SM SUMMIT HOLDINGS LIMITED - listed companycenturion.listedcompany.com/misc/ar2010.pdfUnit 28, Slough Business Park, Slough Avenue Silverwater NSW 2128, Australia Tel: (612) 8756 4488

Annual Report 2010

ALL THE RIGHT

CONNECTIONS

Co. Reg. No.198401088W

45 Ubi Road 1, Summit Building

Singapore 408696

Tel: (65) 6745 3288

Fax: (65) 6748 9612

Email: [email protected]

Website: www.smsummit.com.sg

SM SUMMIT HOLDINGS LIMITED

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SAR1009002 SM Summit AR().indb 1SAR1009002 SM Summit AR().indb 1 3/31/2011 8:19:28 PM3/31/2011 8:19:28 PM

OUR MISSIONTo maintain leadership in Optical Storage Media manufacturing

by providing a one-stop manufacturing solution

and delivering the highest quality products and services to our customers,

in the most effi cient manner.

CONTENTS16 Corporate Information17 Corporate Governance Report26 Financial Report87 Statistics of Shareholdings89 Notice of Annual General Meeting Proxy Form

04 Chairman’s Statement06 Board of Directors09 Senior Management12 Operations Review14 Five-Year Financial Highlights15 Group Structure

OUR VISIONTo be a leading global provider of data storage media,

serving the needs of the Leisure, Entertainment

and Software Industries.

Singapore

SUMMIT CD MANUFACTURE PTE LTDSUMMIT HI-TECH PTE LTD45 Ubi Road 1, Summit Building

Singapore 408696

Tel: (65) 6745 3288

Fax: (65) 6748 9612



FAIRVISION PTE LTD3NGINE PTE LTD45 Ubi Road 1, Summit Building

Singapore 408696

Tel: (65) 6745 3288

Fax: (65) 6749 7728


Website: www.fairvision.com.sg

China

SHANGHAI HUADE PHOTOELECTRON SCIENCE & TECHNOLOGY CO. LTDB4, B5, 558 Gang Ye Road

Song Jiang District

Shanghai Post Code 201614, China

Tel: (8621) 5785 2857

Fax: (8621) 5785 3545


Website: www.smsummit.com.cn

Australia

SUMMIT TECHNOLOGY AUSTRALIA PTY LTDUnit 28, Slough Business Park, Slough Avenue

Silverwater NSW 2128, Australia

Tel: (612) 8756 4488

Fax: (612) 8719 8750


Website: www.summittechnology.com.au

SUMMIT PRINTING (AUSTRALIA) PTY LTDUnit 51, Slough Business Park, Slough Avenue


Tel: (612) 8756 4488

Fax: (612) 8756 4468


Website: www.summitprinting.com.au

Indonesia

PT DIGITAL MEDIA TECHNOLOGYMM2100 Industrial Town

Jl. Bali H1-1, Cibitung

Bekasi 17520, Indonesia

Tel: (6221) 8998 3333

Fax: (6221) 8998 3939


Website: www.dmtech.web.id

CORE SUBSIDIARIES AND ASSOCIATE


POSSIBILITIESENHANCING LIFE

As a leading one-stop manufacturer of the Optical

Storage Media industry, we are constantly providing fresh

innovative ideas and capabilities to realise our customers’

aspirations, offering unlimited possibilities in life. We have

also incorporated environmental-friendly practices in product

and business development to underscore our commitment

towards saving the earth.

PASSIONENHANCING LIFE

With over 30 years of unwavering

commitment towards meeting the

needs of customers, we pride ourselves

on delivering only premium products

and services of exceptional quality in

the most effi cient manner. To us, life’s

passion is about being able to enjoy

what you love best time and again.

SM SUMMIT HOLDINGS LIMITED4A N N U A L R E P O R T 2 0 1 0

When the Going Gets Tough,

the Tough Gets Going

DEAR SHAREHOLDERS,

On behalf of the Board of Directors, I am pleased to

present the Annual Report of SM Summit Holdings Limited

(“the Group”) for the financial year ended 31 December

2010.

FY2010 was a challenging year for the Group despite

the overall global economic recovery. The entertainment

industry continued to be negatively impacted by the

adverse retail environment for DVDs and Compact Discs as

the industry faced increasing competition and changes in

consumption patterns. Demand for optical disc products fell

as our customers became more conservative in managing

their orders and inventory at the retail stores when releasing

their titles. As such, our revenue fell by 11% from S$42.9

million in FY2009 to S$38.3 million in FY2010.

However, I am pleased to announce that the Group has

dug deep and our cost management efforts have yielded

positive results. One of the actions we carried out was a

re-structuring exercise wherein we relocated our machinery

from Singapore and Australia to Indonesia. These efforts

have helped to reduce our labour and factory overheads

and through such cost containment measures, we were

able to improve our gross profit by 7% from S$8.7 million

in 2009 to S$9.3 million in 2010 in spite of the drop in

revenue.

Other income fell by approximately S$1.3 million primarily

due to lower exchange gains for the year. On the other

hand, depreciation was reduced by S$0.8 million as some

assets were already fully depreciated. In line with the lower

CHAIRMAN’S STATEMENT

SM SUMMIT HOLDINGS LIMITED 5A N N U A L R E P O R T 2 0 1 0


sales volume, distribution costs also fell by S$1.1 million

compared to FY2009 as selling expenses such as freight

and marketing salaries were reduced. With an income tax

credit of about S$90,000, the Group successfully swung

from S$0.4 million net loss in FY2009 to net profit of S$0.6

million in FY2010.

CONSOLIDATING CAPABILITIES, OPTIMISING

EFFICIENCY

With global economic growth seen slowing down and

inflationary pressures building up, the macro environment

going forward continues to be uncertain. We foresee that

demand for optical disc manufacturing will likely remain

weak and given the uptrend in the price of polycarbonate,

a key raw material for our products, the Group’s priority

for the coming year will still be cost management through

consolidation of capabilities and effective utilization of

resources to match demand, so as to achieve optimum

efficiency.

In fact, we will continue to focus on our Indonesian

production base as our current capacity and size is still

small. By growing this segment, we expect to gain a

bigger market share while keeping costs down at the

same time. In addition, we will also be exploring new

technologies and cultivating new revenue streams by

working with strategic partners in the areas of BluRay Disc

and EcoDisc manufacturing.

NEW BUSINESS OPPORTUNITY

As the outlook for the optical disc industry remains

challenging, we saw the need to explore alternative

business opportunities to generate new stable streams of

revenue and profits for the Group.

In line with the Group’s diversification plans, we entered

into term sheets to acquire 100% interest in Centurion

Dormitory (Westlite) Pte Ltd (“Westlite”), 45% interest in Lian

Beng Centurion (Mandai) Pte Ltd (“JVCo”) and 75% interest

in JYC-NCL Pte Ltd (“JYC-NCL”), collectively referred to

as the “Proposed Transactions” on 13 January 2011. Both

Westlite and JYC-NCL have existing profitable businesses

in the ownership, management and operation of workers

dormitories and temporary workers’ accommodation. On a

combined basis, the dormitories managed by Westlite and

JYC-NCL can house more than 14,000 workers. JVCo, on

the other hand, is a company which has a piece of land in

Mandai which, subject to the necessary approvals, can be

developed for the operation of workers’ dormitories with a

capacity of at least 4,000 beds.

This will allow the Group to diversify itself from its current

business where the operating environment for optical disc

manufacturing remains difficult. The acquisition of existing

profitable businesses with healthy operating cashflows

will also strengthen the Group’s fundamentals. While

ambitious in nature, the Proposed Transactions will help

the Group make a meaningful foray into this new sector

with foreseeable growth potential.

At the time of writing this message, we are still in the

process of carrying out our due diligence on Westlite,

JVCo and JYC-NCL and are in discussions and enquiring

with the respective vendors on certain matters arising

from the due diligence that are crucial to the Proposed

Transactions. We are also in discussions and negotiations

with the respective vendors of Westlite, JVCo and JYC-

NCL on the terms of the definitive sale and purchase

agreements to be entered into in relation to the Proposed

Transactions.

The Proposed Transactions will require, amongst

others, the approval of shareholders at an Extraordinary

General Meeting to be convened. We will make further

announcement of any material developments on the

Proposed Transactions at the appropriate time. As these

transactions are complex, I must inform shareholders

that there is no certainty or assurance that the Definitive

Agreements will be entered into or that Proposed

Transactions will be proceeded with.

DIVIDEND

To reward our shareholders for their support during

these challenging times, the Board of Directors has

recommended a first and final dividend of 0.5 cent per

ordinary share for FY2010.

APPRECIATION AND ACKNOWLEDGEMENTS

Finally, on behalf of the Board of Directors, I would like

to express my gratitude to the management team and for

their hard work during these trying times. I would also like

to take this opportunity to thank all shareholders, business

associates, partners and customers for their staunch

support over the years. Lastly, I would also like to thank

the Board members for the guidance that they have given

to the Group as we move on to a new chapter.

Lee Kerk Chong

Chairman

25 March 2011


MR. LEE KERK CHONGChairman

Chief Executive Offi cer (CEO)

MR. KONG CHEE MINExecutive Director

Group Finance Director

MR. LEE KERK CHONG was appointed to the Board on 31 March 1984 and

was last re-elected a Director on 28 April 2009. He is a member of the Nominating

Committee.

With a career in the media storage industry spanning over 36 years, Mr. Lee brings

vast entrepreneurial experience and strong management skills to the Summit Group.

As founder of the Group, Mr. Lee has been instrumental in its growth, developing the

Group from a company with a single rented factory in Singapore with 10 employees

to one with a network of 4 production facilities in Singapore, Australia, Indonesia and

China today.

Mr. Lee set up Summit Audio Enterprise in 1981 to manufacture cassette tapes and

in 1991, he capitalised on the growth in optical disc storage by advancing Summit

from a manufacturer of cassette tapes to compact disc and digital versatile disc

manufacturing. A hands-on leader, he remains active in every aspect of the Group’s

operations, on top of overseeing its strategic development and growth.

MR. KONG CHEE MIN was appointed to the Board on 28 March 2000 and was last

re-elected a Director on 28 April 2010.

As the Group’s Finance Director, Mr. Kong leads the Group’s finance, accounting,

information technology, administration and corporate management functions and has

held his current appointment since 2000. Apart from his finance and administrative

duties, he also assists the Managing Director (CEO) to oversee and manage the

Group’s business operations, development and growth.

Mr. Kong is a Certified Public Accountant with over 20 years of finance and corporate

management experience. He worked in an American MNC as well as an international

public accounting firm before joining the Group in 1996. Mr. Kong graduated with a

Bachelor of Accountancy degree from Nanyang Technological University. He is also

a member of the Institute of Certified Public Accountants of Singapore.

BOARD OF DIRECTORS



MR. CHANDRA MOHAN S/O RETHNAMIndependent Non-Executive Director

MR. GN HIANG MENGIndependent Non-Executive Director

MR. GN HIANG MENG was appointed as an Independent Non-Executive Director of

the Company on 17 May 2007 and was last re-elected a Director on 28 April 2010.

He is the Chairman of both the Audit Committee and Nominating Committee and also

a member of the Remuneration Committee.

He was with the United Overseas Bank Group for 28 years and prior to his resignation

in 2001 was the Senior Executive Vice-President in charge of investment banking

and stockbroking businesses. He was the Deputy President of UOL Group prior to

his retirement in 2007. Mr. Gn graduated with a Bachelor of Business Administration

(Honours) degree from the University of Singapore. He is currently a Director of Koh

Brothers Group Limited.

MR. CHANDRA MOHAN S/O RETHNAM was appointed as an Independent Non-

Executive Director of the Company on 17 May 2007 and was last re-elected a Director

on 28 April 2009. He is the Chairman of the Remuneration Committee and a member

of both the Audit Committee and Nominating Committee.

He is presently an Advocate and Solicitor and a Partner of a law firm in Singapore.

Prior to that, he was a lecturer with the Faculty of Law at the National University of

Singapore, in which he joined in 1987. On top of his experience in law, he is also

a Fellow of the Singapore Institute of Arbitrators and the UK Chartered Institute of

Arbitrators. His academic qualifications include a Bachelor of Law (Honours) degree

from the University of Singapore and a Master of Law degree from the University of

Cambridge.


MS. MAK BANG MUINon-Executive Director

MR. TANG KAY HWANon-Executive Director

MS. MAK BANG MUI was appointed as a Non-Executive Director of the Company on

17 May 2007 and was last re-elected a Director on 28 April 2008. She is a member

of the Audit Committee.

Currently the Director of Centurion Investment Management Pte Ltd, she is responsible

for providing advice on the management of funds in the organisation. She first began

her career as an equity analyst in 1986, focusing particularly on Asian markets,

including Singapore, Malaysia and Indonesia. Prior to her present position, she was

with UOB Kay Hian Pte Ltd as a sell-side analyst. Apart from these professional

employments, she had also accumulated a wealth of experience during her previous

tenure in other stockbroking companies. Ms. Mak graduated from the National

University of Singapore in 1986 and is a member of the Institute of Certified Public

Accountants of Singapore.

MR. TANG KAY HWA was appointed as a Non-Executive Director of the Company

on 17 May 2007 and was last re-elected a Director on 28 April 2008. He is a member

of the Remuneration Committee.

Mr Tang is currently the Chief Executive Officer of Centurion Investment Management

Limited which is an Asian private-equity investment company with offices in Singapore,

Hong Kong and Shanghai. Prior to joining Centurion, he was the Deputy Managing

Director of UOB Kay Hian (Hong Kong) Ltd. He brings with him a wealth of financial

experience having spent more than 20 years in stockbroking and equity capital markets

in Hong Kong. Mr. Tang holds a Bachelor’s degree in Business Administration.

BOARD OF DIRECTORS


MR. LEONG SIEW FATT

Group Technical and Operations Director

Mr. Leong started as an engineer in the Group for 4 years

before being promoted to the position of Group Technical

Manager in 1997. He then took up the appointment for

his current role in 2001, and now oversees the Group’s

technical and optical disc manufacturing operations. Mr.

Leong has extensive technical and factory operations

experience spanning over 26 years which includes working

with the Singapore Armed Forces and several private

organisations. In addition to his role, Mr. Leong also

oversees our China associated company’s operations

as General Manager. He graduated with a Bachelor of

Engineering Management degree from the University of

Western Sydney.

MR. YEO BOON HING DAVID

Group Regional Sales & Marketing Director

In his current role, Mr. Yeo is responsible for the regional

sales and marketing function of the Group. He has a wealth

of sales and marketing experience and management

experience in both local and multi-national organisations.

Mr. Yeo first joined Summit CD Manufacture Pte Ltd, a

Singapore subsidiary of the Group, as Sales and Marketing

Director in 1997.

Besides his role as Regional Sales & Marketing Director

at Group level, Mr. Yeo is presently the Chief Executive

Officer of Summit CD Manufacture Pte Ltd overseeing its

local operations. Academically, Mr. Yeo holds a Bachelor

of Science degree with double majors in Finance and

Marketing.

MS. LEE GEOK ING JANICE

Group HR & Admin Manager

Ms. Lee was first appointed to the Board on 11 August

1994. She has resigned from the Board on 18 May 2007

and remains as Group Human Resource and Admin

Manager. She is the sister of Mr. Lee Kerk Chong and

has been with the Group since its incorporation. As HR

& Admin manager, she currently oversees the Group’s

human resource development, administration, security

and facilities management. Ms. Lee is equipped with

more than 26 years of accounting, human resource and

administrative experience, and was an external auditor

with a local public accounting firm and had worked in a

private company overseeing its finance, administration

and human resource matters before becoming part of

the Group.

MR. SEK CHONG POH FRANCIS

CEO of Summit Technology Australia Pty Ltd

Mr. Sek is based in Australia, managing the day-to-day

operations of the Group’s subsidiary in Australia, Summit

Technology Australia Pty Ltd. He first joined the Group in

November 1988 as Regional Marketing Manager and was

posted to Australia for the establishment of the subsidiary

there in 1995. Mr. Sek brings with him over 26 years of

marketing and operations experience. Prior to joining

the group, Mr. Sek worked in a private organisation as

Assistant Manager, a position he held for several years.

MR. SONY TAN

CEO of PT Digital Media Technology

Mr. Tan first joined the Group in January 2001 as a

Finance and Operations Manager. He was posted to

Indonesia to assist in the Group’s expansion goals.

Initially, he was appointed to manage PT Digital Media

Technology (“DMTech”), then an investment for the Group,

after which he was promoted to become the Director of

Finance and Operations. After becoming CEO in 2005, Mr.

Tan is responsible for the strategic planning, expansion

and day-to-day operations of DMTech.

Mr. Tan is armed with 23 years of experience in

accounting, auditing, corporate restructuring, factory

operations and management, having worked for various

local and multi-national companies in Indonesia. Prior

to joining the Group, he was a Division Head of Internal

Audit at PT Bank Tiara Asia, a public-listed company. Mr.

Tan graduated from the University of North Sumatera and

is a registered accountant in Indonesia. He also holds

a Certified Management Accountant degree from the

Institute of Certified Management Accountant Australia and

Certified Human Resource Professional from University of

Atmajaya Jakarta. Mr. Tan is registered as a member of

the Indonesian Institute of Corporate Directorship (IICD).

SENIOR MANAGEMENT


ENHANCING LIFE

PROGRESS

We are in the business of improving lives.

Our data storage solutions make progress

possible in the leisure, entertainment and

software industries. Providing the essentials for

our customers’ lives, we form the fundamentals

of most technological solutions in their daily

lives.


SM SUMMIT is one of the leading manufacturers and

service providers of optical storage media in Asia Pacifi c Region.

A public listed company that has evolved through innovation

and commitment for 30 years.

Serving the audio, video, multimedia and the IT industries,

SM Summit is committed to deliver world class services

and the highest quality of compact disc (CD) and digital versatile disc (DVD).

The Group has over 500 staff across Singapore, Australia,

Indonesia, Japan, and China to serve its prominent diversifi ed clients

in the leisure, entertainment and IT industries.


Being one of the leading manufacturers and service

provider of optical storage media in the Asia Pacific

Region, the Group is focused on delivering world class

services and the highest quality of optical disc products.

ENHANCING EFFICIENCY

In spite of the difficult operating environment and weak

demand faced by our customers, compounded by rising

prices of raw materials, the Group remained steadfast in

its commitment to deliver high quality products at a good

value. To that end, the Group’s key focus for the year was

to rationalise the utilisation of resources and consolidate

capacity pegged to demand, as well as improve efficiency

to optimise operation. By doing so, the Group remained

lean and was able to achieve overall higher margins that

propped up the Group’s bottom line despite the drop in

revenue.

During the year, the Group completed its restructuring

exercise carried out in its Australian subsidiaries and

achieved substantial savings by relocating more production

to its Indonesian base.

Through the Group’s efficient cost-cutting measures,

selling expenses such as freight and marketing salaries

also fell by a greater proportion as compared to the decline

in sales volume. Selling expenses were down by 29% as

opposed to 11% pull back in revenue. Administrative cost

also fell by 7% as the Group continued to rationalise its

manpower needs.

Through the Group’s prudent management of cash flow,

the Group managed to generate S$3 million in cash flow

from its operating activities. Resultantly, after taking into

account the payment of dividends to shareholders and

repayment of bank borrowings upon due, the Group’s

overall cash position improved by approximately S$1 million

over the previous financial year.

COMMITTING TO SECURITY AND QUALITY

However, the Group’s efforts to manage costs did not

deter its steadfast commitment to security and quality. The

production plants under the Group continue to be certified

as compliant under the anti-piracy and security programs

of the Content Delivery and Storage Association (“CDSA”).

This underscores the Group’s dedication towards

OPERATIONS REVIEW



intellectual property rights protection. In addition, the

Group’s staunch adherence towards quality standards and

environmental protection is also displayed in its ISO9001

and ISO14001 certifications, which endorses the Group’s

quality and environmental management systems.

It is this perseverance towards stringent environmental

and quality standards that has built up the Group’s sound

reputation in the region, sustained its strong relationship

with its customers and differentiated the Group from

its competitors. The Group’s brand name continues to

be associated with reliability and quality which gives

customers the confidence that their intellectual property

assets are being well-handled and protected.

FOSTERING NEW GROWTH

The Group recognises that the optical media storage

industry is unlikely to grow by leaps and bounds going

forward. In order to enhance shareholder value, the

management team is constantly been on the lookout for

good business opportunities that the Group can capitalise

on to diversify from its traditional business.

As a result, the Group has recently entered into term

sheets to acquire companies in the business of owning,

managing and operating workers’ dormitories and

temporary workers’ accommodation. Westlite owns

and operates a workers dormitory complex that can

accommodate over 5,000 workers. JYC-NCL on the

other hand, manages three primary dormitories that can

accommodate a total of 9,000 workers. JVCo is not yet

operational, but has a piece of land in Mandai which

offers the Group an opportunity for further expansion of

the dormitory business. Upon obtaining the necessary

approvals, a workers’ dormitory can be built on this piece

of land in Mandai, increasing the Group’s capacity by a

further 4,000 beds.

On completion of this series of Proposed Transactions, the

Group will be able to immediately have on hand a portfolio

of dormitories with a capacity exceeding 14,000 with the

potential to reach 18,000 and more. With such a sizeable

capacity, the Group will be able venture into this new

business in a meaningful way by gaining a strong foothold

right from the start. The operational assets are already

profitable and generating positive cash flow. Hence, the

addition of these assets will also improve profitability and

strengthen the Group’s balance sheet.

REMAINING RESILIENT AND WELL-ROOTED

While the Group is excited with the prospects of its

impending new business, the Group will not lose sight

of its roots. The Group will continue to explore ways

to further enhance its existing operations and maximise

utilisation of resources to further increase efficiency and

productivity. Keeping operations lean and managing cash

flow prudently will continue to keep the Group’s financial

position strong, allowing it to capitalise on opportunities

when they arise.


2010

2010

0.19

13.03

2009

2009

(0.12)

2008

2008

(1.26)

2007

2007

3.71

2006

2006

1.13

19.9716.6916.72

13.36

2010

2010

38,326

541

2009

2009

42,940

(180)

2008

2008

58,865

(5,029)

2007

2007

83,353

12,834

2006

2006

79,306

4,442

TURNOVER($’000)

PROFIT/(LOSS) BEFORE TAX ($’000)

EARNINGS PER SHARE (CENTS)

NET ASSETS PER SHARE (CENTS)

FIVE-YEAR FINANCIAL HIGHLIGHTS


SINGAPORE

AUSTRALIA

INDONESIA

CHINA

SUMMIT CD MANUFACTURE PTE LTD

SUMMIT TECHNOLOGY AUSTRALIA PTY LTD

GATE COSMOS INVESTMENTS LTD

SM SUMMIT INVESTMENT PTE LTD

SUMMIT HI-TECH PTE LTD

SUMMIT TECHNOLOGY JAPAN K. K

SUMMIT PRINTING (AUSTRALIA) PTY LTD

PT DIGITAL MEDIA TECHNOLOGY (ULTIMATE HOLDING)

ADVANCE TECHNOLOGY INVESTMENT LTD

SHANGHAI HUADE PHOTOELECTRON SCIENCE & TECHNOLOGY CO. LTD

FAIRVISION PTE LTD

100%

100%

100%

100%

100%

100%

100%

100%

100%

49%

70%

SM SUMMIT INVESTMENT PTE LTD100%

3NGINE PTE LTD100%

SM SUMMIT HOLDINGS LIMITEDcovering core subsidiaries and associate

GROUP STRUCTURE

BOARD OF DIRECTORS

Executive:

Lee Kerk Chong (Chairman/CEO)

Kong Chee Min

Non-Executive:

Mak Bang Mui

Tang Kay Hwa

Independent Non-Executive:

Chandra Mohan s/o Rethnam

Gn Hiang Meng

AUDIT COMMITTEE

Gn Hiang Meng (Chairman)


Mak Bang Mui

NOMINATING COMMITTEE



Lee Kerk Chong

REMUNERATION COMMITTEE

Chandra Mohan s/o Rethnam (Chairman)

Gn Hiang Meng

Tang Kay Hwa

COMPANY SECRETARIES

Hazel Chia Luang Chew

Juliana Tan Beng Hwee

REGISTERED OFFICE

45 Ubi Road 1

Summit Building

Singapore 408696

Tel : (65) 6745 3288

Fax : (65) 6748 9612

Email : [email protected]

SHARE REGISTRARS

B.A.C.S. Private Limited

63 Cantonment Road

Singapore 089758

Tel : (65) 6593 4848

Fax : (65) 6593 4847

AUDITORS

PricewaterhouseCoopers LLP

8 Cross Street #17-00

PWC Building

Singapore 048424

AUDIT PARTNER-IN-CHARGE

Chua Lay See

(Date of appointment:

For Financial year beginning 01 January 2008)

CORPORATE INFORMATION




CORPORATE GOVERNANCE REPORT

SM Summit Holdings Limited (the “Company”) is committed to achieve good standards of corporate governance and

business conduct in order to protect the interest of shareholders and has adopted the principles and guidelines as set

out in the Code of Corporate Governance 2005 (the “Code”). The Company strives to subscribe to the principles and

guidelines as set out in the Code where applicable, feasible and practical to the Group unless otherwise specified.

BOARD OF DIRECTORS (THE “BOARD”)

The Board comprises 6 members of whom two are Executive Directors, two are Non-Executive Directors and two are

Independent Non-Executive Directors.

The Board oversees the businesses and affairs of the Group and the Company. In addition to its statutory responsibilities,

the Board approves strategic plans, key operational initiatives, major investments and financing decisions and reviews

the financial performance of the Group. The Board is supported by the Audit Committee, Nominating Committee and

Remuneration Committee.

The Board met 5 times during the financial year under review. The Company’s Articles of Association provide for

meetings to be held via telephone conference, video conferencing or other similar means of communications.

The Non-Executive Directors constructively challenge Management and assist in the development of proposals on

strategy.

The Directors are provided with sufficient information including information on financial performance of the Group on a

quarterly and on-going basis and have separate and independent access to Management of the Group. The Chairman/

Chief Executive Officer (“CEO”) also submits a report to the Board on a quarterly basis highlighting the performance,

business conditions and outlook of the Group.

The Directors have separate and independent access to the Company Secretary. The Company Secretary attends Board

and Board Committee meetings and provides advice, secretarial support and assistance to the Board and ensures

adherence to the Board procedures and relevant rules and regulations applicable to the Company.

The Directors may seek independent professional advice to fulfill their duties and such cost will be borne by the

Company.

The Company has in place orientation programmes for newly appointed Directors to ensure that they are familiar with

the Group structure, and the Company’s business and operations. Newly appointed Director is expected to participate

in an orientation programme which includes meeting with the Chairman/CEO and Finance Director to obtain an

understanding of the affairs of the Group’s business.

The Company also has a training budget for its Directors to attend courses and seminars which is utilised on a need

basis. The Directors are provided with updates on changes in the relevant laws and regulations, where appropriate,

to enable them to make well-informed decisions and to discharge their duties responsibly.

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

Group’s operations.

As a group, the Board brings with them a broad range of expertise and experience in areas such as accounting, finance,

legal, business and management experience, industry knowledge, strategic planning and knowledge necessary to meet

the Company’s objectives. Profile of each Director is set out on pages 6 to 8.




Currently, the roles of the Group’s Executive Chairman and CEO are not separated. The Board is of the view that it

is not practical and cost effective to have such a division in view of the present business and scope of operations of

the Group.

The Group’s Executive Chairman and CEO, Mr Lee Kerk Chong, is also the founder of the Group. He has extensive

experience in the media storage industry and is pivotal to the development and growth of the Company’s core

business. The Chairman, amongst his other duties, schedules and chairs Board meetings and, with the assistance

of the Company Secretary and Executive Director, prepares Board agenda as well as controls the quality, quantity

and timeliness flow of information to the Board. The Chairman is also responsible for the workings of the Board and

ensures the integrity and effectiveness of the governance process of the Board. In carrying out his executive duties

and responsibilities for the Company’s operations and business, the Chairman is assisted by the various functional

directors and senior management.

The Chairman’s remuneration is reviewed annually by the Remuneration Committee. The Audit Committee, Nominating

Committee and Remuneration Committee comprise a majority of Independent Non-Executive Directors of the Company.

As such, the Board believes that there are adequate safeguards in place against an uneven concentration of power

and authority in a single individual.

BOARD COMMITTEES

To assist the Board in the execution of its duties, the Board has delegated specific functions to the following Board

Committees:

AUDIT COMMITTEE (“AC”)

The AC comprises 3 Non-Executive Directors, a majority of whom are Independent Non-Executive Directors, as

follows:

Gn Hiang Meng (Chairman) Independent Non-Executive Director

Chandra Mohan s/o Rethnam Independent Non-Executive Director

Mak Bang Mui Non-Executive Director

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

and experience to discharge the AC’s functions.

The AC met 4 times during the financial year, and as and when deemed necessary to carry out its functions.

The AC’s primary function is to provide assistance to the Board in fulfilling its responsibility relating to corporate

accounting and auditing, the Company’s financial reporting practices, the quality and integrity of the Company’s financial

reports and the Company’s internal control systems including financial, operational and compliance controls, and risk

management established by Management and the Board.

The AC also performs the following functions:

• reviews the audit plan and scope of audit examination of the external auditors;

• evaluates the overall effectiveness of both the internal and external audits through regular meetings with the

internal and external auditors;

• reviews the adequacy of the internal audit function;




• determines that no restrictions are being placed by Management upon the work of the internal and external

auditors;

• evaluates the adequacy of the internal control systems of the Group by reviewing written reports from the internal

and external auditors, and Management’s responses and actions to address any deficiencies noted;

• evaluates the adherence to the Group’s administrative, operating and internal accounting controls;

• reviews the quarterly and full-year financial statements and announcements before submission to the Board for

approval;

• reviews interested person transactions in accordance with the requirements of the Listing Rules of the Singapore

Exchange Securities Trading Limited (SGX-ST);

• reviews all non-audit services provided by the external auditors to determine if the provision of such services

would affect the independence of the external auditors;

• reviews and recommends the appointment or re-appointment of the external auditors; and

• considers other matters as requested by the Board.

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

discretion to invite any Executive Director or executive officer to attend its meetings, as well as reasonable resources

to enable it to discharge its functions properly.

Annually, the AC meets with the internal and external auditors without the presence of Management. This is to review

the adequacy of audit arrangements, with particular emphasis on the scope and quality of their audits, the independence

and objectivity of the external auditors and the observations of the auditors.

The Company has in place a whistle-blowing programme where employees of the Company may, in confidence, report

possible improprieties which may cause financial 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.

The AC has reviewed the non-audit services provided by the external auditors, Messrs PricewaterhouseCoopers LLP,

and is of the opinion that the provision of such services does not affect their independence.

The AC had recommended the re-appointment of Messrs PricewaterhouseCoopers LLP as the Company’s external

auditors at the forthcoming Annual General Meeting (“AGM”).

INTERNAL CONTROLS

The Board believes that, in the absence of any evidence to the contrary, the system of internal control maintained by

the Group, which was in place throughout the year and up to the date of this report, is adequate to meet the needs

of the Group in its current business environment.

The Group’s external auditors have, in the course of their statutory audit, carried out a review of the Group’s material

internal control but not for the purpose of expressing an opinion on the effectiveness of the internal control. Material

non-compliance and internal control weaknesses noted during their audit and the auditors’ recommendations are

reported to the AC.




The Group’s internal auditor also carries out major internal control checks and compliance review as instructed by

the AC.

The AC will review the external and internal auditors’ reports and ensure that there are adequate internal controls in

the Group.

INTERNAL AUDIT

The Company has out-sourced its internal audit function to BDO Consultants Pte Ltd. The internal auditor reports

directly to the Chairman of the AC and present their reports and audit findings and recommendations to the AC.

The AC reviews the internal auditor’s reports on the state of the Group’s internal controls on an annual basis. The AC

also reviews and approves the annual internal audit plans.

The AC is satisfied that the internal auditor has the necessary resources to adequately perform its functions. The

internal auditor conducts audits based on the BDO Internal Audit Methodology which is consistent with the Standards

for the Professional Practice of Internal Auditing set by the Institute of Internal Auditors. To ensure the adequacy of

the internal audit function, the AC reviews, on an annual basis, the internal auditor’s activities.

ACCOUNTABILITY AND AUDIT

The Board is accountable to the shareholders, while Management is accountable to the Board.

Directors are provided with adequate and timely information prior to Board meetings and on an on-going basis, and

have separate and independent access to the Company’s senior management.

The Board provides shareholders with a balanced and understandable explanation and analysis of the Company’s

performance on a quarterly basis in the Group’s quarterly and full-year financial results announcements.

NOMINATING COMMITTEE (“NC”)

The NC, regulated by a set of written terms of reference, comprises 3 members, a majority of whom are Independent

Non-Executive Directors, as follows:

Gn Hiang Meng (Chairman) Independent Non-Executive Director

Chandra Mohan s/o Rethnam Independent Non-Executive Director

Lee Kerk Chong Executive Chairman/CEO

The NC is chaired by Gn Hiang Meng, an Independent Non-Executive Director not associated with any substantial

shareholder.

The NC reviews and ensures that there is an appropriate composition of members of the Board with suitably diverse

backgrounds to meet the Group’s operational and business requirements.

The NC is responsible for making recommendations to the Board on all appointments and re-appointment of Directors.

The NC meets at least once annually and as and when deemed necessary.




The principle responsibilities of the NC are summarised below:

• assesses the effectiveness of the Board as a whole and the contribution of each Director;

• reviews and nominates newly appointed Directors and Directors retiring by rotation, having regard to their

contributions and performance, for re-election at each AGM;

• reviews and recommends all new appointments to the Board;

• determines on an annual basis the independence of each Director;

• decides whether a Director is able to and has been adequately carrying out his or her duties as a Director of

the Company, particularly when the Director has multiple Board representations; and

• identifies gaps in the mix of skills, experience and other qualities required in an effective Board so as to better

nominate or recommend suitable candidates to fill the gaps.

In accordance with the Company’s Articles of Association, each Director retires at least once in every three years by

rotation and all newly appointed Directors retire at the next AGM following their appointments. The retiring Directors

are eligible to offer themselves for re-election.

Where a vacancy arises, the NC will consider potential candidate for appointment based on the selection criteria

determined in consultation with the Board and after taking into consideration the qualification and experience of such

candidate, his/her ability to increase the effectiveness of the Board and to add value to the Group’s business. The NC

will recommend the appropriate candidate for the consideration by the Board.

The NC had reviewed the independence of each Director for FY2010 in accordance with the Code’s definition of

independence and is satisfied that at least one-third of the Board comprises Independent Non-Executive Directors.

The NC had recommended the re-appointment of the following Directors who will be retiring at the forthcoming

AGM:

(i) Mak Bang Mui

(ii) Tang Kay Hwa

The Board has accepted the NC’s recommendation and accordingly, the above-named Directors will be offering

themselves for re-election.

The NC had adopted a formal process to evaluate the performance of the Board as a whole. A Board performance

evaluation was carried out to assess and evaluate the Board’s composition, size and expertise. Quantitative financial

criteria such as return on equity (ROE) and return on assets (ROA) were also considered in the evaluation.




REMUNERATION COMMITTEE (“RC”)

The RC, regulated by a set of written terms of reference, comprises 3 Non-Executive Directors, a majority of whom

are Independent Non-Executive Directors, as follows:

Chandra Mohan s/o Rethnam (Chairman) Independent Non-Executive Director

Gn Hiang Meng Independent Non-Executive Director

Tang Kay Hwa Non-Executive Director

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

compensation. The RC also has access to external professional advice on remuneration and human resource related

matters, if required.

The RC reviews and recommends to the Board a framework of remuneration as well as determines the remuneration

package and terms of employment for each Director and employees who are immediate family members of a Director

or controlling shareholder of the Group.

The RC also reviews the remuneration policies and packages for senior management on an annual basis. The review

covers all aspects of remuneration, including but not limited to Directors’ fees, salaries, allowances, bonuses, and

benefits-in-kind. The RC has access to the Company’s internal human resource department to assist in their review.

The RC’s recommendations are submitted for endorsement by the entire Board. Annual reviews of the compensation

of Directors are also carried out by the RC to ensure that the remuneration of the Directors and senior management

commensurate with their performance and value-add to the Group, giving due regard to the financial and commercial

health and business needs of the Group. The remuneration of the Chairman/CEO (along with that of other senior

management) is also reviewed annually by the RC and the Board.

The remuneration package of the Chairman/CEO, includes a variable bonus which is tied to individual performance

as well as the Company’s performance. The remuneration for the Executive Director(s) and senior management staff

comprises a fixed basic salary plus other variable component in the form of annual performance bonus tied to individual

performance as well as the Company’s performance

Directors’ fees payable to all the Directors are set in accordance within a remuneration framework comprising a basic

fee and incremental fixed fee for the level of responsibilities such as chairing Board Committee and attendance at

Board and Board Committee meetings.

The RC has recommended to the Board an amount of S$157,000 as Directors’ fees for the year ended 31 December

2010. The Board will table this recommendation at the forthcoming AGM for shareholders’ approval.

There is an employee of the Group (Lee Geok Ing) who is the sister of Lee Kerk Chong, Chairman/CEO and substantial

shareholder of the Company. For FY2010, the remuneration of this employee did not exceed S$150,000.

The existing service contracts for Executive Directors are for a period of 3 years and thereafter will be automatically

renewed annually. New service contracts or renewals, if any, will be subject to RC’s review to ensure that the terms

are fair and for a reasonable period.

The Company does not have any long-term incentive or share option scheme in place.




DIRECTORS’ REMUNERATION

The remuneration paid for FY2010 is shown below:

Director’s

fees (%)

Salary

(%)

Bonus

(%)

Others Benefits

(%)

Total

(%)

Name

S$250,000 to below S$500,000

Lee Kerk Chong 4 82 7 7 100

Below S$250,000

Kong Chee Min 4 73 3 20 100

Chandra Mohan s/o Rethnam 100 0 0 0 100

Gn Hiang Meng 100 0 0 0 100

Mak Beng Mui 100 0 0 0 100

Tang Kay Hwa 100 0 0 0 100

EMPLOYEES’ REMUNERATION

The annual remuneration paid to each of the top five executives (who are not Directors of the Company) is set out

below:

Salary (%) Bonus (%) Others Benefits (%) Total (%)

Name

S$250,000 to below S$500,000

Sek Chong Poh Francis 89 0 11 100

Below S$250,000

Lee Geok Ing Janice 83 0 17 100

Leong Siew Fatt 76 4 20 100

Sony Tan 60 29 11 100

Yeo Boon Hing David 71 4 25 100

COMMUNICATION WITH SHAREHOLDERS

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

the Board ensures that shareholders are equally informed of all major developments within the Group on a timely

basis.

Financial results and other material information are communicated to shareholders on a timely basis through:

• Annual Report and Notice of the AGM are prepared annually and issued to all shareholders;

• financial statements/results for the respective quarter and full-year which are released through SGXNET in

accordance with the requirements of the SGX-ST’s Listing Rules;




• notices of and explanatory memoranda for AGMs and extraordinary general meetings are also advertised in the

newspapers and also made via SGXNet;

• announcements relating to major developments of the Group are made via SGXNET in accordance with the

requirements of the SGX-ST’s Listing Rules; and

• the Group’s website at which shareholders can access information regarding the Group. The website provides

all corporate announcements, press releases, annual reports, and profiles of the Group.

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

shareholders at least 14 days before the meeting.

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

and to participate in the meeting. Issues seeking approval of shareholders, if any, are usually tabled as separate

resolutions.

The Chairmen of the AC, RC and NC and the external auditors will be available at the forthcoming AGM to attend to

any queries raised by the shareholders.

BUSINESS RISKS/INTERNAL CONTROLS

The Board considers the management of key business risks to be an important and integral part of the Group’s internal

control framework especially in the areas against copyright infringement. Stringent internal controls are in place to

ensure that intellectual property rights are protected and to reduce the risk of inadvertent production of unauthorised

material. Besides working closely with Intellectual Property Rights owner associations such as International Federation

of the Phonographic Industry (IFPI), Business Software Alliance (BSA) and Motion Picture Association (MPA), our

internal control procedures have ensured compliance with the Manufacture of Optical Discs Act. The Company has

also gone one step further on its own accord to apply to have its internal control procedures on copyright verification

be certified by Content Delivery and Storage Association (CDSA), formally known as International Recording Media

Association (IRMA), when its Anti-Piracy Certification/Compliance Program launched in Asia early 2002. The program

contains specific standards and guidelines for copyright verifications which received international recognition and are

endorsed by various Intellectual Property Rights owner associations.

Our Singapore Plant is the first company in Singapore to have certification by CDSA in October 2002. Thereafter, a

Group directive was issued to have all our optical disc manufacturing subsidiaries and associates obtain certification

by CDSA. Our Indonesian Plant and Australian Plant have since received certification in June 2004 and May 2005

respectively. Our associate in China was certified by CDSA in December 2007. Scheduled external surveillance audits

are also conducted every year by CDSA independent auditors to ensure that our internal procedures are in compliance

with the required standards. All our plants have since continued to be certified annually.

Based on internal control review carried out by the internal auditors, the Board is assured that adequate internal

controls are in place.




INTERESTED PERSON TRANSACTIONS

The Company has adopted an internal policy in respect of any transactions 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.

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

DEALINGS IN THE COMPANY’S SECURITIES

The Company has adopted an internal code governing dealings in securities by Directors and officers of the Company

and its subsidiaries. This code has been disseminated to all the Directors and officers of the Group as defined in the

code.

Directors and officers have been informed not to deal in the Company’s securities at all times whilst in possession of

unpublished price sensitive information and during the periods commencing at least two weeks before 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.

Directors and officers have also been directed to refrain from dealing in the Company’s securities on short-term

considerations.

MATERIAL CONTRACTS

No material contracts were entered between the Company or any of its subsidiaries involving the interest of the CEO,

any Directors or controlling shareholder during or at the end of the financial year ended 31 December 2010.

DIRECTORS’ ATTENDANCES AT BOARD AND BOARD COMMITTEE MEETINGS IN FY2010

Board of

Directors

Audit

Committee

Nominating

Committee

Remuneration

Committee

Name

No. Of

Meetings

Held

No. Of

Meetings

Attended

No. Of

Meetings

Held

No. Of

Meetings

Attended

No. Of

Meetings

Held

No. Of

Meetings

Attended

No. Of

Meetings

Held

No. Of

Meetings

Attended

Lee Kerk Chong 5 5 – – 1 1 – –

Kong Chee Min 5 5 – – – – – –

Chandra Mohan

s/o Rethnam

5 5 4 4 1 1 2 2

Gn Hiang Meng 5 5 4 4 1 1 2 2

Mak Bang Mui 5 5 4 4 – – – –

Tang Kay Hwa 5 5 – – – – 2 2

FINANCIAL REPORT27 Directors’ Report

29 Statement by Directors

30 Independent Auditor’s Report

32 Consolidated Income Statement

33 Consolidated Statement of Comprehensive Income

34 Balance Sheets

35 Consolidated Statement of Changes in Equity

36 Consolidated Statement of Cash Flows

37 Notes to the Financial Statements


DIRECTORS’ REPORTFor the fi nancial year ended 31 December 2010

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

financial year ended 31 December 2010 and the balance sheet of the Company as at 31 December 2010.

DIRECTORS

The directors of the Company in office at the date of this report are as follow:

Lee Kerk Chong (Chairman/Chief Executive Officer)

Kong Chee Min

Mak Bang Mui

Tang Kay Hwa


Gn Hiang Meng

ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES AND DEBENTURES

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

object was to enable the directors of the Company to acquire benefits by means of the acquisition of shares in, or

debentures of, the Company or any other body corporate.

DIRECTORS’ INTERESTS IN SHARES OR DEBENTURES

(a) According to the register of directors’ shareholdings, none of the directors holding office at the end of the

financial 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

At

31.12.2010

At

1.1.2010

or date of

appointment,

if later

At

31.12.2010

At

1.1.2010

or date of

appointment,

if later

Company

(No. of ordinary shares)

Lee Kerk Chong 20,932,543 14,932,543 37,500,000 43,500,000

Kong Chee Min 34,375 34,375 – –

Gn Hiang Meng – – 450,000 450,000

(b) The directors’ interests in the ordinary shares of the Company as at 21 January 2011 were the same as those

as at 31 December 2010.

DIRECTORS’ CONTRACTUAL BENEFITS

Since the end of the previous financial year, no director has received or become entitled to receive a benefit by reason

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

or with a company in which he has a substantial financial interest, except as disclosed in the accompanying financial

statements and in this report.


DIRECTORS’ REPORTFor the fi nancial year ended 31 December 2010

SHARE OPTIONS

There were no options granted during the financial year to subscribe for unissued shares of the Company or its

subsidiaries.

No shares have been issued during the financial year by virtue of the exercise of options to take up unissued shares

of the Company or its subsidiaries.

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

AUDIT COMMITTEE

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



Mak Bang Mui

All members of the Audit Committee were non-executive directors. Except for Ms Mak Bang Mui, all members were

independent.

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 financial statements of the Group for the financial year

ended 31 December 2010 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 financial 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

Lee Kerk Chong Kong Chee Min

Director Director

25 March 2011


STATEMENT BY DIRECTORSFor the fi nancial year ended 31 December 2010

In the opinion of the directors,

(a) the balance sheet of the Company and the consolidated financial statements of the Group as set out on pages

32 to 86 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 2010 and of the results of the business, changes in equity and cash flows of the Group for

the financial 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

Lee Kerk Chong Kong Chee Min

Director Director

25 March 2011


INDEPENDENT AUDITOR’S REPORTTo the Members of SM Summit Holdings Limited

REPORT ON THE FINANCIAL STATEMENTS

We have audited the accompanying financial statements of SM Summit Holdings Limited (the “Company”) and its

subsidiaries (the “Group”) set out on pages 32 to 86, which comprise the consolidated balance sheet of the Group

and the balance sheet of the Company as at 31 December 2010, the consolidated income statement, the consolidated

statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement

of cash flows of the Group for the financial year then ended, and a summary of significant accounting policies and

other explanatory information.

Management’s Responsibility for the Financial Statements

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

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

devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that

assets are safeguarded against loss from unauthorised use or disposition, that transactions are properly authorised

and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance

sheets and to maintain accountability of assets.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in

accordance with Singapore Standards on Auditing. Those Standards require that we comply with ethical requirements

and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from

material misstatement.

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

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

material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments,

the auditor considers internal controls relevant to the entity’s preparation of financial statements that give a true

and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose

of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also includes evaluating the

appropriateness of accounting policies used and the reasonableness of accounting estimates made by management,

as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit

opinion.

Opinion

In our opinion, the consolidated financial 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 of the Company as at 31 December 2010, and the results,

changes in equity and cash flows of the Group for the financial year ended on that date.


INDEPENDENT AUDITOR’S REPORTTo the Members of SM Summit Holdings Limited

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 Certified Public Accountants

Singapore, 25 March 2011

CONSOLIDATED INCOME STATEMENTFor the fi nancial year ended 31 December 2010


2010 2009

Note $’000 $’000

Sales 4 38,326 42,940

Cost of sales 5 (29,046) (34,250)

Gross profit 9,280 8,690

Other gains – net 4 1,717 3,066

Expenses

– Distribution 5 (2,607) (3,664)

– Administrative 5 (7,840) (8,468)

– Finance 6 (91) (155)

Share of profit of associated companies 15 82 351

Profit/(loss) before income tax 541 (180)

Income tax credit/(expense) 8 90 (239)

Net profit/(loss) 631 (419)

Profit/(loss) attributable to:

Equity holders of the Company 688 (419)

Non-controlling interests (57) –

631 (419)

Earnings/(losses) per share attributable to equity holders

of the Company (basis and diluted) 9 0.19 cent (0.12) cent

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


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFor the fi nancial year ended 31 December 2010

2010 2009

Note $’000 $’000

Profit/(loss) for the year 631 (419)

Other comprehensive income:

Financial assets, available-for-sale

– Fair value gains 87 400

Currency translation difference arising from consolidation (146) 3,259

Other comprehensive income, net of tax (59) 3,659

Total comprehensive income 572 3,240

Total comprehensive income/(losses) attributable to:

Equity holders of the Company 629 3,240

Non-controlling interests (57) –

572 3,240


BALANCE SHEETSAs at 31 December 2010


Group Company

2010 2009 2010 2009

Note $’000 $’000 $’000 $’000

ASSETS

Current assets

Cash and cash equivalents 10 21,010 20,602 7,040 4,736

Trade and other receivables 11 17,173 17,651 15,684 14,367

Current income tax recoverable 8 – 543 – 500

Inventories 12 2,796 2,663 – –

Other current assets 13 1,789 1,857 786 759

42,768 43,316 23,510 20,362

Non-current assets

Trade and other receivables 11 – – 8,727 13,509

Financial assets, available-for-sale 14 4,488 4,401 4,488 4,401

Investments in associated companies 15 2,647 2,589 1,298 1,298

Investments in subsidiaries 16 – – 9,384 9,384

Property, plant and equipment 17 12,632 16,656 109 216

Intangible assets 18 64 486 – –

19,831 24,132 24,006 28,808

Total assets 62,599 67,448 47,516 49,170

LIABILITIES

Current liabilities

Trade and other payables 19 10,292 12,152 1,813 1,625

Current income tax liabilities 8 900 448 435 –

Borrowings 20 492 1,620 34 34

11,684 14,220 2,282 1,659

Non-current liabilities

Borrowings 20 72 127 9 49

Deferred income tax liabilities 23 683 1,024 28 41

Other liabilities 22 2,938 3,654 1,094 1,679

3,693 4,805 1,131 1,769

Total liabilities 15,377 19,025 3,413 3,428

NET ASSETS 47,222 48,423 44,103 45,742

EQUITY

Capital and reserves attributable to the

equity holders of the Company

Share capital 24 40,194 40,194 40,194 40,194

Other reserves 25 470 529 11 (76)

Retained earnings 26 6,558 7,700 3,898 5,624

Total equity 47,222 48,423 44,103 45,742



CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFor the fi nancial year ended 31 December 2010

Attributable to equity holders of the Company

Share

capital

Other

reserves

Retained

earnings Total

Non-

controlling

interests

Total

equity

Note $’000 $’000 $’000 $’000 $’000 $’000

2010

Beginning of financial year 40,194 529 7,700 48,423 – 48,423

Dividend relating to 2009 paid 27 – – (1,812) (1,812) – (1,812)

Issuance of shares in a

subsidiary – – (18) (18) 568 550

Dilution of shares from

subsidiary to an associated

company – – – – (511) (511)

Total comprehensive (expense)/

income for the year – (59) 688 629 (57) 572

End of financial year 40,194 470 6,558 47,222 – 47,222

2009

Beginning of financial year 40,194 (3,130) 23,522 60,586 – 60,586

Dividend relating to 2008 paid 27 – – (15,403) (15,403) – (15,403)

Total comprehensive income/

(expense) for the year – 3,659 (419) 3,240 – 3,240

End of financial year 40,194 529 7,700 48,423 – 48,423


CONSOLIDATED STATEMENT OF CASH FLOWSFor the fi nancial year ended 31 December 2010


Group

2010 2009

Note $’000 $’000

Cash flows from operating activities

Net profit/(loss) 631 (419)

Adjustments for:

– Tax (credit)/expense (90) 239

– Depreciation and amortisation 4,816 5,625

– Net (gain)/loss on disposal of other property, plant and equipment (11) 12

– Write back of reinstatement cost (186) –

– Impairment of property, plant and equipment – 492

– Dividend income (212) (232)

– Interest income (552) (365)

– Interest expense 91 155

– Share of profit of associated companies (82) (351)

Operating cash flow before working capital changes 4,405 5,156

Changes in working capital

– Inventories (133) 665

– Trade and other receivables 365 6,021

– Other current assets 66 131

– Trade and other payables (2,271) (4,555)

– Currency translation differences (192) 74

Cash generated from operations 2,240 7,492

Income tax received/(paid) – net 750 (288)

Net cash provided by operating activities 2,990 7,204

Cash flows from investing activities

Proceeds from disposal of property, plant and equipment 155 87

Proceeds from disposal of investment properties – 1,469

Proceeds from disposal of financial assets, available-for-sale – 1,013

Purchase of property, plant and equipment (790) (912)

Loan to an associated company (100) (100)

Dividend received 212 232

Interest received 552 365

Short-term deposits released as security to bank – 85

Capital injection in an associated company (4) –

Dilution of share holdings from subsidiary to associated company,

net of cash disposed off 10 454 –

Net cash provided by investing activities 479 2,239

Cash flows from financing activities

Proceeds from borrowings 54 1,000

Repayment of borrowings (748) (3,529)

Interest paid (91) (155)

Dividends paid to shareholders (1,812) (15,403)

Net cash used in financing activities (2,597) (18,087)

Net increase/(decrease) in cash and cash equivalents held 872 (8,644)

Cash and cash equivalents at the beginning of the financial year 18,106 24,780

Effects of exchange rate changes on cash and cash equivalents 82 1,970

Cash and cash equivalents at the end of the financial year 10 19,060 18,106



NOTES TO THE FINANCIAL STATEMENTSFor the fi nancial year ended 31 December 2010

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

1. GENERAL INFORMATION

SM Summit Holdings Limited (the “Company”) is listed on the Singapore Exchange and incorporated and

domiciled in Singapore. The address of its registered office is 45 Ubi Road 1, Summit Building, Singapore

408696.

The principal activities of the Company include investment holding and provision of management services. The

principal activities of the subsidiaries consist of the manufacture and sale of compact discs, digital versatile

discs and data storage products.

2. SIGNIFICANT ACCOUNTING POLICIES

2.1 BASIS OF PREPARATION

These financial statements have been prepared in accordance with Singapore Financial Reporting

Standards (“FRS”). The financial statements have been prepared under the historical cost convention,

except as disclosed in the accounting policies below.

The preparation of financial 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. Areas involving a higher degree of judgement or

complexity, or areas where assumptions and estimates are significant to the financial statements, are

disclosed in Note 3.

Interpretations and amendments to published standards effective in 2010

On 1 January 2010, the Group adopted the new or amended FRS and Interpretations to FRS (“INT FRS”)

that are mandatory for application from that date. 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

Group’s and Company’s accounting policies and had no material effect on the amounts reported for the

current or prior financial years.

2.2 REVENUE RECOGNITION

Sales comprises 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 recognises revenue when the amount of revenue and related cost can be reliably measured,

when it is probable that the collectibility of the related receivables is reasonably assured and when the

specific criteria for each of the Group’s activities are met as follows:

(a) Sale of goods

Revenue from sales of goods is recognised when a Group entity has delivered the products to

the customer and the customers have accepted the products and collectibility of the related

receivables is reasonably assured.



2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.2 REVENUE RECOGNITION (CONTINUED)

(b) Rendering of services

Revenue from rendering of services is recognised when the services are rendered, using the

percentage of completion method based on the actual service provided as a proportion of the

total services to be performed.

(c) Interest income

Interest income is recognised using the effective interest method.

(d) Dividend income

Dividend income is recognised when the right to receive payment is established.

(e) Rental income

Rental income from operating leases (net of any incentive given to the lessees) is recognised on

a straight-line basis over the lease term.

2.3 GROUP ACCOUNTING

(a) Subsidiaries

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

govern the financial and operating policies so as to obtain benefits 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 financial 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 deficit balance.

(b) Acquisition of businesses

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

Group.

The consideration transferred for the acquisition of a subsidiary 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.




2.3 GROUP ACCOUNTING (CONTINUED)

(b) Acquisition of businesses (continued)

Acquisition-related costs are expensed as incurred.

Identifiable 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 identifiable assets.

The excess of 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 fair value of the net identifiable assets acquired is recorded as goodwill4. Please refer to the

paragraph “Intangible assets – Goodwill” for the subsequent accounting policy on goodwill.

(c) Disposals of subsidiaries or businesses

When a change in the Company’s 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 recognised in other comprehensive income in respect of that entity are also reclassified

to profit or loss or transferred directly to retained earnings if required by a specific Standard.

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

amount of the retained investment at the date when control is lost and its fair value is recognised

in profit or loss.

Please refer to the paragraph “Investments in subsidiaries and associated companies” for the

accounting policy on investments in subsidiaries in the separate financial statements of the

Company.

(d) Transactions with non-controlling interests

Changes in the Company’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 Group.

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 in a separate reserve within equity

attributable to the equity holders of the Company.

(e) Associated companies

Associated companies are entities over which the Group has significant influence, but not control,

generally accompanied by a shareholding giving rise to voting rights of 20% and above but not

exceeding 50%. Investments in associated companies are accounted for in the consolidated

financial statements using the equity method of accounting less impairment losses, if any.




2.3 GROUP ACCOUNTING (CONTINUED)

(e) Associated companies (continued)

Investments in associated companies are initially recognised at cost. The cost of an acquisition

is measured at the fair value of the assets given, equity instruments issued or liabilities incurred

or assumed at the date of exchange, plus costs directly attributable to the acquisition. Goodwill

on associated companies represents the excess of the cost of acquisition of the associate over

the Group’s share of the fair value of the identifiable net assets of the associate and is included

in the carrying amount of the investments.

In applying the equity method of accounting, the Group’s share of its associated companies’

post-acquisition profits or losses are recognised in profit or loss and its share of post-acquisition

other comprehensive income is recognised in other comprehensive income. These post-acquisition

movements and distributions received from the associated companies are adjusted against the

carrying amount of the investment. When the Group’s share of losses in an associated company

equals or exceeds its interest in the associated company, including any other unsecured

non-current receivables, the Group does not recognise further losses, unless it has obligations or

has made payments on behalf of the associated company.

Unrealised gains on transactions between the Group and its associated companies are eliminated

to the extent of the Group’s interest in the associated companies. Unrealised losses are also

eliminated unless the transaction provides evidence of an impairment of the asset transferred.

The accounting policies of associated companies have been changed where necessary to ensure

consistency with the accounting policies adopted by the Group.

Gains and losses arising from partial disposals or dilutions in investments in associated companies

are recognised in profit or loss.

Investments in associated companies are derecognised when the Group loses significant influence.

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

carrying amount of the retained investment at the date when significant influence is lost and its

fair value is recognised in profit or loss.

Please refer to the paragraph “Investments in subsidiaries and associated companies” for the

accounting policy on investments in associated companies in the separate financial statements

of the Company.

2.4 PROPERTY, PLANT AND EQUIPMENT

(a) Measurement

(i) Land and buildings

Land and buildings are initially recorded at cost. Buildings and leasehold land are

subsequently carried at cost less accumulated depreciation and accumulated impairment

losses.

(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.




2.4 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

(a) Measurement (continued)

(iii) Component 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.

(b) Depreciation

Capital work-in-progress are 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 and buildings 20 years

Plant, machinery and equipment 3 – 10 years

Renovation, furniture and fittings 4 – 10 years

Motor vehicles 4 – 5 years

Office equipment and computers 3 – 10 years

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 profit or loss when the changes arise.

(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 benefits

associated with the item will flow to the Group and the cost of the item can be measured reliably.

All repair and maintenance expenses are recognised in profit 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 profit or loss within ‘Revenue and other gains

– net’.




2.5 INTANGIBLE ASSETS

(a) Goodwill on acquisitions

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s

share of the identifiable assets and contingent liabilities of the acquired subsidiaries and associated

companies at the date of acquisition.

Goodwill on subsidiaries is recognised separately as intangible assets and carried at cost less

accumulated impairment losses.

Goodwill on associated companies is included in the carrying amount of the investments.

Gains and losses on the disposal of the subsidiaries and associated companies include the carrying

amount of goodwill relating to the entity sold.

(b) Development of software

Costs directly attributable to the development of computer software are capitalised as intangible

assets only when technical feasibility of the project is demonstrated, the Group has an intention

and ability to complete and use the software and the costs can be measured reliably. Such costs

include purchase of materials and services and payroll-related costs of employees directly involved

in the project. These costs are amortised to profit or loss using the straight-line method over their

estimated useful lives of 5 years.

The amortisation period and amortisation method of intangible assets other than goodwill are

reviewed at each balance sheet date. The effects of any revision are recognised in profit or loss

when the changes arise.

2.6 BORROWING COSTS

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

2.7 INVESTMENTS IN SUBSIDIARIES AND ASSOCIATED COMPANIES

Investments in subsidiaries and associated companies are carried at cost less accumulated impairment

losses in the Company’s balance sheet. On disposal of investments in subsidiaries and associated

companies, the difference between disposal proceeds and the carrying amounts of the investments are

recognised in profit or loss.




2.8 IMPAIRMENT OF NON-FINANCIAL ASSETS

(a) Goodwill

Goodwill is tested for impairment annually and whenever there is indication that the goodwill may

be impaired. Goodwill included in the carrying amount of an investment in associated companies

is tested for impairment as part of the investment, rather than separately.

For the purpose of impairment testing of goodwill, goodwill is allocated to each of the Group’s

cash-generating-units (“CGU”) expected to benefit 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 first to reduce the carrying amount of goodwill

allocated to the CGU and then to the other assets of the CGU pro-rated on the basis of the

carrying amount of each asset in the CGU.

An impairment loss on goodwill is recognised as an expense and is not reversed in a subsequent

period.

(b) Intangible assets

Property, plant and equipment

Investments in subsidiaries and associated companies

Intangible assets, property, plant and equipment and investments in subsidiaries and associated

companies 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 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 flows 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 profit or loss.

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 profit or loss.




2.9 FINANCIAL ASSETS

(a) Classification

The Group classifies its financial assets in the following categories: at fair value through profit

or loss, loans and receivables, held to maturity and available-for-sale. However, the Group

has financial assets only in the categories of loans and receivables and financial assets,

available-for-sale. The classification depends on the purpose for which the assets were acquired.

Management determines the classification of its financial assets at initial recognition.

(i) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable

payments that are not quoted in an active market. They are presented as current assets,

except for those maturing 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 except for certain

non-trade receivable from subsidiaries which have been accounted for in accordance with

Note 2.7.

(ii) Financial assets, available-for-sale

Financial assets, available-for-sale are non-derivatives that are either designated in this

category or not classified in any of the other categories. They are presented as non-current

assets unless management intends to dispose off the assets within 12 months after the

balance sheet date.

(b) Recognition and derecognition

Regular way purchases and sales of financial 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 flows from the financial assets

have expired or have been transferred and the Group has transferred substantially all risks and

rewards of ownership. On disposal of a financial asset, the difference between the carrying amount

and the sale proceeds is recognised in the consolidated income statement. Any amount in the fair

value reserve relating to that asset is transferred to profit or loss.

(c) Initial measurement

Financial assets are initially recognised at fair value plus transaction costs.




2.9 FINANCIAL ASSETS (CONTINUED)

(d) Subsequent measurement

Financial assets, available-for-sale 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 financial assets, available-for-sale are recognised separately

in profit or loss. Changes in the fair values of available-for-sale debt securities (i.e. monetary

items) denominated in foreign currencies are analysed into currency translation differences on

the amortised cost of the securities and other changes; the currency translation differences are

recognised in the consolidated income statement and the other changes are recognised in the

fair value reserve. Changes in fair values of available-for-sale equity securities (i.e. non-monetary

items) are recognised in the fair value reserve, together with the related currency translation

differences.

(e) Impairment

The Group assesses at each balance sheet date whether there is objective evidence that a financial

asset or a group of financial assets is impaired and recognises an allowance for impairment when

such evidence exists.

(i) Loans and receivables

Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy,

and default or significant delay in payments are objective evidence that these financial

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 flows, 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

profit or loss.

The allowance for impairment loss account is reduced through profit 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) Financial assets, available-for-sale

Significant or prolonged declines in the fair value of the security below its cost and the

disappearance of an active trading market for the security are objective evidence that the

security is impaired.

The cumulative loss that was recognised in the fair value reserve is transferred to profit 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 in profit or

loss on equity securities are not reversed through profit or loss.




2.10 FINANCIAL GUARANTEES

The Company has issued corporate guarantees to banks for borrowings of its subsidiaries. These

guarantees are financial 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 profit 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 financial 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.

2.11 BORROWINGS

Borrowings are presented as current liabilities unless the Group has unconditional right to defer settlement

for at least 12 months after the balance sheet date.

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 profit or loss over the period of the borrowings using the effective interest method.

2.12 TRADE AND OTHER PAYABLES

Trade and other payables are initially recognised at fair value, and subsequently carried at amortised cost

using the effective interest method.

2.13 FAIR VALUE ESTIMATION OF FINANCIAL ASSETS AND LIABILITIES

The fair values of financial instruments traded in active markets (such as exchange-traded and

over-the-counter securities and derivatives) are based on quoted market prices at the balance sheet date.

The quoted market prices used for financial assets are the current bid prices; the appropriate quoted

market prices for financial liabilities are the current asking prices.

The fair values of current financial assets and liabilities carried at amortised cost approximate their

carrying amounts.

2.14 LEASES

(a) When the Group is the lessee:

The Group leases motor vehicles and certain property, plant and equipment under finance and

operating leases from non-related parties.

(i) Lessee – Finance leases

Leases where the Group assumes substantially the risks and rewards incidental to

ownership of the leased assets, are classified as finance leases.




2.14 LEASES (CONTINUED)

(a) When the Group is the lessee: (continued)

(i) Lessee – Finance leases (continued)

The leased assets and the corresponding lease liabilities (net of finance charges) under

finance leases are recognised on the balance sheet as property, 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 finance expense and the reduction of the

outstanding lease liability. The finance expense is recognised in profit or loss on a basis

that reflects a constant periodic rate of interest on the finance lease liability.

(ii) Lessee – Operating leases

Leases of property, plant and equipment where substantially all risks and rewards incidental

to ownership are retained by the lessors are classified as operating leases. Payments made

under operating leases (net of any incentives received from the lessors) are recognised in

profit or loss on a straight-line basis over the period of the lease.

Profits on sale and leaseback transactions which constitute operating leases are recognised

immediately in the consolidated income statement when such sale and leaseback

transactions are established at fair value. If the sale price is below fair value, any profit or

loss shall be recognised immediately except that, if the loss is compensated for by future

lease payments at below market price, it shall be deferred and amortised in proportion to

the lease payments over the period for which the asset is expected to be used. If the sale

price is above fair value, the excess over fair value shall be determined and amortised over

the period for which the asset is expected to be used.

(b) When the Group is the lessor:

The Group sublease its leased office premises under operating leases to non-related parties.

Leases of investment properties where the Group retains substantially all risks and rewards

incidental to ownership are classified as operating lease.

Rental income from operating leases (net of any incentives given to lessees) is recognised in profit

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 profit or loss over

the lease term on the same basis as the lease income.

2.15 INVENTORIES

Inventories are carried at the lower of cost and net realisable value. Cost is determined on a weighted

average basis. The cost of finished goods and work-in-progress comprises raw materials, direct labour,

other direct costs and related production overheads (based on normal operating capacity) but excludes

borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business,

less applicable variable selling expenses.




2.16 INCOME TAXES

Current income tax for current and prior periods are recognised at the amounts 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 financial 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 profit 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 profit 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.

Current and deferred income taxes are recognised as income or expense in profit 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.

2.17 EMPLOYEE COMPENSATION

The Group’s contributions are recognised as employee compensation expense when they are due, unless

they can be capitalised as an asset.

(a) Defined contribution plans

Defined contribution plans are post-employment benefit plans under which the Group pays fixed

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.

(b) Defined benefit plans

The Group also has an unfunded defined benefit plan as part of a subsidiary’s national severance,

gratuity and corporation benefits plan. An independent actuary’s valuation is obtained in

determining the defined benefit obligation using the projected unit credit method. The present

value of the defined benefit obligation is determined by discounting the estimated future cash

outflows using interest rates of high-quality corporate bonds that are denominated in the currency

in which the benefits will be paid and that have terms of maturity approximating the terms of the

related liability.




2.17 EMPLOYEE COMPENSATION (CONTINUED)

(c) Employee leave entitlements

Employee entitlements to annual leave and long service leave are recognised when they accrue to

employees. A provision is made for the estimated liability for annual leave as a result of services

rendered by employees up to the balance sheet date.

(d) Termination benefits

Termination benefits are those benefits which are payable when employment is terminated before

the normal retirement date. The Group recognises termination benefits when it is demonstrably

committed to terminating the employment of current employees according to a detailed formal

plan without possibility of withdrawal. Benefits falling due more than 12 months after balance sheet

date are discounted to present value.

2.18 CURRENCY TRANSLATION

(a) Functional and presentation currency

Items included in the financial statements of each entity in the Group are measured using the

currency of the primary economic environment in which the entity operates (“the functional

currency”). The financial statements are presented in Singapore Dollar, 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 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

date are recognised in the consolidated income statement, unless they arise from borrowings

in foreign currencies or other currency instruments which are designated and qualifying as net

investment hedges, and net investment in foreign operations. These currency translation differences

are recognised in the currency translation reserve in the consolidated financial statements and

transferred to the consolidated income statement as part of the gain or loss on disposal of the

foreign operation.

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’ financial statements

The results and financial position of all the Group entities (none of which has the currency of a

hyperinflationary 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 date of the balance

sheet;

(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

date of the transactions); and




2.18 CURRENCY TRANSLATION (CONTINUED)

(c) Translation of Group entities’ financial statements (continued)

(iii) All resulting exchange currency translation differences are recognised in the currency

translation reserve.

Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after

1 January 2005 are treated as assets and liabilities of the foreign operations and translated at

the closing rates at the date of the balance sheet. For acquisitions prior to 1 January 2005, the

exchange rates at the dates of acquisition are used.

2.19 SEGMENT REPORTING

Operating segments are reported in a manner consistent with the internal reporting provided by the senior

management whose members are responsible for allocating resources and assessing performance of

the operating segments.

2.20 CASH AND CASH EQUIVALENTS

For the purpose of presentation in the consolidated cash flow statement, cash and cash equivalents

include cash on hand, deposits with financial institutions which are subject to an insignificant risk of

change in value, and bank overdrafts. Bank overdrafts are presented as current borrowings on the

balance sheet.

2.21 SHARE CAPITAL

Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new

ordinary shares are deducted against the share capital account.

2.22 DIVIDENDS TO THE COMPANY’S SHAREHOLDERS

Dividends to the Company’s shareholders are recognised when the dividends are approved for

payments.

2.23 GOVERNMENT GRANTS

Grants from the government are recognised as a receivable at their fair value when there is reasonable

assurance that the grant will be received and the Group will comply with all the attached conditions.

Government grants receivable are recognised as income over the periods necessary to match them with

the related costs which they are intended to compensate, on a systematic basis. Government grants

relating to expenses are shown separately as other income.

Government grants relating to assets are deducted against the carrying amount of the assets.



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.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will,

by definition, seldom equal the related actual results.

(a) Impairment of loans and receivables

Management reviews its loans and receivables for objective evidence of impairment at least quarterly.

Significant financial difficulties of the debtor, the probability that the debtor will enter bankruptcy, and

default or significant delay in payments are considered objective evidence that a receivable is impaired.

In determining this, management makes judgement as to whether there is observable data indicating

that there has been a significant change in the payment ability of the debtor, or whether there have been

significant changes with adverse effect in the technological, market, economic or legal environment in

which the debtor operates in.

Where there is objective evidence of impairment, management makes judgements as to whether an

impairment loss should be recorded as an expense. In determining this, management uses estimates

based on historical loss experience for assets with similar credit risk characteristics. The methodology and

assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly

to reduce any differences between the estimated loss and actual loss experience.

(b) Income taxes

The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in

determining the capital allowances and deductibility of certain expenses during the estimation of the

provision for income taxes. There are many transactions and calculations for which the ultimate tax

determination is uncertain during the ordinary course of business. The Group recognises liabilities for

anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final

tax outcome of these matters is different from the amounts that were initially recorded, such differences

will impact the income tax and deferred income tax provisions in the period in which such determination

is made.



4. REVENUE AND OTHER GAINS – NET

Group

2010 2009

$’000 $’000

Sales of goods 36,963 40,443

Services rendered 1,363 2,497

Total sales 38,326 42,940

Other gains – net:

Rental income 654 835

Interest income 552 365

Dividend income 212 232

Currency exchange gain – net 112 721

Government grant – Jobs Credit Scheme 22 397

Write back in relation to cost incurred on the disposal

of investment property – 115

Net gain/(loss) on disposal of property, plant and equipment 11 (12)

Write back in relation to the aborted acquisition of TES-Envirocorp – 100

Others 154 313

Other gains – net 1,717 3,066

The Jobs Credit Scheme is a cash grant introduced in the Singapore Budget 2009 to help businesses preserve

jobs in the economic downturn. The amount an employee can receive would depend on the fulfillment of the

conditions as stated in the scheme.

5. EXPENSES BY NATURE

Group

2010 2009

$’000 $’000

Purchase of raw materials and consumables 12,755 13,251

Depreciation of property, plant and equipment (Note 17) 4,679 5,437

Amortisation of intangible assets (Note 18) 137 188

Impairment of property, plant and equipment – 492

Employee compensation (Note 7) 11,678 13,555

Rental on operating leases 2,543 2,857

Utilities 2,052 1,903

Repairs and maintenance 1,403 1,545

Insurance 414 454

Freight outwards 305 455

Write back of reinstatement cost (186) –

Changes in inventories of raw materials, work-in-progress and finished goods (133) 665

Non-audit fees paid/payable to:

– Auditors of the Company 76 100

– Other auditors 19 11

Others 3,751 5,469

Total cost of sales, distribution and administrative expenses 39,493 46,382



6. FINANCE EXPENSES

Group

2010 2009

$’000 $’000

Interest expense:

– bank borrowings 20 85

– bank overdrafts 59 42

– finance lease liabilities 12 28

91 155

7. EMPLOYEE COMPENSATION

Group

2010 2009

$’000 $’000

Wages and salaries 10,188 11,617

Employer’s contribution to defined contribution plans,

including Central Provident Fund 1,178 1,536

Post-employment benefits (Note 22) 55 44

Termination benefits 257 358

11,678 13,555

8. INCOME TAXES

(a) Income tax (credit)/expense

Group

2010 2009

$’000 $’000

Tax expense attributable to the results is made up of:

Current income tax

– Singapore 80 56

– Foreign 294 159

374 215

Deferred income tax (Note 23) (252) 24

122 239

Overprovision in prior financial years

– Singapore income tax (125) –

– Deferred tax (Note 23) (87) –

(90) 239



8. INCOME TAXES (CONTINUED)

(a) Income tax (credit)/expense (continued)

The tax on the Group’s profit before tax and share of profit of associated companies differs from the

theoretical amount that would arise using the Singapore standard rate of income tax as follows:

Group

2010 2009

$’000 $’000

Profit/(loss) before tax and share of profit of associated companies 459 (531)

Tax calculated at a tax rate of 17% (2009: 17%) 78 (90)

Effects of:

– changes in tax rates (Note 23) – (29)

– different tax rates in other countries 56 (62)

– statutory stepped income exemption (31) –

– expenses not deductible for tax purposes 213 396

– income not subject to tax (158) (319)

– utilisation of previously unrecognised

• tax losses (193) (101)

• capital allowances (93) –

– others – (18)

Withholding tax 50 49

Unrecognised deferred tax assets 200 413

122 239

Deferred income tax assets of approximately $2,503,000 (2009: $2,561,000) for the Group have not been

recognised for unutilised tax losses and capital allowances of certain subsidiaries as there is no reasonable

certainty that future taxable profits will be available for utilisation of these temporary differences. As at 31

December 2010, total balances of unutilised tax losses and capital allowances available for offset against

future taxable income are disclosed in Note 23 to the financial statements.

(b) Movements in current tax (recoverable)/liabilities

Group Company

2010 2009 2010 2009

$’000 $’000 $’000 $’000

Beginning of financial year (95) (11) (500) (385)

Currency translation differences (4) (11) – –

Income tax refund/(paid) – net 750 (288) 995 (171)

Tax expense 374 215 65 56

Overprovision in prior financial years (125) – (125) –

End of financial year 900 (95) 435 (500)



8. INCOME TAXES (CONTINUED)

(b) Movements in current tax (recoverable)/liabilities (continued)

The current income tax account comprises the following:

Group Company

2010 2009 2010 2009

$’000 $’000 $’000 $’000

Current income tax recoverable – (543) – (500)

Current income tax liabilities 900 448 435 –

900 (95) 435 (500)

9. EARNINGS/(LOSSES) PER SHARE

Basic earnings/(losses) per share is calculated by dividing the net profit/(loss) attributable to equity holders of

the Company by the weighted average number of ordinary shares outstanding during the financial year.

2010 2009

Net profit/(loss) attributable to equity holders of the Company ($’000) 688 (419)

Weighted average number of ordinary shares outstanding

for basic earnings per share (’000) 362,420 362,420

Basic and diluted loss earnings/(losses) per share 0.19 cent (0.12) cent

The diluted earnings/(losses) per share is the same as basic earnings/(losses) per share as there are no dilutive

potential ordinary shares.

10. CASH AND CASH EQUIVALENTS

Group Company

2010 2009 2010 2009

$’000 $’000 $’000 $’000

Cash at bank and on hand 8,464 10,467 375 356

Short-term bank deposits 12,546 10,135 6,665 4,380

21,010 20,602 7,040 4,736

As at 31 December 2010, short-term bank deposits at the balance sheet date have an average maturity of

3 months (2009: 3 months) from the end of the financial year with the following weighted average effective

interest rates:

Group Company

2010 2009 2010 2009

$’000 $’000 $’000 $’000

Singapore Dollar 0.42% 0.58% 0.43% 0.46%

Hong Kong Dollar 0.01% 0.01% – –

Australian Dollar 4.11% 3.28% 4.09% 3.25%



10. CASH AND CASH EQUIVALENTS (CONTINUED)

As at 31 December 2010, short-term bank deposits of the Group and Company amounting to $1,555,000 (2009:

$1,555,000) are charged to a bank as security for the issue of a banker’s guarantee in connection with a bank

loan drawn by an associated company.

For the purposes of presenting the consolidated cash flow statement, the consolidated cash and cash

equivalents comprise the following:

Group

2010 2009

$’000 $’000

Cash and bank balances (as above) 21,010 20,602

Less: Bank overdrafts (Note 20) (395) (941)

Short-term bank deposits charged as security to bank (1,555) (1,555)

Cash and cash equivalents per consolidated cash flow statement 19,060 18,106

DILUTION OF SHAREHOLDING FROM SUBSIDIARY TO ASSOCIATE COMPANY

On 20 August 2010, the Company diluted its interest in Wow Vision Pte Ltd from 51.6% to 34.0% for nil cash

consideration as the Company did not partake in the new shares issued by Wow Vision Pte Ltd. As such, Wow

Vision Pte Ltd is accounted as an associated company with effect from 20 August 2010. The effects of the

dilution on the cash flows of the Group were:

Group

$’000

Carrying amounts of assets and liabilities diluted

Cash and cash equivalents (32)

Trade and other receivables (212)

Property, plant and equipment (Note 17) (29)

Intangible assets (Note 18) (835)

Other current assets (2)

Total assets (1,110)

Trade and other payables 113

Bank overdraft 486

Total liabilities 599

Net assets derecognised (511)

Less: Non-controlling interests 511

Net assets disposed –

The aggregate cash inflows arising from the dilution of Wow Vision Pte Ltd were:

Group

$’000

Net assets disposed (as above) –

Cash proceeds from disposal –

Less: Cash and cash equivalents in Wow Vision Pte Ltd 454

Net cash inflow on disposal 454



11. TRADE AND OTHER RECEIVABLES

(a) Current

Group Company

2010 2009 2010 2009

$’000 $’000 $’000 $’000

Trade receivables – third parties 11,920 12,636 60 64

Less: Allowance for impairment (2,119) (2,007) – –

9,801 10,629 60 64

Receivables from subsidiaries

– trade – – 2,917 3,347

– non-trade – – 6,266 3,201

Receivables from associated companies

– trade 147 10 – –

– non-trade 339 108 181 24

Loans to subsidiaries – – 13,663 15,328

Loans to associated companies 6,260 6,503 – –

6,746 6,621 23,027 21,900

Less: Allowance for impairment – – (7,650) (7,810)

6,746 6,621 15,377 14,090

Other receivables 626 401 247 213

17,173 17,651 15,684 14,367

The non-trade receivables from subsidiaries and associated companies, and loans to subsidiaries and

associated company are unsecured, interest-free and repayable on demand.

(b) Non-current

Company

2010 2009

$’000 $’000

Loans to subsidiaries 13,442 18,647

Less: Allowance for impairment (4,715) (5,138)

8,727 13,509

Loans to an associated company 447 –

Less: Allowance for impairment (447) –

– –

8,727 13,509



11. TRADE AND OTHER RECEIVABLES (CONTINUED)

(b) Non-current (continued)

The loans to subsidiaries are unsecured with no fixed terms of repayment but are not expected to be

repaid within the next twelve months. Included in the loans to subsidiaries is an amount of $6,550,000

(2009: $10,842,000) which bears interest at 2% (2009: 2%) per annum.

Included in loan to subsidiaries is an amount of $12,242,000 (2009: $16,593,000) which are considered

to be part of the Company’s net investment in the subsidiaries.

At the balance sheet date, the carrying amounts of the non-current loans approximated their fair value.

12. INVENTORIES

Group

2010 2009

$’000 $’000

Finished goods 197 169

Work-in-progress 67 134

Raw materials 2,532 2,360

2,796 2,663

The cost of inventories recognised as expense and included in “cost of sales” amounted to $27,451,000 (2009:

$31,174,000).

13. OTHER CURRENT ASSETS

Group Company

2010 2009 2010 2009

$’000 $’000 $’000 $’000

Deposits 1,479 1,427 752 752

Prepayments 310 430 34 7

1,789 1,857 786 759

Included in the deposits is an amount of $464,000 (2009: $506,000) being the cost of an option to acquire

additional shares of an associated company.

14. FINANCIAL ASSETS, AVAILABLE-FOR-SALE

Group and Company

2010 2009

$’000 $’000

Beginning of financial year 4,401 5,014

Disposals – (1,013)

Fair value gains transferred to equity [Note 25(b)(i)] 87 400

End of financial year 4,488 4,401



14. FINANCIAL ASSETS, AVAILABLE-FOR-SALE (CONTINUED)

Financial assets, available-for-sale are analysed as follows:

Group and Company

2010 2009

$’000 $’000

Listed equity securities – Singapore 4,488 4,401

The fair value of listed equities are based on quoted market prices at the balance sheet dates.

15. INVESTMENTS IN ASSOCIATED COMPANIES

Group Company

2010 2009 2010 2009

$’000 $’000 $’000 $’000

Equity investment, at cost 3,735 1,668

Less: Accumulated impairment (2,437) (370)

1,298 1,298


Currency translation difference (28) (52)

Acquisition of associated company 4 –

Share of profit 82 351


(a) The summarised financial information of associated companies, not adjusted for the proportion ownership

interest held by the Group, is as follows:

2010 2009

$’000 $’000

– Assets 19,385 19,214

– Liabilities 11,174 10,982

– Revenue 6,341 5,485

– Net profit 50 827

(b) The Group has not recognised its share of losses of associated companies amounting to $65,000

because the Group’s cumulative share of losses exceeds its interest in those entities and the Group has

no obligation in respect of those losses. The cumulative unrecognised losses amount to $65,000 at the

balance sheet date.



15. INVESTMENTS IN ASSOCIATED COMPANIES (CONTINUED)

(c) The associated companies of the Group are as follows:

Name of companies Principal activities

Country of

incorporation

and business

carried on in Equity holding

2010 2009

% %

Held directly by the Company

Sherford (M) Sdn Bhd+ Property investment Malaysia 25 25

WOW Vision Pte Ltd ^ Provision of wireless applications

and solutions

Singapore 34 ##

Held by subsidiaries

Shanghai Huade

Photoelectron Science &

Technology Co. Ltd* ++

Manufacture and replication

of compact discs, data

storage products and related

components

People’s

Republic

of China

49 49

AVSM Logistics Pte Ltd ^ Provide warehousing and logistic

services

Singapore 40 40

Typhoon Creations Pte Ltd ^ Marketing services Singapore 40 –

+ Audited by M.S. Wong & Co.

* Audited by Shanghai LSC Certified Public Accountants Co., Ltd.

++ Holdings through Advance Technology Investment Limited.

^ Audited by Messrs James Chan & Partners.

## During the year, the Company has diluted its shareholding in Wow Vision Pte Ltd from subsidiary to associated

company.

16. INVESTMENTS IN SUBSIDIARIES

(a)

Company

2010 2009

$’000 $’000

Equity investment, at cost 10,432 11,875

Less: Accumulated impairment (1,048) (2,491)

9,384 9,384



16. INVESTMENTS IN SUBSIDIARIES (CONTINUED)

(b) The subsidiaries of SM Summit Holdings Limited are as follows:

Name of companies Principal activities

Country of

incorporation

and business

carried on in Equity holding

2010 2009

% %

Summit CD Manufacture

Pte Ltd#




components

Singapore 100 100

Summit Hi-Tech Pte Ltd# Manufacture and replication

of digital versatile discs, data


components

Singapore 100 100

SM Summit Investment

Pte. Ltd #

Investment holding Singapore 100 100

FairVision Pte Ltd#^^ Media advertising Singapore 70 70

3ngine Pte. Ltd. #^^ Media advertising Singapore 100 100

Summit CD Manufacture

(HK) Limited*

Dormant Hong Kong 100 100

SM Summit Holdings

(HK) Limited**

Dormant Hong Kong 100 100

Summit Technology

Australia Pty Ltd@


of compact discs and digital

versatile discs

Australia 100 100

SM Summit Holdings

(Australia) Pty Limited+**

Dormant Australia 100 100

Summit Printing (Australia)

Pty Limited+@

Printing Australia 100 100

Wow Vision Australia

Pty Ltd+@

Dormant Australia 100 100

Gate Cosmos Investments

Ltd**

Trading and investment holding British Virgin

Islands

100 100

PT Digital Media

Technology~^




components

Indonesia 100 100

Advance Technology

Investment Limited**^^

Investment holding Hong Kong 100 100

Summit Technology

Japan KK **

Dormant Japan 100 100

Wow Vision Pte Ltd Provision of wireless applications

and solutions

Singapore ## 51



16. INVESTMENTS IN SUBSIDIARIES (CONTINUED)

(b) The subsidiaries of SM Summit Holdings Limited are as follows: (continued)

# Audited by PricewaterhouseCoopers LLP, Singapore.

* Audited by Fung. Yu & Co., Certified Public Accountants (Practising).

@ Audited by PricewaterhouseCoopers, Australia.

~ Audited by Kanaka Puradiredja, Robert Yogi, Suhartono.

** No statutory audit required in the country of incorporation.

+ Holdings through Summit Technology Australia Pty Ltd.

^ Holdings through Gate Cosmos Investments Ltd and SM Summit Investment Pte. Ltd.

^^ Holdings through SM Summit Investment Pte. Ltd..

## During the year, the Company has diluted its shareholding in Wow Vision Pte Ltd from subsidiary to associated

company.

In accordance to Rule 716 of The Singapore Exchange Securities Trading Limited – Listing Rules, the Audit

Committee and Board of Directors of the Company confirmed that they are satisfied that the appointment

of different auditors for its subsidiaries or associated companies would not compromise the standard and

effectiveness of the audit of the Group.

17. PROPERTY, PLANT AND EQUIPMENT

Leasehold Plant, Renovation, Office

land machinery furniture equipment Capital

and and and Motor and work-in-

building equipment fittings vehicles computers progress Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000

Group

2010

Cost

Beginning of financial year 3,652 54,529 4,598 2,051 5,077 166 70,073

Currency translation

differences (12) 713 99 12 60 – 872

Additions 107 538 5 67 88 – 805

Disposals (73) (6,075) (351) (230) (573) – (7,302)

Dilution of share holdings

from subsidiary to

associated company – – (259) – (256) – (515)

Transfer from capital

work-in-progress – 166 – – – (166) –

End of financial year 3,674 49,871 4,092 1,900 4,396 – 63,933

Accumulated depreciation

Beginning of financial year 1,593 42,429 3,210 1,563 4,622 – 53,417


differences 57 664 60 13 55 – 849

Disposals (10) (6,129) (235) (220) (564) – (7,158)

Dilution of share holdings

from subsidiary to

associated company – – (247) – (239) – (486)

Depreciation charge 307 3,708 252 201 211 – 4,679


Net book value

End of financial year 1,727 9,199 1,052 343 311 – 12,632



17. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Leasehold Plant, Renovation, Office

land machinery furniture equipment Capital

and and and Motor and work-in-

building equipment fittings vehicles computers progress Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000

2009

Cost

Beginning of financial year 2,957 48,582 4,194 2,036 4,812 1,875 64,456


differences 546 4,509 491 139 380 107 6,172

Additions 149 469 46 30 106 112 912

Disposals – (946) (133) (154) (234) – (1,467)

Transfer from capital

work-in-progress – 1,915 – – 13 (1,928) –

End of financial year 3,652 54,529 4,598 2,051 5,077 166 70,073


Beginning of financial year 1,012 35,352 2,873 1,268 4,237 – 44,742


differences 270 3,194 221 110 319 – 4,114

Disposals – (941) (133) (112) (182) – (1,368)

Depreciation charge 311 4,332 249 297 248 – 5,437

Impairment charge – 492 – – – – 492


Net book value

End of financial year 2,059 12,100 1,388 488 455 166 16,656




Plant,

machinery

and

equipment

Renovation,

furniture

and

fittings

Motor

vehicles

Office

equipment

and

computers Total

$’000 $’000 $’000 $’000 $’000

Company

2010

Cost

Beginning of financial year 6 842 838 686 2,372

Additions – 2 – 3 5

Disposals – – (108) (128) (236)

End of financial year 6 844 730 561 2,141



Disposals – – (108) (123) (231)

Depreciation charge – 5 97 5 107


Net book value

End of financial year – 9 95 5 109

2009

Cost


Additions – – – – –

Disposals – (126) – (70) (196)




Disposals – (126) – (70) (196)

Depreciation charge – 9 167 13 189


Net book value

End of financial year – 12 192 12 216




(a) At the balance sheet date, the net book value of property, plant and equipment of the Group and the

Company under finance lease agreements amounted to $261,000 (2009: $1,107,000) and $78,000 (2009:

$149,000) [Note 20(b)] respectively.

(b) Certain property, plant and machinery of the Group are mortgaged to banks for term loans and other

credit facilities extended to certain subsidiaries. The net book value of these property, plant and machinery

amounted to approximately $1,668,000 (2009: $2,713,000) [Notes 20(c)].

(c) The leasehold land and buildings of the Group comprise:

Location Tenure Use of Property

Indonesia:

MM2100 Industrial Town

JI. Bali Blok H1-1

Cibitung

Bekasi 17520

22 years lease from 30 September

2004, with an option to extend for

a further 20 years

Industrial factory

building

18. INTANGIBLE ASSETS

Group

2010 2009

$’000 $’000

Composition:

Goodwill arising on consolidation [Note (a)] 64 64

Computer development cost [Note (b)] – 422

64 486

(a) Goodwill on consolidation

Beginning and end of financial year 64 64

Cost 1,649 1,649

Accumulated impairment (1,585) (1,585)

Net book value 64 64

(b) Computer development cost

Beginning of financial year 422 610

Additions 550 –

Amortisation (137) (188)

Dilution of shareholdings from subsidiary to associated company (835) –

End of financial year – 422

Cost 938 938

Additions 550 –

Accumulated amortisation (653) (516)

Dilution of shareholdings from subsidiary to associated company (835) –

Net book value – 422



19. TRADE AND OTHER PAYABLES

Group Company

2010 2009 2010 2009

$’000 $’000 $’000 $’000

Trade payables – third parties 4,186 4,844 123 66

Advanced billings – 79 – –

Deferred income 668 583 583 583

Deposits received 145 173 134 164

Payables to associated companies

– trade 6 – – –

– non-trade 5 – – –

Accrued operating expenses 4,849 6,105 861 795

Other payables 433 368 112 17

10,292 12,152 1,813 1,625

20. BORROWINGS

Group Company

2010 2009 2010 2009

$’000 $’000 $’000 $’000

Current

Bank overdrafts [Note (a)] 395 941 – –

Long term bank loans [Note (c)] – 607 – –

Finance lease liabilities [Notes (b) and 21] 97 72 34 34

492 1,620 34 34

Non-current

Finance lease liabilities [Notes (b) and 21] 72 127 9 49

72 127 9 49

Total borrowings 564 1,747 43 83

(a) Bank overdrafts

The bank overdrafts of the Group are supported by a guarantee given by the Company. The weighted

average effective interest rate of the bank overdrafts at the balance sheet date is 5.75% (2009: 5.75%)

per annum.

(b) Finance lease liabilities

The finance lease liabilities are secured on certain property, plant and machinery purchased under finance

leases of the Group and the Company [Note 17(a)]. The Group’s weighted average effective interest rate

of finance lease liabilities at the balance sheet date is 4.51% (2009: 2.66%) per annum. The Company’s

weighted average effective interest rate of finance lease liabilities at the balance sheet date is 2.88%

(2009: 2.88%) per annum.



20. BORROWINGS (CONTINUED)

(c) Non-current bank loans

Group

Outstanding balances

(effective interest

rates per annum)

2010 2009

$’000 $’000

Loan is repayable by monthly instalments falling due for – 607

payment between 2006 and 2010. The loan is secured by a – (8.23%)

first fixed charge on machines of a subsidiary [Note 17(b)].

– 607

Less: Portion of long term bank loans with repayments due within

twelve months – (607)

– –

(d) Interest rate risk

The periods in which the borrowings reprice or mature, whichever is earlier, are as follows:

Variable

rates Fixed rates

Less than

6 months

Less than

6 months

6 to 12

months

1 to 5

years Total

$’000 $’000 $’000 $’000 $’000

Group

2010

Total borrowings 395 48 49 72 564

2009

Total borrowings 941 482 193 131 1,747

(e) Carrying amounts and fair values

At the balance sheet date, the carrying amounts of the borrowings approximated their fair values.

21. FINANCE LEASE LIABILITIES

Group Company

2010 2009 2010 2009

$’000 $’000 $’000 $’000

Minimum lease payments due:

– not later than one year 107 83 40 40

– between one and five years 78 143 9 55

185 226 49 95

Less: Future finance charges (16) (27) (6) (12)

Present value of finance lease liabilities 169 199 43 83

The present value of finance lease liabilities

may be analysed as follows:

– not later than one year (Note 20) 97 72 34 34

– between one and five years (Note 20) 72 127 9 49

169 199 43 83



22. OTHER LIABILITIES

Group Company

2010 2009 2010 2009

$’000 $’000 $’000 $’000

Provision for long service leave [Note (a)] 364 295 – –

Deferred income arising from sale

and leaseback 1,094 1,679 1,094 1,679

Provision for post-employment benefits

[Note (b)] 240 198 – –

Others 1,240 1,482 – –

2,938 3,654 1,094 1,679

(a) The movement in provision for long service leave during the financial year is as follows:

Group

2010 2009

$’000 $’000


Currency translation differences 15 81

Charged/(credited) to the consolidated income statement 71 (244)

Paid during the financial year (17) (16)

End of financial year 364 295

(b) The movement in provision for post-employment benefits which is an unfunded defined post-employment

benefit plan during the financial year is as follows:

Group

2010 2009

$’000 $’000


Currency translation differences (11) 20

Charged to the consolidated income statement 55 44

Paid during the financial year (2) (3)


The amounts recognised in profit or loss are as follows:

Group

2010 2009

$’000 $’000

Current service cost 32 23

Interest cost 23 14

Past service cost – 7

55 44



22. OTHER LIABILITIES (CONTINUED)

The principal actuarial assumptions used are as follows:

Group

2010 2009

$’000 $’000

Retirement age 55 years 55 years

Future salary increases per annum 8% 8%

Discount rate per annum 10.5% 10.5%

(c) Carrying amounts and fair values

At the balance sheet date, the carrying amounts of the non-current other payables approximated their

fair values.

23. DEFERRED INCOME TAX LIABILITIES

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to setoff current

income tax assets against current income tax liabilities and when the deferred income taxes relate to the same

fiscal authority. The amounts, determined after appropriate offsetting, are shown on the balance sheets as

follows:

Group Company

2010 2009 2010 2009

$’000 $’000 $’000 $’000

Deferred income tax liabilities:

– to be settled within one year 173 228 26 40

– to be settled after more than one year 510 796 2 1

683 1,024 28 41

Movements in the deferred income tax account is as follows:

Group Company

2010 2009 2010 2009

$’000 $’000 $’000 $’000

Beginning of financial year 1,024 981 41 72

Effect of change in Singapore tax rate

[Note 8(a)] – (29) – –

Currency translation differences (2) 19 – –

Tax (credited)/charged to:

– consolidated income statement [Note 8(a)] (339) 53 (13) (31)

End of financial year 683 1,024 28 41

Deferred income tax assets are recognised for tax losses and capital allowances carried forward to the extent

that realisation of the related tax benefits through future taxable profits is probable. The Group has unrecognised

tax losses of $9,160,000 (2009: $9,213,000) and capital allowances of $1,255,000 (2009: $1,789,000) 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 and capital allowances

in their respective countries of incorporation. The tax losses and capital allowances have no expiry date.



23. DEFERRED INCOME TAX LIABILITIES (CONTINUED)

The movements in deferred income tax assets and liabilities (prior to offsetting of balances within the same tax

jurisdiction) is as follows:

Group

Deferred income tax liabilities

Accelerated

tax

depreciation Others Total

$’000 $’000 $’000

2010

Beginning of financial year 1,078 97 1,175

Currency translation differences 6 (3) 3

(Credited)/charged to the consolidated

income statement (380) 36 (344)

End of financial year 704 130 834

2009

Beginning of financial year 1,237 105 1,342

Effect of change in tax rate (29) – (29)

Currency translation differences 52 7 59

Credited to the consolidated income statement (182) (15) (197)

End of financial year 1,078 97 1,175

Deferred income tax assets

Provisions

$’000

2010

Beginning of financial year (151)

Currency translation differences (5)

Charged to the consolidated income statement 5

End of financial year (151)

2009

Beginning of financial year (361)

Currency translation differences (39)

Charged to the consolidated income statement 249

End of financial year (151)



23. DEFERRED INCOME TAX LIABILITIES (CONTINUED)

Company

Deferred income tax liabilities

Accelerated

tax

depreciation Others Total

$’000 $’000 $’000

2010

Beginning of financial year 4 37 41

Credited to the consolidated income statement (2) (11) (13)


2009

Beginning of financial year 8 64 72

Effect of changes in tax rate (4) – (4)

Credited to the consolidated income statement – (27) (27)


24. SHARE CAPITAL

No. of

shares Amount

Issued

share

capital

Issued

share

capital

’000 $’000

2010

Balance as at 1 January and 31 December 2010 362,420 40,194

2009

Balance as at 1 January and 31 December 2009 362,420 40,194

All issued ordinary shares with no par value are fully paid.

25. OTHER RESERVES

Group Company

2010 2009 2010 2009

$’000 $’000 $’000 $’000

(a) Composition

Fair value reserve 11 (76) 11 (76)

Currency translation reserve 459 605 – –

470 529 11 (76)



25. OTHER RESERVES (CONTINUED)Group Company

2010 2009 2010 2009

$’000 $’000 $’000 $’000

(b) Movements

(i) Fair value reserve

Beginning of financial year (76) (476) (76) (476)

Fair value gains on available-for-sale,

financial assets (Note 14) 87 400 87 400

End of financial year 11 (76) 11 (76)

(ii) Currency translation reserve

Beginning of financial year 605 (2,654)

Net exchange differences on translation

of financial statements of foreign

subsidiaries and associated companies (146) 3,259


Other reserves are non-distributable.

26. RETAINED EARNINGS

(a) Retained profits of the Group and the Company are distributable except for retained profits of associated

companies amounting to $312,000 (2009: $291,000) which are included in the Group’s retained

profits.

(b) Movement in retained earnings for the Company is as follows:

Company

2010 2009

$’000 $’000


Net profit 86 7,740

Dividends paid (Note 27) (1,812) (15,403)


27. DIVIDENDS

Group and Company

2010 2009

$’000 $’000

Ordinary dividends paid

Final exempt dividend paid in respect of the previous year

of 0.5 cent (2009: 0.25 cent net per share) 1,812 906

Special exempt dividend paid in respect of the previous year

of nil cent (2009: 4 cents) per share – 14,497

1,812 15,403

At the Annual General Meeting on 28 April 2011, a first and final exempt (one tier) tax dividend of 0.5 cent per

share amounting to a total of $1,812,000 will be recommended. These financial statements do not reflect this

dividend, which will be accounted for in the shareholders’ equity as an appropriation of retained earnings in the

financial year ending 31 December 2011.



28. COMMITMENTS

(a) Operating lease commitments – where the Group is a lessee

The Group leases various buildings under non-cancellable operating lease agreements. The leases have

varying terms and renewal rights.

The future aggregate minimum lease payments under non-cancellable operating leases contracted for

at the reporting date but not recognised as liabilities, are as follows:

Group Company

2010 2009 2010 2009

$’000 $’000 $’000 $’000

Not later than one year 3,015 3,197 1,613 1,581

Between one and five years 4,578 6,455 3,112 4,725

7,593 9,652 4,725 6,306

(b) Unsecured corporate guarantees

The Company has provided unsecured corporate guarantees in favour of financial institutions in

respect of facilities granted to subsidiaries and associated companies amounting to $9,671,000 (2009:

$12,804,000). At 31 December 2010, the amount of the guaranteed loans drawn down by the subsidiaries

and associated companies amounted to $2,197,000 (2009: $3,872,000).

(c) Continuing financial support

The Company has provided an undertaking to provide continuing financial support to certain subsidiaries,

to enable the subsidiaries to meet their obligations as and when they fall due. As at 31 December 2010,

the net liabilities of these subsidiaries amounted to $14,992,000 (2009: $15,338,000).

(d) Other commitments

Group Company

2010 2009 2010 2009

$’000 $’000 $’000 $’000

Uncalled capital contribution

in respect of investment in

Sherford (M) Sdn Bhd 416 416 416 416



29. FINANCIAL RISK MANAGEMENT

Financial risk factors

The Group’s activities expose it to market risk (including currency risk, interest rate risk and price risk), credit

risk and liquidity risk. The Group’s overall risk management strategy seeks to minimise adverse effects from the

unpredictability of financial markets on the Group’s financial performance.

Financial risk management is carried out by management in accordance with the policies approved by the

Board of Directors. Management identifies, evaluates and hedges financial risks in close co-operation with the

Group’s operating units.

(a) Market risk

(i) Currency risk

The Group operates in Asia with dominant operations in Singapore, Indonesia and Australia.

Entities in the Group regularly transact in currencies other than their respective functional

currencies (“foreign currencies”).

Currency risk arises within the entities in the Group when transactions are denominated in foreign

currencies such as Singapore Dollar (“SGD”), Australian Dollar (“AUD”) and United States Dollar

(“USD”). The Group also has a number of investments in foreign subsidiaries, whose net assets

are exposed to currency risk. Exposures to foreign currency risks are managed as far as possible

by natural hedges and monitoring to ensure the exposure is minimised.

The Group’s currency exposure based on the information provided to key management is as

follows:

SGD USD AUD Other Total

$’000 $’000 $’000 $’000 $’000

2010

Financial assets

Cash and cash equivalents 10,732 537 8,570 1,171 21,010

Financial assets, available-for-sale 4,488 – – – 4,488

Inter-company balances 27,349 464 2,934 41 30,788

Trade and other receivables 2,144 4,574 5,438 5,017 17,173

Other financial assets 756 464 12 247 1,479

45,469 6,039 16,954 6,476 74,938

Financial liabilities

Trade and other payables 2,579 4,044 4,616 1,991 13,230

Inter-company balances 27,349 464 2,934 41 30,788

Borrowings 126 – – 438 564

30,054 4,508 7,550 2,470 44,582

Net financial assets 15,415 1,531 9,404 4,006 30,356

Less: Net financial assets denominated

in the respective entities’

functional currencies (17,011) – (5,172) (1,574)

Currency risk exposures (1,596) 1,531 4,232 2,432



29. FINANCIAL RISK MANAGEMENT (CONTINUED)

(a) Market risk (continued)

(i) Currency risk (continued)

SGD USD AUD Other Total

$’000 $’000 $’000 $’000 $’000

2009

Financial assets

Cash and cash equivalents 6,153 1,040 11,687 1,722 20,602

Financial assets, available-for-sale 4,401 – – – 4,401

Inter-company balances 27,311 – 2,529 – 29,840

Trade and other receivables 2,436 5,854 5,461 3,900 17,651

Other financial assets 757 505 12 153 1,427

41,058 7,399 19,689 5,775 73,921


Trade and other payables 3,113 5,012 6,010 1,592 15,727

Inter-company balances 27,311 – 2,529 – 29,840

Borrowings 1,139 – 608 – 1,747

31,563 5,012 9,147 1,592 47,314

Net financial assets 9,495 2,387 10,542 4,183 26,607

Less: Net financial assets denominated

in the respective entities’

functional currencies (10,378) – (6,722) (1,439)

Currency risk exposures (883) 2,387 3,820 2,744






The Company’s currency exposure based on the information provided to key management is as

follows:

2010 2009

SGD USD AUD Total SGD USD AUD Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Financial assets

Cash and cash

equivalents 4,861 5 2,174 7,040 3,730 166 840 4,736

Financial assets

available-for-sale 4,488 – – 4,488 4,401 – – 4,401

Trade and other

receivables 15,937 516 7,958 24,411 15,400 562 11,914 27,876

Other financial

assets 752 – – 752 752 – – 752

26,038 521 10,132 36,691 24,283 728 12,754 37,765


Trade and other

payables 2,907 – – 2,907 3,266 38 – 3,304

Borrowings 43 – – 43 83 – – 83

2,950 – – 2,950 3,349 38 – 3,387

Net financial

assets 23,088 521 10,132 33,741 20,934 690 12,754 34,378

Less: Net financial

assets

denominated

in the

entity’s

functional

currency (23,088) – – (20,934) – –

Currency risk

exposures – 521 10,132 – 690 12,754






If the USD or AUD change against SGD by 4% (2009: 4%) with all other variables including tax

rate being held constant, the effects arising from the net financial asset position would be as

follows:

2010 2009

Increase/(Decrease)

Profit

after tax

Profit

after tax

$’000 $’000

Group

USD against SGD

– strengthened 61 95

– weakened (61) (95)

AUD against SGD


– weakened (169) (153)

Company

USD against SGD


– weakened (21) (28)

AUD against SGD


– weakened (405) (510)

(ii) Price risk

The Group is exposed to equity securities price risk arising from the investments held by the

Group and classified on the consolidated balance sheet as available-for-sale. These securities

are listed in Singapore.

If prices for equity securities listed in Singapore change by 9% (2009: 14%) with all other variables

including tax rate being held constant, the effects on equity will be:

2010 2009

Increase/(Decrease)

Equity Equity

$’000 $’000

Group

Listed in Singapore

– increased by 403 616

– decreased by (403) (616)





(iii) Cash flow and fair value interest rate risks

Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will

fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that

the fair value of a financial instrument will fluctuate due to changes in market interest rates. The

Group’s income is substantially independent of changes in market interest rates.

The Group has no significant exposure to cash flow interest rate risks. The Company’s exposure

to cash flow interest rate risks arise mainly from non-current borrowings and loans to subsidiaries

at fixed rates.

(b) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in

financial loss to the Group. For trade receivables, the Group adopts the policy of dealing only with

customers of appropriate credit history, where appropriate to mitigate credit risk. For other financial

assets, the Group adopts the policy of dealing only with high credit quality counterparties.

Credit exposure to an individual counterparty is restricted by credit limit that are approved by management

based on ongoing credit evaluation. The counterparty’s payment profile and credit exposure are

continuously monitored at the entity level by the respective management and at the Group level. The

Group and Company have no major concentration of credit risk. The Company has no material third party

debtors. The top 5 debtors of the Group represented 35% of trade receivables in 2010 (2009: 29%).

As the Group and Company does not hold any collateral, the maximum exposure to credit risk for each

class of financial instruments is the carrying amount of that class of financial instruments presented on

the balance sheet, except as follows:

Company

2010 2009

$’000 $’000

Corporate guarantees provided to banks on subsidiaries’

and associates’ loans 9,671 12,804

The Group’s major classes of financial assets are bank deposits and trade receivables. The Company’s

major classes of financial assets are bank deposits and loans to subsidiaries and associates.

The Group’s credit risk for trade receivables based on the information provided to key management is

as follows:

Group

2010 2009

$’000 $’000

By geographical areas

Asia 5,802 6,147

Australia 3,999 4,482

9,801 10,629




(b) Credit risk (continued)

Financial assets that are neither past due nor impaired

Bank deposit 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.

Financial assets that are past due and/or impaired

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

receivables.

The age analysis of trade receivables past due but not impaired are as follows:

Group

2010 2009

$’000 $’000

Past due < 3 months 3,528 3,689

Past due 3 to 6 months 462 586

3,990 4,275

The carrying amount of trade receivables individually determined to be impaired and the movement in

the related allowance for impairment are as follows:

Group

2010 2009

$’000 $’000

Gross amount 2,119 2,007

Less: Allowance for impairment (2,119) (2,007)

– –


Currency translation difference 137 280

Allowance made 124 334

Allowance utilised (149) (155)


The impaired trade receivables arise mainly from sales to customers who have financial difficulties and

significant delays in payments.




(c) Liquidity risk

The table below analyses the maturity profile of the Group’s and Company’s financial liabilities (including

derivative financial liabilities) based on contractual undiscounted cash flows.

Less than

1 year

Between

1 and 2

years

Between

2 and 5

years

Over 5

years

$’000 $’000 $’000 $’000

Group

2010

Trade and other payables 10,292 381 1,314 1,243

Borrowings 502 59 19 –

10,794 440 1,333 1,243

2009

Trade and other payables 12,152 1,033 1,245 1,376

Borrowings 1,631 143 – –

13,783 1,176 1,245 1,376

Company

2010

Trade and other payables 1,813 381 713 –

Borrowings 40 9 – –

1,853 390 713 –

2009

Trade and other payables 1,625 434 1,245 –

Borrowings 40 55 – –

1,665 489 1,245 –

(d) Capital risk

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a

going concern and to maintain an optimal capital structure so as to maximise shareholder value. In order

to maintain or achieve optimal capital structure, the Group may adjust the amount of dividend payment,

return capital to shareholders, issue new shares, buy back issued shares, obtain new borrowings or sell

assets to reduce borrowings.

Consistent with others in the industry, management monitors capital based on a gearing ratio. The

Group’s and Company’s strategies, which were unchanged from 2009, are to maintain gearing ratios

below 50%.

The gearing ratio is calculated as borrowings divided by total capital. Total capital is calculated as

borrowing plus equity.




(d) Capital risk (continued)

The gearing ratios are computed as follows:

Group Company

2010 2009 2010 2009

$’000 $’000 $’000 $’000

Borrowings (Note 20) 564 1,747 43 83

Total equity 47,222 48,423 44,103 45,742

Total capital 47,786 50,170 44,146 45,825

Gearing ratio 1% 4% –* –*

* Less than 1%.

The Group and the Company do not need to comply with any externally imposed capital requirements

for the financial years ended 31 December 2009 and 2010.

(e) Fair value measurements

Level 1

$’000

As at 31 December 2010

Financial assets, available-for-sale 4,488

The fair value of financial 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 financial assets held by the Group and Company is the current bid price. These instruments are

included in Level 1.

The carrying amount less impairment provision of trade receivables and payables are assumed to

approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by

discounting the future contractual cash flows at the current market interest rate that is available to the

Group for similar financial instruments. The fair value of current borrowings approximated their carrying

amount.

30. RELATED PARTY TRANSACTIONS

In addition to information disclosed elsewhere in the financial statements, the following transactions took place

between the Group and related parties at terms agreed between the parties:

(a) Sales and purchases of goods and services

The Group

2010 2009

$’000 $’000

Sales to associate 21 18

Management fee income from an associated company 136 –

Rendering of services to a minority interest 14 191

Purchase of services from a minority interest 42 110

Purchase of services from a company in which a director

has an interest 56 193

Outstanding balances at 31 December 2010 arising from sales and purchases of goods are set out in

Notes 11 and 19, respectively.



30. RELATED PARTY TRANSACTIONS (CONTINUED)

(b) Key management’s personnel compensation

The key management’s personnel compensation is as follows:

The Group

2010 2009

$’000 $’000

Wages and salaries 989 1,167

Employer’s contribution to defined contribution plans,

including Central Provident Fund 32 37

1,021 1,204

Included in above, total compensation to directors of the Company amounted to $683,000 (2009:

$852,000).

The following information relates to remuneration of directors of the Company during the financial year:

The Group

2010 2009

Number of directors of the Company in remuneration bands:

Above $499,999 – 1

$250,000 to $499,999 1 1

Below $250,000 5 4

6 6

31. 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 Chairman and Managing

Director, the Chief Financial Officer, and the Chief Executive Officer of each business/geographic segment.

The Senior Management manages and monitors the business in the two primary geographic areas: Asia and

Australia. Operations of Asia and Australia are essentially similar and consist principally of the manufacture and

sale of pre-recorded optical products.



31. SEGMENT INFORMATION (CONTINUED)

The segment information provided to the Senior Management for the reportable segments for the year ended

31 December 2010 is as follows:

Asia Australia Group

$’000 $’000 $’000

Sales:

Total segment sales 21,713 18,611 40,324

Inter-segment sales (1,998) – (1,998)

Sales to external parties 19,715 18,611 38,326

Segment results 266 (480) (214)

Interest income 552

Dividend income 212

Finance expense (91)

Share of profit of associated companies 82

Profit before income tax 541

Income tax credit 90

Net loss 631

Segment assets 27,011 15,907 42,918

Short-term bank deposits 12,546


Investments in associated companies 2,647

Consolidated total assets 62,599

Segment liabilities 8,702 4,528 13,230

Borrowings 564

Current income tax liabilities 900

Deferred income tax liabilities 683

Consolidated total liabilities 15,377

Other segment items:

– Capital expenditure 723 82 805

– Depreciation 2,075 2,604 4,679

– Amortisation 137 – 137

– Property, plant and equipment 7,972 4,660 12,632

– Intangible assets 64 – 64




The segment information provided to the Senior Management for the reportable segments for the year ended

31 December 2009 is as follows:

Asia Australia Group

$’000 $’000 $’000

Sales:

Total segment sales 24,947 21,185 46,132

Inter-segment sales (3,192) – (3,192)

Sales to external parties 21,755 21,185 42,940

Segment results (311) (662) (973)

Interest income 365

Dividend income 232

Finance expense (155)

Share of profit of associated companies 351

Loss before income tax (180)

Income tax expense (239)

Net loss (419)

Segment assets 29,869 19,911 49,780

Short-term bank deposits 10,135


Current income tax recoverable 543

Investments in associated companies 2,589

Consolidated total assets 67,448

Segment liabilities 9,554 6,252 15,806

Borrowings 1,747

Current income tax liabilities 448

Deferred income tax liabilities 1,024

Consolidated total liabilities 19,025

Other segment items:

– Capital expenditure 448 464 912

– Depreciation 2,661 2,776 5,437

– Amortisation 188 – 188

– Property, plant and equipment 9,495 7,161 16,656

– Intangible assets 486 – 486

Sales revenue is based on the country in which the assets are located. Inter-segment transactions are determined

on an arm’s length basis.




Segment assets consists primarily of property, plant and equipment, intangible assets, inventories, receivables

and operating cash, and exclude deferred tax assets, taxes currently recoverable and short-term bank deposits.

Segment liabilities comprise operating liabilities and exclude items such as tax liabilities and bank borrowings.

Capital expenditure comprises additions to property, plant and equipment.

GEOGRAPHICAL MARKET OF THE CUSTOMERS

The following details show the distribution of the Group’s consolidated sales based on the countries in which

the customers are located, regardless of where the goods are produced.

2010 2009

$’000 $’000

External sales revenue

Asia 18,713 19,347

Australia 19,443 21,848

Others 170 1,745

38,326 42,940

As the Group operates substantially in one business segment which is the manufacture and sale of optical discs

and related data storage products, no other segment information by business segment is presented.

32. EVENTS OCCURRING AFTER BALANCE SHEET DATE

On 13 January 2011, the Company announced that it had entered into term sheets to acquire (i) 100% interest

in Centurion Dormitory (Westlite) Pte. Ltd. (“Westlite”); (ii) 45% interest in Lian Beng-Centurion (Mandai) Pte Ltd

(“JVCo”); and (iii) 75% interest in JYC-NCL Pte Ltd (“JYC-NCL”) (collectively, “Proposed Transactions”).

Westlite and JYC-NCL are companies engaged in the ownership, management and/or operation of workers

dormitories and temporary workers’ accommodation and on a combined basis, own and/or manage workers’

dormitories that can house more than 14,000 workers.

JVCo is a company which was granted and has exercised an option to purchase a piece of freehold industrial

land in Mandai. Subject to all necessary approvals from the relevant authorities, JVCo intends to develop and

operate dormorities on all or part of the land. Completion of the acquisition of this 45% interest in JVCo is

conditional upon completion of the acquisition of interests in Westlite and JYC-NCL and upon JVCo obtaining

all necessary approvals and permissions required for the land to be used for the development and operation of

workers’ dormitories with a capacity of at least 4,000 beds, on or before 30 September 2011.

The Proposed Transactions are subject to the Company entering into definitive sale and purchase agreements

with the respective vendors, and will require, amongst others, the approval of shareholders at an Extraordinary

General Meeting to be convened. The Company will make further announcements on any material developments

in respect of the Proposed Transactions at the appropriate time.



33. 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 2011 or later

periods and which the Group has not early adopted:

• Amendments to FRS 24 – Related party disclosures (effective for annual periods beginning on or after 1

January 2011)

The management anticipates that the adoption of the above FRSs, INT FRSs and amendments to FRS in the

future periods will not have a material impact on the financial statements of the Group and of the Company in

the period of their initial adoption, except for the amendments to FRS 24 – related party disclosures.

The amendment clarifies and simplifies the definition of a related party. However, the revised definition of a

related party will mean that some entities will have more related parties and will be required to make additional

disclosures.

Management is currently considering the revised definition to determine whether any additional disclosures will

be required and has yet to put systems in place to capture the necessary information. It is therefore not possible

to disclose the financial impact, if any, of the amendment on the related party disclosures.

34. AUTHORISATION OF FINANCIAL STATEMENTS

These financial statements were authorised for issue in accordance with a resolution of the Board of Directors

of SM Summit Holdings Limited on 25 March 2011


STATISTICS OF SHAREHOLDINGSAs at 16 March 2011

No. of shares issued : 362,419,500

Class of shares : Ordinary shares

Voting rights : One vote per share

DISTRIBUTION OF SHAREHOLDINGS

Size of Shareholding

Number of

Shareholders %

Number of

Shares %

1 - 999 586 12.53 279,381 0.08

1,000 - 10,000 2,029 43.39 10,265,860 2.83

10,001 - 1,000,000 2,041 43.65 106,665,822 29.43

1,000,001 and above 20 0.43 245,208,437 67.66

4,676 100.00 362,419,500 100.00

TWENTY LARGEST SHAREHOLDERS

No. Name of Shareholders

Number of

Shares %

1. UOB Kay Hian Pte Ltd 94,554,375 26.09

2. United Overseas Bank Nominees Pte Ltd 50,937,809 14.05

3. Lee Kerk Chong 20,932,543 5.78

4. Loh Kim Kang David 20,103,000 5.55

5. DBS Nominees Pte Ltd 9,982,904 2.75

6. OCBC Nominees Singapore Pte Ltd 7,032,937 1.94

7. Phillip Securities Pte Ltd 6,965,308 1.92

8. Han Seng Juan 6,144,000 1.70

9. Lee Joh Ern 4,537,500 1.25

10. Yuan Xiaomin 4,150,000 1.15

11. OCBC Securities Private Ltd 3,697,270 1.02

12. Kim Eng Securities Pte. Ltd. 3,560,105 0.98

13. DBS Vickers Securities (S) Pte Ltd 2,228,249 0.61

14. Ong Teck Beng (Wang Deming) 2,130,000 0.59

15. Tang Kok Onn Simon 1,846,000 0.51

16. Lee Geok Ing 1,523,437 0.42

17. Ng Ngee Hung 1,433,000 0.40

18. Ding Chin Look 1,250,000 0.34

19. Foo Kwang Eng 1,150,000 0.32

20. Tan Kock Hua 1,050,000 0.29

Total 245,208,437 67.66


STATISTICS OF SHAREHOLDINGSAs at 16 March 2011

SHAREHOLDING OF THE SUBSTANTIAL SHAREHOLDERS AS AT 16 MARCH 2011

Name

Registered in the name of

substantial shareholder

Shareholding in which

Substantial shareholder is

Deemed to have an interest

Lee Kerk Chong1 20,932,543 37,500,000

Thinkpac Limited2 – 90,000,000

Loh Kim Kang David3 20,103,000 90,000,000

Han Seng Juan4 6,144,000 90,000,000

Notes:

1. Lee Kerk Chong has a beneficial interest in 37,500,000 Shares held by United Overseas Bank Nominees Pte Ltd.

2. Thinkpac Limited has a beneficial interest in the 90,000,000 shares held by UOB Kay Hian Pte Ltd.

3. Loh Kim Kang David is deemed interested in the 90,000,000 shares held by Thinkpac Limited by virtue of his shareholdings

in Thinkpac Limited.

4. Han Seng Juan is deemed interested in the 90,000,000 shares held by Thinkpac Limited by virtue of his shareholdings in

Thinkpac Limited.

PERCENTAGE OF SHAREHOLDING IN PUBLIC’S HANDS

49.99% of the Company’s shares are held in the hands of public. Accordingly, the Company has complied with Rule

723 of the Listing Manual of the SGX-ST.

TREASURY SHARES – RULE 1207(9)(F)

The Company does not hold any Treasury Shares.


NOTICE OF ANNUAL GENERAL MEETINGSM SUMMIT HOLDINGS LIMITED(Incorporated in Singapore)

(Co. Reg. No: 198401088W)

NOTICE IS HEREBY GIVEN that the Annual General Meeting of SM SUMMIT HOLDINGS LIMITED (the “Company”) will

be held at The Conference Room, 45 Ubi Road 1 #05-00, Summit Building, Singapore 408696 on Thursday, 28 April

2011 at 10.00 am for the following purposes:

AS ORDINARY BUSINESS

1. To receive and adopt the Directors’ Report and the Audited Accounts of the Company for the year ended 31

December 2010 together with the Auditors’ Report thereon. (Resolution 1)

2. To declare a first and final one-tier tax exempt dividend of 0.5 cent per ordinary share for the year ended 31

December 2010 (2009: 0.5 cent one-tier tax exempt per ordinary share). (Resolution 2)

3. To re-elect the following Directors retiring by rotation pursuant to Article 89 of the Company’s Articles of

Association:

Ms Mak Bang Mui (Resolution 3)

Mr Tang Kay Hwa (Resolution 4)

Ms Mak Bang Mui will, upon re-election as a Director of the Company, remain a member of the Audit Committee

and will be considered non-independent for the purposes of Rule 704(8) of the Listing Manual of the Singapore

Exchange Securities Trading Limited.

4. To approve the payment of Directors’ fees of S$157,000 for the year ended 31 December 2010 (2009:

S$128,000). (Resolution 5)

5. To re-appoint PricewaterhouseCoopers LLP as the Company’s Auditors and to authorise the Directors to fix

their remuneration. (Resolution 6)

6. To transact any other ordinary business which may properly be transacted at an Annual General Meeting.

AS SPECIAL BUSINESS

To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without any

modifications:

7. Share Issue Mandate

That pursuant to Section 161 of the Companies Act, Chapter 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 fit provided that:



(Co. Reg. No: 198401088W)

AS SPECIAL BUSINESS (CONTINUED)

7. Share Issue Mandate (continued)

(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 fifty 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;

(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 (i)] (Resolution 7)

8. Renewal of Share Purchase Mandate

That for the purposes of Sections 76C and 76E of the Companies Act. Cap. 50, the Directors of the Company

be and are hereby authorised:

(a) to make purchases or otherwise acquire issued shares in the capital of the Company from time to time

(whether by way of market purchases or off-market purchases on an equal access scheme) of up to

ten percent (10%) of the total number of issued shares (excluding treasury shares) in the capital of the

Company (as ascertained as at the date of this Annual General Meeting of the Company) at the price of

up to but not exceeding the Maximum Price in accordance with the terms and conditions set out in the

Summary Sheet together with the Notice of Annual General Meeting to shareholders dated 12 April 2011,

and that this mandate shall, unless revoked or varied by the Company in general meeting, continue in

force until (i) the conclusion of the next Annual General Meeting of the Company; (ii) the expiration of the

period within which the next Annual General Meeting of the Company is required by law to be held; (iii)

the time when this mandate is revoked or varied by an ordinary resolution of the shareholders in general

meeting; or (iv) the date on which the purchases or acquisitions of shares by the Company are carried

out to the full extent mandated, whichever is earlier; and



(Co. Reg. No: 198401088W)

AS SPECIAL BUSINESS (CONTINUED)

8. Renewal of Share Purchase Mandate (continued)

(b) to complete and do all such acts and things (including executing such documents as may be required)

as they may consider expedient or necessary to give effect to the transactions contemplated by this

Resolution. [See Explanatory Note (ii)] (Resolution 8)

By Order of the Board

Hazel Chia Luang Chew

Juliana Tan Beng Hwee

Company Secretaries

Singapore, 12 April 2011

Explanatory Notes:

(i) 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 fifty 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.

(ii) The Ordinary Resolution 8 proposed in item 8 above, if passed, will empower the Directors from the date of

the above Meeting until the next Annual General Meeting to repurchase ordinary shares of the Company by

way of market purchases or off-market purchases of up to ten percent (10%) of the total number of issued

shares (excluding treasury shares) in the capital of the Company at the Maximum Price in accordance with

the terms and conditions set out in the Summary Sheet together with the Notice of Annual General Meeting

to shareholders dated 12 April 2011, the Companies Act, Chapter 50 and the Listing Manual of the Singapore

Exchange Securities Trading Limited.

Notes:

1. A Member entitled to attend and vote at the Annual General Meeting (the “Meeting”) is entitled to appoint

not more than two (2) 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 must be executed under seal or the hand

of its duly authorised officer or attorney.

3. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 45 Ubi Road

1, Summit Building, Singapore 408696 not less than forty-eight (48) hours before the time appointed for holding

the Meeting.

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PROXY FORMSM SUMMIT HOLDINGS LIMITED(Incorporated in Singapore)

(Co. Reg. No: 198401088W)

(Please see notes overleaf before completing this Form)

IMPORTANT:

1. For investors who have used their CPF monies to buy SM Summit

Holdings Limited’s shares, this Annual Report is forwarded to

them at the request of the CPF Approved Nominees and is sent

solely FOR INFORMATION ONLY.

2. This Proxy Form is not valid for use by CPF investors and shall

be ineffective for all intents and purposes if used or purported

to be used by them.

3. CPF investors who wish to vote should contact their CPF

Approved Nominees.

*I/We,

of

being a member/members of SM SUMMIT HOLDINGS LIMITED (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 Meeting as *my/our *proxy/proxies to vote for *me/us on *my/our behalf at the

Annual General Meeting (the “Meeting”) of the Company to be held on Thursday, 28 April 2011 at 10.00 am and at

any adjournment thereof. *I/We direct *my/our *proxy/proxies to vote for or against the Resolutions proposed at the

Meeting as indicated hereunder. If no specific direction as to voting is given or in the event of any other matter arising

at the Meeting and at any adjournment thereof, the *proxy/proxies will vote or abstain from voting at *his/her discretion.

The authority herein includes the right to demand or to join in demanding a poll and to vote on a poll.

(Please indicate your vote “For” or “Against” with a tick [✓] within the box provided.)

No. Resolutions relating to: For Against

1 Directors’ Report and Audited Accounts for the year ended 31 December 2010

2 Payment of proposed first and final dividend

3 Re-election of Mak Bang Mui as a Director

4 Re-election of Tang Kay Hwa as a Director

5 Approval of Directors’ fees

6 Re-appointment of PricewaterhouseCoopers LLP as Auditors

7 Share Issue Mandate

8 Renewal of Share Purchase Mandate

*Delete where inapplicable

Dated this day of 2011

Total number of Shares in: No. of Shares

(a) CDP Register

(b) Register of Members

Signature of Shareholder(s)

or, 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 defined in Section 130A of the

Companies Act, Chapter 50 of Singapore), you should insert that number of Shares. If you have Shares registered in your name in the Register of Members, you

should insert that number of Shares. If you have Shares entered against your name in the Depository Register and Shares registered in your name in the Register

of Members, you should insert the aggregate number of Shares entered against your name in the Depository Register and registered in your name in the Register

of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the Shares held by you.

2. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend and vote in his/her stead.

A proxy need not be a member of the Company.

3. Where a member appoints two proxies, the appointments shall be invalid unless he/she specifies 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 office of the Company at 45 Ubi Road 1, Summit Building, Singapore 408696

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 seal or under the hand of an officer or attorney duly authorised. Where the

instrument appointing a proxy or proxies is executed by an attorney on behalf of the appointor, the letter or power of attorney or a duly certified copy thereof must

be lodged with the instrument.

6. A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the

Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore.

General:

The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of

the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of Shares

entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown

to have Shares entered against his name in the Depository Register as at forty-eight (48) hours before the time appointed for holding the Meeting, as certified by The

Central Depository (Pte) Limited to the Company.

First fold and glue overleaf. Do not staple.


Co. Reg No. 198401088W


Singapore 408696

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OUR MISSIONTo maintain leadership in Optical Storage Media manufacturing

by providing a one-stop manufacturing solution

and delivering the highest quality products and services to our customers,

in the most effi cient manner.

CONTENTS16 Corporate Information17 Corporate Governance Report26 Financial Report87 Statistics of Shareholdings89 Notice of Annual General Meeting Proxy Form

04 Chairman’s Statement06 Board of Directors09 Senior Management12 Operations Review14 Five-Year Financial Highlights15 Group Structure

OUR VISIONTo be a leading global provider of data storage media,

serving the needs of the Leisure, Entertainment

and Software Industries.

Singapore

SUMMIT CD MANUFACTURE PTE LTDSUMMIT HI-TECH PTE LTD45 Ubi Road 1, Summit Building

Singapore 408696

Tel: (65) 6745 3288

Fax: (65) 6748 9612



FAIRVISION PTE LTD3NGINE PTE LTD45 Ubi Road 1, Summit Building

Singapore 408696

Tel: (65) 6745 3288

Fax: (65) 6749 7728


Website: www.fairvision.com.sg

China

SHANGHAI HUADE PHOTOELECTRON SCIENCE & TECHNOLOGY CO. LTDB4, B5, 558 Gang Ye Road

Song Jiang District

Shanghai Post Code 201614, China

Tel: (8621) 5785 2857

Fax: (8621) 5785 3545


Website: www.smsummit.com.cn

Australia

SUMMIT TECHNOLOGY AUSTRALIA PTY LTDUnit 28, Slough Business Park, Slough Avenue


Tel: (612) 8756 4488

Fax: (612) 8719 8750


Website: www.summittechnology.com.au

SUMMIT PRINTING (AUSTRALIA) PTY LTDUnit 51, Slough Business Park, Slough Avenue


Tel: (612) 8756 4488

Fax: (612) 8756 4468


Website: www.summitprinting.com.au

Indonesia

PT DIGITAL MEDIA TECHNOLOGYMM2100 Industrial Town

Jl. Bali H1-1, Cibitung

Bekasi 17520, Indonesia

Tel: (6221) 8998 3333

Fax: (6221) 8998 3939


Website: www.dmtech.web.id

CORE SUBSIDIARIES AND ASSOCIATE


Annual Report 2010

ALL THE RIGHT

CONNECTIONS

Co. Reg. No.198401088W


Singapore 408696

Tel: (65) 6745 3288

Fax: (65) 6748 9612




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Designed and produced by

(65) 6578 6522


Documents

SM SUMMIT HOLDINGS LIMITED - listed companycenturion.listedcompany.com/misc/ar2010.pdfUnit 28, Slough Business Park, Slough Avenue Silverwater NSW 2128, Australia Tel: (612) 8756 4488