability position will be as follows:

2013 2012

Increase / (decrease) Group Company

Loss after tax

Other comprehensive

incomeLoss

after tax

Other

comprehensive

income

US$’000 US$’000 US$’000 US$’000

The GroupRMB against USD

- strengthened (51) – (42) –

- weakened 51 – 42 –

NTD against USD

- strengthened – 89 – 133

- weakened – (89) – (133)

The CompanyRMB against USD

- strengthened (98) – (64) –

- weakened 98 – 64 –

(ii) Price risk

The Group is exposed to equity securities price risk arising from the investments held by the Group which are

classifi ed on the consolidated balance sheet as available-for-sale fi nancial assets. Further details of these equity

investments can found in Note 13 to the fi nancial statements.

Equity price sensitivity

The sensitivity analyses below have been determined based on the exposure to equity price risks at the

reporting date.

In respect of equity investments classifi ed as available-for-sale fi nancial assets, if equity prices had been

5% higher or lower, with all other variables including tax rate being held constant, the Group’s equity as at

31 December 2013 would increase/decrease by US$109,000 (2012: US$161,000).

NOTES TO





(iii) Cash fl ow and fair value interest rate risks

Cash fl ow interest rate risk is the risk that the future cash fl ows of a fi nancial instrument will fl uctuate

because of changes in market interest rates. Fair value interest rate risk is the risk that the fair value of a

fi nancial instrument will fl uctuate due to changes in market interest rates. As the Group has no signifi cant

interest-bearing assets, the Group’s income is substantially independent of changes in market interest rates.

The Group’s policy is to obtain the most favourable interest rates available without increasing its interest rate

exposure and by keeping bank loans to the minimum required to sustain the operations of the Group.

The Group’s and the Company’s borrowings at variable rates on which effective hedges have not been entered

into are denominated mainly in USD. If the USD interest rate had increased/decreased by 1% (2012: 1%) with

all other variables including tax rate being held constant, the loss after tax would have been higher/lower by

US$360,000 (2012: US$490,000).

(b) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in fi nancial

loss to the Group. The major classes of fi nancial assets of the Group and of the Company are bank deposits

and trade receivables. For trade receivables, the Group adopts the policy of dealing only with customers of

appropriate credit standing and history. For other fi nancial assets, the Group adopts the policy of dealing only

with high credit quality counterparties.

Credit exposure to an individual counterparty is restricted by credit limits that are approved by the Chief

Executive Offi cer (“CEO”) based on ongoing credit evaluation. The counterparty’s payment pattern and credit

exposure are continuously monitored at the entity level by the respective management and at the Group level by

the CEO.

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

of fi nancial instruments is the carrying amount of that class of fi nancial instruments presented on the balance

sheet, except as follows:

Group2013 2012

US$’000 US$’000

Corporate guarantees provided to banks on subsidiaries’ loans 32,348 31,919

The trade receivables of the Group comprise fi ve debtors (2012: fi ve debtors) that represented 47% (2012:

32%) of trade receivables.

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

Group2013 2012

US$’000 US$’000

By geographical areas

People’s Republic of China 8,788 8,573

Asia 4,152 3,070

12,940 11,643

NOTES TO




(b) Credit risk (continued)

(i) Financial assets that are neither past due nor impaired

Bank deposits that are neither past due nor impaired are mainly deposits with banks with high credit-

ratings assigned by international credit-rating agencies. Trade receivables that are neither past due nor

impaired are substantially companies with a good collection track record with the Group.

The Group’s trade receivables not past due include receivables amounting to US$8,052,000 (2012:

US$7,998,000). The Group has no trade receivables past due or impaired that were re-negotiated during

the fi nancial year.

(ii) Financial assets that are past due and/or impaired

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

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

Group2013 2012

US$’000 US$’000

Past due < 3 months 4,736 3,400

Past due > 3 months 152 245

4,888 3,645

The carrying amount of trade receivables individually determined to be impaired and the movement in

the related allowance for impairment are as follows:

Group2013 2012

US$’000 US$’000

Gross amount 236 209

Less: Allowance for impairment (234) (207)

2 2



Allowance made 26 98

Allowance utilised – (53)


Allowance for impairment of US$26,000 (US$98,000) was recognised during the fi nancial year based

on amount recoverable. The impaired receivables arise mainly from debtors with signifi cant fi nancial

diffi culties, default or delay in payments.

NOTES TO




(c) Liquidity risk

Liquidity risk arises from the possibility that customers may not be able to settle obligations to the Group

within the normal terms of trade. Due to the dynamic nature of the underlying businesses, the Group aims at

maintaining suffi cient cash and fl exibility in funding by keeping committed credit lines available.

Short-term funding is obtained from bank loans and borrowings. The Group manages this risk by monitoring

working capital projections, taking into account the available banking facilities of the Group and ensuring that

the Group has adequate working capital to meet current requirements.

The table below analyses non-derivative fi nancial liabilities of the Group and the Company into relevant maturity

groupings based on the remaining period from the balance sheet date to the contractual maturity date. The

amounts disclosed in the table are the contractual undiscounted cash fl ows. Balances due within 12 months

equal their carrying balances as the impact of discounting is not signifi cant.

Lessthan 1 year

Between1 and 5 years

US$’000 US$’000

Group

At 31 December 2013Trade and other payables 21,994 –Borrowings 33,925 2,581

At 31 December 2012Trade and other payables 12,294 –

Borrowings 47,755 2,429

Company

At 31 December 2013

Trade and other payables 12,884 –Financial guarantee contracts 32,348 –

At 31 December 2012Trade and other payables 7,754 –

Financial guarantee contracts 31,919 –

(d) Capital risk

The Group’s objective when managing capital is to safeguard the Group’s ability to continue as a going concern

by maintaining a strong credit rating, healthy capital ratios and optimal capital structure so as to maximise

shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic

conditions. To maintain or achieve an optimal capital structure, the Group may adjust the dividend payment to

shareholders, return capital to shareholders, issue new shares, buy back issued shares, obtain new borrowings

or to sell assets to reduce borrowings.

NOTES TO




(d) Capital risk (continued)

The Group monitors capital based on total capital. Net debt is calculated as borrowings plus trade and other

payables less cash and cash equivalents. Total capital is calculated as total equity plus net debt.

Group Company2013 2012 2013 2012

US$’000 US$’000 US$’000 US$’000

Net debt 51,745 47,274 12,516 7,533

Total equity 30,581 12,805 3,515 19,273

Total capital 82,326 60,079 16,031 26,806

The Group and the Company are in compliance with all externally imposed capital requirements for the fi nancial

years ended 31 December 2013 and 2012 except for the breach of loan covenants as disclosed in Note 21(b)

to the fi nancial statements.

(e) Fair value measurements

The following table presents assets and liabilities measured at fair value and classifi ed by level of the following

fair value measurement hierarchy:

(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);

(b) inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either

directly (i.e. as prices) or indirectly (i.e. derived from prices) (Level 2); and

(c) inputs for the asset or liability that are not based on observable market data (unobservable inputs)

(Level 3).

Level 1 Level 2 Level 3 TotalUS$’000 US$’000 US$’000 US$’000

Group

2013AssetsAvailable-for-sale fi nancial assets 2,187 – – 2,187

2012AssetsAvailable-for-sale fi nancial assets 2,778 – 550 3,328

Company

2013 and 2012 AssetsAvailable-for-sale fi nancial assets 1 – – 1

The fair value of fi nancial instruments traded in active markets (such as trading and available-for-sale securities)

is based on quoted market prices at the balance sheet date. The quoted market price used for fi nancial assets

held by the Group is the current bid price. These instruments are included in Level 1.

NOTES TO




(e) Fair value measurements (continued)

The fair value of fi nancial instruments that is not traded in an active market (e.g. over-the-counter derivatives)

is determined by using value-in-use method. The Group uses a variety of methods and makes assumptions

that are based on market conditions existing at each balance sheet date. These instruments are included in

Level 2. In infrequent circumstances, where a valuation technique for these instruments is based on signifi cant

unobservable inputs, such instruments are included in Level 3.

The following table presents the changes in Level 3 instruments:

Group2013 2012

US$’000 US$’000


Beginning of fi nancial year 550 3,377

Transfer to Level 1 – (1,789)

Impairment loss (550) (1,125)

Currency translation differences – 87

End of fi nancial year – 550

The carrying value less impairment allowance of trade receivables and payables are assumed to approximate

their fair values. The fair value of borrowings approximates their carrying amount.

(f) Financial Instruments by category

The carrying amount of the different categories of fi nancial instruments is as follows:

Group Company2013 2012 2013 2012

US$’000 US$’000 US$’000 US$’000

Available-for-sale fi nancial assets 2,187 3,328 1 1

Loans and receivables 22,595 32,222 2,329 1,896

Financial liabilities at amortised cost 58,006 61,322 12,884 7,754

29. Related party transactions

In addition to the information disclosed elsewhere in the fi nancial statements, the following transactions took place

between the Group and related parties at terms agreed between the parties:

(a) Transactions with a related party

Group2013 2012

US$’000 US$’000

Rental expenses paid to a director of the Company 28 28

Purchase of bio-logical assets from a related party company 16 24

Related party companies are companies which are controlled by a common shareholder/director. Balances with

the related party companies at the balance sheet date are set out in Note 14.

NOTES TO



29. Related party transactions (continued)

(b) Key management personnel compensation

Group2013 2012

US$’000 US$’000

Salaries, wages and bonuses 1,310 1,283

Employer’s contribution to defi ned contribution

plans including Central Provident Fund 48 54

1,358 1,337

Included in the above is total compensation to directors of the Company amounting to US$730,000 (2012:

US$806,000).

30. Segment information

Management has determined the operating segments based on the reports reviewed by the Senior Management that

are used to make strategic decisions. The Senior Management comprises the Chief Executive Offi cer, the Regional

Financial Offi cer and the department heads of each business within each geographic segment.

The Group is primarily divided into 2 business segments, namely manufacture and sale of film capacitors

(“Manufacturing”) and distribution of active and passive components (“Distribution”). The Group adopts these 2

business segments as the basis for its primary segment information.

Other services included within Singapore, the People’s Republic of China, Hong Kong and Taiwan include investment

holding and provision of management services. The results of these operations are included in the “investment holding

and other” column. The segment information provided to the Senior Management for the reportable segments are as

follows:

Manufacturing Distribution

Investment holding

and other

Total reportable segments

US$’000 US$’000 US$’000 US$’000

Group

2013

Revenue:

- Total segment sales 21,537 21,344 49 42,930- Inter-segment sales (2,375) (2,599) (7) (4,981)

Sales to external parties 19,162 18,745 42 37,949

Gross (loss)/profi t (1,232) 1,181 9 (42)

(Loss)/profi t before tax (5,753) 11,977 (17,390) (11,166)

NOTES TO



30. Segment information (continued)

Manufacturing Distribution

Investment holding

and other

Total reportable segments

US$’000 US$’000 US$’000 US$’000

Other losses/(gains):

- Depreciation 1,871 255 13 2,139- Amortisation 10 1 – 11- Impairment loss of available-for-sale fi nancial assets – – 1,032 1,032- Impairment of trade and non-trade receivables 1,531 – – 1,531- Gain on disposal of available-for-sale fi nancial assets – – (51) (51)- Gain on disposal of property, plant and equipment – (41) – (41)

Segment assets 66,401 11,780 11,647 89,828Segment assets includes:

Additions to property, plant and equipment 1,276 208 2 1,486

Segment liabilities 18,979 37,408 2,860 59,247

Group

2012

Revenue:

- Total segment sales 25,248 24,970 18 50,236

- Inter-segment sales (4,715) (2,783) (3) (7,501)

Sales to external parties 20,533 22,187 15 42,735

Gross (loss)/profi t (841) 855 (10) 4

Loss before tax (4,102) (14,823) (1,303) (20,228)

Other losses/(gains):

- Depreciation 1,761 143 – 1,904

- Amortisation 11 1 – 12

- Impairment loss of available-for-sale fi nancial assets – – 1,125 1,125

- Gain on disposal of available-for-sale fi nancial assets – – (101) (101)

- Loss on liquidation of subsidiaries – 3,665 – 3,665

- Impairment of non-trade receivables arising from

liquidation of subsidiaries – 980 – 980

- Loss on disposal of property, plant and equipment 113 – – 113

- Impairment of intangible assets – 1,827 – 1,827

Segment assets 50,831 20,640 5,930 77,401

Segment assets includes:

Additions to property, plant and equipment 367 238 – 605

Segment liabilities 18,377 45,878 341 64,596

NOTES TO



30. Segment information (continued)

Geographical segments

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

(i) Singapore – the Company is headquartered and has operations in Singapore. The operations in this area are

principally the trading of electronic components and investment holding;

(ii) Hong Kong – the operations in Hong Kong are principally the trading of electronic components;

(iii) People’s Republic of China and Taiwan – the operations in People’s Republic of China and Taiwan include the

manufacture of own in-house electronic components and trading of electronic components.

(i) Revenue by geographical segments are as follows:

Group2013 2012

US$’000 US$’000


Asia 14,292 16,267

Other 635 406

37,949 42,735

Revenue of approximately US$5,443,000 (2012: US$5,314,000) is derived from a single external customer.

These revenues are attributable to the People’s Republic of China distribution and Asia distribution segment.

(ii) Carrying amounts of non-current assets by geographical segments are as follows:

Group2013 2012

US$’000 US$’000


Asia 7,664 7,254

60,344 35,208

NOTES TO



31. New or revised accounting standards and interpretations

Below are the mandatory standards, amendments and interpretations to existing standards that have been published,

and are relevant for the Group’s accounting periods beginning on or after 1 January 2014 or later periods and which

the Group has not early adopted:

FRS 110 – Consolidated Financial Statements (effective for annual periods beginning on or after 1 January

2014)

FRS 111 – Joint Arrangments (effective for annual periods beginning on or after 1 January 2014)

FRS 112 – Disclosures of Interest in Other Entities (effective for annual periods beginning on or after 1 January

2014)

Amendments to FRS 107 Disclosures and FRS 32 – Offsetting of Financial Assets and Financial Liabilities

(effective for annual periods beginning on or after 1 January 2014)

Amendments to FRS 36 – Recoverable Amount Disclosures for Non-Financial Assets (effective for annual

periods beginning on or after 1 January 2014)

The management does not expect the adoption of the above FRSs and amendments to FRS in the future periods

to have a material impact on the fi nancial statements of the Group and of the Company in the period of their initial

adoption.

32. Subsequent events

(a) Conditional Sales and Purchase Agreement with All Sincere Limited, Manbon Limited, Longbest Co., Limited

and Regalis Investments Pte Ltd, Mr Max Tong, Ms Lu Hong and Mr Low Yew Shen (collectively, the “Vendors”)

and Mr Huang Chien-Hung (Chief Executive Offi cer of Europtronic Group Ltd)

On 29 July 2013, the Company entered into a conditional Sales and Purchase Agreement with the Vendors and

Mr Huang Chien-Hung in respect of the following:

(i) Proposed acquisition of a 100% interest in Gold Impact Limited by the Company and proposed sale of

its existing businesses to the existing director of the Company, or his nominee.

(ii) The proposed acquisition by the Company of a 100% interest in Gold Impact Limited is contingent on

the following key conditions:

Completion and satisfactory due diligence results.

Gold Impact Limited to obtain an independent professional valuation report with value of the Gold

Mines to be approximately S$160 million.

Approval of Singapore Stock Exchange and shareholders as well as other conditions as

stipulated in the agreement and must be completed within 12 months from the date of

agreement.

As at 31 December 2013, management is still in discussion with the Vendors and the key conditions have not

been met as at 31 December 2013.

NOTES TO



32. Subsequent events (continued)

(b) Formal notice of acquisition of factory and offi ce premises of Europtronic (Suzhou) Co., Ltd, a wholly-owned

subsidiary of the Company, from Wujiang Economic and Technological Development Zone.

Europtronic (Suzhou) Co., Ltd had received a formal notice, dated 29 September 2013, from Wujiang Economic

and Technological Development Zone expressing its intention to acquire the factory and offi ce premises of

Europtronic (Suzhou) Co., Ltd for urban planning by the Wujiang Economic and Technological Development

Zone (“Compulsory Acquisition”).

As at 31 December 2013, management is in the process of negotiating the terms and compensation for the

factory relocation arrangement with the Wujiang Authority in connection with the Compulsory Acquisition.

33. Listing of signifi cant companies in the Group

Principal activitiesName of companies (Country of business/incorporation) Equity holding

2013 2012

% %

Subsidiaries held by the Company

Europtronic (HK) Company Limited (c) Trading of electronic components

(Hong Kong)

100 100

Europtronic (Singapore) Pte Ltd (a) Trading of electronic components,

and provision of handling services

(Singapore)

100 100

Europtronic (Taiwan) Ind. Corp. (c) Trading of electronic components, procurement

centre and business development centre

(Republic of China)

100 100

Europtronic Investment Pte Ltd (a) Investment holding

(Singapore)

100 100

UPT Component (S) Pte Ltd (a) Trading of electronic components

(Singapore)

100 100

Europtronic Electronic (Shenzhen)

Co., Ltd (b)

Manufacture and distribution of own in-house

manufactured metalised fi lm capacitors,

electronic components and ballasts

(People’s Republic of China)

100 100

Europtronic (Suzhou) Co., Ltd (b) Manufacture and distribution of own in-house

manufactured metalised fi lm capacitors, plastic

fi lm capacitors, ceramic capacitors, tantalum

capacitors and various types of chip capacitors


100 100

Europtronic Technology (Suzhou)

Co., Ltd

Dormant


100 100

Europtronic Green Energy Pte Ltd (a) Growing of bio-fuel related plantlets and

renewable energy related business development

(Singapore)

100 100

NOTES TO



33. Listing of signifi cant companies in the Group (continued)

Principal activitiesName of companies (Country of business/incorporation) Equity holding

2013 2012

% %

Subsidiary held by Europtronic Investment Pte Ltd:Crypson Electronics (S) Pte Ltd (a) Trading of electronic components and related goods

(Singapore)

100 100

Subsidiary held by UPT Component (S) Pte Ltd:

UPT Crypson Component (Shanghai)

Co., Ltd (b)

Trading of electronic components


100 100

Subsidiary held by Europtronic (Taiwan) Ind. Corp.:

Housing Technology Corp. (c) (d) Manufacture and distribution of chip inductors and chip

beads

(Republic of China)

100 100

(a) The fi nancial statements of these subsidiaries are audited by PricewaterhouseCoopers LLP, Singapore for statutory reporting

purpose.

(b) The fi nancial statements of these companies are audited by PricewaterhouseCoopers Zhong Tian LLP for group reporting

purpose.

(c) The financial statements of these companies are audited by PricewaterhouseCoopers Hong Kong and

PricewaterhouseCoopers Taiwan for statutory reporting purpose.

(d) The equity holding in Housing Technology Corp. is 99.97%

34. Authorisation of fi nancial statements

These fi nancial statements were authorised for issue in accordance with a resolution of the Board of Directors of

Europtronic Group Ltd on 1 April 2014.

SUPPLEMENTARY

INFORMATION(SGX-ST LISTING MANUAL DISCLOSURE REQUIREMENT)


The Group’s properties as at 31 December 2013 are:

Name of building/location Description Tenure

10E-4 No. 2 Lane 258

Rueiguang Road, Neihu District

Taipei, Taiwan ROC

Offi ce Freehold

No. 1618 Yundongdadao

Wujiang Economic Development Zone

Suzhou, Jiangsu Province, PRC

Production, warehouse

and dormitory

50 years commencing

9 August 1999 to 8 August 2049

13F-A No. 333

Zhao Jia Bang Road

Shanghai City, PRC 200032

Offi ce 50 years commencing

6 December 1992 to 5 December 2042

13F-D No. 333

Zhao Jia Bang Road




13F-A/D No. 333

Zhao Jia Bang Road


Carpark Lot

No. 64 & No. 67

50 years commencing


STATISTICS OF

SHAREHOLDINGSAS AT 14 MARCH 2014


DISTRIBUTION OF SHAREHOLDINGS

SIZE OF SHAREHOLDINGSNO. OF

SHAREHOLDERS %NO. OF

SHARES %

1 - 999 60 3.71 24,244 0.00

1,000 - 10,000 318 19.65 1,763,288 0.23

10,001 - 1,000,000 1,138 70.33 137,182,414 17.44

1,000,001 AND ABOVE 102 6.31 647,474,208 82.33

TOTAL 1,618 100.00 786,444,154 100.00

TWENTY LARGEST SHAREHOLDERS

NO. NAME NO. OF SHARES %

1 CITIBANK NOMINEES SINGAPORE PTE LTD 113,333,658 14.41

2 PHILLIP SECURITIES PTE LTD 35,915,400 4.57

3 MAYBANK KIM ENG SECURITIES PTE. LTD. 27,588,032 3.51

4 LIM HAN QIN 22,645,000 2.88

5 LOW YEW SHEN (LIU YAOSHENG) 20,454,000 2.60

6 DBS VICKERS SECURITIES (SINGAPORE) PTE LTD 20,361,000 2.59

7 HONG LEONG FINANCE NOMINEES PTE LTD 19,875,000 2.53

8 ONG HO YONG ADAM 18,508,000 2.35

9 LEONG WAI PING 18,181,000 2.31

10 RAFFLES NOMINEES (PTE) LIMITED 17,050,000 2.17

11 PHUA CHENG YENN 14,700,000 1.87

12 UOB KAY HIAN PRIVATE LIMITED 12,523,000 1.59

13 LIM CHAP HUAT 11,716,000 1.49

14 SUEN YIU CHUNG DICKY 11,514,818 1.46

15 DB NOMINEES (SINGAPORE) PTE LTD 11,378,512 1.45

16 DBS NOMINEES (PRIVATE) LIMITED 10,743,800 1.37

17 HUANG YUN JU 10,557,704 1.34

18 HSBC (SINGAPORE) NOMINEES PTE LTD 10,435,000 1.33

19 OCBC NOMINEES SINGAPORE PRIVATE LIMITED 8,801,800 1.12

20 BNP PARIBAS NOMINEES SINGAPORE PTE LTD 8,050,000 1.02

TOTAL 424,331,724 53.96

STATISTICS OF

SHAREHOLDINGSAS AT 14 MARCH 2014


Shareholders' Informations as at 14 March 2014

Number of Issued Shares : 786,444,154

Number of Issued Shares (excluding Treasury Shares) : 786,444,154 ordinary shares

Number/Percentage of Treasury Shares : NA

Class of Shares : Ordinary Shares

Voting Rights (excluding Treasury Shares) : 1 vote per share

Substantial Shareholders as at 14 March 2014 (As recorded in the Register of Substantial Shareholders)

Name of Substantial ShareholdersDirect Deemed

No. of Shares % No. of Shares %Huang Shih-An 161,620,193 20.55 92,124,465* 11.71

Huang Chuang Shueh-Ou 92,124,465 11.71 161,620,193** 20.55

Notes:

* Mr Huang Shih-An is deemed to have an interest in the shares held by his spouse, Mrs Huang Chuang Shueh-Ou.

** Mrs Huang Chuang Shueh-Ou is deemed to have an interest in the shares held by her spouse, Mr Huang Shih-An.

Shareholdings Held in Hands of Public

As at 14 March 2014, approximately 64.82% of the Company’s issued ordinary shares (excluding Treasury Shares) are held in

the hands of the public. Rule 723 of the Listing Manual of the Singapore Exchange Securities Trading Limited has accordingly

been complied with.

NOTICE OF

ANNUAL GENERAL MEETINGEUROPTRONIC GROUP LTD (INCORPORATED IN THE REPUBLIC OF SINGAPORE)(CO.REG.NO: 200009775K)


NOTICE IS HEREBY GIVEN that the Annual General Meeting of EUROPTRONIC GROUP LTD (the “Company”) will be held at

The Conference Room, 60 Kaki Bukit Place, Eunos Techpark #01-10, Singapore 415979, on Friday, 25 April 2014 at 2.30 pm

for the following purposes:

AS ORDINARY BUSINESS

1. To receive and adopt the Directors’ Report and the Audited Financial Statements of the Company for the year ended

31 December 2013 together with the Auditors’ Report thereon. (Resolution 1)

2. To re-elect the following Directors retiring pursuant to Article 89 of the Company’s Articles of Association:

Mrs Huang Chuang Shueh-Ou (Resolution 2) Mr Tan Sek Khee (Resolution 3)

3. To pass the following Ordinary Resolution pursuant to Section 153(6) of the Companies Act, Cap. 50:

“That pursuant to Section 153(6) of the Companies Act, Cap. 50, Mr Lin Chien be re-appointed a Director of the

Company to hold offi ce until the next Annual General Meeting.”

[See Explanatory Note (i)] (Resolution 4)

4. To approve the payment of Directors’ fees of US$80,000 (S$100,000) for the year ended 31 December 2013 (2012:

US$83,367 (S$101,667)). (Resolution 5)

5. To re-appoint PricewaterhouseCoopers LLP as the Company’s Auditors and to authorise the Directors to fi x their

remuneration. (Resolution 6)

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

AS SPECIAL BUSINESS

To consider and if thought fi t, passing with or without modifi cations, the following resolutions as Ordinary Resolutions:

7. Share Issue Mandate

That pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806 of the Listing Manual of the Singapore

Exchange Securities Trading Limited (“SGX-ST”), authority be given to the Directors of the Company to issue shares

(“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 at any time

and upon such terms and conditions and to such persons as the Directors may, in their absolute discretion, deem fi t

provided that:

(a) The aggregate number of Shares (including Shares to be issued in pursuance of Instruments made or

granted pursuant to this Resolution) does not exceed fi fty percent (50%) of the total number of issued shares

(excluding treasury shares) in the capital of the Company at the time of the passing of this Resolution, of which

the aggregate number of Shares and convertible securities to be issued other than on a pro rata basis to all

shareholders of the Company shall not exceed twenty percent (20%) of the total number of issued shares

(excluding treasury shares) in the capital of the Company;

(b) For the purpose of determining the aggregate number of Shares that may be issued under sub-paragraph (a)

above, the total number of issued shares (excluding treasury shares) shall be based on the total number of

issued shares (excluding treasury shares) of the Company as at the date of the passing of this Resolution, after

adjusting for:

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

NOTICE OF



(ii) new shares arising from exercising share options or vesting of Share awards outstanding or subsisting at

the time this Resolution is passed; and

(iii) any subsequent bonus issue, consolidation or subdivision of shares.

(c) And that such authority shall, unless revoked or varied by the Company in general meeting, continue in force

(i) until the conclusion of the Company’s next Annual General Meeting or the date by which the next Annual

General Meeting of the Company is required by law to be held, whichever is earlier or (ii) in the case of shares

to be issued in accordance with the terms of convertible securities issued, made or granted pursuant to this

Resolution, until the issuance of such shares in accordance with the terms of such convertible securities.

[See Explanatory Note (ii)] (Resolution 7)

8. Authority to Allot and Issue Shares under Europtronic Performance Share Scheme

That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors be authorised and empowered to allot and

issue from time to time such number of shares in the capital of the Company as may be required to be issued pursuant

to the vesting of awards under the Europtronic Performance Share Scheme (“EPSS”) provided that the aggregate

number of Shares to be issued pursuant the EPSS shall not exceed fi fteen percent (15%) of the total number of issued

shares (excluding treasury shares) in the capital of the Company from time to time.

[See explanatory Note (iii)] (Resolution 8)

9. Renewal of the Properties Disposal Mandate

That:

(a) approval be and is hereby given for the disposal of the Properties (as defi ned in Appendix I to this Notice to

shareholders dated 10 April 2014 (“Appendix I”)), on the terms and subject to the conditions of the Properties

Disposal Mandate (as defi ned in Appendix I) and the Properties Disposal Mandate shall, unless revoked or

varied by the Company in general meeting, continue in force up to the earliest of (i) twelve (12) months from the

date of such approval, (ii) the date on which the next annual general meeting of the Company is held or required

by law to be held and (iii) the date on which the disposal of the Properties are carried out to the full extent

mandated under the Properties Disposal Mandate; and

(b) any Director of the Company be and is hereby authorised to do all such acts and things as he may consider

necessary, desirable or expedient to give effect to the disposal of the Properties under the Properties Disposal

Mandate and/or this Resolution, including without limitation to the foregoing, to negotiate, sign, execute and

deliver all documents, approve any amendment, alteration or modifi cation to any document and to affi x the

Common Seal of the Company to any such documents (if required).

[See Explanatory Note (iv)] (Resolution 9)

10. Renewal of the Share Buy-Back Mandate

That:

(a) for the purposes of Sections 76C and 76E of the Companies Act (Chapter 50) of Singapore (“Act”), the exercise

by the Directors of the Company of all the powers of the Company to purchase or otherwise acquire issued

ordinary shares in the capital of the Company (“Shares”), not exceeding in aggregate the Prescribed Limit (as

hereinafter defi ned), at such price or prices as may be determined by the Directors of the Company from time to

time up to the Maximum Price (as hereinafter defi ned), whether by way of:

(i) market purchase(s) (each an “On-Market Purchase”) on the Singapore Exchange Securities Trading

Limited (“SGX-ST”); and/or

(ii) off-market purchase(s) (each an “Off-Market Purchase”) effected otherwise than on the SGX-ST in

accordance with any equal access scheme(s) as may be determined or formulated by the Directors of

the Company as they consider fi t, which scheme(s) shall satisfy all the conditions prescribed by the Act,

NOTICE OF



and otherwise in accordance with all other laws and 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 (“Share Buy-Back

Mandate”);

(b) unless varied or revoked by the Company in general meeting, the authority conferred on the Directors of the

Company pursuant to the Share Buy-Back Mandate may be exercised by the Directors of the Company at any

time and from time to time during the period commencing from the passing of this Resolution and expiring on

the earlier of:

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

and

(ii) the date on which purchases or acquisitions of Shares pursuant to the Share Buy-Back Mandate are

carried out in full to the Prescribed Limit mandated.

(c) in this Resolution:

“Prescribed Limit” means that number of issued Shares representing ten percent (10%) of the total number of

issued Shares as at the date of the passing of this Resolution unless the Company has effected a reduction of

the total number of issued Shares of the Company in accordance with the applicable provisions of the Act, at

any time during the Relevant Period (as defi ned below), in which event the total number of issued Shares shall

be taken to be the total number of issued Shares as altered. Any Shares which are held as treasury shares will

be disregarded for purposes of computing the ten percent (10%) limit;

“Relevant Period” means the period commencing from the date of the annual general meeting at which the

renewal of the Share Buy-Back Mandate is approved and thereafter, expiring on the date on which the next

annual general meeting of the Company is held or required by law to be held, whichever is earlier, after the date

of this Resolution;

“Maximum Price” in relation to a Share to be purchased or acquired, means the purchase price (excluding

brokerage, commission, applicable goods and services tax and other related expenses) which shall not exceed,

whether pursuant to an On-Market Purchase or an Off-Market Purchase, one hundred and fi ve percent (105%)

of the Average Closing Price of the Shares;

“Average Closing Price” means the average of the closing market prices of the Shares over the last fi ve (5)

market days on which transactions in the Shares were recorded before the date of the On-Market Purchase by

the Company or, as the case may be, the date of the making of the offer pursuant to the Off-Market Purchase,

and deemed to be adjusted for any corporate action that occurs after the relevant fi ve (5) day period; and

“date of the making of the offer” means the date on which the Company announces its intention to make an

offer for the purchase or acquisition of Shares from shareholders, stating therein the purchase price (which shall

not be more than the Maximum Price determined on the foregoing basis) for each Share and the relevant terms

of the equal access scheme for effecting the Off-Market Purchase;

(d) the Directors of the Company and/or any of them be and are hereby authorised to deal with the Shares

purchased or acquired by the Company pursuant to the Share Buy-Back Mandate in any manner as they think

fi t, which is permissible under the Act; and

(e) the Directors of the Company and/or any of them be and are hereby authorised to complete and do all such

acts and things (including executing such documents as may be required) as they and/or he may consider

expedient or necessary to give effect to the transactions contemplated and/or authorised by this Resolution.

[See Explanatory Note (v)] (Resolution 10)

NOTICE OF



By Order of the Board

Busarakham Kohsikaporn

Toh Lei Mui

Company Secretaries

Singapore, 10 April 2014

Explanatory Notes on Resolutions to be passed:

(i) The effect of the Ordinary Resolution 3 proposed in item 3 above, is to re-appoint a director who is over 70 years of age.

(ii) The Ordinary Resolution 7 proposed in item 7 above, if passed, will empower the Directors from the date of the above Meeting until

the date of the next Annual General Meeting, to allot and issue Shares and convertible securities in the Company up to an amount not

exceeding fi fty percent (50%) of the total number of issued shares (excluding treasury shares) in the capital of the Company, of which up

to twenty percent (20%) may be issued other than on a pro rata basis.

(iii) The Ordinary Resolution 8 proposed in item 8 above, if passed, will empower the Directors of the Company, to allot and issue shares

in the Company pursuant to the Europtronic Performance Share Scheme (“EPSS”), provided that the aggregate number of shares to

be issued pursuant to the EPSS shall not exceed in total fi fteen percent (15%) of the total number of issued shares (excluding treasury

shares) in the capital of the Company from time to time. The EPSS were approved by the shareholders at an Extraordinary General

Meeting of the Company held on 26 April 2005.

(iv) The Ordinary Resolution 9 proposed in item 9 above, if passed, will empower the Company to dispose of the Properties (as defi ned

in Appendix I to this Notice to shareholders dated 10 April 2014 (“Appendix I”)), in accordance with the terms and subject to the

conditions of the Properties Disposal Mandate (as defi ned in Appendix I). This authority will, unless revoked or varied at general

meeting, continue in force up to the earliest of (a) twelve (12) months from the date of such approval, (b) the date on which the next

annual general meeting of the Company is held or required by law to be held, and (c) the date on which the disposal of the Properties

are carried out to the full extent mandated under the Properties Disposal Mandate. Information relating to the Properties Disposal

Mandate is set out in Appendix I enclosed with the Annual Report.

(v) The Ordinary Resolution 10 proposed in item 10 above, if passed, will empower the Directors of the Company to buy-back issued

ordinary shares of the Company (“Shares”) from time to time (whether by way of on-market purchases or off-market purchases on an

equal access scheme) of up to ten percent (10%) of the total number of issued Shares of the Company (excluding treasury shares)

at the prices of up to but not exceeding the Maximum Price (as defi ned in Appendix II to this Notice of shareholders dated 10 April

2014 (“Appendix II”)), and in accordance with the terms and subject to the conditions of the Share Buy-Back Mandate (as defi ned

in Appendix II), the Companies Act (Chapter 50) of Singapore and the Listing Manual of the Singapore Exchange Securities Trading

Limited. This authority will, unless revoked or varied at general meeting, continue in force until the earlier of (a) the date that the next

annual general meeting of the Company is held or required by law to be held and (b) the date on which purchases or acquisitions of

Shares pursuant to the Share Buy-Back Mandate are carried out in full to the prescribed limit mandated.

The Company intends to use its internal sources of funds (comprising cash and fi xed deposits) to fi nance the purchase or acquisition

of its Shares pursuant to the Share Buy-Back Mandate. The amount of fi nancing required for the Company to purchase or acquire its

Shares, and the impact on the Company’s fi nancial position, cannot be ascertained as at the date of this Notice as these will depend

on the number of Shares purchased or acquired, the price at which such Shares were purchased or acquired and whether the Shares

purchased or acquired are cancelled or held as treasury shares.

The fi nancial effects of the purchase or acquisition of Shares by the Company pursuant to the proposed Share Buy-Back Mandate on

the audited fi nancial statements of the Company and the Company and its subsidiaries for the fi nancial year ended 31 December 2013,

based on certain assumptions, are set out in paragraph 2.6 of Appendix II.

Notes:

1. A member of the Company entitled to attend and vote at the Annual General Meeting (the “Meeting”) is entitled to appoint not more

than two proxies to attend and vote in his/her stead. A proxy need not be a member of the Company.

2. If the appointor is a corporation, the instrument appointing a proxy or proxies must be executed under seal or the hand of its duly

authorised offi cer or attorney.

3. The instrument appointing a proxy or proxies must be deposited at the registered offi ce of the Company at 60 Kaki Bukit Place, Eunos

Techpark #01-10, Singapore 415979, not less than forty-eight (48) hours before the time appointed for the Meeting.

APPENDIX IN RELATION TO THE PROPOSED RENEWAL OF THE PROPERTIES DISPOSAL MANDATE EUROPTRONIC GROUP LTD (CO. REG. NO. 200009775K) (INCORPORATED IN THE REPUBLIC OF SINGAPORE)


Appendix I

10 April 2014

THIS APPENDIX I IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

This Appendix I is circulated to shareholders of Europtronic Group Ltd (the “Company”) together with the Company’s

Annual Report for its fi nancial year ended 31 December 2013 (the “Annual Report”). Its purpose is to provide information to

shareholders for the proposed renewal of the properties disposal mandate (the “Properties Disposal Mandate”) to be tabled

at the Annual General Meeting of the Company to be held on Friday, 25 April 2014 at The Conference Room, 60 Kaki Bukit

Place, Eunos Techpark #01-10, Singapore 415979 at 2.30 p.m.

This Appendix I forms part of the Annual Report and must be read in conjunction with the Annual Report.

The ordinary resolution proposed to be passed in respect of the above matter is set out in the Notice of Annual General

Meeting enclosed with the Annual Report.

If you are in any doubt as to the action you should take, you should consult your stockbroker, bank manager, solicitor,

accountant or other professional adviser immediately.

The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of any of the statements

made, opinions expressed or reports contained in this Appendix I.

EUROPTRONIC GROUP LTD(Company Registration Number 200009775K)

(Incorporated in the Republic of Singapore)

APPENDIX IN RELATION TO THE PROPOSED RENEWAL OF THE PROPERTIES DISPOSAL MANDATE



CONTENTS

Page

DEFINITIONS .................................................................................................................................................................. 111

LETTER TO SHAREHOLDERS

1. INTRODUCTION ................................................................................................................................................. 114

2. REQUIREMENT FOR SHAREHOLDERS’ APPROVAL ......................................................................................... 115

3. RATIONALE FOR THE DISPOSAL AND THE PROPERTIES DISPOSAL MANDATE ............................................ 116

4. USE OF PROCEEDS FROM THE DISPOSAL OF THE PROPERTIES .................................................................. 116

5. SHAREHOLDERS’ PROTECTION ....................................................................................................................... 116

6. VALIDITY OF THE PROPERTIES DISPOSAL MANDATE ..................................................................................... 117

7. FINANCIAL EFFECTS OF THE DISPOSALS ........................................................................................................ 118

8. RELATIVE FIGURES COMPUTED PURSUANT TO RULE 1006 OF THE LISTING MANUAL................................ 120

9. INTERESTS OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS ................................................................. 123

10. DIRECTORS’ RECOMMENDATION ..................................................................................................................... 123

11. ANNUAL GENERAL MEETING ............................................................................................................................ 123

12. ACTION TO BE TAKEN BY SHAREHOLDERS .................................................................................................... 124

13. DIRECTORS’ RESPONSIBILITY STATEMENT ..................................................................................................... 124

14. DOCUMENTS AVAILABLE FOR INSPECTION ..................................................................................................... 124



DEFINITIONS

In this Appendix I, the following defi nitions shall apply throughout unless the context otherwise requires:

“AGM” : The annual general meeting of the Company to be held on Friday, 25 April 2014,

at The Conference Room, 60 Kaki Bukit Place, Eunos Techpark #01-10, Singapore

415979 at 2.30 p.m., the Notice of which is set out in the Annual Report

“Annual Report” : The annual report of the Company for its fi nancial year ended 31 December 2013

“Appendix I” : This Appendix I dated 10 April 2014

“Board” : Board of Directors of the Company for the time being

“CDP” : The Central Depository (Pte) Limited

“Chupei Property” : The property which comprises of a factory unit located at No. 8 Lane 646 Po Ai

Street, Chupei Hsinchu 30265, Taiwan (新竹县,竹北市,博爱街646巷8号)

“Companies Act” : The Companies Act, Chapter 50 of Singapore, as amended or modifi ed from time

to time

“Company” : Europtronic Group Ltd

“Directors” : The Directors of the Company for the time being

“Disposal” : Disposal of, all or any of, the Properties by the Group under the Properties Disposal

Mandate

“EPS” : Earnings per Share

“Group” : The Company and its subsidiaries

“Latest Practicable Date” : 1 April 2014, being the latest practicable date prior to the printing of this Appendix I

“Listing Manual” : The Listing Manual of the SGX-ST, as amended or modifi ed from time to time

“Market Day” : A day on which the SGX-ST is open for trading in securities

“Minimum Price” : Being:

(a) the Shanghai Property Minimum Price with respect to the Shanghai

Property; and

(b) the Taipei Property Minimum Price with respect to the Taipei Property

“Notice” : The Notice of AGM dated 10 April 2014

“NTA” : Net tangible assets

“PRC” : People’s Republic of China

“Properties” : Collectively the Shanghai Property and the Taipei Property and each a “Property”

“Properties Disposal Mandate” : The general mandate to authorise the Group to dispose of, all or any of, the

Properties upon and subject to the terms of such mandate



“SGX-ST” : Singapore Exchange Securities Trading Limited

“Shanghai Property” : The property which comprises of an offi ce unit located at Room 13F-A/D, No. 333,

Zhao Jia Bang Road, Shanghai City, PRC 200032 (上海市肇嘉浜路333号13楼A,

D座)

“Shanghai Property Minimum Price” : Being not less than RMB18,970,000 (equivalent to US$3,094,616.64, based on

an exchange rate of US$1.00 to RMB6.13 as at 31 December 2013 and, unless

otherwise stated, the said exchange rate has been used in this Appendix I to

convert RMB to US$)

“Shareholders” : Registered holders of Shares, except that where the registered holder is CDP, the

term “Shareholders” shall, in relation to such Shares and where the context so

admits, mean the Depositors whose securities accounts maintained with CDP are

credited with the Shares

“Shares” : Ordinary shares in the capital of the Company

“Shenzhen Property” : The property which comprises of a factory unit located at Block 19, 8/F South,

Shatoujiao Free Trade Zone, Shenzhen, PRC 518081 (深圳市沙头角保税区19栋8层南面)

“subsidiaries” : Shall have the meaning ascribed to it by the Companies Act

“Taipei Property” : The property which comprises of an offi ce unit located at 10E-4 No. 2 Lane 258

Rueiguang Rd, Neihu District, Taipei City 11491, Taiwan (北市内湖區瑞光路258巷2

号10楼之四)

“Taipei Property Minimum Price” : Being not less than NT$146,767,241 (equivalent to US$4,946,654.57, based on

an exchange rate of US$1.00 to NT$29.67 as at 31 December 2013 and, unless

otherwise stated, the said exchange rate has been used in this Appendix I to

convert NT$ to US$)

“NT$” : New Taiwan dollars, being the lawful currency of Taiwan, Republic of China

“RMB” : Renminbi, being the lawful currency of the PRC

“S$” : Singapore dollars, being the lawful currency of the Republic of Singapore

“US$” or “US cents” : United States dollars or cents respectively, being the lawful currency of the United

States of America

“%” : Percentage or per centum

The words “Depositor” and “Depository Register” shall have the meanings ascribed to them respectively in Section 130A of

the Companies Act.

Words importing the singular shall, where applicable, include the plural and vice versa, and words importing the masculine

gender shall, where applicable, include the feminine and neuter genders.

Words importing persons shall, where applicable, include corporations.

Any reference in this Appendix I to any enactment is a reference to that enactment as for the time being amended or

re-enacted.



Any word defi ned under the Companies Act and used in this Appendix I shall have the meaning assigned to it under the

Companies Act.

Any reference to dates or time of day in this Appendix I shall be a reference to Singapore dates and time.

Any discrepancies in tables included in this Appendix I between the amounts listed and the totals thereof are due to rounding.

Accordingly, fi gures shown as totals in this Appendix I may not be an arithmetic aggregation of the fi gures that precede them.

In this Appendix I, unless otherwise stated, the exchange rate of US$1.00 to S$1.25 as at the Latest Practicable Date has

been used to convert Singapore dollars to United States dollars.





Directors: Registered Offi ce:

Huang Shih-An (Chairman) 60 Kaki Bukit Place

Huang Chuang Shueh-Ou (Vice Chairman) Eunos Techpark #01-10

Huang Chien-Hung (Chief Executive Offi cer) Singapore 415979

Ho Toon Bah (Independent Director)

Tan Sek Khee (Independent Director)

Lin Chien (Independent Director)

10 April 2014

To: The Shareholders of Europtronic Group Ltd

Dear Sir/Madam

PROPOSED RENEWAL OF THE PROPERTIES DISPOSAL MANDATE

1. INTRODUCTION

The Company proposes to seek the approval of its Shareholders at the AGM to be held on 25 April 2014 at The

Conference Room, 60 Kaki Bukit Place, Eunos Techpark #01-10, Singapore 415979 at 2.30 p.m. for the proposed

renewal of the Properties Disposal Mandate.

The Properties Disposal Mandate was originally approved by the Shareholders at the extraordinary general meeting

held on 14 September 2011 (the “2011 EGM”) and renewed at the last annual general meeting of the Company held

on 26 April 2013. The Properties Disposal Mandate, if renewed at the AGM, authorises the Group to dispose of, all or

any of, the Shanghai Property and the Taipei Property.

The Properties Disposal Mandate, approved by the Shareholders at the 2011 EGM, authorises the Group to dispose

of, all or any of, the Chupei Property, the Shanghai Property, the Shenzhen Property and the Taipei Property at such

minimum price as per the terms of the Properties Disposal Mandate. Following such approval of the Shareholders for

the Properties Disposal Mandate, the Company had, on 23 September 2011, announced the sale of the Shenzhen

Property for RMB7,170,000 and, on 5 October 2011, announced the sale of the Chupei Property for NT$52,000,000,

making an aggregate gross gain of approximately S$281,000. Please refer to the announcements made by the

Company on 23 September 2011, 5 October 2011 and 9 December 2011 for further information relating to the sale of

the Shenzhen Property and the Chupei Property. As at the Latest Practicable Date, the Group has yet to dispose of the

Shanghai Property and the Taipei Property.

The Company refers to the Notice accompanying the Annual Report for its fi nancial year ended 31 December 2013

and Ordinary Resolution 9 in relation to the proposed renewal of the Properties Disposal Mandate under the heading

“Special Business” set out in the Notice.

The purpose of this Appendix I is to provide Shareholders with information relating to the Properties Disposal Mandate.



The details of the Properties are as follows:

No. Subsidiary Owner Address Use Tenure Minimum Price

1 UPT Crypson

Component (Shanghai)

Co., Ltd

Room 13F-A/D, No.

333, Zhao Jia Bang

Road, Shanghai City,

PRC 200032

(上海市肇嘉浜路333号13楼A,D座)


from 6 December

1992 and expiring on 5

December 2042

Not less than

RMB18,970,000

(equivalent to

US$3,094,616.64

based on an exchange

rate of US$1.00 to

RMB6.13 as at the

Latest Practicable

Date)

2 Europtronic (Taiwan)

Ind. Corp.

10E-4 No. 2 Lane 258

Rueiguang Rd, Neihu

District, Taipei City

11491, Taiwan

(北市内湖區瑞光路258

巷2号10楼之四)

Offi ce Freehold Not less than

NT$146,767,241

(equivalent to

US$4,946,654.57

based on an exchange

rate of US$1.00 to

NT$29.67 as at the

Latest Practicable

Date)

The possible methods of disposal to be adopted by the Group under the Properties Disposal Mandate will include,

inter alia, the sale of the Properties by auction, tender or direct contracts, subject to the provisions as stated under

“Shareholders’ Protection” of this Appendix I. The Company will also comply with the requirements of Chapter 9 of

the Listing Manual in the event that any Disposal constitutes an interested person transaction (as defi ned in the Listing

Manual).

2. REQUIREMENT FOR SHAREHOLDERS’ APPROVAL

Chapter 10 of the Listing Manual governs the continuing listing obligations of a listed company in respect of

acquisitions and realisations. Under Rule 1014, Shareholders’ approval must be obtained for “major transactions”.

Rule 1006 sets out the computation for relative fi gures for acquisitions and disposals of assets by a listed issuer.

Shareholders’ approval is required if any of the relative fi gures as computed on the bases set out in Rule 1006 exceeds

20% and such a transaction is classifi ed as a “major transaction”. In determining whether a disposal transaction or a

series of disposal transactions is considered a major transaction, the SGX-ST may aggregate separate transactions

completed within a twelve (12) month period and treat these transactions as one under Rule 1005 of the Listing

Manual.

In the event that the Group disposes of the Properties, any of the relative fi gures computed under Rule 1006 may

exceed 20%. While a single disposal transaction under the Properties Disposal Mandate may, in itself, trigger the

requirement of Shareholders’ approval in accordance with Rule 1014, the Directors believe that it is also possible

that Shareholders’ approval may be required in the event the Disposals are undertaken separately within a twelve

(12) month period and which the SGX-ST may aggregate and consider them to be a single transaction. As such, the

Company is seeking the approval of its Shareholders for the renewal of the Properties Disposal Mandate.



3. RATIONALE FOR THE DISPOSAL AND THE PROPERTIES DISPOSAL MANDATE

The Group’s business is primarily in the manufacturing and distribution of electronic components, and does not exist

for the purpose of holding properties for investment. Therefore, the disposal of the Properties does not constitute a

disposal of the Group’s core business and thus will not materially affect the risk profi le of the Group. In addition, the

offi ce premises at the Shanghai Property and the Taipei Property are currently underutilised. The Group had relocated

its offi ce at Shanghai and it intends to relocate its offi ce in Taipei to alternative premises. As such, the Group considers

the Properties to be non-core assets.

In connection with this, the Directors are of the view that the Disposal is benefi cial to the Group as it allows for the

disposal of the Group’s non-core assets to improve its balance sheet. This will enable the Group to rationalise its

resources and re-deploy its capital more effi ciently towards consolidating the Group’s businesses, reducing borrowings

and exploring possible new opportunities.

As the transactions under the Properties Disposal Mandate, may itself or when aggregated, be considered a “major

transaction” under Chapter 10 of the Listing Manual as mentioned above, the Company is seeking the prior approval

of its Shareholders of the transactions contemplated under the Properties Disposal Mandate. While the Properties are

fairly marketable, favourable opportunities to sell at optimum prices may not be easy to come by, and the Company

must therefore be able to commit to unconditional and binding agreements in a very short time frame.

For the reasons specifi ed above, the Board believes that it is important that the Company obtains Shareholders’

approval for the renewal of the Properties Disposal Mandate in order for the Group to dispose of the Properties

expediently when the opportunities arise. The Properties Disposal Mandate will allow the Group to act fl exibly and

decisively on opportunities that will maximise the disposal value of the Properties but at the same time without

compromising value realisation to Shareholders.

4. USE OF PROCEEDS FROM THE DISPOSAL OF THE PROPERTIES

The net proceeds from the disposal of the Properties will be used by the Group as working capital and for investments

and/or repayment of existing indebtedness. Pending the deployment of the net proceeds for such purposes, the net

proceeds may be placed in deposits with fi nancial institutions as the Directors may, in their absolute discretion, deem

fi t.

5. SHAREHOLDERS’ PROTECTION

In order to protect Shareholders’ interests for any disposal carried out under the Properties Disposal Mandate, the

Board will ensure that each transaction carried out under the Properties Disposal Mandate will be carried out on

an arm’s length basis and in accordance with the Disposal Guidelines set out below (subject always to the relevant

Minimum Price).

Assuming that the Company obtains Shareholders’ approval for the renewal of the Properties Disposal Mandate at the

AGM, the executive Directors will be responsible for facilitating the Disposals according to the guidelines as approved

by the Board (the “Disposal Guidelines”).

The Disposal Guidelines provide for, inter alia, the relevant valuation metrics to be used when carrying out any

Disposal and any material amendments to the Disposal Guidelines will be subject to the approval of the Board. Such

aforementioned valuation metrics include reference to the valuation reports of independent valuers appointed by the

Group to conduct valuation on the Properties. The Group shall conduct such valuation on the Properties annually,

with any such independent valuation report to be dated no more than twelve (12) months prior to the proposed date

of a transaction conducted under the Properties Disposal Mandate (each, an “Independent Valuation Report”). In

the event that the valuation in an Independent Valuation Report is higher than the relevant Minimum Price, the Group

will not dispose of the Property at a price lower than the valuation set out in such Independent Valuation Report. In

arriving at the open market values of the Properties, such independent valuers will usually adopt either or both the

Comparison Method and the Investment (Income) Method of Valuation. With the Comparison Method, sale transactions

of comparable properties will be taken into consideration with regard to their location, tenure, age, size, condition,

layout and design amongst other factors. The Investment (Income) Method examines the present worth of the future

income stream in the form of the net profi t rental value capitalised at an appropriate investment yield.



When the Company fi rst sought the approval of its Shareholders for the Properties Disposal Mandate at the 2011

EGM, the minimum price for the Shanghai Property was RMB18,200,000 (being equivalent to the market value of

the Shanghai Property as at 12 April 2011) and the minimum price for the Taipei Property was NT$86,607,000 (being

equivalent to the market value of the Taipei Property as at 2 July 2010). Such minimum price was based on the market

value of the Properties as per the respective valuation reports as commissioned by the Group on the Properties.

As per the Disposal Guidelines, the Group had conducted valuation on each of the Properties in 2013. Based on

the respective Independent Valuation Report as commissioned by the Group, the Shanghai Property was valued at

RMB18,970,000 as at 31 December 2013 and the Taipei Property was valued at NT$146,767,241 as at 31 December

2013. Accordingly, the Minimum Price for the Taipei Property has been adjusted to NT$146,767,241 and the Minimum

Price for the Shanghai Property has been adjusted to RMB18,970,000.

In addition, the Company will keep Shareholders informed of transactions conducted under the Properties Disposal

Mandate by doing the following:

(i) in the event that any one transaction conducted under the Properties Disposal Mandate, or any further

transaction (when aggregated with the previous transaction conducted under the Properties Disposal Mandate)

exceeds 5% but does not exceed 20% of any of the relative fi gures computed on the bases set out in Rule

1006 of the Listing Manual, the Company will make an announcement setting out the information required

under Rule 1010 of the Listing Manual. Such transactions are “discloseable transactions” as defi ned under Rule

1010; or

(ii) in the event that any one transaction conducted under the Properties Disposal Mandate, or any further

transaction (when aggregated with the previous transaction conducted under the Properties Disposal Mandate)

exceeds 20% of any of the relative fi gures computed on the bases set out in Rule 1006 of the Listing Manual,

the Company will make an announcement setting out the information required under Rule 1014 of the Listing

Manual. Such transactions are “major transactions” as defi ned under Rule 1014; or

(iii) upon the earlier of the disposal of all of the Properties or upon the expiry of the Properties Disposal Mandate,

the Company will make an announcement of such fact.

6. VALIDITY OF THE PROPERTIES DISPOSAL MANDATE

The Properties Disposal Mandate will take effect from the passing of the Ordinary Resolution to approve the renewal of

the Properties Disposal Mandate and continue in force up to the earliest of:

(a) twelve (12) months from the date of such approval;

(b) the date on which the next annual general meeting is held or required by law to be held; and

(c) the date on which the Disposals are carried out to the full extent mandated under the Properties Disposal

Mandate (i.e., the disposal of all the Properties).

The Properties Disposal Mandate will be put to Shareholders for renewal at each subsequent annual general meeting

of the Company in the event that the Disposals have not been carried out to the full extent mandated under the

Properties Disposal Mandate during its validity period.



7. FINANCIAL EFFECTS OF THE DISPOSALS

The pro forma fi nancial effects of the Disposals on the Group set out below are purely for illustrative purposes only and

do not refl ect the future fi nancial position of the Company or the Group after completion of the Disposals. Transaction

costs and expenses in connection with the Disposals are assumed to be insignifi cant and ignored for computational

purposes. In addition, the pro forma fi nancial effects of the Disposals set out below do not take into account taxes that

may be levied on capital gains in respect of a disposal of any of the Properties.

7.1 Financial Effects of the Disposal of the Shanghai Property

For illustration purposes, assuming that the disposal of the Shanghai Property was at the Shanghai Property Minimum

Price, there would not be any excess of the proceeds or any net gain from such disposal as the net asset value of the

Shanghai Property had been adjusted to US$3,094,616.64 which is equivalent to (i) the value of the Shanghai Property

as at 31 December 2013 based on the Independent Valuation Report as commissioned by the Group and (ii) the

Shanghai Property Minimum Price.

(a) NTA per Share

For illustration purposes, assuming that the disposal of the Shanghai Property had taken place on 31 December

2013, being the end of the most recently completed fi nancial year, and based on the audited consolidated

fi nancial statements of the Company for its fi nancial year ended 31 December 2013, the disposal of the

Shanghai Property at the Shanghai Property Minimum Price would have the following impact on the NTA of the

Group:

Before Disposal of the Shanghai Property

After Disposal of the Shanghai Property

NTA (US$’000) 30,157 30,157

Number of Shares 786,444,154 786,444,154

NTA per Share (US cents) 3.83 3.83

(b) EPS

For illustration purposes, assuming that the disposal of the Shanghai Property had been completed on

1 January 2013, being the beginning of the most recently completed fi nancial year, and based on the audited

consolidated fi nancial statements of the Company for its fi nancial year ended 31 December 2013, the disposal

of the Shanghai Property at the Shanghai Property Minimum Price would have the following impact on the EPS

of the Group:

Before Disposal of the Shanghai Property

After Disposal of the Shanghai Property

Profi t after tax (US$’000) (11,467) (11,467)

Weighted average number of Shares 786,444,154 786,444,154

EPS (US cents) (1.46) (1.46)



7.2 Financial Effects of the Disposal of the Taipei Property

For illustration purposes, assuming that the disposal of the Taipei Property was at the Taipei Property Minimum Price,

there would not be any excess of the proceeds or any net gain from such disposal as the net asset value of the

Taipei Property had been adjusted to US$4,946,654.57 which is equivalent to (i) the value of the Taipei Property as at

31 December 2013 based on the Independent Valuation Report as commissioned by the Group and (ii) the Taipei

Property Minimum Price.

(a) NTA per Share

For illustration purposes, assuming that the disposal of the Taipei Property had taken place on 31 December


fi nancial statements of the Company for its fi nancial year ended 31 December 2013, the disposal of the Taipei

Property at the Taipei Property Minimum Price would have the following impact on the NTA of the Group:

Before Disposal of theTaipei Property

After Disposal of theTaipei Property

NTA (US$’000) 30,157 30,157

Number of Shares 786,444,154 786,444,154


(b) EPS

For illustration purposes, assuming that the disposal of the Taipei Property had been completed on 1 January

2013, being the beginning of the most recently completed fi nancial year, and based on the audited consolidated

fi nancial statements of the Company for its fi nancial year ended 31 December 2013, the disposal of the Taipei

Property at the Taipei Property Minimum Price would have the following impact on the EPS of the Group:

Before Disposal of theTaipei Property

After Disposal of theTaipei Property



EPS (US cents) (1.46) (1.46)



7.3 Financial Effects of the Disposal of all the Properties

For illustration purposes, assuming that the disposal of the Properties was at the respective Minimum Prices, there

would not be any excess of the proceeds or any net gain from such disposals as the aggregate net asset value of the

Properties had been adjusted and is equivalent to (i) the aggregate value of the Properties as at 31 December 2013

based on the respective Independent Valuation Reports as commissioned by the Group and (ii) the aggregate of the

Shanghai Property Minimum Price and the Taipei Property Minimum Price.

(a) NTA per Share

For illustration purposes, assuming that the disposal of all the Properties had taken place on 31 December


fi nancial statements of the Company as at 31 December 2013, the disposal of all the Properties at the

respective Minimum Prices would have the following impact on the NTA of the Group:

Before Disposal of the Properties

After Disposal of the Properties

NTA (US$’000) 30,157 30,157

Number of Shares 786,444,154 786,444,154


(b) EPS

For illustration purposes, assuming that the disposal of all the Properties had been completed on 1 January

2013, being the beginning of the most recently completed fi nancial year, and based on the audited consolidated

fi nancial statements of the Company for its fi nancial year ended 31 December 2013, the disposal of all the

Properties at the respective Minimum Prices would have the following impact on the EPS of the Group:

Before Disposal of the Properties

After Disposal of the Properties



EPS (US cents) (1.46) (1.46)

8. RELATIVE FIGURES COMPUTED PURSUANT TO RULE 1006 OF THE LISTING MANUAL

The following relative fi gures are computed based on the latest audited fi nancial statements of the Group for its

fi nancial year ended 31 December 2013 and based on the following assumptions:

(a) that each Property is disposed at the relevant Minimum Price pursuant to the Properties Disposal Mandate;

(b) a price of S$0.046 per Share (equivalent to approximately US$0.0368) (being the weighted average price of the

Shares transacted on the SGX-ST on the Market Day immediately preceding the Latest Practicable Date); and

(c) the Company’s market capitalisation of S$36,176,431.08 (equivalent to approximately US$28,941,144.87)

based on assumption (b) and the total number of issued Shares of 786,444,154 Shares as at the Latest

Practicable Date.



8.1 Relative Figures Computed in relation to the Disposal of the Shanghai Property

The relative fi gures computed on the bases set out in Rule 1006 of the Listing Manual in relation to the disposal of the

Shanghai Property are as follows:

%

(a) Net asset value of the Shanghai Property(1) to be disposed of compared with the

Group’s audited net asset value(2) for the fi nancial year ended 31 December 2013

10.26

(b) Net profi ts attributable to the Shanghai Property disposed of compared with the

Group’s audited net losses for the fi nancial year ended 31 December 2013

Not meaningful(3)

(c) The aggregate value of consideration received compared with the Company’s market

capitalisation of US$28,941,144.87

10.69

(d) The number of equity securities issued by the Company as consideration for the

proposed disposal of the Shanghai Property compared with the number of equity

securities previous in issue

Not applicable(4)

Notes:

(1) Based on the net asset value of the Shanghai Property of US$3,094,616.64 as at 31 December 2013.

(2) Based on the net asset value of the Group of US$30,157,000 as at 31 December 2013.

(3) Based on the net asset value of the Shanghai Property as at 31 December 2013 which is equivalent to the Shanghai Property

Minimum Price, no net profi t would be attributable to the Shanghai Property in the event that the Shanghai Property was

disposed at the Shanghai Property Minimum Price. The Group made a net loss in its fi nancial year ended 31 December 2013.

Accordingly, the basis under Rule 1006(b) of the Listing Manual is not meaningful.

(4) Not applicable as no equity securities will be issued in connection with the disposal of the Shanghai Property.

As none of the relative fi gures under Rule 1006 exceeds 20%, the proposed disposal of the Shanghai Property at

the Shanghai Property Minimum Price is considered to be a discloseable transaction under Chapter 10 of the Listing

Manual. Nevertheless, the relative fi gures under Rule 1006 of the Listing Manual may exceed 20% in the event

that the Shanghai Property is disposed at a value which is above the Shanghai Property Minimum Price or if the

SGX-ST aggregates the disposal of the Shanghai Property and the Taipei Property and treat them as one transaction.

Accordingly, the Company is seeking the approval of its Shareholders for the proposed renewal of the Properties

Disposal Mandate at the AGM.

8.2 Relative Figures Computed in relation to the Disposal of the Taipei Property

The relative fi gures computed on the bases set out in Rule 1006 of the Listing Manual in relation to the disposal of the

Taipei Property are as follows:

%

(a) Net asset value of the Taipei Property(1) to be disposed of compared with the Group’s

audited net asset value(2) for the fi nancial year ended 31 December 2013

16.40

(b) Net profi ts attributable to the Taipei Property disposed of compared with the Group’s

audited net losses for the fi nancial year ended 31 December 2013

Not meaningful(3)



17.09


proposed disposal of the Taipei Property compared with the number of equity

securities previous in issue

Not applicable(4)



Notes:

(1) Based on the net asset value of the Taipei Property of US$4,946,654.57 as at 31 December 2013.


(3) Based on the net asset value of the Taipei Property as at 31 December 2013 which is equivalent to the Taipei Property

Minimum Price, no net profi t would be attributable to the Taipei Property in the event that the Taipei Property was disposed at

the Taipei Property Minimum Price. The Group made a net loss in its fi nancial year ended 31 December 2013. Accordingly, the

basis under Rule 1006(b) of the Listing Manual is not meaningful.

(4) Not applicable as no equity securities will be issued in connection with the disposal of the Taipei Property.

As none of the relative fi gures under Rule 1006 exceeds 20%, the proposed disposal of the Taipei Property at the

Taipei Property Minimum Price is considered to be a discloseable transaction under Chapter 10 of the Listing Manual.

Nevertheless, the relative fi gures under Rule 1006 of the Listing Manual may exceed 20% in the event that the Taipei

Property is disposed at a value which is above the Taipei Property Minimum Price or if the SGX-ST aggregates

the disposal of the Taipei Property and the Shanghai Property and treat them as one transaction. Accordingly, the

Company is seeking the approval of its Shareholders for the proposed renewal of the Properties Disposal Mandate at

the AGM.

8.3 Relative Figures Computed in relation to the Disposal of all the Properties

The relative fi gures computed on the bases set out in Rule 1006 of the Listing Manual in relation to the disposal of all

the Properties are as follows:

%

(a) Aggregate net asset value of the Properties(1) to be disposed of compared with the

Group’s audited net asset value(2) for the fi nancial year ended 31 December 2013

26.66

(b) Aggregate net profi ts attributable to the Properties disposed of compared with the

Group’s audited net losses for the fi nancial year ended 31 December 2013

Not meaningful(3)



27.78


proposed disposal of the Properties compared with the number of equity securities

previous in issue

Not applicable(4)

Notes:

(1) Based on the aggregate net asset value of the Properties of US$8,041,271.21 as at 31 December 2013.


(3) Based on the aggregate net asset value of the Properties as at 31 December 2013 which is equivalent to the sum of the

Shanghai Property Minimum Price and the Taipei Property Minimum Price, no net profi t would be attributable to the Properties

in the event that the Properties were disposed at their respective Minimum Prices. The Group made a net loss in its fi nancial

year ended 31 December 2013. Accordingly, the basis under Rule 1006(b) of the Listing Manual is not meaningful.

(4) Not applicable as no equity securities will be issued in connection with the disposal of the Properties.

As the relative fi gures under Rule 1006(a) and Rule 1006(c) will exceed 20%, the proposed disposal of the Properties

collectively at their respective Minimum Prices is considered to be a major transaction under Chapter 10 of the Listing

Manual and is conditional upon the approval of the Shareholders. Accordingly, the Company is seeking the approval of

its Shareholders for the proposed renewal of the Properties Disposal Mandate at the AGM.



9. INTERESTS OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS

The interests of the Directors and substantial shareholders in the Shares as at the Latest Practicable Date, as recorded

in the Register of Directors’ Shareholdings and the Register of Substantial Shareholders maintained under the

provisions of the Companies Act, were as follows:

Direct Interest Deemed InterestNo. of Shares %(1) No. of Shares %(1)

Directors

Huang Shih-An(2) 161,620,193 20.55 92,124,465 11.71

Huang Chuang Shueh-Ou(2) 92,124,465 11.71 161,620,193 20.55

Huang Chien-Hung 12,397,620 1.58 – –

Ho Toon Bah – – – –

Tan Sek Khee – – – –

Lin Chien – – – –

Substantial Shareholders

Huang Shih-An(2) 161,620,193 20.55 92,124,465 11.71


Notes:

(1) Based on the issued share capital of 786,444,154 Shares as at the Latest Practicable Date.

(2) Mr Huang Shih-An is deemed to be interested in the Shares held by his spouse, Mrs Huang Chuang Shueh-Ou and vice versa.

Save as disclosed above, none of the Directors has any interest, direct or indirect, in the disposal of the Properties to

unrelated third parties, other than by reason only of being a Director or a holder of Shares.

Save as disclosed above, none of the substantial shareholders of the Company has any interest, direct or indirect, in

the disposal of the Properties to unrelated third parties, other than by reason only of having an interest in the Shares.

10. DIRECTORS’ RECOMMENDATION

Having fully considered the rationale and the information relating to the proposed renewal of the Properties Disposal

Mandate (set out in this Appendix I), the Directors are of the opinion that the proposed renewal of the Properties

Disposal Mandate is in the best interests of the Company and accordingly they recommend that Shareholders vote

in favour of Resolution 9, being the Ordinary Resolution relating to the proposed renewal of the Properties Disposal

Mandate, to be proposed at the AGM.

11. ANNUAL GENERAL MEETING

The AGM, notice of which is set out in the Annual Report of the Company, will be held on Friday, 25 April 2014 at The

Conference Room, 60 Kaki Bukit Place, Eunos Techpark #01-10, Singapore 415979 at 2.30 p.m. for the purpose of

considering and, if thought fi t, passing with or without modifi cations, the Ordinary Resolution relating to the proposed

renewal of the Properties Disposal Mandate.



12. ACTION TO BE TAKEN BY SHAREHOLDERS

Shareholders who are unable to attend the AGM and who wish to appoint a proxy to attend on their behalf are

requested to complete, sign and return the Proxy Form enclosed with the Annual Report in accordance with the

instructions printed thereon as soon as possible and, in any event, so as to reach the registered offi ce of the Company

at 60 Kaki Bukit Place, Eunos Techpark #01-10, Singapore 415979 not less than 48 hours before the time appointed

for the AGM. The completion and lodgement of the Proxy Form by a Shareholder will not prevent him from attending

and voting at the AGM in person if he so wishes.

A Depositor shall not be regarded as a member of the Company entitled to attend the AGM and to speak and vote

thereat unless his name appears on the Depository Register at least 48 hours before the AGM.

13. DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors collectively and individually accept full responsibility for the accuracy of the information given in this

Appendix I and confi rm after making all reasonable enquiries that, to the best of their knowledge and belief, this

Appendix I constitutes full and true disclosure of all material facts about the proposed renewal of the Properties

Disposal Mandate, the Company and its subsidiaries, and the Directors are not aware of any facts the omission of

which would make any statement in this Appendix I misleading.

Where information in this Appendix I has been extracted from published or otherwise publicly available sources or

obtained from a named source, the sole responsibility of the Directors has been to ensure that such information has

been accurately and correctly extracted from those sources and/or reproduced in this Appendix I in its proper form and

context.

14. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents may be inspected at the registered offi ce of the Company at 60 Kaki Bukit Place,

Eunos Techpark #01-10, Singapore 415979 during normal business hours from the date of this Appendix I up to and

including the date of the AGM:

(a) Memorandum and Articles of Association of the Company; and

(b) Annual report of the Company for its fi nancial year ended 31 December 2013.

Yours faithfully

for and on behalf of the Board of Directors of

Europtronic Group Ltd

Huang Chien-Hung

Chief Executive Offi cer

APPENDIX IN RELATION TO THE PROPOSED RENEWAL OF THE SHARE BUY-BACK MANDATE EUROPTRONIC GROUP LTD (CO. REG. NO. 200009775K) (INCORPORATED IN THE REPUBLIC OF SINGAPORE)


APPENDIX II

10 April 2014

THIS APPENDIX II IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

This Appendix II is circulated to shareholders of Europtronic Group Ltd (the “Company”) together with the Company’s

Annual Report for its fi nancial year ended 31 December 2013 (the “Annual Report”). Its purpose is to provide information to

shareholders for the proposed renewal of the share buy-back mandate (the “Share Buy-Back Mandate”) to be tabled at the

Annual General Meeting of the Company to be held on Friday, 25 April 2014 at The Conference Room, 60 Kaki Bukit Place,

Eunos Techpark #01-10, Singapore 415979 at 2.30 p.m.

This Appendix II forms part of the Annual Report and must be read in conjunction with the Annual Report.

The ordinary resolution proposed to be passed in respect of the above matter is set out in the Notice of Annual General

Meeting enclosed with the Annual Report.

If you are in any doubt as to the action you should take, you should consult your stockbroker, bank manager, solicitor,

accountant or other professional adviser immediately.

The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of any of the statements

made, opinions expressed or reports contained in this Appendix II.



APPENDIX IN RELATION TO THE PROPOSED RENEWAL OFTHE SHARE BUY-BACK MANDATE



CONTENTS

Page

DEFINITIONS .................................................................................................................................................................. 127

LETTER TO SHAREHOLDERS

1. INTRODUCTION ................................................................................................................................................. 129

2. THE PROPOSED RENEWAL OF THE SHARE BUY-BACK MANDATE ................................................................ 129

3. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTERESTS .................................................................... 142

4. ANNUAL GENERAL MEETING ............................................................................................................................ 142

5. DIRECTORS’ RECOMMENDATION ..................................................................................................................... 142

6. ACTION TO BE TAKEN BY SHAREHOLDERS .................................................................................................... 143

7. DIRECTORS’ RESPONSIBILITY STATEMENT ..................................................................................................... 143

8. DOCUMENTS AVAILABLE FOR INSPECTION ..................................................................................................... 143



DEFINITIONS

In this Appendix II, the following defi nitions shall apply throughout unless the context otherwise requires:

“ACRA” : Accounting and Corporate Regulatory Authority of Singapore

“AGM” : The annual general meeting of the Company to be held on Friday, 25 April 2014, at The

Conference Room, 60 Kaki Bukit Place, Eunos Techpark #01-10, Singapore 415979 at

2.30 p.m., the Notice of which is set out in the Annual Report

“Annual Report” : The annual report of the Company for its fi nancial year ended 31 December 2013

“Appendix II” : This Appendix II dated 10 April 2014

“Approval Date” : The date of the AGM at which the Share Buy-Back Mandate is proposed to be renewed

“Board” : Board of Directors of the Company for the time being

“CDP” : The Central Depository (Pte) Limited

“Companies Act” : The Companies Act, Chapter 50 of Singapore, as amended or modifi ed from time to time

“Company” : Europtronic Group Ltd

“Directors” : The Directors of the Company for the time being

“Group” : The Company and its subsidiaries

“Latest Practicable Date” : 1 April 2014, being the latest practicable date prior to the printing of this Appendix II

“Listing Manual” : The Listing Manual of the SGX-ST, as amended or modifi ed from time to time

“Market Day” : A day on which the SGX-ST is open for trading in securities

“Notice” : The Notice of AGM dated 10 April 2014

“NTA” : Net tangible assets

“Public” : Persons other than:

(a) directors, chief executive offi cer, substantial shareholders or controlling shareholders

of the Company or its subsidiaries; and

(b) associates of the persons in paragraph (a) above

“Relevant Period” : The period from the Approval Date to the date of the next annual general meeting or such

date as the next annual general meeting of the Company is required by law to be held,

whichever is earlier

“SGX-ST” : Singapore Exchange Securities Trading Limited

“Share Buy-Back” : The purchase or acquisition by the Company of its issued Shares

“Share Buy-Back Mandate” : The general mandate given by Shareholders to authorise the Directors to exercise all the

powers of the Company to purchase or otherwise acquire its issued Shares upon and

subject to the terms of such mandate



“Shareholders” : Registered holders of Shares except that where the registered holder is CDP, the term

“Shareholders” shall, in relation to such Shares and where the context so admits, mean the

Depositors whose securities accounts maintained with CDP are credited with the Shares

“Shares” : Ordinary shares in the capital of the Company

“SIC” : The Securities Industry Council of Singapore

“subsidiaries” : Shall have the meaning ascribed to it by the Companies Act

“Take-over Code” : Singapore Code on Take-overs and Mergers, as amended or modifi ed from time to time

“treasury shares” : Issued Shares of the Company which were (or are treated as having been) purchased by

the Company in circumstances which Section 76H of the Companies Act applies and have

since purchase been continuously held by the Company

“%” : Percentage or per centum

“S$” : Singapore dollars

“US$” and “US cents” : United States dollars and cents respectively

The words “Depositor” and “Depository Register” shall have the meanings ascribed to them respectively in Section 130A of

the Companies Act.

Words importing the singular shall, where applicable, include the plural and vice versa, and words importing the masculine

gender shall, where applicable, include the feminine and neuter genders.

Words importing persons shall, where applicable, include corporations.

Any reference in this Appendix II to any enactment is a reference to that enactment as for the time being amended or

re-enacted.

Any word defi ned under the Companies Act and used in this Appendix II shall have the meaning assigned to it under the

Companies Act.

Any reference to dates or time of day in this Appendix II shall be a reference to Singapore dates and time.

In this Appendix II, unless otherwise stated, the exchange rate of US$1.00 to S$1.25 as at the Latest Practicable Date has

been used to convert Singapore dollars to United States dollars.





Directors: Registered Offi ce:

Huang Shih-An (Chairman) 60 Kaki Bukit Place

Huang Chuang Shueh-Ou (Vice Chairman) Eunos Techpark #01-10

Huang Chien-Hung (Chief Executive Offi cer) Singapore 415979

Ho Toon Bah (Independent Director)

Tan Sek Khee (Independent Director)

Lin Chien (Independent Director)

10 April 2014

To : The Shareholders of Europtronic Group Ltd

Dear Sir/Madam

PROPOSED RENEWAL OF THE SHARE BUY-BACK MANDATE

1. INTRODUCTION

The Company proposes to seek the approval of its Shareholders at the AGM to be held on 25 April 2014 for the

proposed renewal of the Share Buy-Back Mandate originally approved at the extraordinary general meeting held on

19 January 2006 and renewed at the Company’s last annual general meeting held on 26 April 2013 authorising the

Directors of the Company to purchase or otherwise acquire its issued Shares.

The Company refers to the Notice accompanying the Annual Report for its fi nancial year ended 31 December 2013

and Ordinary Resolution 10 in relation to the proposed renewal of the Share Buy-Back Mandate under the heading

“Special Business” set out in the Notice.

The purpose of this Appendix II is to provide Shareholders with information relating to the Share Buy-Back Mandate.

2. THE PROPOSED RENEWAL OF THE SHARE BUY-BACK MANDATE

2.1 Shareholders’ Approval

Approval is being sought from Shareholders at the AGM for the renewal of the general and unconditional Share

Buy-Back Mandate. If approved, the Share Buy-Back Mandate will take effect from the date of the AGM and continue

in force until the date of the next annual general meeting or such date as the next annual general meeting is required

by law to be held, whichever is the earlier, unless prior thereto, Share Buy-Backs are carried out to the full extent

mandated or the Share Buy-Back Mandate is revoked or varied by the Company in general meeting. The Share

Buy-Back Mandate may be put to Shareholders for renewal at each subsequent annual general meeting.

2.2 Rationale

The Share Buy-Back Mandate will give the Directors the fl exibility to purchase or acquire its issued Shares if and when

circumstances permit. The Directors believe that the Share Buy-Back Mandate provides the Company and its Directors

with a mechanism to facilitate the return of surplus cash over and above the Company’s ordinary capital requirements,

in an expedient and cost-effi cient manner. The Share Buy-Back Mandate would also allow the Directors to exercise

greater control over the Company’s share capital structure, dividend payout and cash reserves. The Share Buy-Back

Mandate may be used to purchase existing Shares to satisfy awards granted in relation to the Company’s performance

share scheme known as the Europtronic Performance Share Scheme.

The Directors will only make Share Buy-Backs when they believe that it would benefi t the Company and its

Shareholders, taking into consideration factors such as market conditions and funding arrangements at that time.



2.3 Authority and Limits on the Share Buy-Back Mandate

The authority and limitations placed on Share Buy-Backs under the Share Buy-Back Mandate, if renewed at the

AGM, are similar in terms to those previously approved by Shareholders and for the benefi t of the Shareholders, are

summarised below:

(a) Maximum Number of Shares

Only Shares that are issued and fully paid-up may be purchased or acquired by the Company. The total number

of Shares which may be purchased or acquired by the Company pursuant to the Share Buy-Back Mandate

is limited to that number of Shares representing not more than 10% of the total number of issued Shares as

at the Approval Date, unless the Company has effected a reduction of the share capital of the Company in

accordance with the applicable provisions of the Companies Act, at any time during the Relevant Period, in

which event the total number of issued Shares of the Company shall be taken to be the total number of Shares

as altered. For purposes of calculating the percentage of issued Shares above, any Shares which are held as

treasury shares will be disregarded.

For illustrative purposes only, on the basis of 786,444,154 issued Shares as at the Latest Practicable Date

and assuming that between the Latest Practicable Date and the date of the AGM (i) no new Shares are issued

and (ii) no Shares are purchased by the Company and cancelled or held as treasury shares, not more than

78,644,415 Shares (representing 10% of the total number of issued Shares as at that date) may be purchased

by the Company pursuant to the Share Buy-Back Mandate.

(b) Duration of Authority

Under the Share Buy-Back Mandate, the Company may purchase or acquire its issued Shares at any time and

from time to time on and from the Approval Date up to the earliest of:

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

(ii) the date on which the authority conferred by the Share Buy-Back Mandate is revoked or varied by the

Company in general meeting; and

(iii) the date on which the Share Buy-Backs are carried out to the full extent mandated under the Share

Buy-Back Mandate.

(c) Manner of Share Buy-Backs

Share Buy-Backs may be made by way of:

(i) on-market Share Buy-Backs transacted on the SGX-ST through the SGX-ST’s trading system, through

one or more duly licensed stockbrokers appointed by the Company for the purpose (“On-Market Purchases”); and/or

(ii) off-market Share Buy-Backs (if effected otherwise than on the SGX-ST) in accordance with any equal

access scheme(s) as may be determined or formulated by the Directors as they may consider fi t, which

scheme(s) shall satisfy all the conditions prescribed by the Companies Act and the Listing Manual

(“Off-Market Purchases”).



(d) Off-Market Purchases

In an Off-Market Purchase, the Directors may impose such terms and conditions which are not inconsistent

with the Share Buy-Back Mandate, the Listing Manual, the Companies Act, the memorandum and articles of

association of the Company and other applicable laws and regulations, as they consider fi t in the interests of the

Company in connection with or in relation to any equal access scheme or schemes. Under the Companies Act,

an equal access scheme must satisfy all the following conditions:

(i) offers under the scheme shall be made to every person who holds shares to purchase or acquire the

same percentage of their shares;

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

them; and

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

(1) differences in consideration attributable to the fact that the offers relate to shares with different

accrued dividend entitlements;

(2) differences in consideration attributable to the fact that the offers relate to shares with different

amounts remaining unpaid; and

(3) differences in the offers introduced solely to ensure that each person is left with a whole number

of shares.

In addition, the Listing Manual provides that, in making an Off-Market Purchase in accordance with an equal

access scheme, the Company must issue an offer document to all Shareholders, containing, inter alia, the

following information:

(i) the terms and conditions of the offer;

(ii) the period and procedures for acceptances;

(iii) the reasons for the proposed Share Buy-Back;

(iv) the consequences, if any, of Share Buy-Back by the Company that will arise under the Take-over Code

or other applicable take-over rules;

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

(vi) details of any Share Buy-Back made by the Company in the previous 12 months (whether On-Market

Purchases or Off-Market Purchases), specifying the total number of Shares purchased, the purchase

price per Share or the highest and lowest prices paid for the purchases, where relevant, and the total

consideration paid for the purchases; and

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



(e) Maximum Price to be paid for the Shares

The purchase price (excluding brokerage, commission, applicable goods and services tax and other related

expenses) to be paid for a Share in the event of any Share Buy-Back will be determined by the Directors.

However, the purchase price to be paid for the Shares pursuant to any Share Buy-Back must not exceed:

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

(ii) in the case of an Off-Market Purchase pursuant to an equal access scheme, 105% of the Average

Closing Price,

(the “Maximum Price”) in either case, excluding related expenses of the Share Buy-Back.

For the purposes of determining the Maximum Price:-

“Average Closing Price” means the average of the closing market prices of the Shares over the last fi ve (5)

Market Days on which transactions in the Shares were recorded before the date of the Market Purchase by

the Company or, as the case may be, the date of the making of the offer (as defi ned below) pursuant to the

Off-Market Purchase, and deemed to be adjusted for any corporate action that occurs after the relevant fi ve (5)

day period; and

“date of the making of the offer” means the date on which the Company announces its intention to make an

offer for the purchase or acquisition of Shares from Shareholders, stating therein the purchase price (which shall

not be more than the Maximum Price determined on the foregoing basis) for each Share and the relevant terms

of the equal access scheme for effecting the Off-Market Purchase.

2.4 Source of funds

The Company may only apply for funds for the Share Buy-Back in accordance with the applicable laws in Singapore.

The Company may not purchase or acquire its Shares listed on the SGX-ST for a consideration other than cash or for

settlement otherwise than in accordance with the trading rules of the SGX-ST.

Under the Companies Act, any purchase of Shares pursuant to the Share Buy-Back Mandate may be made out of

the Company’s capital or profi ts, so long as the Company is solvent. It is an offence for a Director or an offi cer of the

Company to approve or authorise the Share Buy-Back, knowing that the Company is not solvent. For this purpose,

pursuant to the Companies Act, a company is solvent if:

(i) the company is able to pay its debts in full at the time when the share buy-back is being conducted and will

be able to pay its debts as they fall due in the normal course of business during the period of 12 months

immediately following the date of payment pursuant to the share buy-back; and

(ii) the value of the company’s assets is not less than the value of its liabilities (including contingent liabilities) and

will not, after the share buy-back, become less than the value of its liabilities (including contingent liabilities).

The Company will use internal sources of funds (comprising cash and fi xed deposits) to fi nance purchases of its

Shares.

The Company has not obtained or incurred nor does it intend to obtain or incur any borrowings (other than the

Company’s fi nancing of its operations in the ordinary course of its business) to fi nance any Share Buy-Back. The

Company will not exercise the Share Buy-Back Mandate in full to the extent that its internal sources of funds are not

suffi cient for this purpose.



2.5 Status of purchased or acquired Shares

(a) Cancellation of Shares

Any Share which is purchased or acquired by the Company shall, unless held as treasury shares to the extent

permitted under the Companies Act (as set out below), be deemed cancelled immediately on purchase, and all

rights and privileges attached to that Share shall expire on cancellation. All Shares purchased or acquired by the

Company (other than treasury shares held by the Company to the extent permitted under the Companies Act)

will be automatically delisted by the SGX-ST.

Where Shares are purchased or acquired and cancelled:

(i) if the Shares are purchased or acquired entirely out of the capital of the Company, the Company shall

reduce the amount of its share capital by the total amount of the purchase price paid by the Company

for the Shares cancelled;

(ii) if the Shares are purchased or acquired entirely out of the profi ts of the Company, the Company shall

reduce the amount of its profi ts by the total amount of the purchase price paid by the Company for the

Shares cancelled; or

(iii) where the Shares are purchased or acquired out of both the capital and the profi ts of the Company, the

Company shall reduce the amount of its share capital and profi ts proportionately by the total amount of

the purchase price paid by the Company for the Shares cancelled.

Where the consideration paid by the Company for the purchase or acquisition of Shares is made out of profi ts,

such consideration (excluding related brokerage, commission, applicable goods and services tax, clearance

fees and other related expenses) will correspondingly reduce the amount available for the distribution of cash

dividends by the Company. Where the consideration paid by the Company for the purchase or acquisition of

Shares is made out of capital, the amount available for the distribution of cash dividends by the Company will

not be reduced.

(b) Treasury Shares

Pursuant to the Companies Act, shares which have been purchased or acquired by a company may be held as

treasury shares. Treasury shares may be, inter alia, sold for cash, transferred for the purposes of or pursuant to

an employees' share scheme, transferred as consideration for the acquisition of shares in or assets of another

company or assets of a person, cancelled, or sold, transferred or otherwise used for such other purposes as

may be prescribed by the Minister for Finance. The aggregate number of shares that may be held as treasury

shares shall not at any time exceed 10% of the total number of issued shares of the same class.

The treasury shares will not confer upon the Company any right to attend or vote at meetings, nor any right to

receive dividends and/or other distributions (whether in cash or otherwise) of the Company’s assets (including

any distribution of assets to members on a winding up). However, the allotment of fully paid bonus shares in

respect of treasury shares is allowed. The treasury shares may be sub-divided or consolidated, so long as the

total value of the treasury shares after such sub-division or consolidation is the same as the total value of the

treasury shares before the sub-division or consolidation, as the case may be.

Under Rule 704(28) of the Listing Manual, an immediate announcement must be made of any sale, transfer,

cancellation and/or use of treasury shares (in each case, the “usage”). Such announcement must include details such

as the date of the usage, the purpose of the usage, the number of treasury shares comprised in the usage, the number

of treasury shares before and after the usage, the percentage of the number of treasury shares comprised in the usage

against the total number of issued shares (of the same class as the treasury shares) which are listed on the SGX-ST

before and after the usage and the value of the treasury shares comprised in the usage.



2.6 Financial Effects of Share Buy-Backs

The fi nancial impact on the Company and the Group arising from Share Buy-Backs which may be made pursuant to

the Share Buy-Back Mandate will depend on, inter alia, whether the Shares are purchased or acquired out of capital

and/or profi ts of the Company, the aggregate number of Shares purchased or acquired, the price at which such Shares

are purchased or acquired, whether the Shares purchased or acquired are cancelled or held as treasury shares and the

amount (if any) borrowed by the Company to fund the Share Buy-Back.

For illustration purposes only, the fi nancial effects of the purchase or acquisition of Shares by the Company

pursuant to the Share Buy-Back Mandate on the audited fi nancial statements of the Group and the Company for the

fi nancial year ended 31 December 2013 and assuming the following:

(a) Share Buy-Backs are made out of capital;

(b) Share Buy-Backs are made at the Maximum Price of S$0.046 (equivalent to approximately US$0.0368) for

each Share (being the price equivalent to 5% above the average of the closing market prices of the Shares for

the fi ve (5) Market Days on which the Shares were traded on the SGX-ST immediately preceding the Latest

Practicable Date); and

(c) the purchase or acquisition of 78,644,415 Shares, representing 10% of the total number of Shares in issue as

at the Latest Practicable Date, by way of On-Market Purchases or Off-Market Purchases at the Maximum Price

and such Shares are cancelled upon purchase or acquisition or held as treasury shares, as the case may be,

are set out below:

(i) If 78,644,415 Shares are purchased or acquired pursuant to the Share Buy-Back Mandate and are cancelled

Company Group

BeforeShare

Buy-Back

After Share

Buy-Back

BeforeShare

Buy-Back

After Share

Buy-Back

Number of Shares 786,444,154 707,799,739 786,444,154 707,799,739

NTA(1) (US$’000) 3,515 476 30,157 27,118

Total Borrowings(2) (US$’000) – – 36,012 36,012

NTA per Share (US cents) 0.45 0.07 3.83 3.83

Gearing(3) (%) – – 1.18 1.31

Current Ratio(4) (times) 0.20 (0.03) 0.53 0.47

Earnings per Share (US cents) (2.07) (2.30) (1.46) (1.62)

Notes:

(1) NTA means total net assets less intangible assets.

(2) Total borrowings means short term and long term loans and fi nance lease obligations.

(3) Gearing means total borrowings divided by total equity.

(4) Current ratio means current assets divided by current liabilities.

The fi nancial effects are the same whether the Shares are purchased via On-Market Purchases or Off-Market

Purchases.



(ii) If 78,644,415 Shares are purchased or acquired pursuant to the Share Buy-Back Mandate and are held as treasury shares

Company Group

BeforeShare

Buy-Back

After Share

Buy-Back

BeforeShare

Buy-Back

After Share

Buy-Back

Number of Shares (excluding treasury

shares)

786,444,154 707,799,739 786,444,154 707,799,739

Treasury Shares (US$’000) – 3,039 – 3,039

NTA(1) (US$’000) 3,515 476 30,157 27,118

Total Borrowings(2) (US$’000) – – 36,012 36,012

NTA per Share (US cents) 0.45 0.07 3.83 3.83

Gearing(3) (%) – – 1.18 1.31

Current Ratio(4) (times) 0.20 (0.03) 0.53 0.47

Earnings per Share (US cents) (2.07) (2.30) (1.46) (1.62)

Notes:

(1) NTA means total net assets less intangible assets.

(2) Total borrowings means short term and long term loans and fi nance lease obligations.

(3) Gearing means total borrowings divided by total equity.

(4) Current ratio means current assets divided by current liabilities.

The fi nancial effects are the same whether the Shares are purchased via On-Market Purchases or Off-Market

Purchases.

As illustrated above, Share Buy-Backs will:

(i) reduce the number of issued Shares of the Company when the Shares purchased or acquired are cancelled;

(ii) reduce the NTA per Share of the Company and the Group; and

(iii) reduce the earnings per Share of the Company and the Group.

The actual impact of Share Buy-Backs will depend on the number and price of the Shares purchased or acquired

by the Company. The Directors do not propose to exercise the Share Buy-Back Mandate to such an extent that it

would have a material adverse effect on the working capital requirements of the Company. Share Buy-Backs will only

be effected after assessing the relative impact of a Share Buy-Back taking into consideration both fi nancial factors

(such as cash surplus, debt position and working capital requirements) and non-fi nancial factors (such as share market

conditions and performance of the Shares).

Shareholders should note that the fi nancial effects illustrated above are for illustration purposes only. In particular, it is important to note that the above analysis is based on the audited fi nancial statements of the Company and the Group as at 31 December 2013 and is not necessarily representative of the future fi nancial performance of the Group. Although the Share Buy-Back Mandate would authorise the Company to purchase or acquire up to 10% of the Company’s issued Shares as at the Approval Date, the Company may not necessarily purchase or acquire or be able to purchase or acquire such Shares in full. In addition, the Company may cancel all or part of the Shares purchased or hold all or part of the Shares purchased as treasury shares.



2.7 Taxation

Shareholders who are in doubt as to their respective tax positions or any tax implications, or who may be subject to tax

in a jurisdiction outside Singapore, should consult their own professional advisers.

2.8 Reporting Requirements

2.8.1 The Companies Act and the Listing Manual require the Company to make reports in relation to the Share

Buy-Back Mandate as follows:

(a) Within 30 days of the passing of the Shareholders’ resolution to approve the renewal of the Share

Buy-Back Mandate, the Company is required to lodge a copy of such resolution with ACRA.

(b) The Company must notify ACRA within 30 days of a Share Buy-Back made via the SGX-ST or

otherwise. Such notifi cation, in the form as may be prescribed by ACRA, shall include details such as

the date of the Share Buy-Back, the total number of Shares purchased or acquired by the Company, the

number of Shares cancelled, the number of Shares held as treasury shares, the Company’s issued share

capital before and after the Share Buy-Back, the amount of consideration paid by the Company for the

purchase or acquisition of Shares and whether the Shares were purchased or acquired out of profi ts or

capital of the Company.

(c) Share Buy-Backs must be reported to the SGX-ST in the form prescribed by the Listing Manual and

announced to the public. In the case of On-Market Purchases, it must be reported not later than

9.00 a.m. on the Market Day following the day on which the Company makes an On-Market Purchase

and in the case of Off-Market Purchases, not later than 9.00 a.m. on the second Market Day following

the close of acceptance of offers made by the Company.

(d) In its annual report and accounts, the Company shall make disclosure of details pertaining to purchases

of Shares made during the fi nancial year, including the total number of Shares purchased during the

fi nancial year under review, the purchase price paid for each Share or the highest and lowest prices paid

for the purchases; and where relevant, the total consideration paid.

2.8.2 While the Listing Manual does 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 share buy-back, the Company will not undertake any Share Buy-Back pursuant to the Share

Buy-Back Mandate at any time after a price sensitive matter or development has occurred or has been

the subject of a decision of the Board until the price sensitive information has been publicly announced. In

particular, in line with the Company’s internal guide on securities dealings, the Company will not purchase or

acquire any Shares during the period commencing two (2) weeks before the announcement of the Company’s

results for each of the fi rst three quarters of its fi nancial year, or one (1) month before its full year’s results, and

ending on the date of announcement of the relevant results.

2.9 Listing Status on SGX-ST

The Listing Manual requires a listed company to ensure that at least 10% of its issued shares (excluding treasury

shares, preference shares and convertible equity securities) is at all times held by the public.

As at the Latest Practicable Date, 509,744,172 Shares, representing approximately 64.82% of the total number of

issued Shares, are held in the hands of the Public. In the event that the Company purchases the maximum number of

Shares under the Share Buy-Back Mandate from the Public, the resultant percentage of the issued Shares held by the

Public would be reduced to approximately 60.91%. Accordingly, the Company is of the view that there is a suffi cient

number of Shares in issue held by the Public which would permit the Company to undertake purchases or acquisitions

of its Shares up to the full 10% limit pursuant to the Share Buy-Back Mandate without affecting the listing status of the

Shares on the SGX-ST and that the number of Shares remaining in the hands of the Public will not fall to such a level

as to cause market illiquidity.

The Directors will use their best efforts to ensure that the Company does not effect a purchase of Shares which would

result in the number of Shares remaining in the hands of the Public falling to such a level as to cause market illiquidity

or adversely affect the orderly trading of the Shares or the listing status of the Company.



2.10 Take-over implications under the Take-over Code

Appendix 2 of the Take-over Code contains the Share Buy-Back Guidance Note. The take-over implications arising

from any Share Buy-Back by the Company are set out below.

2.10.1 Obligation to make a Take-over Offer

If, as a result of any purchase or acquisition by the Company of its Shares, the proportionate interest in the

voting capital of the Company of a Shareholder and persons acting in concert with him increases, such

increase will be treated as an acquisition for the purposes of Rule 14 of the Take-over Code. Consequently, a

Shareholder or a group of Shareholders acting in concert with a Director could obtain or consolidate effective

control of the Company and become obliged to make an offer under Rule 14 of the Take-over Code.

2.10.2 Persons acting in concert

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 effective control of that company.

Unless the contrary is established, the Take-over Code presumes, inter alia, the following individuals and

companies to be persons acting in concert with each other:

(i) a company with its parent company, subsidiaries, its fellow subsidiaries, any associated companies of

the above companies, any company whose associated companies include any of the above companies

and any person who has provided fi nancial assistance (other than a bank in its ordinary course of

business) to any of the above companies for the purchase of voting rights;

(ii) a company with any of its directors, together with their close relatives, related trusts and any companies

controlled by any of the directors, their close relatives and related trusts;

(iii) a company with any of its pension funds and employee share schemes;

(iv) a person with any investment company, unit trust or other fund in respect of the investment account

which such person manages on a discretionary basis;

(v) a fi nancial or other professional adviser, including a stockbroker, with its client in respect of the

shareholdings of the adviser and the persons controlling, controlled by or under the same control as the

adviser and all the funds which the adviser manages on a discretionary basis, where the shareholdings

of the adviser and any of those funds in the client total 10% or more of the client’s equity share capital;

(vi) directors of a company, together with their close relatives, related trusts and companies controlled by

any of them, which is subject to an offer or where they have reason to believe a bona fi de offer for their

company may be imminent;

(vii) partners; and

(viii) an individual, his close relatives, his related trusts, and any person who is accustomed to act according

to his instructions, companies controlled by any of the above persons and any person who has provided

fi nancial assistance (other than a bank in its ordinary course of business) to any of the above persons for

the purchase of voting rights.

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 of the Take-over Code after a

purchase or acquisition of Shares by the Company are set out in Appendix 2 of the Take-over Code.



2.10.3 Effect of Rule 14 and Appendix 2

In general terms, the effect of Rule 14 and Appendix 2 of the Take-over Code is that, unless exempted,

Directors and persons acting in concert with them will incur an obligation to make a take-over offer under Rule

14 if, as a result of the Company purchasing or acquiring its Shares, the voting rights of such Directors and their

concert parties would increase to 30% or more, or in the event that such Directors and their concert parties

hold between 30% and 50% of the Company’s voting rights, if the voting rights of such Directors and their

concert parties would increase by more than 1% in any period of 6 months. In calculating the percentages of

voting rights of such Directors and their concert parties, treasury shares shall be excluded.

Under Appendix 2 of the Take-over Code, a Shareholder not acting in concert with the Directors will not be

required to make a take-over offer under Rule 14 if, as a result of the Company purchasing or acquiring its

Shares, the voting rights of such Shareholder would increase to 30% or more, or, if such Shareholder holds

between 30% and 50% of the Company’s voting rights, the voting rights of such Shareholder would increase

by more than 1% in any period of 6 months. Such Shareholder need not abstain from voting in respect of the

resolution authorising the Share Buy-Back Mandate.

2.10.4 Application of the Take-Over Code

As at the Latest Practicable Date, Mr Huang Shih-An, Mrs Huang Chuang Shueh-Ou and Mr Huang

Chien-Hung are Directors of the Company. Mrs Huang Chuang Shueh-Ou is the spouse of Mr Huang Shih-An

and Mr Huang Chien-Hung is the son of Mr and Mrs Huang.

As at the Latest Practicable Date, Ms Huang Yun Ju, a Shareholder, holds 10,557,704 Shares and is the

daughter of Mr and Mrs Huang.

Accordingly, under the Take-over Code, Mr Huang Shih-An, Mrs Huang Chuang Shueh-Ou, Mr Huang

Chien-Hung and Ms Huang Yun Ju are deemed to be persons acting in concert with each other (the “Concert Party Group”).

As at the Latest Practicable Date, the Concert Party Group holds in aggregate 276,699,982 Shares,

representing approximately 35.18% of the issued share capital of the Company.

As at the Latest Practicable Date, the voting rights of each of the persons within the Concert Party Group

before and after Share Buy-Backs pursuant to the Share Buy-Back Mandate, assuming (a) the Company

purchases 78,644,415 Shares, being 10% of the total number of issued Shares as at the Latest Practicable

Date, (b) no further Shares are issued by the Company and (c) there is no change in the number of Shares held

or deemed to be held by such persons would be as follows:

Before Share Buy-Backs After Share Buy-BacksDirect

Interest(%)(1)

Deemed Interest

(%)(1)

Total Interest

(%)(1)

DirectInterest

(%)(2)

DeemedInterest

(%)(2)

Total Interest

(%)(2)

Huang Shih-An(3)(4) 20.55 11.71 32.26 22.83 13.02 35.85

Huang Chuang Shueh-Ou(3)(4) 11.71 20.55 32.26 13.02 22.83 35.85

Huang Chien-Hung(4) 1.58 – 1.58 1.75 – 1.75

Huang Yun Ju(4) 1.34 – 1.34 1.49 – 1.49

Notes:

(1) As a percentage of the issued share capital of the Company comprising 786,444,154 Shares as at the Latest

Practicable Date.

(2) As a percentage of the issued share capital of the Company comprising 707,799,739 Shares (assuming that the

Company acquires or purchases the maximum number of 78,644,415 Shares pursuant to the Share Buy-Back

Mandate).



(3) Mr Huang Shih-An is deemed to be interested in the Shares held by his spouse, Mrs Huang Chuang Shueh-Ou and

vice versa.

(4) The members of the Concert Party Group have undertaken to the Company that he or she will not acquire further

Shares and/or sell, transfer or otherwise dispose any of his or her shareholding in the Company for the period

commencing from the Latest Practicable Date till the date of the AGM. Based on their undertaking, the interest of

each member of the Concert Party Group in the Company as at the date of the AGM will be as per illustrated in this

paragraph 2.10.4.

For illustrative purposes only, based on the shareholding interest of the Concert Party Group listed above

and assuming that the Company acquired or purchased a maximum of 78,644,415 Shares pursuant to the

Share Buy-Back Mandate and no further Shares are issued by the Company, the interest of the Concert Party

Group will increase from 35.18% to 39.09%.

In the event that Shareholders’ approval is obtained for the renewal of the Share Buy-Back Mandate, the

Concert Party Group would, unless exempted under the Take-over Code, become obligated to make a general

offer under the Take-over Code if, as a result of the Company buying back Shares and subsequently cancelling

or holding such Shares as treasury shares, their interest in the voting rights of the Company and that of persons

acting in concert with them increases by more than 1% in any period of six (6) months.

2.10.5 Exemption from the requirement to make a general offer under the Take-over Code

Section 3(a) of Appendix 2 of the Take-over Code sets out the conditions for exemption from the obligation

to make a general offer under Rule 14 of the Take-over Code in the case of directors and persons acting in

concert with them incurring such an obligation as a result of a listed company purchasing its own shares as per

the requirements of the Companies Act.

Pursuant to Section 3(a) of Appendix 2 of the Take-over Code, the Concert Party Group and persons acting in

concert with them (if any) will be exempted from the requirement to make an offer for the Company under Rule

14 of the Take-over Code, subject to the fulfi lment of the following conditions:

(i) the circular to Shareholders on the resolution to approve the Share Buy-Back Mandate contains advice

to the effect that by voting in favour of the resolution to approve the renewal of the Share Buy-Back

Mandate (the “Buy-back Resolution”), Shareholders are waiving their right to a general offer at the

required price from the Concert Party Group and persons acting in concert with them (if any) who, as

a result of Share Buy-Backs by the Company, would increase their percentage of total voting rights by

more than 1% in any six (6) month period;

(ii) the aforesaid circular discloses the names and voting rights of the members of the Concert Party Group

and persons acting in concert with them (if any) (a) as at the time of the Buy-back Resolution, and

(b) after Share Buy-Backs up to the maximum limit under the Share Buy-Back Mandate;

(iii) the Buy-back Resolution is approved by a majority of those Shareholders present and voting at the

meeting on a poll who could not become obliged to make a general offer for the Company as a result of

Share Buy-Backs;

(iv) the members of the Concert Party Group and persons acting in concert with them (if any) abstain from

(a) voting on the Buy-back Resolution, and (b) recommending Shareholders to vote in favour of the

Buy-back Resolution;

(v) within 7 days after the passing of the Buy-back Resolution, each of Mr Huang Shih-An, Mrs Huang

Chuang Shueh-Ou and Mr Huang Chien-Hung submits to the SIC a duly signed form as prescribed by

the SIC; and



(vi) the Concert Party Group and persons acting in concert with them (if any) not having acquired and not

to acquire any Shares between the date on which they know that the announcement of the proposed

renewal of the Share Buy-Back Mandate is imminent and the earlier of:

(a) the date on which the authority for the renewed Share Buy-Back Mandate expires; and

(b) the date on which the Company announces that it has (aa) bought back such number of Shares

as authorised by the renewed Share Buy-Back Mandate, or (bb) decided to cease buying back

the Shares, as the case may be,

if such acquisitions, taken together with Share Buy-Backs, would cause the aggregate voting rights in

the Company of the Concert Party Group and persons acting in concert with them to increase by more

than 1% in the preceding 6 months.

It follows that where the aggregate voting rights held by the Concert Party Group and persons acting in

concert with them (if any) increase by more than 1% solely as a result of Share Buy-Backs and none of

them has acquired any Shares during the relevant period defi ned above, then the Concert Party Group

and/or persons acting in concert with them (if any) would be eligible for the SIC’s exemption from the

requirement to make a general offer under Rule 14, or where such exemption had been granted, would

continue to enjoy the exemption.

If the Company ceases to buy-back Shares pursuant to the Share Buy-Back Mandate and the increase in the

percentage of total voting rights held by the Concert Party Group and persons acting in concert with them (if

any) as a result of Share Buy-Backs at such time is less than 1%, the Concert Party Group and persons acting

in concert with them (if any) may acquire further voting rights in the Company. However, any increase in their

percentage of voting rights in the Company as a result of Share Buy-Backs under the Share Buy-Back Mandate

will be taken into account together with any voting rights acquired by the Concert Party Group and persons

acting in concert with them (if any) (by whatever means) in determining whether the Concert Party Group and

persons acting in concert with them (if any) have increased their aggregate voting rights in the Company by

more than 1% in any six (6) month period.

The exemption will expire at the earliest of:

(a) the date the Share Buy-Back Mandate lapses;

(b) when the Company has bought such number of Shares as authorised by the Share Buy-Back Mandate;

and

(c) when the Company has decided to cease buying back Shares.

It should therefore be noted that approving the renewal of the Share Buy-Back Mandate will constitute a waiver

by the Shareholders in respect of their rights to a general offer at the required price from the Concert Party

Group and persons acting in concert with them (if any) who, as a result of the Company acquiring Shares under

the Share Buy-Back Mandate, would increase their aggregate voting rights in the Company by more than 1% in

any period of 6 months.

The voting rights of the Concert Party Group as at the Latest Practicable Date and in the event of Share

Buy-Backs up to the maximum of 10% of the total number of issued Shares as permitted by the Share

Buy-Back Mandate are set out in paragraph 2.10.4 of this Appendix II. The members of the Concert Party

Group, namely Mr Huang Shih-An, Mrs Huang Chuang Shueh-Ou, Mr Huang Chien-Hung and Ms Huang Yun

Ju, have undertaken to the Company not to acquire further Shares and not to sell any of their Shares so as to

maintain their shareholdings in the Company as at the Latest Practicable Date up to the date of the AGM in

which Shareholders approval will be sought by the Company for the renewal of the Share Buy-Back Mandate.



2.10.6 Advice to Shareholders

Shareholders should note that by approving the renewal of the Share Buy-Back Mandate, they are waiving their rights to receive a general offer by the Concert Party Group and persons acting in concert with them in the circumstances set out in paragraphs 2.10.4 and 2.10.5 above. Such a general offer, if required to be made and had not been exempted, would have to be made in cash or be accompanied by a cash alternative at not less than the highest price (excluding stamp duty and commission) paid by the Concert Party Group and persons acting in concert with them or by the Company for any Share within the preceding six (6) months.

Save as disclosed above, the Directors are not aware of any facts or factors which suggest or imply that any

particular person(s) and/or Shareholder(s) are, or may be regarded as, persons acting in concert such that their

respective interests in voting shares of the Company should or ought to be consolidated, and consequences

under the Take-over Code would ensue as a result of Share Buy-Back by the Company pursuant to the Share

Buy-Back Mandate.

Section 3(a) of Appendix 2 of the Take-over Code requires that the Ordinary Resolution to approve the renewal

of the Share Buy-Back Mandate be approved by a majority of those Shareholders present and voting at the

meeting on a poll who could not become obliged to make an offer under the Take-over Code as a result of

Share Buy-Backs. Accordingly, the Ordinary Resolution relating to the proposed renewal of the Share Buy-Back

Mandate set out in the Notice will be voted on by way of a poll.

Shareholders who are in doubt as to their obligations, if any, to make a mandatory take-over offer under the Take-over Code as a result of any purchase or acquisition of Shares by the Company should consult the SIC and/or their professional advisers at the earliest opportunity.

2.10.7 Form 2 submission to the SIC

Form 2 (Submission by directors and their concert parties pursuant to Appendix 2) is the prescribed form

to be submitted to the SIC by a director and persons acting in concert with him pursuant to the conditions

for exemption (see condition (v) of paragraph 2.10.5 above) from the requirement to make a take-over offer

under Rule 14 of the Take-over Code as a result of the buy-back of shares by a listed company under its share

buy-back mandate.

As at the Latest Practicable Date, each of Mr Huang Shih-An, Mrs Huang Chuang Shueh-Ou and Mr Huang

Chien-Hung has informed the Company that each of them will be submitting a Form 2 to the SIC within 7 days

after the passing of the Ordinary Resolution relating to the renewal of the Share Buy-Back Mandate.

2.10.8 Abstention from Voting

In compliance with the conditions of the exemption as set out in paragraph 2.10.5 above, Mr Huang Shih-An,

Mrs Huang Chuang Shueh-Ou, Mr Huang Chien-Hung and Ms Huang Yun Ju, persons acting in concert with

them and their associates (if any):

(a) will abstain from voting in respect of the Ordinary Resolution to approve the renewal of the Share

Buy-Back Mandate; and

(b) shall not accept nominations as proxies or otherwise for voting at the AGM on the renewal of the Share

Buy-Back Mandate unless the Shareholder who appoints them as proxies has given specifi c instructions

as to voting.

Mr Huang Shih-An, Mrs Huang Chuang Shueh-Ou and Mr Huang Chien-Hung are Directors and will abstain

from recommending the Shareholders to vote in favour of the Ordinary Resolution to approve the renewal of the

Share Buy-Back Mandate to be proposed at the AGM.



2.11 Shares bought by the Company in the previous 12 months

The Company has not made any Share Buy-Back in the 12 months preceding the Latest Practicable Date.

3. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTERESTS

The interests of the Directors and substantial shareholders in the Shares as at the Latest Practicable Date, as recorded

in the Register of Directors’ Shareholdings and the Register of Substantial Shareholders maintained under the

provisions of the Companies Act, were as follows:

Direct Interest Deemed InterestNo. of Shares %(1) No. of Shares %(1)

Directors

Huang Shih-An(2) 161,620,193 20.55 92,124,465 11.71


Huang Chien-Hung 12,397,620 1.58 – –

Ho Toon Bah – – – –

Tan Sek Khee – – – –

Lin Chien – – – –

Substantial Shareholders

Huang Shih-An(2) 161,620,193 20.55 92,124,465 11.71

Huang Chuang Shueh-Ou(2) 92,124,465 11.71 161,620,193 20.55 Notes:

(1) Based on the issued share capital of 786,444,154 Shares as at the Latest Practicable Date.

(2) Mr Huang Shih-An is deemed to be interested in the Shares held by his spouse, Mrs Huang Chuang Shueh-Ou and vice versa.

4. ANNUAL GENERAL MEETING

The AGM, notice of which is set out in the Annual Report of the Company, will be held on Friday, 25 April 2014 at The

Conference Room, 60 Kaki Bukit Place, Eunos Techpark #01-10, Singapore 415979 at 2.30 p.m. for the purpose of

considering and, if thought fi t, passing with or without modifi cations, the Ordinary Resolution relating to the proposed

renewal of the Share Buy-Back Mandate.

5. DIRECTORS’ RECOMMENDATION

Having considered, amongst others, the rationale and benefi t of the Share Buy-Back Mandate, the Directors (save for

Mr Huang Shih-An, Mrs Huang Chuang Shueh-Ou and Mr Huang Chien-Hung who had abstained from making any

recommendation) are of the opinion that the Share Buy-Back Mandate is in the interest of the Company. Accordingly,

they recommend that Shareholders vote in favour of Resolution 10, being the Ordinary Resolution relating to the

renewal of the Share Buy-Back Mandate, to be proposed at the AGM.



6. ACTION TO BE TAKEN BY SHAREHOLDERS

Shareholders who are unable to attend the AGM and who wish to appoint a proxy to attend on their behalf are

requested to complete, sign and return the Proxy Form enclosed with the Annual Report in accordance with the

instructions printed thereon as soon as possible and, in any event, so as to reach the registered offi ce of the Company

at 60 Kaki Bukit Place, Eunos Techpark #01-10, Singapore 415979 not less than 48 hours before the time appointed

for the AGM. The completion and lodgement of the Proxy Form by a Shareholder will not prevent him from attending

and voting at the AGM in person if he so wishes.

A Depositor shall not be regarded as a member of the Company entitled to attend the AGM and to speak and vote

thereat unless his name appears on the Depository Register at least 48 hours before the AGM.

7. DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors collectively and individually accept full responsibility for the accuracy of the information given in this

Appendix II and confi rm after making all reasonable enquiries that, to the best of their knowledge and belief, this

Appendix II constitutes full and true disclosure of all material facts about the proposed renewal of the Share Buy-Back

Mandate, the Company and its subsidiaries, and the Directors are not aware of any facts the omission of which would

make any statement in this Appendix II misleading.

Where information in this Appendix II has been extracted from published or otherwise publicly available sources or

obtained from a named source, the sole responsibility of the Directors has been to ensure that such information has

been accurately and correctly extracted from those sources and/or reproduced in this Appendix II in its proper form

and context.

8. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents may be inspected at the registered offi ce of the Company at 60 Kaki Bukit Place,

Eunos Techpark #01-10, Singapore 415979 during normal business hours from the date of this Appendix II up to and

including the date of the AGM:

(a) Memorandum and Articles of Association of the Company; and

(b) Annual report of the Company for its fi nancial year ended 31 December 2013.

Yours faithfully

for and on behalf of the Board of Directors of

Europtronic Group Ltd

Huang Chien-Hung

Chief Executive Offi cer

EUROPTRONIC GROUP LTD(Incorporated In the Republic of Singapore)

(Co. Reg. No: 200009775K)

PROXY FORM(Please see notes overleaf before completing this Form)

IMPORTANT:

1. For investors who have used their CPF monies to buy the Company’s

shares, this Report is forwarded to them at the request of their CPF

Approved Nominees and is sent solely FOR THEIR INFORMATION

ONLY.

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

ineffective for all intents and purposes if used or purported to be used

by them.

3. CPF investors who wish to vote should contact their CPF Approved

Nominees.

*I/We, (Name and NRIC/Passport Number)

of (Address)

being a member/members of EUROPTRONIC GROUP LTD (the “Company”), hereby appoint:

Name NRIC/Passport No. Proportion of Shareholdings

No. of Shares %

Address

and/or (delete as appropriate)

Name NRIC/Passport No. Proportion of Shareholdings

No. of Shares %

Address

or failing *him/her, the Chairman of the Annual General Meeting of the Company (the "Meeting"), as *my/our *proxy/proxies to

attend and vote for *me/us on *my/our behalf at the Meeting to be held at The Conference Room, 60 Kaki Bukit Place, Eunos

Techpark #01-10, Singapore 415979 on Friday, 25 April 2014 at 2.30 p.m. and at any adjournment thereof. *I/We direct

*my/our *proxy/proxies to vote for or against the Resolutions to be proposed at the Meeting as indicated hereunder. If no

specifi c direction as to voting is given or in the event of any other matter arising at the Meeting and at any adjournment

thereof, the *proxy/proxies will vote or abstain from voting at *his/their discretion. The authority herein includes the right to

demand or to join in demanding a poll and to vote on a poll.

(Please indicate your vote “For” or “Against” with a tick [] within the box provided.)

No. Resolutions relating to: For Against1 Directors’ Report and Audited Financial Statements for the year ended

31 December 2013

2 Re-election of Mrs Huang Chuang Shueh-Ou as a Director

3 Re-election of Mr Tan Sek Khee as a Director

4 Re-appointment of Mr Lin Chien as a Director

5 Approval of Directors’ fees amounting to US$80,000 (S$100,000)

6 Re-appointment of PricewaterhouseCoopers LLP as Auditors

7 Share Issue Mandate

8 Authority to Allot and Issue Shares under Europtronic Performance Share Scheme

9 Renewal of the Properties Disposal Mandate

10 Renewal of the Share Buy-Back Mandate

*Delete where inapplicable

Dated this day of 2014

Total number of Shares in: No. of Shares(a) CDP Register

(b) Register of Members

Signature of Shareholder(s)/

Common Seal of Corporate Shareholder

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

defi ned in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of Shares. If you have Shares

registered in your name in the Register of Members, you should insert that number of Shares. If you have Shares entered against your

name in the Depository Register and Shares registered in your name in the Register of Members, you should insert the aggregate

number of Shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no

number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the Shares held by you.

2. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend

and vote in his/her stead. A proxy need not be a member of the Company.

3. Where a member appoints two proxies, the appointments shall be invalid unless he/she specifi es the proportion of his/her shareholding

(expressed as a percentage of the whole) to be represented by each proxy.

4. The instrument appointing a proxy or proxies must be deposited at the registered offi ce of the Company at 60 Kaki Bukit Place, Eunos

Techpark #01-10, Singapore 415979, not less than forty-eight (48) hours before the time appointed for the Meeting.

5. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing.

Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its common seal or

under the hand of an offi cer or attorney duly authorised. Where the instrument appointing a proxy or proxies is executed by an attorney

on behalf of the appointor, the letter or power of attorney or a duly certifi ed copy thereof must be lodged with the instrument.

6. A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fi t to act

as its representative at the Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore.

General:

The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or

where the true intentions of the appointor are not ascertainable from the instructions of the appointor specifi ed in the instrument appointing a

proxy or proxies. In addition, in the case of Shares entered in the Depository Register, the Company may reject any instrument appointing a

proxy or proxies lodged if the member, being the appointor, is not shown to have Shares entered against his name in the Depository Register

as at forty-eight (48) hours before the time appointed for the Meeting, as certifi ed by The Central Depository (Pte) Limited to the Company.

Co. Reg. No.: 200009775K60 Kaki Bukit PlaceEunos Techpark #01-10Singapore 415979Tel.: (65) 6447 2037 Fax: (65) 6447 1582Website: www.europtronicgroup.comEnquiry: [email protected]

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