ENERGISING FUTURE Report/Annual Report 2010.pdf2011 Business Outlook In an effort to improve...

ENERGISING the FUTURE

ANNUAL REPORT 2010

CONTENTSCorporate Profile

Chairman’s Statement

Operations Review

Financial Review

Financial Highlights

Group Structure

Board of Directors

Senior Management Team

Group OrganisationStructure

Global Network

Corporate Directory

Corporate Information

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CORPORATEPROFILE

Europtronic Group, a SGX-listed company headquartered in Singapore, has key businesses in electronic components manufacturing and distribution, and a rapidly-growing biotechnology unit.

Originally established in 1977 as Taiwan CTI Industrial Corporation, Europtronic has grown from a trading company into an integrated manufacturer and distributor of electronic components. The Group produces its own brand of film capacitors at two state-of-the art factories located in Shenzhen and Suzhou, in the People’s Republic of China. These products include metallized and non-metallized polypropylene film capacitors, and metallized polypropylene film capacitors for AC circuits (X2). It also produces chip inductors and chip beads via its 87.98% wholly-owned subsidiary Housing Technology Corp. in Hsinchu, Taiwan.

In addition, the Group also distributes other various active and passive components for established international brands, including AVX, Sharp, Micro Crystal, Tyco, JST and Semikron. These include products such as aluminum electrolytic and MLCC capacitors, opto-electronic devices such as transmitters and receivers, flat panel displays, base-band crystals, connectors, and diodes.

Europtronic Green Energy, established in 2008, is now one of the largest plantlet propagators in Asia. Using biotechnology, the unit specialises in the tissue culturing of fuel crop seedlings & ornamental plantlets. Based in Singapore, it is also one of the select few companies to start breeding and propagate clonal Jatropha seedlings and plantlets in China for clients across Asia Pacific region.

The Group has a strong geographical presence in the People’s Republic of China, as well as offices around Asia - Singapore, Beijing, Hong Kong, London, Shanghai, Shenzhen, Taipei, Tianjin, Chengdu and Xiamen.

In 2002, Europtronic was officially listed on the main board of the Singapore Stock Exchange (SGX) under the symbol “ETGL”.

annual report 2010EUROPTRONIC GROUP LTD

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Dear Shareholders,

On behalf of the Board of Directors, I would like to present the annual report for the financial year ended 31 December 2010 (“FY 2010”).

In FY 2010, Europtronic Group Ltd (“Europtronic” or the “Company”) and together with its subsidiaries (“the Group”), registered a net profit of SGD 3.6 million and total revenue of SGD 125.6 million, an increase by 89.0% as compared with FY 2009. After several years of hard work, the Company has returned to its steady growth path in FY 2010 from the global economic downturn across all industries in FY 2008.

Internal Corporate Restructuring

The company has been gradually carrying out the process of internal restructuring since the global financial crisis. For example, we have been nurturing a bigger pool of talents. These employees are key to the organization. With the commitment of our dynamic management team and dedicated employees, we are able to attain the Group’s success at all fronts. Correspondingly, we have to adapt quickly to meet the challenging demand of the ever changing market, constantly working to build and strengthen our institutional structure. The process is long and complex but the benefits vastly outweigh any temporary inconvenience.

Continued Expansion of Application Industries

We have been continuously developing new products, expanding our customer base beyond essential daily consumer electronic applications to various industries such as automotive sector as well as alternative / renewable energy; to open up more opportunities for the Group and increase its profitability. While trying to obtain various certifications, we continue to optimize and enhance our product quality in order to assure excellent customer service. For instance, the Group’s Components Manufacturing Business Unit (CMBU) successfully attained TS 16949 certification this year.

MESSAGE TOSHAREHOLDERS


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Successfully facing the challenges

Due to Asian economy recovery, various countries and regions which Europtronic operates in faces rising cost and higher tax rate. It brings forth challenges to Europtronic and we responded with the best way possible. In an effort to offer more support to workers with low income, the government of China lifted its minimum wage standards. We acted quickly through enhancing automation to cut down on manpower needs and indirectly, reduce total labor cost. This cost cutting becomes necessary for us to maintain a strict budget to achieve a desired profit margin. In recent years, the factory is affected by the government’s effort to green the nation. Local factories have to take turns cutting power consumption. To reduce losses from such measures, we make sure that the production yield rate is as high as possible.

Moving in the right direction

On the other hand, the Group continues its mission on improving the overall long term competitive advantage. We began to dispose off our non-core assets to channel resources to core business activities. Looking ahead, 2011 will present many new and exciting opportunities for growth.

2011 Business Outlook

In an effort to improve organizational process performance, the announcement of a three year (2008-2010) re-organization project previously did bring the Group to new heights. I would like to take this opportunity to thank all the shareholders and stakeholders who have contributed to Europtronic’s recovery over the past year. I look forward to bringing you another successful year in 2011!

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In 2010, our R&D team developed new products and penetrated into new industries like LED TV, LED Lighting, UPS, Solar Energy and Wind Power. The new product lines are used in PV Inverter, and other applications like DC Link, DC Filter, and Snubber capacitor for IGBT module.

We have also achieved another milestone in October 2010 by obtaining ISO TS16949 for our manufacturing business unit. This will enable us to venture into automotive market. With all these new products and management systems in place, our manufacturing arm is now transforming from a traditional film capacitor business focusing in TV/Notebook, home appliance market to Green Energy and Automotive industry.

EXPLORINGOPPORTUNITIES


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OPERATIONSREVIEW

Manufacturing Business Unit

Revenues from the Group’s Components Manufacturing Business Unit (CMBU) increased by 29.3% from SGD 21.6 million in FY2009 to SGD 27.9 million in FY 2010.This increases is due to the following reasons:

- Change in product mix resulting in an overall increase in the sale of higher value and higher margin products;

- Higher machine utilization due to increase of sales; and

- Better yield rate and production efficiency.

In FY2010, the manufacturing division continued to focus on its research and development initiatives. Amidst the challenging business climate, the division is pleased to announce that for 2010, the sales growth rate has increased. This was due to successful penetration into new markets such as Taiwan. The division also continued its long term relationships with strategic customers such as TPV, Delta, Lite-On, Panasonic and Yamaha, while forging new ones with Chicony and Emerson. In order to stay ahead of competition, the division will be rolling out more cost-cutting measures, as well as optimizing existing manufacturing processes.

Corresponding actions that were carried out during 2010 included the lowering of inventories levels, expanding of manufacturing facility in China to cater to the ever increasing customers’ demand, enhancing product quality and increasing customer satisfaction levels.

The manufacturing division attained ISO TS16949 certification for automotive sector in 2010. TS16949 is an international standard to certify our product quality fulfill the requirement of automotive industry. This achievement is in line with the division’s strategic plan to expand its market reach and customer base in the automotive industry. The process of getting certified has also improved CMBU’s overall management system.

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The manufacturing division plans to produce new products with the aim of attaining market leadership among its competitors. Focus will be given to the solar power inverter, which is a critical component in the solar energy system. The division sees potential for this product to expand over the next two years and expects the solar inverter to gain a strong foothold in the industry by 2012. The division will also aim for higher yield rate in the coming years so as to maximize its returns and profits. Above all, the division will continue to attract, recruit and retain talents who are deemed essential in achieving its business goals. Riding on today’s accomplishments, the Group strives to continue positioning itself favorably so as to better its results moving forward.

OPERATIONSREVIEW


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Distribution Business Unit

Amidst a challenging market environment, the Components Distribution Business Unit has seen tremendous growth throughout the past year. The fact is that the unit doubled its sales revenue in 2010 as compared to 2009. The revenue contribution to the Group from the distribution unit in FY2010 was SGD 97.7 million or 77.8 %, compared with FY2009, the revenue increased by 117.7 %.

At a glance, FY2010 was a very successful year for the unit. Increasing customer base is one of the most important aspects of growing a business therefore; the unit stays in constant contact and focus with potential customers. It helps to widen the unit’s segmentation coverage. As expected, the unit reported strong developments in South East Asia especially Singapore and Thailand. While on the other hand, China, Taiwan, and Hong Kong remained as strong contributors for the unit because domestic consumption makes up a large proportion of the profit generated.

In FY2010, the unit sees continued strong demands across major industries. We have already covered Tel Communications, Power, Medical, and Industrial as well as Energy in 2010. This trend triggers tight supply during 2010. Indirectly, it resulted in unusually long lead time and allocations. The unit aims to further strengthening its market position through leveraging of new market segment, active customer service and innovative marketing.

With the slow but steady global economic recovery set to continue, the unit is expecting 2011 to be another good year. With many firms expanding their business into Asia which offers more options and competition worldwide, the unit remains optimistic about fiscal 2011 and sees strong growth in 2011.

Going forward, focus will be put on our key suppliers with products complementing existing product portfolio. Stress also will be given in specific segment for example smart phone, power management, solar, windmill, industrial and automotive. The unit also seeks to further strengthen its people’s skill and capability so as to control and lower its operation cost. Priority will be given on consolidating our backend support for our operations in China as the Chinese economy is expected to grow significantly in the coming years. On the other hand, the unit places a high value on the quality of its on going investments on any new potential joint venture as well as merges and acquisitions. All in all, with these strategic measures undertaken, the unit will continue to further boost opportunities in the market we are in.

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We continue to focus on driving growth with the following strategies:

• Obtaining new franchises from principal suppliers who are eager to drive new businesses; and

• Penetrating into new market segments with specialty products.

SEIZINGOPPORTUNITIES


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FINANCIALREVIEW

Group revenue increased by S$59.1 million or 89.0% from S$66.5 million in FY2009 to S$125.6 million in FY2010 and the increase was mainly from our distribution business.

The overall gross profit increased by 8.5% in FY2010 compared to FY2009 due to higher sales and better profit margin.

Administrative expenses increased by S$1.4 million were due to increase in salary cost, travelling expenses and professional fees incurred on the proposed acquisition of additional shares in a subsidiary.

Share of results from an associate decreased by S$0.1 million in FY2010 compared to FY2009 due mainly to dilution of interest from 25% to 10.42% in Dinghan Biotechnology Co Ltd during the year.

Finance expenses decreased by S$0.3 million or 14.4% due to a lower interest rates and early repayment of borrowings.

Revaluation on property, plant and equipment decreased by S$14.1 million in FY2010 compared to FY2009 due mainly to the disposal of land and property during the year.

The overall taxation of the Group increased by S$0.3 million in FY2010 compared to FY2009 due mainly to better performance of certain subsidiaries of the Group and due partly to tax incurred on disposal of land in Suzhou.

Property, plant and equipment decreased by S$6.4 million due partly to the disposal of land and property in FY2010.

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FINANCIALREVIEW

The increase in cash and bank balances of S$1.3 million was due to the proceeds received from the disposal of land in Suzhou.

Inventory increased from S$18.5 million in FY2009 to S$26.0 million in FY2010 due mainly to order placed in 3Q FY2010 in anticipation of the recovery in the electronic market.

Short-term borrowings increased by S$2.0 million in FY2010 compared to FY2009 due mainly to the re-classification of loans from long term borrowings.

The Group recorded a positive cash flow from operations of S$1.6 million in FY2010 due to an increase in revenue. A positive cash flow from investment activities of S$1.5 million for the year compared to negative cash flow of S$2.6 million in FY2009 due to proceeds received from the disposal of land in Suzhou.


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130

115

90

75

60

45

30

30

15

02006 2007 2008 2009 2010

76.982.0

70.7 66.5

125.6

Turnover (S$m)

10

5

0

(5)

(10)

(15)

(20)

(25)2006 2007 2008 2009 2010

Profit After Tax (S$m)

2

1

0

(1)

(2)

(3)

(4)

(5)2006 2007 2008 2009 2010

Earnings Per Share (Cents)

20

15

10

5

0

Net Tangible Assets Per Share (Cents)

2006 2007 2008 2009 2010

(9.3)

0.2

(6.7)

(20.1)

3.6

(2.72)

0.05

(1.87)

(4.46)

(0.04)13.17

11.719.49

5.536.30

FINANCIALHIGHLIGHTS

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For FY2010, we managed to get back on track to a steady growth which contributed by our distribution unit, subsidiaries in Hong Kong and Shenzhen as well as manufacturing unit in Suzhou. The launch of windmill and solar power product will be our key drivers for growth in the next few years. The manufacturing team will continue to focus in power management device to improve our margin in 2011. With this momentum, we aim to create greater returns and value for our stakeholders.

REALISINGOPPORTUNITIES


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UPT Component (S) Pte Ltd

Europtronic (H.K.) Company Limited

Europtronic Investment Pte Ltd

Europtronic (Singapore) Pte Ltd

Europtronic (Suzhou) Co., Ltd

Europtronic (Taiwan) Ind. Corp

Europtronic Electronic (Shenzhen) Co. Ltd

Europtronic Technology (Suzhou) Co. Ltd

Europtronic Green Energy Pte Ltd

Europtronic Group Ltd 100%

UPT Crypson Component (Shanghai) Co., Ltd

Project Industrial (H.K.) Limited

Crypson Electronics (S) Pte Ltd

Shenzhen Project Industrial Ltd.

Crypson Electronics (HK) Company Limited

Crypson Electronics (Shanghai) Co., Ltd

Housing Technology Corp.

GROUPSTRUCTURE

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Huang Shih-AnCHAIRMAN

One of the Group’s co-founders, Mr. Huang was appointed to the Board in November 2000. His primary responsibilities include charting and reviewing of the Group’s corporate developments, strategic initiatives, marketing operations, and overseas businesses.

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

Huang Chuang Shueh-OuVICE CHAIRMAN

One of the Group’s co-founders, Mrs. Huang is responsible for the Group’s operational and administrative matters as well as investment policies and financial issues. She was appointed to the Board in November 2000. In 1999, Mrs. Huang received the “Model of Overseas Entrepreneur Award” from the China Youth Career Development Association Headquarters, Republic of China.

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

Chen Wan Shou, ArthurNON-EXECUTIVE INDEPENDENT DIRECTOR

Mr. Chen Wan Shou, Arthur was appointed as Executive Director in January 2005 and was re-designated as non-executive director on March 1, 2006. With effect from February 26, 2010, he was re-designated as non-executive independent director of the Company. He is a member of the Company’s Audit, Nominating and Remuneration Committees. Mr. Chen has over 20 years of work experience in top management positions at Motorola. Before becoming the Vice-President and Regional Director for its Southeast Asia Region, he was Vice-President and Global Sales Director for Motorola Semiconductors Consumer Solutions Group.

Mr. Chen holds a Master Degree in Solid States Science from National Chiao Tung University in Taiwan.

Chiu Jin Yi, CheyneNON-EXECUTIVEINDEPENDENT DIRECTOR

Mr. Chiu was appointed to the Board in March 2002. He is currently Chairman of the Company’s Nominating and Remuneration Committees, as well as a member of the Audit Committee. Prior to his retirement in 2000, Mr. Chiu was the Taiwan representative to Singapore, from 1994 to 1996, and the Minister for Civil Service of Taiwan from 1996 to 2000.

He holds a Bachelor degree in Law from the National Cheng-Chi University in Taiwan and an Executive MBA from the National University of Singapore.

Huang Shih-An

Huang Chuang Shueh-Ou

Chen Wan Shou, Arthur

Chiu Jin Yi, Cheyne

BOARD OFDIRECTORS


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Lim Lee Meng

Huang Chien-Hung

Lim Lee MengNON-EXECUTIVEINDEPENDENT DIRECTOR

Mr. Lim was appointed to the Board in March 2002. He is Chairman of the Company’s Audit Committee, as well as a member of the Nominating and Remuneration Committees. Mr. Lim also holds independent directorships in several public listed companies in Singapore, including ARA Trust Management (Suntec) Limited, ARA Asset Management (Fortune) Limited, Datapulse Technology Limited, Teckwah Industrial Corporation Ltd and Tye Soon Ltd. He is currently a senior partner of RSM Chio Lim LLP, a member firm of RSM International and has more than 20 years experience in the accounting profession.

Mr. Lim is a practicing member of the Institute of Certified Public Accountants of Singapore, an associate member of the Institute of Chartered Secretaries and Administrators and a member of the Singapore Institute of Directors. He is also the Chairman of Yio Chu Kang Citizen Consultative Committee and the Chairman of the finance committee of Ang Mo Kio - Yio Chu Kang Town Council. He is also a member of the Casino Regulatory Authority.

Mr. Lim graduated from the Nanyang University with a Bachelor of Commerce (Accountancy) degree in May 1980. He also holds a Master of Business Administration degree from the University of Hull (1992), a Diploma in Business Law from the National University of Singapore (1989) and an ICSA Qualification from the Institute of Chartered Secretaries and Administrators.

Huang Chien-HungEXECUTIVE DIRECTOR & ACTING CHIEF EXECUTIVE OFFICER

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

Mr. Huang identifies and develops new business opportunities and strategic alliances. Prior to this current role, Mr. Huang began his career with the Group’s distribution business unit focused on expanding its regional presence and has been instrumental in developing it to be the Group’s largest revenue-generating business unit today.

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

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Leong Mei Theng

Leong Mei Theng is Group Financial Controller for the Group. Ms. Leong is responsible for directing key aspects of financial activities for the Group and its subsidiaries, managing of cash flow and funds for business operations, ensuring corporate governance as well as overseeing investor relations. Ms. Leong has been with the Group since 2004 and was promoted to the Group’s Finance Manager in 2006. Ms. Leong was appointed to her current position on 18 November 2010.

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

Tan Chee Kong

Tan Chee Kong is General Manager of the Components Manufacturing Business Unit (CMBU). He is responsible for the overall day-to-day operations of the Group’s manufacturing facilities in Suzhou and Shenzhen. He was previously Group Information Technology Director, responsible for planning, designing and implementing IT infrastructure and systems.

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

Hsieh Min-Tsun

Hsieh Min-Tsun is the Deputy General Manager, Sales of the Components Manufacturing Business Unit (CMBU). With over 25 years experience in the electronic components industry, he is well-connected in the upstream suppliers as well as downstream customers. Mr. Hsieh’s responsibilities include developing growth and sales strategies for the Greater China region, as well as grooming and retaining sales talents. Prior to joining us in 1997, Mr. Hsieh worked with Camel Electronic Ind., Corp from 1984 to 1989. He was promoted to Assistant Sales Manager when he joined Camel Electronic (M) Sdn Bhd from 1990 to 1997, where his final position was Assistant General Manager.

Uchita Masami

Uchita Masami is the Research & Development and Engineering Director of the Components Manufacturing Business Unit (CMBU). His responsibilities include product research and development, as well as product engineering.

Mr. Uchita has more than 20 years of professional work experience in the electronic components industry, and is a licensed electrical engineer for low voltage products in Japan. Prior to joining us in April 2003, Mr. Uchita worked with Taitsu Corporation in Japan from 1987 to March 2003, where he was promoted to Senior Chief of the Engineering Division in March 2002.

Timothy Tan Joo Kwang

Timothy Tan Joo Kwang is the Senior Director, Marketing for the Components Distribution Business Unit (CDBU). With over 20 years experience in product marketing, channel management and business development in the electronic components industry, his responsibilities include driving the overall marketing activities of CDBU’s product lines in the China and South East Asia regions. Prior to joining us in 2001, Mr. Tan worked with SGS Thomson Microelectronic, and served with the Republic of Singapore Air Force for six years.

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

Xiang Yi Ming

Xiang Yi Ming is one of the co-founders of Project Group which was incorporated in 2009. With over 22 years of experience in the electronics industry, Mr. Xiang has demonstrated a broad range of electronic expertise and a proven track record in managing and developing the Project Group. In addition to that, Mr. Xiang is responsible for the team’s overall marketing and product development strategy.

Mr. Xiang graduated from Zhejiang University in 1988 and gained a Bachelor Degree in Electrical Engineering.

Huang Yun Ju

Huang Yun Ju serves as Group Human Resources Director. She guides and manages the overall provision of human resources services, policies and programmes for the Group. Ms. Huang works with the management in providing a high performance culture that emphasizes empowerment, quality, productivity and the ongoing development of a talent pool.

Ms. Huang graduated from Lancaster University, United Kingdom, with a BSc (Hons) in management, and has a Washington-Fudan Executive MBA from the Olin School of Business at Washington University in the United States.

SENIOR MANAGEMENTTEAM


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GROUP ORGANIZATIONSTRUCTURE

Chairman’s Office

CEO’s Office

ProjectGroup CDBU* CMBU**

GreenEnergy

GroupFinance

GroupHR

GroupIT

Housing

* CDBU- Components Distribution Business Unit ** CMBU- Components Manufacturing Business Unit

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GLOBALNETWORK

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1 London2 Chengdu3 Beijing4 Tianjin5 Suzhou6 Shanghai7 Shenzhen8 Hong Kong9 Hsinchu10 Taipei11 Singapore


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Singapore Europtronic (Singapore) Pte LtdCrypson Electronics (Singapore) Pte LtdUPT Component (S) Pte LtdEuroptronic Group LtdEuroptronic Investment Pte LtdEuroptronic Green Energy Pte Ltd

No. 80 Marine Parade Road#16-08 Parkway ParadeSingapore 449269 Tel: (65) 64472037Fax: (65) 64471582

Hong KongEuroptronic (H.K.) Company LimitedCrypson Electronics (H.K.) Company LimitedUnit 11A Phase 1Goodman Shatin Logisitics Centre6 Wong Chuk Yeung Street, FotanShatin, N.T. Hong KongTel: (852) 27564786Fax: (852) 27564876

TaiwanEuroptronic (Taiwan) Ind. Corp.10E-4 No.2 Lane 258 Rueiguang Rd.Neihu District ,Taipei City 11491Taiwan, R.O.C.Tel: (886)2-87523118Fax: (886)2-87523116

Housing Technology Corp.No. 8 Lane 646 Po Ai St.Chupei Hsinchu 30265Taiwan, R.O.C.Tel: (886) 3-5533280Fax: (886) 3-5533282

Shanghai UPT Crypson Component(Shanghai) Co., LtdCrypson Electronics (Shanghai) Co., Ltd Room 1301 No.333Zhao Jia Bang RoadShanghai City, PRC 200032Tel: (86) 21-64162909

Fax: (86) 21-64167138

Beijing UPT Crypson Component - Beijing BranchRoom 6Q, Office Tower A, East Gate Plaza, No. 9 Dongzhong Street, Dongcheng District,Beijing, PRC 100005Tel: (86) 10-65189830Fax: (86) 10-65189831

ShenzhenEuroptronic Electronic (Shenzhen) Co., Ltd Block 19, 8/F, Shatoujiao Free Trade Zone,Shenzhen, PRC 518081Tel: (86) 755-25260670Fax: (86) 755-25260672

Shenzhen Project Industrial Ltd.Project Industrial (H.K.) LimitedRoom 405, Block West,Tian An Hi-Tech Plaza Phase II,Tian An Cyberpark, Futian District, Shenzhen, PRC 518040 Tel: (86) 755-83439333Fax: (86) 755-83439666

ChengduUPTCrypson Component-Chengdu Representative OfficeRoom 408 Flat 1 Building 33No.86 Xin Hong Nan Road,Chengdu City, PRC 610051Tel: (86) 28-84330699Fax: (86) 28-84330699

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

Europtronic (Suzhou) Co., Ltd - Fuqing Representative Office4/F No. 7-8 Yuan Nong Zi BuildingHonglu Town, Fuqing, FujianPRC 350300Tel: (86) 591-85368590Fax: (86) 591-85368590

TianjinUPT Crypson Component -Tianjin Representative Office2-1-402 Jinxia Shuiyu HuachengZhongbei Town, Xiqing DistrictTianjin, PRC 300112Tel: (86) 22-27811013Fax: (86) 22-27811013

CORPORATEDIRECTORY

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Board of DirectorsExecutive:Huang Shih-An (Chairman)Huang Chuang Shueh-Ou (Vice Chairman) Huang Chien-HungNon-Executive:Chen Wan Shou, Arthur (Independent)Chiu Jin Yi, Cheyne (Independent)Lim Lee Meng (Independent)

Audit CommitteeLim Lee Meng (Chairman)Chiu Jin Yi, CheyneChen Wan Shou, Arthur

Nominating CommitteeChiu Jin Yi, Cheyne (Chairman)Lim Lee MengChen Wan Shou, Arthur

Remuneration CommitteeChiu Jin Yi, Cheyne (Chairman)Lim Lee MengChen Wan Shou, Arthur

AuditorsNexia TS Public Accounting Corporation5 Shenton Way#16-00 UIC BuildingSingapore 068808Tel : (65) 6534 5700Fax : (65) 6534 5766Kristin YS KimDirector-in-charge(Appointed since financial year ended31 December 2008)

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

Company SecretariesHazel Chia Luang ChewJuliana Tan Beng Hwee

Registered Office80 Marine Parade Road #16-06 Parkway ParadeSingapore 449269Tel: (65) 6447 2037Fax: (65) 6447 1582

Business Address80 Marine Parade Road#16-08 Parkway ParadeSingapore 449269Tel: (65) 6447 2037Fax: (65) 6447 1582

Investor Relations ConsultantMr. Michael Tan

Tel : (65) 9687 8783

Email : [email protected]

CORPORATEINFORMATION


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CORPORATE GOVERNANCE REPORT

The Board of Directors (the “Board”) and Management of Europtronic Group Ltd (the “Company”) are committed to high standards of corporate governance by complying with specifi c reference to the principles and guidelines as set out in the Code of Corporate Governance 2005 (“Code”). Corporate Governance refers to the processes by which corporate affairs are directed and managed with the objective of enhancing long-term shareholder’s value through improving corporate performance and accountability. Fundamentals of good corporate governance include timely and reliable fi nancial reporting, transparent and effi cient management, and respect for stakeholders such as employees, shareholders and customers.

The approach of the Company and its subsidiaries (collectively refer to as “the Group”) in 2010 remains unchanged. 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 specifi ed.

(A) BOARD MATTERS

Board’s Conduct of its Affairs

The Board is collectively responsible for the success of the Group. The Board works with Management to achieve this and Management remains accountable to the Board.

Role of the Board of Directors

The Board’s primary role is to protect and enhance long-term shareholder’s value. It sets the overall strategy for the Group and supervises executive management. To fulfi ll this role, the Board is responsible for the overall corporate governance of the Group including setting its strategic direction, establishing goals for management and monitoring the achievement of these goals.

Matters Requiring Board Approval

The directors have identifi ed a number of areas in which the Board has direct responsibility for decision-making. The Board considers and approves the following corporate events and actions including, but not limited to:

Approval of quarterly and full-year results announcements;

Approval of the annual report and accounts;

Declaration of interim and proposal of fi nal dividends;

Convening of shareholders' meetings;

Approval of corporate strategies; and

Material acquisitions and disposal of assets.

Matters which require the Board’s decision are those involving material acquisitions and disposal of assets, corporate or fi nancial restructuring and share issuances, dividends and other returns to shareholders. All other matters are delegated to Board committees whose actions are reported and monitored by the Board.

Board Processes

The Board meets at least four times a year and as and when deemed necessary. The Company’s Articles of Association provide for meetings to be held via a conference telephone, video conferencing or other similar means of communications.

To assist in the execution of its responsibilities, the Board has established an Audit Committee (“AC”), a Nominating Committee (“NC”), and a Remuneration Committee (‘RC”). These committees are regulated by its own set of function within its’ clearly defi ned terms of reference and operating procedures which are reviewed as and where appropriate.

Details of the AC, NC and RC are set out on pages 28,23 and 25 of this Annual Report respectively.

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Training of Directors

Directors are provided with background information about the Group’s history, mission, and values. The Directors also visit the Group’s operational facilities and meet with Management to gain a better understanding of its business operations, as and when deemed necessary.

The Group has an on-going training budget for its Directors to attend industry conferences and seminars whenever necessary. This budget may be utilised by each director subject to approval by the Chairman. Newly appointed directors would also be given training appropriate to the level of their past working experience. Directors are provided with updates, where appropriate, to enable them to make well-informed decisions and to discharge their duties and responsibilties.

Board Composition and Balance

As at the date of this report, the Board comprises six Directors of whom three are independent non-executive Directors, as follows:

Executive Directors:

Mr Huang Shih-An (Chairman) Mrs Huang Chuang Shueh-Ou (Vice Chairman) Mr Huang Chien-Hung (Acting Chief Executive Offi cer) Independent non-executive Directors:

Mr Lim Lee Meng Mr Chiu Jin Yi, Cheyne Mr Chen Wan Shou, Arthur

The NC reviews the composition of the Board to ensure that the Board has the appropriate mix of expertise and experience, and collectively possess the necessary core competencies for effective functioning and informed decision-making.

When a vacancy arises under any circumstances, or where it is considered that the Board would benefi t from the services of a new Director with particular skills, the NC, in consultation with the Board, determines the selection criteria and selects candidates with the appropriate expertise and experience for the position.

The NC has in place a process for selection and appointment of new Directors. This provides the procedure for identifi cation of potential candidates, evaluation of candidates skills, knowledge and experience, assessment of candidates’ suitability and recommendation for nomination to the Board.

The non-executive Directors constructively challenge Management and assist in the development of proposals on strategy

The Board and NC are of the view that the current size of the Board is appropriate taking into account the nature and scope of the Group’s operations. As a Group, the Directors bring with them a broad range of expertise in areas such as accounting, fi nance, management experience, industry knowledge, customer-based knowledge as well as familiarity with applicable regulatory requirements. The diversity of the Directors’ experience allows the useful exchange of ideas and views.

The Independent non-executive Directors contribute to the Board process by monitoring and reviewing Management’s performance against goals and objectives. Their views and opinions provide alternative perspectives to the Group’s business. When challenging Management proposals or, decisions, they bring independent judgement to bear on business activities and transactions involving confl icts of interest and other complexities.

The profi les of the directors are set out on page 18 of this Annual Report. Their shareholdings in the Company are also disclosed on page 34 of the Report of the Directors.


23


Chairman and Acting Chief Executive Offi cer (“Acting CEO”)

Currently, the roles of the Chairman and Acting CEO are separate in line with good corporate practices. They each perform separate functions to ensure appropriate balance of power, increased accountability and provide the Board with greater capacity for independent decision making. There is a clear division of responsibilities between the Chairman and Acting CEO.

Mr Huang Shih-An, Executive Chairman of the Group, manages the business of the Board and in consultation with the Executive Directors, sets Board meetings at appropriate intervals during the year. The Executive Chairman is also responsible for the workings of the Board and ensures the integrity and effectiveness of the governance process of the Board.

On 16 November 2010, Mr Huang Chien-Hung is appointed the Acting CEO of the Company after the departure of the Company’s CEO, Mr Chan Sze Ming on 30 November 2010. He assumes the role of Acting CEO until such time when the Board decides on the appointment of a new CEO.

As Acting CEO, besides overseeing the day-to-day running of the Group, Mr Huang Chien-Hung also undertakes management oversights for its fi nancial, operational, administrative and legal functions of the Group.

All major decisions made by the Executive Chairman and Acting CEO are endorsed by the Board. Their performance are reviewed periodically by the NC and their remuneration packages are reviewed periodically by the RC. As at the date of this report, the NC and RC comprise all independent non-executive Directors. The Board believes that the independent non-executive Directors have demonstrated high commitment in their role as Directors and have ensured that there is a good balance of power and authority. As such, the Board believes that there are adequate safeguards in place against an uneven concentration of power and authority in a single individual.

Although Mr Huang Chien-Hung, Acting CEO, is the son of Mr Huang Shih-An, Executive Chairman and substantial shareholder of the Company, and Mrs Huang Chuang Shueh-Ou, Vice Chairman and substantial shareholder of the Company, the Board is of the view that there is adequate representation of independent non-executive Directors (more than one-third) on the Board, and therefore, the appointment of a lead independent Director is deemed not necessary. However, the Board will review, from time to time, the need to appoint a lead independent Director.

Board Membership

Nominating Committee (“NC”)

As at the date of this report, the NC comprises three members, namely, Mr Chiu Jin Yi, Cheyne (Chairman), Mr Lim Lee Meng and Mr Chen Wan Shou, Arthur, all of whom are independent non-executive Directors. The NC is chaired by Mr Chiu Jin Yi, Cheyne who is not associated with any substantial shareholder.

The responsibilities of the NC are to develop and maintain a transparent and formal process for the appointment of new Directors, to review and recommend Directors retiring by rotation for re-election at annual general meeting as well as to review and evaluate the Board’s performance.

In addition, the NC also performs the following functions:

(a) Reviews and makes recommendation to the Board on all appointment and re-appoints and makes plans for succession, in particular for the Chairman and CEO.

(b) determines, on an annual basis, the independence of each Director.

(c) decides whether or not a director is able to and has been adequately carrying out his/her duties as a Director of the Company, particularly when he/she has multiple board representations.

(d) assesses the effectiveness of the Board as a whole and contribution of each Director to the effectiveness of the Board.

(e) makes recommendations to the Board for the continuation (or not) of services of any Director who has reached the age of seventy (70) years, where appropriate.

24


The NC had reviewed the independence of each Director for FY2010 in accordance with the Code’s defi nition of independence and is satisfi ed that at least one-third of the Board comprise non-executive independent Directors.

The Directors who are retiring and who, being eligible, will offer themselves for re-election at the forthcoming Annual General Meeting (“AGM”) are named below:

Name of directorDate of fi rstappointment

Date of last re-election/re-appointment

Director due for re-election / re-appointment

Mr Huang Shih-An 18 November 2000 28 April 2009 Retiring under Article 89Mrs Huang Chuang Shueh-Ou 18 November 2000 26 April 2010 –Mr Chiu Jin Yi, Cheyne 12 March 2002 26 April 2010 Re-appointing pursuant

to Section 153(6) of the Companies Act, Cap. 50

Mr Lim Lee Meng 12 March 2002 26 April 2010 –Mr Chen Wan Shou, Arthur 13 January 2004 28 April 2009 Retiring under Article 89Mr Huang Chien-Hung 3 August 2009 26 April 2010 –

The Directors submit themselves for nomination and re-election at regular intervals of at least once in every three years. In accordance with the Company’s Articles of Association, each Director is required to retire from offi ce at least once every three years by rotation and all newly appointed Directors will have to retire at the next AGM following their appointments. The retiring Directors are eligible to offer themselves for re-election.

In accordance with Section 153(6) of the Companies’ Act Cap.50, a Director over 70 years of age is required to vacate offi ce every year. The Director is eligible to offer himself for re-appointment.

The NC had recommended the re-election and re-appointment of the following Directors respectively who will be retiring at the forthcoming AGM:

(i) Mr Huang Shih-An

(ii) Mr Chen Wan Shou, Arthur

(iii) Mr Chiu Jin Yi, Cheyne

The Board has also accepted the NC’s recommendation and accordingly, the above-mentioned Directors will be offering themselves for re-election and re-appointment respectively.

Board Performances

The NC has established a process for assessing the effectiveness of the Board as a whole. A Board performance evaluation was carried out to assess and evaluate the Board’s size, composition and expertise, the Board’s access to information, as well as Board accountability and processes. The results of the performance evaluation will be reviewed by the Chairman of the NC. The Board and the NC ensure that Directors appointed to the Board possess the relevant experience, knowledge and skills critical to the Group’s business, so as to enhance the core competencies of the Board.

Directors’ Attendance at Board and Board Committee Meetings in FY2010

Board Audit CommitteeNominatingCommittee

RemunerationCommittee

Name of DirectorsNo of

meetingsheld

No ofmeetingsattended

No ofmeetings

held


No ofmeetings

held


No ofmeetings

held


Huang Shih-An 5 5 – – – – – –Huang Chuang Shueh-Ou 5 5 – – – – – –Chen Wan Shou, Arthur 5 4 4 3 1 0 1 0Chiu Jin Yi, Cheyne 5 5 4 4 1 1 1 1Lim Lee Meng 5 5 4 4 1 1 1 1Huang Chien-Hung 5 5 – – – – – –Chan Sze Ming* 5 5

* Resigned on 30 November 2010.


25


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

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

Board papers are prepared for each Board meeting and are normally circulated to the Directors before the meeting. The Board papers include suffi cient information from Management on fi nancial, business and corporate issues to enable the Directors to be properly briefed on issues to be considered at Board meetings. Analysts’ reports on the Group are also forwarded to the Directors on an on-going basis as and when received by Management.

The Directors have independent access to the Company Secretary and senior management of the Group at all times in carrying out their duties.

The Company Secretary or her representative attends all Board and Board Committees meetings. The Company Secretary provides advices, secretarial support and assistance to the Board and ensure adherence to Board procedures and relevant rules and regulations applicable to the Company.

The Directors may seek independent legal and other professional advice, as required, to fulfi ll their duties and responsibilities as Directors and such costs will be borne by the Company.

(B) REMUNERATION MATTERS

Procedures for Developing Remuneration Policies

Remuneration Committee (“RC”)

As at the date of this report, the RC comprises three members, namely, Mr Chiu Jin Yi, Cheyne (Chairman), Mr Lim Lee Meng and Mr Chen Wan Shou, Arthur all of whom are independent non-executive Directors.

The RC reviews the framework of remuneration policies and packages for directors, the Acting CEO, senior management of the Group and employees related to Directors and controlling shareholders of the Group. The review covers all aspects of remuneration, including directors’ fees, salaries, allowances, bonuses, performance shares and options and benefi ts-in-kind. The review of the remuneration packages takes into consideration the industry standards, performance-related elements and the job scopes and levels of responsibility of the individual. The RC’s recommendations are submitted for endorsement by the entire Board.

The members of the RC have many years of corporate experience and are knowledgeable in the fi eld of executive compensation. However, the RC has access to external professional advice on remuneration and human resource related matters, if required.

Europtronic Employees’ Share Option Scheme (the “Share Option Scheme”)

The Share Option Scheme, administrated by the RC, covered confi rmed employees, associates of substantial shareholders and any director (including independent non-executive Directors) except for those who are the Company’s substantial shareholders or any employee who has been selected by RC.

No share options have been granted in FY2010.

Details of the Share Option Scheme are set out on page 33 of this Annual Report under the Report of the Directors. Performance Share Scheme (the “Scheme”)

The purpose of adopting the Scheme in addition to the existing Share Option Scheme is to give the Group greater fl exibility to align the interests of employees, especially key executives, with those of shareholders as well as to reward, retain and motivate employees to achieve superior performance.

26


Under the Scheme, awards represent the right of a Participant to receive fully paid ordinary shares in the Company (“Shares”) free of charge, upon the Participant achieving prescribed performance targets.

The selection of a Participant and the number of Shares which are the subject of each award to be granted to a Participant in accordance with the Scheme shall be determined at the absolute discretion of the RC, which shall take into account criteria such as his rank, job performance, years of service and potential for future development, his contribution to the success and development of the Group and the extent of effort required to achieve the performance target within the performance period.

Details of the Scheme are set out under page 34 of this Annual Report.

Level and Mix of Remuneration

In setting remuneration packages, the Group takes into account pay and employment conditions within the same industry and in comparable companies, as well as the Group’s relative performance and the performance of individual Director and the Acting CEO.

Directors’ fees payable to the independent non-executive Directors are set within a remuneration framework and in consideration of the contribution, effort and time incurred and responsibilities of the independent non-executive Directors. The RC had recommended to the Board an amount of S$105,000 as Directors fees for approval at the Company’s AGM.

The remuneration for the executive directors, the Acting CEO and the key senior management comprise a basic salary component and a variable component which is the annual bonus, based on the Group’s performance and the individual performance.

The annual reviews of the compensation of directors are carried out by the RC to ensure that the remuneration of the executive Directors, the Acting CEO and senior management commensurate with their performance, giving due regard to the fi nancial and commercial health and business needs of the Group. The performance of the Acting CEO (together with other senior management) is reviewed periodically by the RC and the Board.

Disclosure of Remuneration

On 12 March 2002, the Company entered into separate service agreements with the executive Directors, Mr Huang Shih-An and Mrs Huang Chuang Shueh-Ou. The service agreements do not have an expiry date as they were entered prior to the Company’s admission to the SGX-ST on 5 April 2002 but may be terminated by either party upon giving not less than six (6) months notice in writing.

The Company has also entered into separate service agreement with Mr Huang Chien-Hung on 11 August 2007 and he was appointed as Acting CEO on 16 November 2010. The Company issued an addendum to the Service Agreement for Mr Huang. There were no changes to the terms and conditions. These service agreements do not have an expiry date but may be terminated by either party upon giving not less than three (3) months notice in writing.

The service agreements may also be terminated if any of the executive Directors commits a breach of the service agreements, such as being convicted of an offence involving fraud or dishonesty or being adjudicated bankrupt.


27


The bands of remuneration in FY2010 are disclosed in the compensation table below:

Directors’ RemunerationName Fees Salary’ Bonus Others’ Total

Between $500,001 to $750,000

Nil

Between $250,001 to $500,000

Huang Shih-An 98.2 1.8 100

Huang Chuang Shueh-Ou 97.2 2.8 100

Chan Sze Ming* 98.8 1.2 100

Below $250,000

Chen Wan Shou, Arthur 100 100

Chiu Jin Yi, Cheyne 100 100

Lim Lee Ming 100 100

Huang Chien-Hung 97.0 3.0 100

Notes:

1) Includes Employers’ CPF contribution

2) Includes Transport medical and insurance

* Resigned on 30 November 2010.

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

As at 31 December 2010, there were 5 employees who are related to a Director or the Acting CEO. These 5 employees were: Mr Huang Hsuan-Chin(1), Ms Huang Chung-Huei(2), Ms Huang Yun Ju(3), Mr Tan Chee Kong(4) and Yang Hungi(5) all of whom are executive offi cers. The basis of determining the remuneration of these related employees is the same as the basis of determining the remuneration of other unrelated employees. For the year under review, the remuneration of each related employee is below S$150,000.

Adjustments to the remuneration packages for the related employees are reviewed annually by the RC to ensure that they are in line with the Group’s staff remuneration guidelines and commensurate with their job scope and level of responsibility. In the event that a member of the RC is related to the employee under review, that member will abstain from the review accordingly.

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

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

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

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

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

As at 31 December 2010, the Group’s top 6 key executives (who are not Directors of the Company) were: Mr Chong Chee Seng*, Ms Leong Mei Theng, Ms Huang Yun Ju, Mr Tan Chee Kong, Mr Timothy Tan Joo Kwang and Mr Xiang Yi Ming.

*Resigned on 31 December 2010

28


The table below sets out the band of gross remuneration received by the top 6 key executives (who are not directors) of the Group in FY2010:

Remuneration band FY2010 FY2009

S$250,000 - S$500,000 – –

Below S$250,000 6 5

(C) ACCOUNTABILITY AND AUDIT

Accountability

In presenting the quarterly and full-year announcements and annual fi nancial statements to shareholders, the Board aims to provide the shareholders with a detailed analysis, explanation and assessment of the Group’s fi nancial position and prospects. In addition, Management provides to the executive Directors monthly management accounts, which show the Group’s performance, position and prospects.

Audit Committee (“AC”)

As at the date of this report, the AC comprises three members, namely Mr Lim Lee Meng (Chairman), Mr Chiu Jin Yi, Cheyne and Mr Chen Wan Shou, Arthur, all of whom are independent non-executive Directors.

The Board is of the view that the AC members have adequate accounting or related fi nancial management expertise and experience to discharge the AC’s functions.

The AC meets at least 4 times a year and as and when deemed necessary to discuss and review with the external auditors and Management, the Group’s accounting, auditing and fi nancial reporting matters so as to ensure that an effective control environment is maintained.

The AC monitors proposed changes in accounting policies, reviews the internal audit functions and discusses the accounting implications of major transactions.

Specifi cally, the AC:

reviews the audit plans (including the nature and scope of the audit before the audit commences) and evaluates their overall effectiveness through regular meetings with the internal and external auditors;

reviews and recommends to the Board the re-appointment of external auditors;

reviews the scope and results of the internal audit procedures including the effectiveness of the internal audit functions;

evaluates the adequacy of the internal control systems of the Group by reviewing management letter from the internal and external auditors, and the management’s responses and actions to correct any defi ciencies;

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

reviews the quarterly and full year announcement and annual fi nancial statements to shareholders before submission to the Board for adoption;

reviews interested person transactions in accordance with the requirements of the Listing Manual of the SGX-ST to ensure that they are on normal commercial terms and not prejudicial to the interests of the Company and its minority shareholders;

reviews all non-audit service provided by the external auditors to determine if the provision of such service would affect the independence of the external auditors; and

considers, if any, 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 resources, which are necessary to enable it to discharge its functions properly


29


The Company has in place a whistle-blowing programme where employees may, in confi dence, report possible improprieties which may cause fi nancial loss or non fi nancial 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.

Annually, the AC meets with the external auditors and internal auditors separately, without the presence of Management. This is to review the adequacy of audit arrangements, with particular emphasis on the observations of the auditors, the scope and quality of their audits and the independence and objectivity of the auditors. The AC had reviewed the non-audit services provided by the external auditors to satisfy itself that the nature and extent of such services, if any, would not affect the independence of the external auditors. The external auditors did not provide any non-audit services to the Group and there were no non-audit fees paid to the external auditors.

The Audit Committee, with the concurrence of the Board, had recommended the re-appointment of Nexia TS Public Accounting Corporation as the external auditors at the forthcoming AGM.

Internal Control

The Board acknowledges that it is responsible for the overall internal control framework, but recognises that no cost effective internal control system will preclude all errors and irregularities, as a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can provide only reasonable and not absolute assurance against material misstatement or loss.

Risk assessment and evaluation takes place as an integral part of the annual strategic planning cycle. Having identifi ed the risks to the achievement of their strategic objectives, each business is required to document the management and mitigating actions in place and proposed in respect of each signifi cant risk.

During the fi nancial year under review, the AC, on behalf of the Board, has reviewed the effectiveness of the Group’s system of internal controls in the light of key business and fi nancial risks affecting the operations. Based on the internal auditors’ reports submitted by the internal auditors and the various controls put in place by Management, the Board is satisfi ed that there are adequate internal controls in the Group.

Internal Audit

The Board recognizes that it is responsible for maintaining a system of internal control processes to safeguard shareholders’ investments and the Group’s business and assets. The systems that are in place are intended to provide reasonable but not absolute assurance against the occurrence of material errors, human error, losses, fraud or other irregularities, and include the safeguarding of assets, the maintenance of proper accounting records, the reliability of fi nancial information, compliance with appropriate legislation and best practices, and the containment of business risks. The effectiveness of the internal fi nancial control systems and procedures are monitored by Management and the internal audit function is out-sourced to Baker Tilly Consultancy (Singapore) Pte Ltd (“Baker Tilly”).

The internal auditors report directly to the Chairman of the AC and present their reports, findings and recommendations to the AC. The Group’s internal audit activities are guided by the International Standards for the Professional Practice of Internal Auditing set by The Institute of Internal Auditors. The role of the internal auditors is to support the AC in ensuring that the Group maintains a sound system of internal controls by monitoring and assessing the effectiveness of key controls and procedures, conducting in-depth audits of high risk areas and undertaking investigations as directed by the AC. The AC assesses the adequacy of the internal audit function on an annual basis.

(D) COMMUNICATION WITH SHAREHOLDERS

Communication with Shareholders

The Company does not practice selective disclosure. In line with the continuous disclosure obligations of the Company pursuant to the SGX-ST’s Listing Rules and the Companies Act, Cap. 50, the Board’s policy is that all shareholders are informed of all major developments within the Group. Information is communicated to shareholders on a timely basis through:

annual reports that are prepared and issued to all shareholders;

30


quarterly and full year announcements containing a summary of the fi nancial information and affairs of the Group for the period are published through SGXNET and news releases, as appropriate;

notices of and explanatory memorandums for annual general meetings and extraordinary general meetings;

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

the Group’s website at www.europtronic.com at which shareholders can access information on the Group. The website provides, inter alia, corporate announcements, press releases, annual reports, and profi les of the Group. In addition, shareholders are encouraged to attend the AGM to ensure a high level of accountability and to stay informed of the Group’s strategy and goals. The AGM is the principal forum for dialogue with shareholders. The notice of the AGM is dispatched to shareholders, together with explanatory notes or a circular on items of special business.

At the AGM, shareholders are given opportunities to communicate their views on matters pertaining to the Group 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 as well as the external auditors will be available at the forthcoming AGM to address any queries raised by shareholders.

(E) DEALING IN THE COMPANY’S SECURITIES

The Group has in place procedures governing dealings in the Company’s shares by its Directors and key offi cers of the Company and its subsidiaries.

All Directors and key offi cers of the Company and its subsidiaries have been informed not to deal in the Company’s shares at all times whilst in possession of unpublished price sensitive information and during the periods commencing two weeks prior to the announcement of the Company’s results for each of the fi rst three quarters of its fi nancial 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.

The Directors and key offi cers are also expected to observe insider-trading laws at all times even when dealing in securities within permitted trading period. Where a potential confl ict of interest arises, the Director concerned does not participate in discussions and refrains from exercising any infl uence over other members of the Board.

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

The Company has complied with Rule 1207(18) of the Listing Manual of the SGX-ST.

(F) INTERESTED PERSON TRANSACTIONS

The Company has adopted an internal policy in respect of any transaction with interested person and has set out the procedures for review and approval of the Company’s interested person transactions. All interested person transactions are subject to review by the AC. During the fi nancial year under review, there are no interested person transactions entered into by the Company which are more than S$100,000.

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

(G) MATERIAL CONTRACTS

Save for the service agreements entered into with the Executive Directors, the Group did not enter into any material contracts in which the Acting CEO, directors or controlling shareholders has any interests and no such material contracts subsist at FY2010.


31


(H) RISK MANAGEMENT

The Company currently does not have a risk management committee. However, Management reviews the Group’s business and operational activities on a regular basis to identify areas of signifi cant business risks as well as appropriate measure to control and mitigate these risks. Signifi cant matter will be reported to the AC and Board.

32

DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010

The directors present their report to the members together with the audited fi nancial statements of the Group for the fi nancial year ended 31 December 2010 and the balance sheet of the Company as at 31 December 2010.

Directors

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

Mr Huang Shih-An (Chairman) Mrs Huang Chuang Shueh-Ou (Vice Chairman)Mr Huang Chien-Hung (Acting Chief Executive Offi cer)Mr Chiu Jin Yi, CheyneMr Lim Lee MengMr Chen Wan Shou, Arthur

In accordance with Article 89 of the Company’s Articles of Association, Mr Huang Shih-An and Mr Chen Wan Shou, Arthur are subject to retirement and re-election at the forthcoming Annual General Meeting.

In accordance with Section 153(6) of the Singapore Companies Act, Cap 50, Mr Chiu Jin Yi, Cheyne is subject to retirement and re-appointment at the forthcoming Annual General Meeting.

Arrangements to enable directors to acquire shares and debentures

Neither at the end of nor at any time during the fi nancial year was the Company a party to any arrangement whose object was to enable the directors of the Company to acquire benefi ts by means of the acquisition of shares in, or debentures of, the Company or any other body corporate, other than as disclosed under “Share options” on page 2 and 3 of this report.

Directors’ interests in shares and debentures

According to the register of directors’ shareholdings, none of the directors holding offi ce at the end of the fi nancial year had any interest in the shares or debentures of the Company or its related corporations, except as follows:

Holdings registered in name of director

Holdings in which director is deemed to have an interest

At01.01.2010

At 31.12.2010

At 01.01.2010

At 31.12.2010

Company

(No. of ordinary shares)

Mr Huang Shih-An 161,620,193 161,620,193 148,594,465 148,594,465

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

Mr Huang Chien-Hung (2) 12,397,620 12,397,620 − −

Mr Lim Lee Meng 108,000 108,000 − −

Mr Chiu Jin Yi, Cheyne 47,000 47,000 − −

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

By virtue of Section 7 of the Singapore Companies Act (Cap. 50) (the “Act”), Mr Huang Shih-An and Mrs Huang Chuang Shueh-Ou are deemed to have interests in all the subsidiaries at the beginning and at the end of the fi nancial year.

The Directors’ interests in the ordinary shares of the Company as at 21 January 2011 were the same as those as at 31 December 2010.



33

Directors’ contractual benefi ts

Since the end of the previous fi nancial year, no director has received or become entitled to receive a benefi t by reason of a contract made by the Company or a related corporation with the director or with a fi rm of which he is a member or with a company in which he has a substantial fi nancial interest, except as disclosed in the accompanying fi nancial statements and in this report.

Share options

(a) The Europtronic Employee Share Option Scheme (“Share Option Scheme”) approved by the shareholders of the Company on 18 February 2002 is administered by the Remuneration Committee comprising 3 members, namely, Mr Chiu Jin Yi, Cheyne (Chairman), Mr Lim Lee Meng and Mr Chen Wan Shou, Arthur.

(b) Under the Share Option Scheme, an option entitles the option holder to subscribe for a specifi c number of new ordinary shares in the Company comprised in the option at a subscription price per share determined with reference to the market price of the share at the time of grant of the option. The Remuneration Committee may, at its discretion, fi x that subscription price at a discount up to 20% off market price. The consideration for the grant of an option is $1.00. Options granted with the subscription price set at the market price shall only be exercised after the fi rst anniversary but before the tenth anniversary (fi fth anniversary for non-executive directors) of the date of grant of that option. Options granted with the market price set at a discount to the market price shall only be exercised after the second anniversary but before the tenth anniversary (fi fth anniversary for non-executive directors) of the date of grant of that option. The shares under option may be exercised in whole or in part on the payment of the relevant subscription price. Options granted will lapse when the option holder ceases to be a full-time employee of the Company or any company within the Group subject to certain exceptions at the discretion of the Company.

The selection of a participant and the number of shares granted shall take into account criteria such as rank, job performance, years of service and potential for future development, contribution to the success and development of the Group and the extent of effort required to achieve the performance target within the performance period.

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

Date of grant

Balanceas at

01.01.2010 Expired

Balanceas at

31.12.2010Exercise

priceExpirydate

28.07.2009 1,723,600 (79,200) 1,644,400 $0.1375 17.02.2013

1,723,600 (79,200) 1,644,400

No options have been granted to controlling shareholders of the Company or their associates (as defi ned in the Listing Manual of Singapore Exchange Securities Trading Limited).

No participant other than Huang Hsuan-Chin, Hsieh Min-Tsun, Chen Lai-Fu, Tan Joo Kwang and Huang Chung Huei has received 5% or more of the total number of shares under option available under the Scheme.

There were no options granted during the fi nancial year to subscribe for unissued shares of the Company.

No shares have been issued during the fi nancial year by virtue of the exercise of options to take up unissued shares of the Company.

There were no unissued shares of the Company under option at the end of the fi nancial year.

34


Europtronic Performance Share Scheme

(a) The Europtronic Performance Share Scheme was approved by shareholders of the Company at an Extraordinary General Meeting held on 26 April 2005. The Performance Share Scheme is also administered by the Remuneration Committee (“RC”), comprising Mr Chiu Jin Yi, Cheyne (Chairman), Mr Lim Lee Meng and Mr Chen Wan Shou, Arthur.

The purpose of adopting the Performance Share Scheme in addition to the existing Share Option Scheme is to give the Group greater fl exibility to align the interests of employees, especially key executives, with those of shareholders as well as to reward, retain and motivate employees to achieve superior performance.

(b) Since the commencement of the Performance Share Scheme, 2,000,000 ordinary shares vested were satisfi ed by delivery of shares and have been granted, as permitted under the Performance Share Scheme.

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

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

Some information on the Performance Share Scheme is as follows:

(i) Awards over the Company’s ordinary shares may be granted to all the executive directors, non-executive directors and executives of the Group, except those who are controlling shareholders, as may be determined by the Remuneration Committee from time to time.

(ii) Under the Performance Share Scheme, awards represent the right of a participant to receive fully paid ordinary shares in the Company free of charge, upon the participant achieving prescribed performance targets.

The selection of a participant and the number of shares which are the subject to each award to be granted to a participant in accordance with the Performance Share Scheme shall be determined at the absolute discretion of the RC, which shall take into account criteria such as his rank, job performance, years of service and potential for future development, his contribution to the success and development of the Group and the extent of effort required to achieve the performance target within the performance period.

(iii) The total number of new shares of the Company which may be issued pursuant to awards granted under the Performance Share Scheme on any date, when added to the number of total number of new shares issued and issuable in respect of all awards granted under the Performance Share Scheme, and all options granted under the Europtronic Employees’ Share Option Scheme, shall not exceed 15% of the total number of issued shares (excluding treasury shares) in the capital of the Company.

(iv) Subject to the prevailing legislation and SGX-ST guidelines, the Company will have the fl exibility to deliver ordinary shares of the Company to participants under the Performance Share Scheme upon vesting of their awards by way of an issue of new ordinary shares and/or the transfer of existing ordinary shares held by the Company in treasury.



35

Audit Committee

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

Mr Lim Lee Meng (Chairman) Mr Chiu Jin Yi, CheyneMr Chen Wan Shou, Arthur

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

During the fi nancial year, the Audit Committee held 4 meetings and performed the functions specifi ed in Section 201B(5) of the Singapore Companies Act, including the following:

Review the audit plans of the internal and external auditors of the Company (including the nature and scope of the audit before the audit commences), and evaluate their overall effectiveness through regular meetings with the internal and external auditors;

Review and recommend to the Board the re-appointment of external auditors;

Review the scope and results of the internal audit procedures including the effectiveness of the internal audit functions;

Evaluate the adequacy of the internal control systems of the Group by reviewing management letters from the internal and external auditors, and the management’s responses and actions to correct any defi ciencies;

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

Review the quarterly and full year announcements, and annual fi nancial statements to shareholders before submission to the Board for adoption;

Review interested person transactions in accordance with the requirements of the Listing Manual of the SGX-ST to ensure that they are on normal commercial terms and not prejudicial to the interests of the Company or its minority shareholders;

Evaluate quality of work performed by external auditors;

Review all non-audit services provided by the external auditors to determine if the provision of such service would affect the independence of the external auditors; and

Consider other matters as requested by the Board.

The Audit Committee has full access to and co-operation by the Company’s management and has full discretion to invite any director or executive offi cer to attend its meetings. The auditors have unrestricted access to the Audit Committee. The Audit Committee has reasonable resources to enable it to discharge its functions properly.

The Audit Committee has recommended to the Board that the independent auditor, Nexia TS Public Accounting Corporation, be nominated for re-appointment at the forthcoming Annual General Meeting of the Company.

36


Independent Auditor

The independent auditor, Nexia TS Public Accounting Corporation, has expressed its willingness to accept re-appointment.

On behalf of the directors

Huang Shih-AnDirector

Huang Chuang Shueh-OuDirector

23 March 2011

STATEMENT BY DIRECTORSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010


37

In the opinion of the directors,

(a) the balance sheet of the Company and the consolidated fi nancial statements of the Group as set out on pages 39 to 96 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 fl ows of the Group for the fi nancial year then ended; and

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

The Board of Directors has, on the date of this statement, authorised these fi nancial statements for issue.

On behalf of the directors

Huang Shih-AnDirector

Huang Chuang Shueh-OuDirector

23 March 2011

38

INDEPENDENT AUDITOR’S REPORTTO THE MEMBERS OF EUROPTRONIC GROUP LTD

Report on the Financial Statements

We have audited the accompanying fi nancial statements of Europtronic Group Ltd (the “Company”) and its subsidiaries (the “Group”) set out on pages 39 to 96, which comprise the consolidated balance sheet of the Group and the balance sheet of the Company as at 31 December 2010, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated cash fl ow statements of the Group for the fi nancial year then ended, and a summary of signifi cant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of fi nancial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act (the “Act”) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls suffi cient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition that transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profi t and loss accounts and balance sheets and to maintain accountability of assets.

Auditor’s Responsibility

Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity’s preparation of fi nancial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal 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 fi nancial statements.

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

Opinion

In our opinion, the consolidated fi nancial statements of the Group and the balance sheet of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2010, and the results, changes in equity and cash fl ows of the Group for the fi nancial year ended on that date.

Report on other Legal and Regulatory Requirements

In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors, have been properly kept in accordance with the provisions of the Act.

Nexia TS Public Accounting CorporationPublic Accountants and Certifi ed Public Accountants

Director-in-charge: Kristin YS KimAppointed since fi nancial year ended 31 December 2008

Singapore23 March 2011

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010

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


39

Group

Note2010$’000

2009$’000

Revenue 4 125,581 66,450

Cost of sales (106,802) (62,119)

Gross profi t 18,779 4,331

Other income 7 1,407 599

Other gains/(losses) – net 8 1,566 (8,547)

Expenses

- Distribution and marketing (6,180) (6,019)

- Administrative (9,494) (8,084)

- Finance 9 (1,762) (2,058)

Share of results of associated company 19 8 120

Loss before income tax 4,324 (19,658)

Income tax expense 10 (766) (417)

Net profi t/(loss) 3,558 (20,075)

Other comprehensive income/(losses):

Financial assets, available-for-sale

- Fair value gains 13 710 –

- Reclassifi cations – 7,189

Revaluation (losses)/gains on property, plant and equipment (426) 13,713

Currency translation differences arising from consolidation 74 (2,270)

Other comprehensive income, net of tax 358 18,632

Total comprehensive profi t/(loss) 3,916 (1,443)

Profi t/(loss) attributable to:

Equity holders of the Company (300) (21,463)

Non-controlling interests 3,858 1,388

3,558 (20,075)

Total comprehensive income/(loss) attributable to:

Equity holders of the Company 58 (2,831)

Non-controlling interests 3,858 1,388

3,916 (1,443)

Loss per share for net loss attributable to equity

holders of the Company (cents per share)

- Basic 11 (0.04) (4.46)

- Diluted 11 (0.04) (4.46)

40

BALANCE SHEETSAS AT 31 DECEMBER 2010


Group Company

Note2010$’000

2009$’000

2010$’000

2009$’000

ASSETSCurrent assetsCash and cash equivalents 12 8,656 7,322 217 290Financial assets, available-for-sale 13 1,421 1,031 1 1Trade and other receivables 14 29,645 30,719 9,621 10,052Inventories 15 26,049 18,458 – –Biological assets 16 – 2 – –Other current assets 17 2,407 2,425 15 23

68,178 59,957 9,854 10,366Assets held for sale under FRS 105 18 3,070 – – –

71,248 59,957 9,854 10,366

Non-current assetsInvestment in associated company 19 – 2,057 – –Investments in subsidiaries 20 – – 47,402 47,402Investment properties 21 383 – – –Financial assets, available-for-sale 13 6,594 4,529 – –Property, plant and equipment 22 41,959 48,355 – –Intangible assets 23 3,504 3,377 – –Deferred income tax assets 24 – 118 – –

52,440 58,436 47,402 47,402

Total assets 123,688 118,393 57,256 57,768

LIABILITIESCurrent liabilitiesTrade and other payables 25 29,590 28,379 1,772 2,293Borrowings 26 39,016 37,039 – 148Deferred income tax liabilities 24 28 – – –Current income tax liabilities 199 278 68 68

68,833 65,696 1,840 2,509

Non-current liabilitiesBorrowings 26 8,037 10,305 – –Deferred income 16 24 – –Deferred income tax liabilities 24 529 11 – –

8,582 10,340 – –

Total liabilities 77,415 76,036 1,840 2,509

NET ASSETS 46,273 42,357 55,416 55,259

EquityCapital and reserves attributable to equity holders of the CompanyShare capital 28 58,782 58,782 58,782 58,782Treasury shares 28 (318) (318) (318) (318)Other reserves 29 9,443 8,992 185 185Accumulated losses (27,161) (26,768) (3,233) (3,390)

40,746 40,688 55,416 55,259Non-controlling interests 5,527 1,669 – –Total equity 46,273 42,357 55,416 55,259

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010


41

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57

CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010

42


Note 2010 2009

$’000 $’000

Cash fl ows from operating activities

Net profi t/(loss) 4,324 (19,658)

Adjustments for:

- Allowance for impairment of doubtful receivables (Trade) 84 211

- Allowance for inventories obsolescence 15 233 1,297

- Reversal for inventories obsolescence 15 (260) –

- Amortisation of intangible assets 23 184 22

- Bad debts written (back)/off (36) 613

- Depreciation of property, plant and equipment 22 3,014 2,816

- Goodwill written off 23 – 987

- Impairment loss on fi nancial assets, available-for-sale – 7,701

- Interest expense 9 1,762 2,058

- Biological assets written-off 2 –

- Share of results on associated company (8) (120)

- Gain on disposal of fi nancial assets, available-for-sale 8 (507) –

- Gain on disposal of property, plant and equipment 8 (51) (137)

- Gain on disposal of intangible assets 8 (171) –

- Interest income 7 (16) (7)

- Write back of allowance for doubtful receivables (non-trade) (16) (16)

- Unrealised currency translation losses 70 1,402

8,608 (2,831)

Change in working capital

- Inventories (7,560) (2,174)

- Trade and other receivables 1,042 (9,147)

- Other current assets 18 1,198

- Trade and other payables 1,203 15,238

Cash generated from operations 3,311 2,284

Interest received 16 7

Interest paid (593) (686)

Income tax paid (181) (423)

Net cash provided by operating activities 2,553 1,182

Cash fl ows from investing activities

Additions to property, plant and equipment (1,149) (3,525)

Additions of intangible assets (443) (1,059)

Proceeds from disposal of fi nancial assets, available-for-sale 827 –

Proceeds from disposal of intangible assets 259 –

Proceeds from disposal of property, plant and equipment 1,859 1,959

Net cash provided by/(used in) investing activities 1,353 (2,625)

CONSOLIDATED STATEMENT OF CASH FLOWS (Cont’d)FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010


43

Note 2010 2009

$’000 $’000

Cash fl ows from fi nancing activities

Bank deposit pledged (3,905) (273)

Proceeds from borrowings 8,792 22,249

Proceeds from issuance of ordinary shares, net – 8,262

Repayment of borrowings (9,458) (23,680)

Repayments of fi nance lease liabilities (779) (176)

Interest paid (1,169) (1,372)

Net cash (used in)/provided by fi nancing activities (6,519) 5,010

Net (decrease)/increase in cash and cash equivalents (2,613) 3,567

Cash and cash equivalents

Beginning of fi nancial year 6,758 3,407

Effects of currency translation on cash and cash equivalents 42 (216)

End of fi nancial year 12 4,187 6,758

44

NOTES TO FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010

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

1. General information

Europtronic Group Ltd (the “Company”) is listed on the Singapore Exchange and incorporated and domiciled in Singapore. The address of its registered offi ce is 80 Marine Parade Road, #16-06 Parkway Parade, Singapore 449269.

The principal activity of the Company is that of an investment holding company. The principal activities of its subsidiaries are disclosed in Note 20 to the fi nancial statements.

2. Signifi cant accounting policies

2.1 Basis of preparation

These fi nancial statements have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”). The fi nancial statements have been prepared under the historical cost convention, except as disclosed in the accounting policies below.

The preparation of fi nancial statements in conformity with FRS requires management to exercise its judgement in the process of applying the Group’s accounting policies. It also requires the use of certain critical accounting estimates and assumptions. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are signifi cant to the fi nancial statements, are disclosed in Note 3.

Interpretations and amendments to published standards effective in 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 fi nancial years except as disclosed below:

(a) FRS 103 (revised) Business Combinations (effective for annual periods beginning on or after 1 July 2009)

As the changes have been implemented prospectively, no adjustments were necessary to any of the amounts previously recognised in the fi nancial statements.

(b) FRS 27 (revised) Consolidated and Separate Financial Statements (effective for annual periods beginning on or after 1 July 2009)

The revisions to FRS 27 principally change the accounting for transactions with non-controlling interests. Please refer to Notes 2.3(a)(iii) for the revised accounting policy on changes in ownership interest that results in a lost of control and 2.3(b) for that on changes in ownership interests that do not result in lost of control.

As the changes have been implemented prospectively, no adjustments were necessary to any of

the amounts previously recognised in the fi nancial statements. There were no transactions with non-controlling interests in the current fi nancial year. Accordingly, these changes do not have any impact on the fi nancial statements for the current fi nancial year.



45

2. Signifi cant accounting policies (Cont’d)

2.1 Basis of preparation (Cont’d)

(c) Amendment to FRS 7 Statement of Cash Flows (effective for annual periods beginning on or after 1 January 2010)

Under the amendment, only expenditures that result in a recognised asset in the balance sheet can be classifi ed as investing activities in the statement of cash fl ows. Previously, such expenditure could be classifi ed as investing activities in the statement of cash fl ows. This change has been applied retrospectively. It had no material effect on the amounts presented in the statement of cash fl ows for the current or prior year.

2.2 Revenue recognition

Sales comprise the fair value of the consideration received or receivable for the sale of goods 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, it is probable that the collectability of the related receivables is reasonably assured and when the specifi c criteria for each of the Group’s activities are met as follows:

Sale of goods

Revenue from these sales is recognised when a Group entity has delivered the goods to locations specifi ed by its customers and the customers have accepted the parts in accordance with the sales contract.

Dividend income

Dividend income is recognised when the Group’s rights to receive payment have been established.

Interest income

Interest income is recognised using the effective interest method.

Rental income

Rental income from operating leases (net of any incentives given to the lessees) is recognised on a straight-line basis over the lease term.

2.3 Group accounting

(a) Subsidiaries

(i) Consolidation

Subsidiaries are entities over which the Group has power to govern the fi nancial and operating policies so as to obtain benefi ts from its activities, generally accompanied by a shareholding giving rise to a majority of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date on which control ceases.

In preparing the consolidated fi nancial statements, transactions, balances and unrealised gains on transactions between group entities are eliminated. Unrealised losses are also eliminated but are considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

46



2.3 Group accounting (Cont’d)

(a) Subsidiaries (Cont’d)

(i) Consolidation (Cont’d)

Non-controlling interests are that part of the net results of operations and of net assets of a subsidiary attributable to the interests which are not owned directly or indirectly by the equity holders of the Company. They are shown separately in the consolidated statement of comprehensive income, statement of changes in equity and balance sheet. Total comprehensive income is attributed to the non-controlling interests based on their respective interests in a subsidiary, even if this results in the non-controlling interests having a defi cit balance.

(ii) 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.

Acquisition-related costs are expensed as incurred.

Identifi able assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date.

On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree at the date of acquisition either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifi able assets.

The excess of 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 identifi able assets acquired is recorded as goodwill. Please refer to the paragraph “Intangible assets - Goodwill” for the subsequent accounting policy on goodwill.

(iii) Disposals 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 reclassifi ed to profi t or loss or transferred directly to retained earnings if required by a specifi c 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 profi t or loss.

Please refer to the paragraph “Investments in subsidiaries and an associated company” for the accounting policy on investments in subsidiaries in the separate fi nancial statements of the Company.



47


2.3 Group accounting (Cont’d)

(b) 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.

(c) Associated company

Associated company is entity over which the Group has signifi cant infl uence, but not control, generally accompanied by a shareholding giving rise to voting rights of 20% and above but not exceeding 50%. Investment in associated company is accounted for in the consolidated fi nancial statements using the equity method of accounting less impairment losses, if any.

Investment in associated company is 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 company represents the excess of the cost of acquisition of the associate over the Group’s share of the fair value of the identifi able 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 company’s post-acquisition profi ts or losses are recognised in profi t 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 company 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 company are eliminated to the extent of the Group’s interest in the associated company. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. The accounting policies of associated company 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 investment in associated company are recognised in profi t or loss.

Investment in associated company is derecognised when the Group loses signifi cant infl uence. 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 signifi cant infl uence is lost and its fair value is recognised in profi t or loss.

Please refer to the paragraph “Investments in subsidiaries and an associated company” for the accounting policy on investment in associated company in the separate fi nancial statements of the Company.

48



2.4 Property, plant and equipment

(a) Measurement

(i) Land and buildings

Land and buildings are initially recognised at cost. Freehold land is subsequently carried at the revalued amount less accumulated impairment losses. Buildings and leasehold land are subsequently carried at the revalued amounts less accumulated depreciation and accumulated impairment losses.

Land and buildings are revalued by independent professional valuers on a triennial basis and whenever their carrying amounts are likely to differ materially from their revalued amounts. When an asset is revalued, any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset. The net amount is then restated to the revalued amount of the asset.

Increases in carrying amounts arising from revaluation, including currency translation differences, are recognised in the asset revaluation reserve, unless they offset previous decreases in the carrying amounts of the same asset, in which case they are recognised in profi t or loss. Decreases in carrying amounts that offset previous increases of the same asset are recognised against the asset revaluation reserve. All other decreases in carrying amounts are recognised as a loss in the statement of comprehensive income.

(ii) Other property, plant and equipment All other items of property, plant and equipment are initially recognised at cost and

subsequently carried at cost less accumulated depreciation and accumulated impairment losses.

(iii) Components of costs

The cost of an item of property, plant and equipment includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. The projected cost of dismantlement, removal or restoration is also included as part of the cost of property, plant and equipment if the obligation for the dismantlement, removal or restoration is incurred as a consequence of acquiring or using the asset.

(b) Depreciation

Depreciation of property, plant and equipment begins when it is available for use and is calculated using the straight-line method to allocate their depreciable amounts over their estimated useful lives as follows:

Useful lives Leasehold land, buildings and improvement - 40 – 50 years Machinery and equipment - 5 – 15 years Motor vehicles - 5 years

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

The residual values, estimated useful lives and depreciation method of property, plant and equipment are reviewed, and adjusted as appropriate, at each balance sheet date. The effects of any revision are recognised in profi t or loss when the changes arise.



49


2.4 Property, plant and equipment (Cont’d)

(c) Subsequent expenditure

Subsequent expenditure relating to property, plant and equipment that has already been recognised is added to the carrying amount of the asset only when it is probable that future economic benefi ts associated with the item will fl ow to the Group and the cost of the item can be measured reliably. All other repair and maintenance expenses are recognised in profi t or loss when incurred.

(d) Disposal

On disposal of an item of property, plant and equipment, the difference between the disposal proceeds and its carrying amount is recognised in profi t or loss within ‘Other gains/(losses) – net’. Any amount in revaluation reserve relating to that asset is transferred to retained profi ts directly.

2.5 Intangible assets

(a) Goodwill on acquisitions

Goodwill on acquisitions of subsidiaries on or after 1 January 2010 represents 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 identifi able assets acquired.

Goodwill on acquisition of subsidiaries prior to 1 January 2010 and on acquisition of associated company represents the excess of the cost of the acquisition over the fair value of the Group’s share of the net identifi able assets acquired.

Goodwill on subsidiaries is recognised separately as intangible assets and carried at cost less accumulated impairment losses.

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

Gains and losses on the disposal of subsidiaries and associated company include the carrying amount of goodwill relating to the entity sold, except for goodwill arising from acquisitions prior to 1 January 2001. Such goodwill was adjusted against retained profi ts in the year of acquisition and is not recognised in profi t or loss on disposal.

(b) Patent and club memberships

Patent and club memberships acquired are initially recognised at cost and are subsequently carried at cost less accumulated amortisation and accumulated impairment losses. These costs are amortised to profi t or loss using the straight-line method over their estimated useful lives and periods of contractual rights.

(c) Customer relationship

Customer relationship acquired is initially recognised at cost and is subsequently carried at cost less accumulated impairment losses.

50



2.5 Intangible assets (Cont’d)

(d) Research and development Research expenditure is written off as incurred. Expenditure on development activities, whereby research fi ndings are applied to a plan or design for

the production of new or substantially improved products and processes, is capitalised if this cost is identifi able and it is probable that the cost will generate future economic benefi t and its recoverable value exceeds the cost and can be measured reliably. The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads. Other expenditure is recognised in the statement of comprehensive income as an expense when incurred. Capitalised development expenditure is stated at cost less impairment losses. The management will carry out annual assessment that the criteria for capitalisation of development cost including technical and commercial feasibilities are met, if these criteria are not met, expenditure would be written off.

2.6 Investment properties

Investment properties comprise apartments that are held for long-term rental yields and/or for capital appreciation.

Investment properties are initially recognised at cost and subsequently carried at cost less accumulated depreciation and accumulated impairment losses. Depreciation is calculated using the straight-line method to allocate the depreciable amounts over the estimated useful lives of 50 years. The residual values, useful lives and depreciation method of investment properties are reviewed, and adjusted as appropriate, at each balance sheet date. The effects of any revision are included in profi t or loss when the changes arise.

Investment properties are subject to renovations or improvements at regular intervals. The cost of major renovations and improvements is capitalised and the carrying amounts of the replaced components are recognised in profi t or loss. The cost of maintenance, repairs and minor improvements is recognised in profi t or loss when incurred.

On disposal of an investment property, the difference between the disposal proceeds and the carrying amount is recognised in profi t or loss.

2.7 Investments in subsidiaries and an associated company

Investments in subsidiaries and an associated company are carried at cost less accumulated impairment losses in the Company’s balance sheet. On disposal of investments in subsidiaries and associated company, the difference between disposal proceeds and the carrying amounts of the investments are recognised in profi t or loss.

2.8 Impairment of non-fi nancial assets

(a) Goodwill

Goodwill recognised separately as an intangible asset is tested for impairment annually and whenever there is indication that the goodwill may be impaired.

For the purpose of impairment testing of goodwill, goodwill is allocated to each of the Group’s cash-generating-units (“CGU”) expected to benefi t from synergies arising from the business combination.

An impairment loss is recognised when the carrying amount of a CGU, including the goodwill, exceeds the recoverable amount of the CGU. The recoverable amount of a CGU is the higher of the CGU’s fair value less cost to sell and value-in-use.

The total impairment loss of a CGU is allocated fi rst to reduce the carrying amount of goodwill allocated to the CGU and then to the other assets of the CGU pro-rata on the basis of the carrying amount of each asset in the CGU.

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



51


2.8 Impairment of non-fi nancial assets (Cont’d)

(b) Intangible assets Property, plant and equipment Investments in subsidiaries and associated company

Intangible assets, property, plant and equipment and investments in subsidiaries and associated company are tested for impairment whenever there is any objective evidence or indication that these assets may be impaired.

For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash infl ows that are largely independent of those from other assets. If this is the case, the recoverable amount is determined for the CGU to which the asset belongs.

If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount.

The difference between the carrying amount and recoverable amount is recognised as an impairment loss in profi t or loss, unless the asset is carried at revalued amount, in which case, such impairment loss is treated as a revaluation decrease. Please refer to the paragraph “Property, plant and equipment” for the treatment of a revaluation decrease.

An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The carrying amount of this asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortisation or depreciation) had no impairment loss been recognised for the asset in prior years.

A reversal of impairment loss for an asset other than goodwill is recognised in profi t or loss, unless the asset is carried at revalued amount, in which case, such reversal is treated as a revaluation increase. However, to the extent that an impairment loss on the same revalued asset was previously recognised as an expense, a reversal of that impairment is also credited to profi t or loss.

2.9 Financial assets

(a) Classifi cation

The Group classifi es its fi nancial assets in the following categories: loans and receivables and available-for-sale. The classifi cation depends on the nature of the asset and the purpose for which the assets were acquired. Management determines the classifi cation of its fi nancial assets at initial recognition.

(i) Loans and receivables

Loans and receivables are non-derivative fi nancial assets with fi xed or determinable payments that are not quoted in an active market. They are presented as current assets, except for those expected to be realised later than 12 months after the balance sheet date which are presented as non-current assets. Loans and receivables are presented as “trade and other receivables” and “cash and cash equivalents” on the balance sheet.

(ii) Financial assets, available-for-sale

Financial assets, available-for-sale are non-derivatives that are either designated in this category or not classifi ed in any of the other categories. They are presented as non-current assets unless management intends to dispose of the assets within 12 months after the balance sheet date.

52



2.9 Financial assets (Cont’d)

(b) Recognition and derecognition

Regular way purchases and sales of fi nancial assets are recognised on trade-date – the date on which the Group commits to purchase or sell the asset.

Financial assets are derecognised when the rights to receive cash fl ows from the fi nancial assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. On disposal of a fi nancial asset, the difference between the carrying amount and the sale proceeds is recognised in profi t or loss. Any amount in the fair value reserve relating to that asset is reclassifi ed to profi t or loss.

Trade receivables that are factored out to banks and other fi nancial institutions with recourse to the Group are not derecognised until the recourse period has expired and the risks and rewards of the receivables have been fully transferred. The corresponding cash received from the fi nancial institutions is recorded as borrowings.

(c) Initial measurement

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

(d) Subsequent measurement

Financial assets, available-for-sale are subsequently carried at fair value except for investment in unquoted equity security that is carried at cost less any accumulated impairment losses, as they do not have a quoted market price in an active market and whole fair value cannot be reliably measured.

Loans and receivables are subsequently carried at amortised cost using the effective interest method.

Interest and dividend income on fi nancial assets, available-for-sale are recognised separately in profi t or loss.

(e) Impairment

The Group assesses at each balance sheet date whether there is objective evidence that a fi nancial asset or a group of fi nancial assets is impaired and recognises an allowance for impairment when such evidence exists.

(i) Loans and receivables Signifi cant fi nancial diffi culties of the debtor, probability that the debtor will enter bankruptcy,

and default or signifi cant delay in payments are objective evidence that these fi nancial assets are impaired.

The carrying amount of these assets is reduced through the use of an impairment allowance account which is calculated as the difference between the carrying amount and the present value of estimated future cash fl ows, discounted at the original effective interest rate. When the asset becomes uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are recognised against the same line item in profi t or loss.

The allowance for impairment loss account is reduced through profi t or loss in a subsequent period when the amount of impairment loss decreases and the related decrease can be objectively measured. The carrying amount of the asset previously impaired is increased to the extent that the new carrying amount does not exceed the amortised cost had no impairment been recognised in prior periods.



53


2.9 Financial assets (Cont’d)

(e) Impairment (Cont’d)

(ii) Financial assets, available-for-sale

In addition to the objective evidence of impairment described in Note 2.9(e)(i), a signifi cant or prolonged decline in the fair value of an equity security below its cost is considered as an indicator that the available-for-sale fi nancial asset is impaired.

If any evidence of impairment exists, the cumulative loss that was recognised in the fair value reserve is reclassifi ed to profi t or loss. The cumulative loss is measured as the difference between the acquisition cost (net of any principal repayments and amortisation) and the current fair value, less any impairment loss previously recognised as an expense. The impairment losses recognised as an expense on equity securities are not reversed through profi t or loss.

2.10 Financial guarantees

The Company has issued corporate guarantees to banks for borrowings of its subsidiaries. These guarantees are fi nancial guarantees as they require the Company to reimburse the banks if the subsidiaries fail to make principal or interest payments when due in accordance with the terms of their borrowings.

Financial guarantees are initially recognised at their fair values plus transaction costs in the Company’s balance sheet.

Financial guarantees are subsequently amortised to profi t or loss over the period of the subsidiaries’ borrowings, unless it is probable that the Company will reimburse the bank for an amount higher than the unamortised amount. In this case, the fi nancial guarantees shall be carried at the expected amount payable to the bank in the Company’s balance sheet.

Intra-group transactions are eliminated on consolidation.

2.11 Borrowings

Borrowings are presented as current liabilities unless the Group has an unconditional right to defer settlement for at least 12 months after the balance sheet date.

Borrowings are initially recognised at fair value (net of transaction costs) and subsequently carried at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profi t or loss over the period of the borrowings using the effective interest method.

2.12 Trade and other payables

Trade and other payables are initially recognised at fair value, and subsequently carried at amortised cost using effective interest method.

2.13 Fair value estimation of fi nancial assets and liabilities

The fair values of fi nancial instruments traded in active markets (such as exchange-traded and over-the-counter securities and derivatives) are based on quoted market prices at the balance sheet date. The quoted market prices used for fi nancial assets are the current bid prices; the appropriate quoted market prices for fi nancial liabilities are the current asking prices.

The fair values of fi nancial instruments that are not traded in an active market are determined by using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date. Where appropriate, quoted market prices or dealer quotes for similar instruments are used. Valuation techniques, such as discounted cash fl ow analyses, are also used to determine the fair values of the fi nancial instruments.

54



2.13 Fair value estimation of fi nancial assets and liabilities (Cont’d)

The fair values of currency forwards are determined using actively quoted forward exchange rates. The fair values of interest rate swaps are calculated as the present value of the estimated future cash fl ows discounted at actively quoted interest rates.

The fair values of current fi nancial assets and liabilities carried at amortised cost approximate their carrying amounts.

2.14 Leases

(a) When the Group is the lessee:

The Group leases land, motor vehicles and certain plant and machinery under fi nance leases and factories and warehouses under operating leases from non-related parties.

(i) Finance leases

Leases where the Group assumes substantially all risks and rewards incidental to ownership of the leased assets are classifi ed as fi nance leases.

The leased assets and the corresponding lease liabilities (net of fi nance charges) under fi nance leases are recognised on the balance sheet as plant and equipment and borrowings respectively, at the inception of the leases based on the lower of the fair value of the leased assets and the present value of the minimum lease payments.

Each lease payment is apportioned between the fi nance expense and the reduction of the outstanding lease liability. The fi nance expense is recognised in profi t or loss on a basis that refl ects a constant periodic rate of interest on the fi nance lease liability.

(ii) Operating leases

Leases where substantially all risks and rewards incidental to ownership are retained by the lessors are classifi ed as operating leases. Payments made under operating leases (net of any incentives received from the lessors) are recognised in profi t or loss on a straight-line basis over the period of the lease.

(b) When the Group is the lessor:

Operating leases

Leases of investment properties where the Group retains substantially all risks and rewards incidental to ownership are classifi ed as operating leases. Rental income from operating leases (net of any incentives given to the lessees) is recognised in profi t or loss on a straight-line basis over the lease term.

Initial direct costs incurred by the Group in negotiating and arranging operating leases are added to the carrying amount of the leased assets and recognised as an expense in profi t or loss over the lease term on the same basis as the lease income.

2.15 Inventories

Inventories are carried at the lower of cost and net realisable value. Cost is determined using the fi rst-in, fi rst-out method. The cost of fi nished goods and work-in-progress comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity) but excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and applicable variable selling expenses.



55


2.16 Income taxes

Current income tax for current and prior periods is recognised at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

Deferred income tax is recognised for all temporary differences arising between the tax bases of assets

and liabilities and their carrying amounts in the fi nancial statements except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profi t or loss at the time of the transaction.

A deferred income tax liability is recognised on temporary differences arising on investments in subsidiaries, associated companies and joint ventures, except where the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

A deferred income tax asset is recognised to the extent that it is probable that future taxable profi t will be available against which the deductible temporary differences and tax losses can be utilised.

Deferred income tax is measured:

(i) at the tax rates that are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date; and

(ii) based on the tax consequence that will follow from the manner in which the Group expects, at the balance sheet date, to recover or settle the carrying amounts of its assets and liabilities.

Current and deferred income taxes are recognised as income or expense in profi t or loss, except to the extent that the tax arises from a business combination or a transaction which is recognised directly in equity. Deferred tax arising from a business combination is adjusted against goodwill on acquisition.

2.17 Employee compensation

Employee benefi ts are recognised as an expense, unless the cost qualifi es to be capitalised as an asset.

(a) Defi ned contribution plans

Defi ned contribution plans are post-employment benefi t plans under which the Group pays fi xed contributions into separate entities such as the Central Provident Fund on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid.

(b) Employees share option scheme

The directors of the Company (including non-executive and independent directors) and employees of the Group receive remuneration in the form of share options as consideration for services rendered (“equity-settled transactions”).

The cost of equity-settled transactions is measured by reference to the fair value at the date on which the share options are granted. In valuing the share options, no account is taken of any performance conditions, other than conditions linked to the price of the shares of the Company (“market conditions”), if applicable.

56



2.17 Employee compensation (Cont’d)

(b) Employees share option scheme (Cont’d)

The cost of equity-settled transactions is recognised, together with a corresponding increase in the share option reserve, over the period in which the performance and/or service conditions are fulfi lled, ending on the date on which the relevant employees become fully entitled to the award (“the vesting date”). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date refl ects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The charge or credit to the consolidated income statement for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vested irrespective of whether or not the market condition is satisfi ed, provided that all other performance conditions are satisfi ed. The share option reserve is transferred to revenue reserves upon expiry of the options.

(c) Performance share scheme

Employees of the Company receive remuneration in the form of fully paid shares as consideration for services rendered. The cost of these equity settled transactions with employees is measured by reference to the fair value of the shares at the date on which the shares are granted. This cost is recognised in profi t or loss, with a corresponding increase in equity. There is no vesting period for these performance shares.

2.18 Currency translation

(a) Functional and presentation currency

Items included in the fi nancial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“functional currency”). The fi nancial statements are presented in Singapore Dollars, which is the functional currency of the Company.

(b) Transactions and balances

Transactions in a currency other than the functional currency (“foreign currency”) are translated into the functional currency using the exchange rates at the dates of the transactions. Currency translation differences resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the closing rates at the balance sheet date are recognised in profi t or loss, unless they arise from borrowings in foreign currencies and other currency instruments designated and qualifying as net investment hedges and net investment in foreign operations. Those currency translation differences are recognised in the currency translation reserve in the consolidated fi nancial statements and transferred to profi t or loss 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.



57


2.18 Currency translation (Cont’d)

(c) Translation of Group entities’ fi nancial statements

The results and fi nancial position of all the Group entities (none of which has the currency of a hyperinfl ationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i) Assets and liabilities are translated at the closing exchange rates at the reporting date; (ii) Income and expenses are translated at average exchange rates (unless the average is not a

reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated using the exchange rates at the dates of the transactions); and

(iii) All resulting currency translation differences are recognised in 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 reporting date. 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 to the executive committee 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 statement of cash fl ows, cash and cash equivalents include cash on hand, deposits with fi nancial institutions which are subject to an insignifi cant risk of change in value.

2.21 Share capital and treasury shares

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

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

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

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

58



2.22 Dividends to Company’s shareholders

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

2.23 Non-current assets held for sale

Non-current assets are classifi ed as assets held for sale and carried at the lower of carrying amount and fair value less costs to sell if their carrying amount is recovered principally through a sale transaction rather than through continuing use. The assets are not depreciated or amortised while they are classifi ed as held for sale. Any impairment loss on initial classifi cation and subsequent measurement is recognised as an expense. Any subsequent increase in fair value less costs to sell (not exceeding the accumulated impairment loss that has been previously recognised) is recognised in profi t or loss.

2.24 Biological assets

Biological assets are plants managed by the Company, which is involved in the agricultural activities of transforming biological assets for sales.

Biological assets are measured at fair value less estimated point-of-sale costs at initial recognition and at each balance sheet date. The fair value of biological assets is determined based on market price with reference to the species, growing condition, cost incurred and expected yield of the crops.

The gain or loss arising on initial recognition of biological assets at fair value less estimated point-of-sale costs and from a change in fair value less estimated point-of-sale costs is recognised in the statement of comprehensive income for the fi nancial period in which it arises.

2.25 Provisions for other liabilities and charges

Provisions for other liabilities and charges are recognised when the Group has a present legal or constructive obligation as a result of past events, it is more likely than not that an outfl ow of resources will be required to settle the obligation and the amount has been reliably estimated.

2.26 Contingent liabilities

Determination of the treatment of contingent liabilities in the fi nancial statements is based on management’s view of the expected outcome of the applicable contingency. Contingent liabilities are possible but not probable obligations whose existence will be confi rmed only by the occurrence or non-occurrence of one or more uncertain event not wholly within the control of the Group.

The Group consults with legal counsel on matters related to litigation and other experts both within and outside the Group with respect to matters in the ordinary course of business.

2.27 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.



59

3. Critical accounting estimates, assumptions and judgements

Estimates, assumptions and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

3.1 Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a signifi cant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next fi nancial year are discussed below:

(a) Useful lives of machinery and equipment

The costs of machinery and equipment for the manufacturing activities are depreciated on a straight-line basis over their useful lives. Management estimates the useful lives of these machinery and equipment to be within 5 to 15 years. These are common life expectancies applied in the industry. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets. Therefore, future depreciation charges could be revised.

(b) Impairment of property, plant and equipment

The carrying values of property, plant and equipment are reviewed for impairment when there are indicators of impairment. As at 31 December 2010, there are no indications of impairment and the carrying amount of the Group’s property, plant and equipment was $41,959,000 (2009: $48,355,000).

(c) Impairment of goodwill on consolidation

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value-in-use of the cash-generating units to which the goodwill is allocated. Estimating the value-in-use requires the Group to make an estimate of the expected future cash fl ows from the cash-generating unit, and also to choose a suitable discount rate in order to calculate the present value of those cash fl ows. The carrying amount of the Group’s goodwill arising from consolidation as at 31 December 2010 was $1,607,000 (2009: $1,607,000).

(d) Impairment of loans and receivables

Management reviews its loans and receivables for objective evidence of impairment at least quarterly. Signifi cant fi nancial diffi culties of the debtor, the probability that the debtor will enter bankruptcy, and default or signifi cant 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 signifi cant change in the payment ability of the debtor, or whether there have been signifi cant 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 fl ows are reviewed regularly to reduce any differences between the estimated loss and actual loss experience. The carrying amount of the Group’s loans and receivables at the balance sheet date is disclosed in Notes 12 and 14 to the fi nancial statements.

(e) Deferred income tax assets

The Group recognises deferred income tax assets on carried forward tax losses to the extent there are suffi cient estimated future taxable profi ts and/or taxable temporary differences against which the tax losses can be utilised and that the Group is able to satisfy the continuing ownership test. The carrying amount of the Group’s deferred income tax assets at the balance sheet date is $Nil (2009: deferred tax assets $118,000).

60


3. Critical accounting estimates, assumptions and judgements (Cont’d)

3.1 Key sources of estimation uncertainty (Cont’d)

(f) Employee share options

The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the employee share options at the date at which they are granted. Judgement is required in determining the most appropriate valuation model for the share option granted, depending on the terms and conditions of the grant. Management are also required to use judgement in determining the most appropriate inputs to the valuation model including expected life of the option, volatility and dividend yield.

3.2 Critical judgements in applying the entity’s accounting policies

The following are the judgments made by management in the process of applying the Group’s accounting policies that have the most signifi cant effect on the amount recognised in the fi nancial statements.

(a) Income taxes

The Group has exposures to income taxes in numerous jurisdictions. Signifi cant judgment is involved in determining the Group’s and the Company’s provision for income taxes. The Group and the Company recognise liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the fi nal tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. The carrying amounts of the Group’s and the Company’s provision for taxation at the balance sheet date were $199,000 (2009: $278,000) and $68,000 (2009: $68,000) respectively. The carrying amounts of the Group’s deferred tax assets and liabilities as at 31 December 2010 were $Nil (2009: $118,000) and $557,000 (2009: $11,000) respectively.

(b) Determination of functional currency

The Group measures foreign currency transactions in the respective functional currencies of the Company and its subsidiaries. In determining the functional currencies of the entities in the Group, judgment is required to determine the currency that mainly infl uences sales prices for goods and services and of the country whose competitive forces and regulations mainly determines the sales prices of its goods and services. The functional currencies of the entities in the Group are determined based on management’s assessment of the economic environment in which the entities operate and the entities’ process of determining sales prices.

(c) Impairment of fi nancial assets, available-for-sale

The Group classifies quoted investment securities as financial assets, available-for-sale and recognises changes in their fair value in equity. When the fair value declines, management exercises judgment based on the observable data relating to the possible events that may have caused the decline in value to determine whether the decline in value is an impairment that should be recognised in the income statement.

The Group has reversed the fair value losses of $Nil (2009: $7,189,000) to profi t or loss as the management in the opinion that trade prices had been below costs for a prolonged period.

4. Revenue

Group2010$’000

2009$’000

Sale of goods 125,581 66,450



61

5. Expenses by nature

Group2010 2009$’000 $’000

Purchases of inventories 102,358 55,357

Allowance for impairment of doubtful receivables (Note 33) 84 211

(Reversal)/allowance for inventories obsolescence (Note 15) (31) 1,297

Amortisation of intangible assets (Note 23) 184 22

Depreciation of property, plant and equipment (Note 22) 3,014 2,816

Employee compensation (Note 6) 13,236 10,779

Changes in inventories (7,110) (1,943)

Utilities 1,310 1,267

Rental expense on operating leases 730 547

Transportation 1,246 918

Professional fees 354 454

Other 7,101 4,497

Total cost of sales, distribution and marketing costs and administrative expenses 122,476 76,222

6. Employee compensation

Group2010 2009$’000 $’000

Wages and salaries 12,570 10,179

Employer’s contribution to defi ned contribution plans including Central Provident Fund 666 600

13,236 10,779

7. Other income

Group2010 2009$’000 $’000

Interest income

- bank deposits 16 7

Government Grant – Jobs credit scheme 40 111

Subsidy from foreign government 41 123

Sale of scrap 537 173

Consultancy service 317 –

Others 456 185

1,407 599

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 employer can receive depends on the fulfi lment of certain conditions under the scheme.

62


8. Other gains/(losses) – net

Group2010 2009$’000 $’000


- Impairment loss – Listed securities (Note 29) – (7,189)

- Impairment loss – Unlisted securities (Note13) – (512)

Goodwill written-off – (987)

Currency translation gain – net 837 4

Gain on disposal of property, plant and equipment 51 137

Gain on disposal of intangible assets 171 –

Gain on disposal of fi nancial assets, available-for-sale 507 –

1,566 (8,547)

9. Finance expenses

Group2010 2009$’000 $’000

Interest expense

- bank borrowings 1,156 1,345

- trust receipts 593 686

- fi nance lease liabilities 13 27

Finance expenses recognised in profi t or loss 1,762 2,058

10. Income taxes

(a) Income tax expense

Group2010 2009$’000 $’000

Tax expense attributable to profi t is made up of:

- Profi t from current fi nancial year:

Current income tax

- Singapore – 41

- Foreign 606 250

606 291

Deferred income tax (Note 24) 149 66

755 357

- Under provision in prior fi nancial years:

Current income tax 11 60

766 417



63

10. Income taxes (Cont’d)

(a) Income tax expense (Cont’d)

The tax on the Group’s profi t/(loss) before tax differs from the theoretical amount that would arise using the Singapore standard rate of income tax as follows:

Group2010 2009$’000 $’000

Profi t/(loss) before income tax 4,324 (19,658)

Tax calculated at tax rate of 17% (2009: 17%) 736 (3,342)

Effects of

- different tax rates in other countries (238) 1,196

- expenses not deductible for tax purposes 440 2,374

- income not subject to tax (1,330) (93)

- deferred tax assets not recognised 1160 222

- partial tax exemption – (27)

- other (13) 27

Tax charge 755 357

11. Loss per share

(a) Basic loss per share Basic loss per share is calculated by dividing the net loss attributable to equity holders of the Company by

the weighted average number of ordinary shares outstanding during the fi nancial year.

Group

2010 2009

Net loss attributable to equity holders of the Company ($’000) (300) (21,463)

Weighted average number of ordinary shares outstanding for basic loss per share (‘000) 675,109 481,192

Basic loss per share (cents per share) (0.04) (4.46)

(b) Diluted loss per share

Diluted loss per share amounts are calculated by dividing loss for the year that is attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the fi nancial year plus the weighted average number of ordinary shares that would be issued on the conversion of all the diluted potential ordinary shares into ordinary shares. The Company only has one category of dilutive potential ordinary shares – share options.

Potential ordinary shares are anti-dilutive when their conversion to ordinary shares would decrease earnings per share or increase loss per share. The calculation of diluted loss per share does not assume conversion, exercise, or other issue of potential ordinary shares that would have an anti-dilutive effect on loss per share.

For share options, the weighted average number of shares on issue has been adjusted as if all dilutive options were exercised. The number of shares that could have been issued upon the exercise of all dilutive share options less the number of shares that could have been issued at fair value (determined as the Company’s average share price for the fi nancial year) for the same total proceeds is added to the denominator as the number of shares issued for no consideration. No adjustment is made to the net loss.

64


11. Loss per share (Cont’d)

(b) Diluted loss per share (Cont’d)

Group

2010 2009

Net loss attributable to equity holders of the Company ($’000) (300) (21,463)

Weighted average number of ordinary shares outstanding for basic loss per share (‘000) 675,109 481,192

Diluted loss per share (cents per share) (0.04) (4.46)

12. Cash and cash equivalents

Group Company2010 2009 2010 2009$’000 $’000 $’000 $’000

Cash at bank and on hand 4,187 6,758 217 290

Short-term bank deposits 4,469 564 – –

8,656 7,322 217 290

For the purpose of presenting the consolidated statement of cash fl ows, cash and cash equivalents comprise the following:

Group2010 2009$’000 $’000

Cash and bank balances (as above) 8,656 7,322

Less: Bank deposits pledged (4,469) (564)

Cash and cash equivalents per consolidated statement of cash fl ows 4,187 6,758

Short-term bank deposits of $4,469,000 (2009: $564,000) were pledged to banks to secure trust receipts and trade facilities (Note 26).



65

13. Financial assets, available-for-sale

Group Company2010 2009 2010 2009$’000 $’000 $’000 $’000

Beginning of fi nancial year 5,560 6,072 1 1

Fair value gains recognised in equity (Note 29(b)(iv)) 710 – – –

Impairment losses recognised in profi t or loss (Note 8) – (512) – –

Disposals (320) – – –

Reclassifi cation from associated company (Note 19) 2,065 – – –

End of fi nancial year 8,015 5,560 1 1

Less: Current portion (1,421) (1,031) (1) (1)

Non-current portion 6,594 4,529 – –

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

Group Company2010 2009 2010 2009$’000 $’000 $’000 $’000

Listed securities

- equity securities – Singapore 1,421 1,031 1 1 Unlisted securities

- equity securities – Taiwan 4,529 4,529 – –

- equity securities – People’s Republic of China 2,065 – – –

8,015 5,560 1 1 Bank borrowings are secured on fi nancial assets, available-for-sale of the Group with carrying amount of $1,421,000

(2009: $1,031,000).

No impairment losses have been recognised during the fi nancial year ended 31 December 2010 (2009: $512,000).

The fair value of the unlisted equity securities is deemed to be not reliably measurable as the probabilities of the various estimates within the range cannot be reasonably assessed as used in estimating fair value. Consequently the fi nancial assets, available-for-sale is carried at cost less allowance for impairment.

66


14. Trade and other receivables

Group Company2010 2009 2010 2009$’000 $’000 $’000 $’000

Trade receivables

- Non-related parties 23,150 21,796 – –

- Bill receivables 360 580 – –

23,510 22,376 – –

Less: Allowance for impairment of receivables – non- related parties (407) (523) – –

Trade receivables – net 23,103 21,853 – –

Non-trade receivables

- Subsidiaries – – 9,420 9,852

- Receivables from disposal of property, plant and equipment 1,605 2,493 – –

- Advances to non-related parties 211 1,156 – –

- Receivables from scrap sales 633 673 – –

- Other 4,124 4,591 201 200

6,573 8,913 9,621 10,052

Less: Allowance for impairment of receivables – non-related parties (31) (47) – –

Non-trade receivables – net 6,542 8,866 9,621 10,052

29,645 30,719 9,621 10,052

The non-trade amount due from subsidiaries of the Company is unsecured, interest-free and is repayable on demand.

The Group has recognised a write back of allowance for impairment on trade and non-trade receivables of $Nil (2009: $80,000) and $16,000 (2009: $16,000) respectively subsequent to a debt recovered.

15. Inventories

Group2010 2009$’000 $’000

Raw materials 1,048 804

Work-in-progress 2,711 1,996

Finished goods 23,652 17,047

27,411 19,847

Less: Allowance of obsolescence (1,362) (1,389)

26,049 18,458

The cost of inventories recognised as an expense and included in “cost of sales” amounts to $102,358,000 (2009:$55,357,000).

The Group has recognised a reversal and write-down of $260,000 (2009: $Nil) and $233,000 (2009: $1,297,000) respectively and included in “distribution and marketing expenses”.



67

16. Biological assets

Group2010 2009$’000 $’000

Beginning of fi nancial year 2 2

Less: Write-off (2) –

End of fi nancial year – 2

17. Other current assets

Group Company2010 2009 2010 2009$’000 $’000 $’000 $’000

Deposits 1,210 273 – 4

Prepayments 1,197 2,152 15 19

2,407 2,425 15 23

18. Assets held for sale under FRS 105

Certain buildings are presented as held for sale following the decision of management to dispose the assets. The sale is expected to be completed by 2011.

Group Company2010 2009 2010 2009$’000 $’000 $’000 $’000

Assets held for sale:

Buildings at net book value 3,070 – – –

Carrying value in balance sheet 3,070 – – –

19. Investment in associated company

Group2010 2009$’000 $’000

Equity investment at cost – 360


Share of profi ts 8 120

Reclassifi cation to fi nancial assets, available-for-sale (Note 13) (2,065) –

End of fi nancial year – 2,057

68


19. Investment in associated company (Cont’d)

The summarised fi nancial information of associated company, not adjusted for the proportion of ownership interest held by the Group, is as follows:

Group2010 2009$’000 $’000

- Assets 14,283 13,934

- Liabilities 4,538 5,496

- Revenue 6,135 6,021

- Net (loss)/profi t (575) 482

Equity holding

2010 2009

Name of Company(Country of incorporation)

Principal activities(Country of business) % %

Dinghan Biotechnology Co., Ltd(People’s Republic of China) (a)

Supply of all sizes of the Phalaenophsis species of orchids and orchids seedlings, and growing of mericlone seedlings(People’s Republic of China)

10.42 25

(a) Audited by Ernst & Young LLP, Taiwan

During the year, Group has reduced the equity interest held for associated company from 25% to 10.42%.

20. Investments in subsidiaries

Company2010 2009$’000 $’000

Equity investments at cost


Increase in capital – 6,348

Impairment in subsidiary – (4,170)

End of fi nancial year 44,582 44,582

Amount due from a subsidiary (non-trade) 2,820 2,820

47,402 47,402

The non-trade amount due from a subsidiary is unsecured, interest-free and has no fi xed terms of repayment and settlement of this amount due from the subsidiary is neither planned nor likely to occur in the foreseeable future.

As a result, management considers this amount due from subsidiary to be in substance part of the Company’s net investment in this subsidiary.



69

20. Investments in subsidiaries (Cont’d)

Equity holding

2010 2009



Held by the Company:

Europtronic (HK) Company Limited (b) (Hong Kong)

Trading of electronic components(Hong Kong)

100 100

Europtronic (Singapore) Pte Ltd (a) (Singapore)

Trading of electronic components, and provision of handling services(Singapore)

100 100

Europtronic (Taiwan) Ind. Corp. (c) (Republic of China)

Trading of electronic components, procurement centre and business development centre of the Group(Republic of China)

100 100

Europtronic Investment Pte Ltd (a) (Singapore)

Investment holding(Singapore)

100 100

UPT Component (S) Pte Ltd (a) (Singapore)

Trading of electronic components(Singapore)

100 100

Europtronic Electronic (Shenzhen) Co., Ltd (a) (People’s Republic of China)

Manufacture and distribution of own in-house manufactured metalised fi lm capacitors, electronic components and ballasts(People’s Republic of China)

100 100

Europtronic (Suzhou) Co., Ltd (a) (People’s Republic of China)

Manufacture and distribution of own in-house manufactured metalised fi lm capacitors, plastic fi lm capacitors, ceramic capacitors, tantalum capacitors and various type of chip capacitors(People’s Republic of China)

100 100

Europtronic Technology (Suzhou) Co., Ltd

(a) (People’s Republic of China)

Dormant(People’s Republic of China)

100 100

Europtronic Green Energy Pte Ltd (a) (Singapore)

Growing of bio-fuel related plantlets and renewable energy related business development (Singapore)

100 100

Held by Europtronic Investment Pte Ltd:

Crypson Electronics (S) Pte Ltd (a) (Singapore)

Trading of electronic components and related goods(Singapore)

100 100

Held by Crypson Electronics (S) Pte Ltd:

Crypson Electronics (HK) Company Limited (b) (Hong Kong)

Trading of electronic components(Hong Kong)

100 100

Crypson Electronics (Shanghai) Co., Ltd

(a) (1)

(People’s Republic of China)

Trading of electronic components(People’s Republic of China)

100 100

70


20. Investments in subsidiaries (Cont’d)

Equity holding

2010 2009



Held by UPT Component (S) Pte Ltd:

UPT Crypson Component (Shanghai) Co., Ltd (a) (People’s Republic of China)

Trading of electronic components(People’s Republic of China)

100 100

Held by Europtronic (Taiwan) Ind. Corp.:

Housing Technology Corp. (c) (1)

(Republic of China)Manufacture and distribution of chip inductors and chip beads(Republic of China) 88 88

Held by Europtronic (HK) Co., Ltd:

Project Industrial (HK) Ltd (b) (Hong Kong)

Trading of electronic components(Hong Kong) 51 51

Held by UPT Crypson Component (Shanghai) Co., Ltd:

Shenzhen Project Industrial Ltd (a)

(People’s Republic of China)Trading of electronic components(People’s Republic of China) 51 51

(a) Audited by Nexia TS Public Accounting Corporation

(b) Audited by Nexia Charles Mar Fan & Co., a member fi rm of Nexia International

(c) Audited by Nexia, Sunrise CPAs & Co., a member fi rm of Nexia International

(1) As at the balance sheet date, the Group assessed the impairment of each of the subsidiaries. As the recoverable amount of Crypson Electronics (Shanghai) Co., Ltd and Housing Technology Corp are lower than its cost of investment, the management has impaired $227,000 and $463,000 respectively during the fi nancial year in the separate fi nancial statements of the respective subsidiaries based on value-in-use of the subsidiaries as at the balance sheet date.

21. Investment properties

Group2010 2009$’000 $’000

Beginning of fi nancial year – –

Reclassifi cation from property, plant and equipment (Note 22) 383 –

End of fi nancial year 383 –

Investment properties are carried at cost less accumulated depreciation and accumulated impairment losses at the balance sheet date.

The investment properties did not generate rental income during the fi nancial year.



71

22. Property, plant and equipment

Freehold land $’000

Leasehold land,

buildings and improvement

$’000

Machinery and

equipment$’000

Motor vehicles

$’000

Construction-in-

progress$’000

Total$’000

Group

2010

Cost or valuation

Beginning of fi nancial year

Cost – – 31,287 993 2,581 34,861

Valuation 4,167 28,470 – – – 32,637

4,167 28,470 31,287 993 2,581 67,498

Currency translation differences – (9) (6) (2) – (17)

Additions – 111 1,550 17 625 2,303

Disposals – (91) (306) (126) (2,189) (2,712)

Reclassifi cations to assets held for sale (Note 18) and investment properties (Note 21) – (3,682) – – (383) (4,065)

Adjustments – – (1,178) – 481 (697)

Revaluation adjustment (734) 826 – – – 92

Transfers – – 667 – (667) –

End of fi nancial year 3,433 25,625 32,014 882 448 62,402

Representing:

Cost – – 32,014 882 448 33,344

Valuation 3,433 25,625 – – – 29,058

3,433 25,625 32,014 882 448 62,402

Accumulated depreciation

Beginning of fi nancial year – 2,990 15,430 723 – 19,143

Currency translation differences – (7) (9) (2) – (18)

Depreciation charge – 753 2,159 102 – 3,014

Disposals – (82) (210) (95) – (387)

Adjustments – – (697) – – (697)

Reclassifi cations to assets held for sale (Note 18) – (612) – – – (612)

End of fi nancial year – 3,042 16,673 728 – 20,443

Net book value

End of fi nancial year 3,433 22,583 15,341 154 448 41,959

72


22. Property, plant and equipment (Cont’d)

Freehold land $’000

Leasehold land,

buildings and improvement

$’000

Machinery and

equipment$’000

Motorvehicles

$’000

Construction-in-

progress$’000

Total$’000

Group 2009Cost or valuationBeginning of fi nancial year

Cost – – 35,942 948 2,580 39,470

Valuation 2,890 17,776 – – – 20,666

2,890 17,776 35,942 948 2,580 60,136

Currency translation differences (128) (1,220) (2,779) (46) (294) (4,467)

Additions – 163 1,542 91 1,729 3,525

Disposals – (557) (4,852) – – (5,409)

Revaluation adjustment 1,405 12,308 – – – 13,713

Transfers – – 1,434 – (1,434) –

End of fi nancial year 4,167 28,470 31,287 993 2,581 67,498

Representing:

Cost – – 31,287 993 2,581 34,861

Valuation 4,167 28,470 – – – 32,637

4,167 28,470 31,287 993 2,581 67,498

Accumulated depreciation

Beginning of fi nancial year – 2,699 17,937 633 – 21,269

Currency translation differences – (208) (1,390) (26) – (1,624)

Depreciation charge – 577 2,123 116 – 2,816

Disposals – (78) (3,240) – – (3,318)

End of fi nancial year – 2,990 15,430 723 – 19,143

Net book value

End of fi nancial year 4,167 25,480 15,857 270 2,581 48,355

Machinery andequipment

Motorvehicles Total

$’000 $’000 $’000

Company2010CostBeginning and end of fi nancial year 3 67 70

Accumulated depreciationBeginning and end of fi nancial year 3 67 70

Net book valueEnd of fi nancial year – – –



73

22. Property, plant and equipment (Cont’d)

Machinery andequipment

Motorvehicles Total

$’000 $’000 $’000

Company2009CostBeginning and end of fi nancial year 3 67 70

Accumulated depreciationBeginning and end of fi nancial year 3 67 70

Net book valueEnd of fi nancial year – – –

(a) Included in additions in the consolidated fi nancial statements are machinery and equipments acquired under fi nance leases amounting to $1,471,000 (2009: $2,473,000).

The carrying amounts of machinery and equipments held under fi nance leases are $1,164,000 (2009: $1,984,000) at the balance sheet date.

(b) The freehold land, leasehold land, buildings and improvements of the Group were valued by independent professional valuers based on the properties’ highest-and-best-use using the Direct Market Comparison Method at the balance sheet date.

(c) If the land and buildings stated at valuation were included in the fi nancial statements at cost less accumulated depreciation, their net book values would be:

Group2010 2009$’000 $’000

Freehold land 2,762 2,762

Leasehold land, buildings and improvements 13,012 14,243

(d) Bank borrowings are secured on freehold and leasehold land, buildings and improvement of the Group with carrying amounts of $9,176,000 (2009: $13,425,000) (Note 26).

23. Intangible assets

Group2010 2009$’000 $’000

Composition:

Goodwill arising on consolidation (Note a) 1,607 1,607

Patents (Note b) 25 31

Club memberships (Note c) 574 680

Customer relationship (Note d) 741 785

Research and development (Note e) 557 274

3,504 3,377

74


23. Intangible assets (Cont’d)

(a) Goodwill arising on consolidation

Group2010 2009$’000 $’000

Cost

Beginning and end of fi nancial year 2,594 2,594

Accumulated impairment

Beginning of fi nancial year (987) –

Impairment charge (Note 8) – (987)

End of fi nancial year (987) (987)

Net book value 1,607 1,607

Impairment tests for goodwill

Goodwill is allocated to the Group’s cash-generating units (“CGUs”) identifi ed according to countries of operation and business segments.

A segment-level summary of the goodwill allocation is as follows:

Group

2010 2009Manufacturing

segmentDistribution

segment TotalManufacturing

segmentDistribution

segment Total$’000 $’000 $’000 $’000 $’000 $’000

People’s Republic Of China (“PRC”) – 800 800 – 800 800

Asia – 807 807 – 807 807

– 1,607 1,607 – 1,607 1,607

The recoverable amount of a CGU was determined based on value-in-use. Cash fl ow projections used in the value-in-use calculations were based on fi nancial budgets approved by management covering a fi ve-year period. Cash fl ows beyond the fi ve-year period were extrapolated using the estimated growth rates stated below. The growth rate did not exceed the long-term average growth rate for the component parts business in which the CGU operates.

Key assumptions used for value-in-use calculations:

2010 2009

Manufacturingsegment

Distributionsegment

Manufacturingsegment

Distributionsegment

Gross margin 1 10% – 20% 10% - 20% 10% – 15% 12% - 20%

Growth rate 2 20% 20% 20% 20%

Discount rate 3 5.2% 5.2% 4.2% 4.2%

1 Budgeted gross margin

2 Weighted average growth rate used to extrapolate cash fl ows beyond the budget period

3 Pre-tax discount rate applied to the pre-tax cash fl ow projections



75


(a) Goodwill arising on consolidation (Cont’d)

Key assumptions used for value-in-use calculations: (Cont’d)

These assumptions were used for the analysis of each CGU. Management determined budgeted gross margin based on past performance and its expectations of the market development. The weighted average growth rates used were consistent with the forecasts included in industry reports. The discount rates used were pre-tax and refl ected specifi c risks relating to the relevant segments.

(b) Patents

Group2010 2009

$’000 $’000

Cost


Currency translation differences – (6)

End of fi nancial year 59 59

Accumulated amortisation


Amortisation charge 6 6



Net book value 25 31

(c) Club memberships

Group2010 2009$’000 $’000

Cost


Disposals (127) –





Amortisation charge 18 16

Disposals (39) –




76



(d) Customer relationship

Group2010 2009$’000 $’000

Cost

Beginning of fi nancial year 785 –

Additions – 785

Currency translation differences (44) –


The recoverable amount of customer relationship was determined based on value-in-use. Cash fl ows projections used in the value-in-use calculations were based on fi nancial budgets approved by management covering a fi ve-year period. Please refer to Note 23(a) for key assumptions used for value-in-use calculations.

(e) Research and development

Group2010 2009$’000 $’000

Cost

Beginning of fi nancial year 274 –

Additions 443 274



Beginning of fi nancial year – –

Amortisation charge 160 –

End of fi nancial year 160 –




77

24. Deferred income taxes

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current income tax assets against current income tax liabilities and when the deferred income taxes relate to the same fi scal authority. The amounts, determined after appropriate offsetting, are shown on the balance sheet as follows:

Group2010 2009$’000 $’000

Deferred income tax assets to be recovered after one year – (118)

Deferred income tax liabilities to be settled within one year 28 –

Deferred income tax liabilities to be settled after one year 529 11

557 11

Movement in deferred income tax account is as follows:

Beginning of fi nancial year (107) (180)

Tax charge to

- profi t or loss 149 66

- equity 518 –

Currency translation differences (3) 7

End of fi nancial year 557 (107) As at 31 December 2010, deferred tax assets of $Nil (2009: $118,000) and deferred tax liabilities of $557,000 (2009:

$11,000) arose due to temporary differences.

The Group has not recognised tax losses of $11,741,000 (2009: $8,367,000) at the balance sheet date which can be carried forward and used to offset against future taxable income subject to meeting certain statutory requirements by those companies with unrecognised tax losses in their respective countries of incorporation. No deferred tax asset is recognised due to uncertainty of its recoverability.

25. Trade and other payables

Group Company2010 2009 2010 2009$’000 $’000 $’000 $’000

Trade payables to


- Bills payables 2,463 2,319 – –

23,898 18,892 – –

Non-trade payables to

- Subsidiaries – – 1,255 1,872


- Bills payables 159 – – –

Other accruals for operating expenses 2,441 1,386 517 421

29,590 28,379 1,772 2,293

The non-trade amounts due to subsidiaries of the Company are unsecured, bear interest at 0.45% (2009: 0.6375%) and are repayable on demand.

78


26. Borrowings

Group Company2010 2009 2010 2009$’000 $’000 $’000 $’000

Current

Bank borrowings

- Trust receipts 23,935 19,466 – –

- Short-term loan 14,520 17,383 – –

- Mortgage loan 85 14 – –

38,540 36,863 – –

Finance lease liabilities (Note 27) 476 176 – 148

39,016 37,039 – 148

Non-current

Bank borrowings

- Mortgage loan 4,160 4,239 – –

- Long term bank loan 3,718 5,982 – –

7,878 10,221 – –

Finance lease liabilities (Note 27) 159 84 – –

8,037 10,305 – –

Total borrowings 47,053 47,344 – 148

The exposure of the borrowings of the Group and of the Company to interest rate changes and the contractual repricing dates at the balance sheet dates are as follows:

Group Company2010 2009 2010 2009$’000 $’000 $’000 $’000

Not later than one year 39,016 37,039 – 148

Between one and fi ve years 6,887 9,076 – –

Later than fi ve years 1,150 1,229 – –

47,053 47,344 – 148

(a) Security granted

Total borrowings include secured liabilities of $47,053,000 (2009: $47,344,000) and $Nil (2009: $148,000) for the Group and the Company respectively. Bank borrowings of the Group are secured over certain bank deposits (Note 12), fi nancial assets, available-for-sale (Note 13), certain land and buildings (Note 22) and corporate guarantee by the Company.

Finance lease liabilities of the Group and the Company are secured by the rights to the leased plant and equipment, and motor vehicles (Note 22), which will revert to the lessor in the event of default by the Group and the Company.



79

26. Borrowings (Cont’d)

(b) Fair value of non-current borrowings

Group Company2010 2009 2010 2009$’000 $’000 $’000 $’000

Bank borrowings 3,809 10,221 – –

Finance lease liabilities 230 84 – – The fair values above are determined from the cash fl ow analyses, discounted at market borrowing rates of

an equivalent instrument at the balance sheet date which the directors expect to be available to the Group as follows:

Group Company2010 2009 2010 2009

% % % %

Bank borrowings 2.0 to 3.0 2.0 to 6.0 – –

Finance lease liabilities 3.0 to 15.0 3.0 to 9.0 – –

27. Finance lease liabilities

The Group leases certain plant and equipment, and motor vehicles from non-related parties under fi nance leases. The lease agreements do not have renewal clauses but provide the Group with options to purchase the leased assets at nominal values at the end of the lease term.

Group Company2010 2009 2010 2009$’000 $’000 $’000 $’000

Minimum lease payments due

- Not later than one year 601 190 – 155

- Between one and fi ve years 270 104 – –

871 294 – 155

Less: Future fi nance charges (236) (34) – (7)

Present value of fi nance lease liabilities 635 260 – 148

The present values of fi nance lease liabilities are analysed as follows:

- Not later than one year 476 176 – 148

- Between one and fi ve years 159 84 – –

635 260 – 148

80


28. Share capital and treasury shares

No. of ordinary shares Amount

Sharecapital

Treasury shares

Sharecapital

Treasury shares

‘000 ‘000 $’000 $’000

Group and Company

2010

Beginning and end of fi nancial year 677,610 (2,500) 58,782 (318)

2009

Beginning of fi nancial year 338,555 (2,500) 50,520 (318)

Shares issued 339,055 – 8,514 –

Share issue expenses – – (252) –

End of fi nancial year 677,610 (2,500) 58,782 (318)

All issued ordinary shares are fully paid. There is no par value for these ordinary shares.

(a) Treasury shares

There is no movement in the treasury shares account during the fi nancial year.

(b) Share options

No. of ordinary shares under option

Beginning of fi nancial

year Adjustment Forfeited

End of fi nancial

yearExercise

priceExercise period

Group and Company

2010

2009 Options 1,723,600 (79,200) – 1,644,400 $0.1375 17.2.2013

1,723,600 (79,200) – 1,644,400

2009

2003 Options 785,300 (785,300) – – $0.275 17.2.2013

2004 Options 76,500 (76,500) – – $0.275 17.2.2013

2009 Options – 1,723,600 – 1,723,600 $0.1375 17.2.2013

861,800 861,800 – 1,723,600

The vesting of granted options is conditional on the key management or employee holding employment with the Group. Once the options are vested, they are exercisable for a contractual period depending on the category of the options issued.



81

29. Other reserves

Group Company2010 2009 2010 2009$’000 $’000 $’000 $’000

(a) Composition:

Share option reserve 185 185 185 185

Statutory reserve 1,607 1,514 – –

Asset revaluation reserve 13,287 13,713 – –

Fair value reserve 710 – – –

Currency translation reserve (6,346) (6,420) – –

9,443 8,992 185 185

(b) Movements:

(i) Share options reserve

Beginning and end of fi nancial year 185 185 185 185

(ii) Statutory reserve

Beginning of fi nancial year 1,514 2,027 – –

Transfer from/(to) retained earnings 93 (513) – –

End of fi nancial year 1,607 1,514 – –

Subsidiaries incorporated in the People’s Republic of China are required by laws to set aside 10% of its annual net profi t after tax less prior year’s losses, if any, as statutory reserves until the accumulated reserves reach an amount equal to 50% of the respective subsidiaries’ paid-up capital. Such statutory reserves can be used to offset a defi cit in the Group’s revenue reserves. These statutory reserves are not available for distribution as dividends.

(iii) Asset revaluation reserves

Beginning of fi nancial year 13,713 – – –

Deferred tax (518) – – –

Revaluation gains 826 13,713 – –

Revaluation losses (734) – – –

End of fi nancial year 13,287 13,713 – –

(iv) Fair value reserves

Beginning of fi nancial year – (7,189) – (6)


- Fair value gains (Note 13) 710 – – 6

- Reclassifi cation to profi t or loss

(Note 8) – 7,189 – –

End of fi nancial year 710 – – –

Fair value reserves record the cumulative fair value changes for fi nancial assets, available-for-sale until they are de-recognised or impaired.

82


29. Other reserves (Cont’d)

(b) Movements: (Cont’d)

Group Company2010 2009 2010 2009

$’000 $’000 $’000 $’000

(v) Currency translation reserves

Beginning of fi nancial year (6,420) (4,150) – –

Net currency translation differences of fi nancial statements of foreign subsidiaries and associated company 74 (2,270) – –

End of fi nancial year (6,346) (6,420) – –

Currency translation reserves related to exchange differences arising from the translation of the fi nancial statements of foreign operations, whose functional currencies are different from that of the Group’s presentation currency. Such reserves are not available for distribution as dividends.

30. Contingencies

The Company has issued corporate guarantees to banks for borrowings of certain subsidiaries. These bank borrowings amount to $37,014,000 (2009: $43,747,000) at the balance sheet date. The subsidiaries have not defaulted in the payment of borrowings.

31. Commitments

(a) Operating lease commitments – where the Group is a lessee

The Group leases land, factories and warehouses from non-related parties under non-cancellable operating lease agreements. The leases have varying terms, escalation clauses and renewal rights.

The future minimum lease payables under non-cancellable operating leases contracted for at the balance

sheet date but not recognised as liabilities, are as follows:

Group2010 2009$’000 $’000

Not later than one year 536 487

Between one and fi ve years 119 197

655 684



83

32. Related party transactions

In addition to the information disclosed elsewhere in the fi nancial statements, the following transactions took place between the Group and related parties at terms agreed between the parties:

(a) Transactions with a related party

Group2010 2009$’000 $’000

Interest expense paid – 110

Rental expenses paid 55 55

Related party is a company which is controlled or signifi cantly infl uenced by the Group’s key management personnel and their close family members.

(b) Key management personnel compensation

Group2010 2009$’000 $’000

Wages and salaries 2,536 1,856

Employer’s contribution to defi ned contribution plans 92 70

including Central Provident Fund 2,628 1,926

Included in the above is total compensation to directors of the Company amounting to $1,452,000 (2009:$1,314,000).

33. Financial risk management The Group’s activities expose it to market risk (including currency risk, price risk and interest rate risk) credit risk

and liquidity risk. The Group’s overall strategies, tolerance of risks and general risk management philosophy are determined by the Board of Directors in accordance with prevailing economic and operating conditions.

(a) Market risk

(i) Currency risk

The Group incurs foreign exchange risk on sales and purchases that are mainly denominated in Renminbi (RMB), and United States Dollars (USD).

The Group has transactional currency exposures arising from sales or purchases that are denominated in a currency other than the respective functional currencies of the Group’s entities, primarily Singapore Dollars (SGD), Hong Kong Dollars (HKD), New Taiwan Dollars (NTD) and Renminbi (RMB). The foreign currency in which these transactions are denominated is mainly USD. Approximately 73.1% (2009: 63.5%) of the Group’s sales are denominated in USD. The Group’s trade receivables and trade payables balances at the balance sheet date have similar exposures.

The Group and the Company also hold cash and cash equivalents denominated in foreign currencies for working capital purposes. At the balance sheet date, such foreign currency balances (mainly in USD) amount to $2,155,000 and $200,000 for the Group and the Company respectively.

The Group is also exposed to currency translation risk arising from its net investments in foreign operations, including Hong Kong, People’s Republic of China (“PRC”) and Taiwan.

84


33. Financial risk management (Cont’d)

(a) Market risk (Cont’d)

(i) Currency risk (Cont’d)

The Group does not have any formal hedging policy against foreign exchange fl uctuations. However, the Board continuously monitors the exchange rates of the major currencies and will consider hedging material foreign currency exposure should the need arise. It is the Group’s policy not to trade in derivative contracts.

The Group’s currency exposure based on the information provided to key management is as follows:

SGD USD RMB HKD NTD Others Total

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

At 31 December 2010

Financial assets

Cash and cash equivalents and fi nancial assets,

available-for-sale 8,311 2,676 5,360 50 219 55 16,671

Trade and other receivables 136 16,094 12,086 734 581 14 29,645

8,447 18,770 17,446 784 800 69 46,316

Financial liabilities

Trade and other payables (616) (14,070) (12,315) (832) (1,706) (51) (29,590)

Borrowings (3,970) (29,117) (4,030) – (1,899) – (39,016)

(4,586) (43,187) (16,345) (832) (3,605) (51) (68,606)

Net fi nancial liabilities 3,861 (24,417) 1,101 (48) (2,805) 18 (22,290)

Add: Net non-fi nancial assets/(liabilities) 7,693 (3,718) 47,421 12,960 4,207 – 68,563

Currency profi le including non-fi nancial assets and

liabilities 11,554 (28,135) 48,522 12,912 1,402 18 46,273

Currency exposure of fi nancial assets/(liabilities)

net of those denominated in the respective entities’ functional currencies – (24,417) 1,101 (48) (2,805) 18 (26,151)



85




The Group’s currency exposure based on the information provided to key management is as follows:

SGD USD RMB HKD NTD Others Total

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

At 31 December 2009

Financial assets


available-for-sale 5,616 4,696 2,029 256 208 77 12,882

Trade and other receivables 190 12,172 16,410 1,018 928 1 30,719

5,806 16,868 18,439 1,274 1,136 78 43,601


Trade and other payables (745) (13,783) (12,345) (246) (1,225) (35) (28,379)

Borrowings (9,236) (27,789) – – (14) – (37,039)

(9,981) (41,572) (12,345) (246) (1,239) (35) (65,418)

Net fi nancial liabilities (4,175) (24,704) 6,094 1,028 (103) 43 (21,817)

Add: Net non-fi nancial assets/(liabilities) (6,870) – 55,006 7,310 8,728 – 64,174

Currency profi le including non-fi nancial assets and

liabilities (11,045) (24,704) 61,100 8,338 8,625 43 42,357

Currency exposure of fi nancial assets/(liabilities)

net of those denominated in the respective entities’ functional currencies – (24,704) 6,094 1,028 (103) 43 (17,642)

86





The Company’s currency exposure based on the information provided to key management is as follows:

2010 2009 SGD USD Others Total SGD USD Others Total$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Financial assets


available-for-sale 18 200 – 218 16 275 – 291

Trade and other receivables 8,399 – 1,222 9,621 8,828 – 1,224 10,052

8,417 200 1,222 9,839 8,844 275 1,224 10,343


Trade and other payables (1,748) (24) – (1,772) (2,267) (26) – (2,293)

Borrowings – – – – (148) – – (148)

(1,748) (24) – (1,772) (2,415) (26) – (2,441)

Net fi nancial assets/ (liabilities) 6,669 176 1,222 8,067 6,429 249 1,224 7,902

Add: Net non-fi nancial assets 47,349 – – 47,349 47,357 – – 47,357

Currency profi le including non-fi nancial assets

and liabilities 54,018 176 1,222 55,416 53,786 249 1,224 55,259

Currency exposure of fi nancial assets/

(liabilities) net of those denominated in the respective entities’ functional currencies – 176 1,222 1,398 – 249 1,224 55,259

If the USD change against the SGD by 5% (2009: 5%) with all other variables including tax rate being held constant, the Group’s and Company’s profi t after tax would have been $1,221,000 (2009: $1,235,000) higher/lower and $9,000 (2009: $12,000) higher/lower, as a result of currency translation gains/losses.



87



(ii) Price risk

The Group is exposed to equity securities price risk arising from the investments held by the Group which are classifi ed on the consolidated balance sheet as available-for-sale. These securities are listed in Singapore. To manage its price risk arising from investments in equity securities, the Group monitors its investments on a regular basis and makes timely adjustment to the carrying value of its investments.

If prices for equity securities listed in Singapore change by 5% (2009: 5%) with all other variables including tax rate being held constant, the effects on profi t after tax would have been:

Increase/(Decrease)

2010 2009

Profi tafter tax

Profi tafter tax

$’000 $’000

Group

Listed in Singapore

- increased by 71 52

- decreased by (71) (52)

Company

Listed in Singapore

- increased by – –

- decreased by – –

(iii) Interest rate risk

The Group’s exposure to cash fl ow interest rate risks arises mainly from variable-rate borrowings. The Group’s exposure to cash fl ow interest rate risks arises mainly from bank loans and borrowings. The Group’s policy is to obtain the most favourable interest rates available without increasing its interest rate exposure.

The Group’s and the Company’s borrowings at variable rates on which effective hedges have not been entered into are denominated mainly in USD. The possible change in the movement in the USD interest rate with all other variables held constant assessed by management is 0.05% (2009: 0.05%). Management has assessed the impact to net profi t as being not material.

(b) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in fi nancial loss to the Group. The major classes of fi nancial assets of the Group and of the Company are bank deposits and trade receivables. For trade receivables, the Group adopts the policy of dealing only with customers of appropriate credit history. For other fi nancial assets, the Group adopts the policy of dealing only with high credit quality counterparties.

Credit exposure to an individual counterparty is restricted by credit limits that are approved by the Chief Executive Offi cer (“CEO”) based on ongoing credit evaluation. The counterparty’s payment profi le and credit exposure are continuously monitored at the entity level by the respective management and at the Group level by the CEO.

88



(b) Credit risk (Cont’d)

As the Group and the Company do not hold any collateral, the maximum exposure to credit risk for each class of fi nancial instruments is the carrying amount of that class of fi nancial instruments presented on the balance sheet, except as follows:

Company2010 2009$’000 $’000

Corporate guarantees provided to banks on subsidiaries’ loans 37,014 43,747

The trade receivables of the Group comprise 5 debtors (2009: 5 debtors) that individually represented 22% (2009: 37%) of trade receivables.

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

Group2010 2009$’000 $’000

By geographical areasPeople’s Republic of China 20,100 19,804Asia 3,003 2,049

23,103 21,853

By industry sectorsDistribution 10,883 12,416Manufacturing 12,220 9,437

23,103 21,853

(i) Financial assets that are neither past due nor impaired

Bank deposits that are neither past due nor impaired are mainly deposits with banks with high credit-ratings assigned by international credit-rating agencies. Trade receivables that are neither past due nor impaired are substantially companies with a good collection track record with the Group.

The Group’s trade receivables not past due include receivables amounting to $17,138 (2009: $15,439) that would have been past due or impaired if the terms were not re-negotiated during the fi nancial year.

(ii) Financial assets that are past due and/or impaired

There is no other class of fi nancial assets that is past due and/or impaired except for trade receivables.

The age analysis of trade receivables past due but not impaired is as follows:

Group2010 2009$’000 $’000

Past due < 3 months 5,815 5,735Past due > 3 months 147 676

5,962 6,411



89


(b) Credit risk (Cont’d)

(ii) Financial assets that are past due and/or impaired (Cont’d) The carrying amount of trade receivables individually determined to be impaired and the movement in

the related allowance for impairment are as follows:

Group2010 2009$’000 $’000

Gross amount 410 526Less: Allowance for impairment (407) (523)

3 3

Beginning of fi nancial year 523 1,001Currency translation differences (6) (74)Allowance made 84 211Allowance utilised (194) (615)End of fi nancial year 407 523

(c) Liquidity risk Liquidity risk arises from the possibility that customers may not be able to settle obligations to the Group

within the normal terms of trade. Due to the dynamic nature of the underlying businesses, the Group aims at maintaining fl exibility in funding by keeping committed credit lines available.

Short-term funding is obtained from bank loans and borrowings. The Group manages this risk by monitoring working capital projections, taking into account the available banking facilities of the Group and ensuring that the Group has adequate working capital to meet current requirements.

The table below analyses non-derivative fi nancial liabilities of the Group and the Company into relevant maturity groupings based on the remaining period from the balance sheet date to the contractual maturity date.

Not laterthan 1 year

Between1 and 5 years Over 5 years

$’000 $’000 $’000

GroupAt 31 December 2010Trade and other payables 29,590 – –Borrowings 39,016 7,123 1,150

At 31 December 2009Trade and other payables 28,379 – –Borrowings 37,039 9,110 1,229

CompanyAt 31 December 2010Trade and other payables 1,772 – –Borrowings – – –

At 31 December 2009Trade and other payables 2,293 – –Borrowings 148 – –

90



(d) Capital risk

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain and adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies and processes during the fi nancial year ended 31 December 2010 and 2009.

In accordance with the Foreign Enterprise Law applicable to subsidiaries in the People’s Republic of China (“PRC”), the subsidiaries are required to make appropriation to a Statutory Reserve Fund (“SRF”). At least 10% of the statutory after tax profi ts as determined in accordance with the applicable PRC accounting standards and regulations must be allocated to the SRF until the cumulative total of the SRF reaches 50% of the subsidiaries’ registered capital. Subject to approval from the relevant PRC authorities, the SRF may be used to offset any accumulated losses or increases the registered capital of the subsidiaries. The SRF is not available for dividend distribution to shareholders. This externally imposed capital requirement has been complied with by the above-mentioned subsidiaries for the fi nancial years ended 31 December 2010 and 2009.

The Group monitors capital based on a gearing ratio. The gearing ratio is calculated as net debt divided by total capital. Net debt is calculated as borrowings plus trade and other payables less cash and cash equivalents. Total capital is calculated as total equity plus net debt.

Group Company2010 2009 2010 2009$’000 $’000 $’000 $’000

Net debt 67,987 68,401 1,555 2,003

Total equity 46,273 42,357 55,416 55,259

Total capital 114,260 110,758 56,971 57,262

Gearing ratio 60% 62% 3% 3%

The Group and the Company are in compliance with all externally imposed capital requirements for the fi nancial years ended 31 December 2010 and 2009.

(e) Fair value measurements The following table presents assets and liabilities measured at fair value and classifi ed by level of the

following fair value measurement hierarchy:

(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);

(b) inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (is as prices) or indirectly (ie derived from prices) (Level 2); and

(c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).



91


(e) Fair value measurements (Cont’d)

Level 1 Level 2 Level 3 Total $’000 $’000 $’000 $’000

Group

2010

Assets

Financial assets, available-for-sale 1,421 – 6,594 8,015

Total assets 1,421 – 6,594 8,015

2009

Assets

Financial assets, available-for-sale 1,031 – 4,529 5,560

Total assets 1,031 – 4,529 5,560

Company

2010

Assets

Financial assets, available-for-sale 1 – – 1

Total assets 1 – – 1

2009

AssetsFinancial assets, available-for-sale 1 – – 1

Total assets 1 – – 1

The fair value of fi nancial instruments traded in active markets (such as trading and available-for-sale securities) is based on quoted market prices at the balance sheet date. The quoted market price used for fi nancial assets held by the Group is the current bid price. These instruments are included in Level 1.

The fair value of fi nancial instruments that is not traded in an active market is determined by using value-in-use method. The Group uses a variety of methods and makes assumptions that are based on unobservable inputs as at the balance sheet date. This instrument is included in Level 3.

The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values. The fair value of fi nancial liabilities for disclosure purposes is estimated based on quoted market prices or dealer quotes for similar instruments by discounting the future contractual cash fl ow at the current market interest rate that is available to the Group for similar fi nancial instruments. The fair value of current borrowings approximated their carrying amount.

92


34. Segment information

Management has determined the operating segments based on the reports reviewed by the Board of Directors (“BOD”) that are used to make strategic decisions.

The Group is primarily divided into 2 business segments, namely manufacture and sale of fi lm capacitors (“Manufacturing”) and distribution of active and passive components (“Distribution”). The Group adopts these 2 business segments as the basis for its primary segment information.

Other services included within Singapore, the People’s Republic of China, Hong Kong and Taiwan include investment holding and provision of management services; but these are not included within the reportable operating segments, as they are not included in the reports provided to the BOD. The results of these operations are included in the “all other segments” column.

Reportable segments’ results

The BOD assesses the performance of the operating segments based on a measure of Earnings before interest, tax, depreciation and amortisation (“adjusted EBITDA”). This measurement basis excludes the effects of expenditure incurred as a result of required standard accounting treatment from the operating segments such as impairment in fi nancial assets, available-for-sale, receivables and write-down of inventories. Interest income and fi nance expenses are not allocated to segments.

Reportable segments’ assets

The amounts provided to the BOD with respect to total assets are measured in a manner consistent with that of the fi nancial statements. For the purposes of monitoring segment performance and allocating resources between segments, the BOD monitors the receivables, inventories, other current assets, property, plant and equipment, intangible assets, and operating cash attributable to each segment. All assets are allocated to reportable segments other than deferred income tax assets and fi nancial assets, available-for-sale.

Reportable segments’ liabilities

The amounts provided to the BOD with respect to total liabilities are measured in a manner consistent with that of the fi nancial statements. These liabilities are allocated based on the operations of the segment. All liabilities are allocated to reportable segments other than current income tax liabilities and deferred income tax liabilities.

Allocation basis and transfer pricing

Segments results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets, liabilities and expenses.

Transfer prices between business segments are set on an arm’s length basis in a manner similar to transactions with third parties. Segment revenue, expenses and results include transfers between business segments. These transfers are eliminated on consolidation.



93

34. Segment information (Cont’d)

The segment information provided to the BOD for the reportable segments for the fi nancial year ended 31 December 2010 and 2009 is as follows:

Manufacturing DistributionAll other

segments

Total reportable segments

$’000 $’000 $’000 $’000

2010

Sales

- Total segment sales 50,149 125,439 – 175,588

- Inter-segment sales (22,293) (27,714) – (50,007)

Sales to external parties 27,856 97,725 – 125,581

Adjusted EBITDA 2,834 15,945 (9,484) 9,295

Amortisation and depreciation (2,674) (524) – (3,198)

Share of results of associated company – – 8 8

Segment assets 70,117 43,662 2,141 115,920

Segment assets includes:

Additions to:

- Property, plant and equipment 2,138 164 1 2,303

- Intangible assets 443 – – 443

Segment liabilities 16,505 59,644 538 76,687

Manufacturing DistributionAll other

segments

Total reportable segments

$’000 $’000 $’000 $’000

2009

Sales

- Total segment sales 39,426 59,773 – 99,199

- Inter-segment sales (17,875) (14,874) – (32,749)

Sales to external parties 21,551 44,899 – 66,450

Adjusted EBITDA (1,647) 5,978 (8,535) (4,204)

Amortisation and depreciation (2,350) (454) – (2,804)

Goodwill written-off (987) – – (987)

Share of results of associated company – – 120 120

Segment assets 63,552 45,290 3,873 112,715

Segment assets includes:

Investment in associated company – – 2,057 2,057

Additions to:

- Property, plant and equipment 3,306 219 – 3,525

- Intangible assets 274 785 – 1,059

Segment liabilities 19,341 55,821 585 75,747

94


34. Segment information (Cont’d)

(a) Reconciliations

(i) Segment profi ts

A reconciliation of adjusted EBITDA to profi t/(loss) before income tax is provided as follows:

2010 2009$’000 $’000

Adjusted EBITDA for reported segments 18,779 4,331

Other segments EBITDA (9,466) (9,068)

Amortisation and depreciation (3,198) (2,803)

Write-down of inventories 31 (1,297)

Allowance for impairment of doubtful trade receivables (84) (211)

Share of results of associated company 8 120

Write back of allowance for impairment of doubtful receivables (non-trade) 16 16

Fair value losses on fi nancial assets, available-for-sale – (7,189)

Impairment loss on fi nancial assets, available-for-sale – (512)

Goodwill written-off – (987)

Finance expenses (1,762) (2,058)

Profi t/(loss) before income tax 4,324 (19,658)

(ii) Segment assets

The reportable segments’ assets are reconciled to total assets as follows:

2010 2009$’000 $’000

Segment assets for reportable segments 113,779 108,842

Other segment assets 2,141 3,873

Unallocated assets:

- Deferred income tax assets – 118

- Financial assets, available-for-sale 7,768 5,560

Total assets 123,688 118,393 (iii) Segment liabilities

The reportable segments’ liabilities are reconciled to total liabilities as follows:

2010 2009$’000 $’000

Segment liabilities for reportable segments 76,149 75,162

Other segment liabilities 538 585

Unallocated liabilities:

- Current income tax liabilities 199 278

- Deferred income tax liabilities 529 11

Total liabilities 77,415 76,036



95

34. Segment information (Cont’d) (b) Geographical segments

Geographical segments are analysed by two principal geographical areas based on the location of customers, namely People’s Republic of China (including Hong Kong) and Asia (excluding People’s Republic of China and Hong Kong).

Group 2010 2009 $’000 $’000 People’s Republic of China 109,293 58,342

Asia 16,034 7,753

Other 254 355

125,581 66,450

Carrying amounts of segment assets by geographical segments are as follows:


Asia 29,499 29,341

123,688 118,393

Additions to property, plant and equipment by geographical segments are as follows:


Asia 96 219

2,303 3,525

96


35. Events occurring after balance sheet date

On 7 March 2011, the Company purchased 10,000,000 of its ordinary shares by way of on-market purchases at an average share price of S$0.025 amounting to a total cost, including brokerage, of S$250,930.

On 18 March 2011, the wholly owned subsidiary, Europtronic Electronic (Shenzhen) Co., Ltd, had entered into a Sale and Purchase Agreement for the sale of factory building located at Block 19, 8/F Shatoujiao Free Trade Zone Shenzhen, People Republic Of China, for a consideration of RMB6,200,000. The factory building is disclosed as part of assets held for sale under FRS 105 in Note 18 to the fi nancial statements.

36. 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)

Amendments to FRS 32 Financial Instruments: Presentation – Classifi cation of rights issues (effective for annual periods beginning on or after 1 February 2010)

Amendments to INT FRS 114 – Prepayments of a minimum funding requirement (effective for annual periods commencing on or after 1 January 2011)

INT FRS 119 Extinguishing financial liabilities with equity instruments (effective for annual periods commencing on or after 1 July 2010)

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 fi nancial 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 removes the requirement for government-related entities to disclose details of all transactions with the government and other government-related entities. It also clarifi es and simplifi es the defi nition of a related party. However, the revised defi nition 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 defi nition 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 fi nancial impact, if any, of the amendment on the related party disclosures.

37. Authorisation of fi nancial statements

These fi nancial statements were authorised for issue in accordance with a resolution of the Board of Directors of Europtronic Group Ltd on 23 March 2011.

SUPPLEMENTARY INFORMATION(SGX-ST LISTING MANUAL DISCLOSURE REQUIREMENT)


97

The Group’s properties as at 31 December 2010 are:

Name of building/location Description Tenure

80 Marine Parade Road#16-05/06 Parkway ParadeSingapore 449269

Offi ce 99 years commencing26 June 1979

80 Marine Parade Road#16-07/08 Parkway ParadeSingapore 449269

Offi ce 99 years commencing17 August 1979

10E-4 No. 2 Lane 258Rueiguang Rd. Neihu DistrictTaipei, Taiwan ROC

Offi ce Freehold

No. 8 Lane 646 Po Ai StChupei Hsinchu 30265 Taiwan, ROC

Factory Freehold

No. 1618 YundongdadaoWujiang Economic Development ZoneSuzhou, Jiangsu Province, PRC

Production, warehouse and dormitory

50 years commencing9 August 1999 to 8 August 2049

Factory unit at Block 19, 8th FloorNorth/South Luohu DistrictShatoujiao, Shenyan RoadBonded Area, Shenzhen PRC

Factory 50 years commencing15 March 1989 to 14 March 2039

13F-A No. 333Zhao Jia Bang RoadShanghai City, PRC 200032

Offi ce 50 years commencing6 December 1992 to 5 December 2042

13F-D No. 333Zhao Jia Bang RoadShanghai City, PRC 200032

Offi ce 50 years commencing6 December 1992 to 5 December 2042

13F-A/D No. 333Zhao Jia Bang RoadShanghai City, PRC 200032

Carpark LotNo. 64 & No. 67

50 years commencing6 December 1992 to 5 December 2042

98

STATISTICS OF SHAREHOLDINGSAS AT 18 MARCH 2011

SHAREHOLDERS’ INFORMATION AS AT 18 MARCH 2011

No. of shares issued 665,109,154Class of shares OrdinaryVoting rights One vote per share

DISTRIBUTION OF SHAREHOLDINGS

SIZE OF SHAREHOLDINGSNO. OF

SHAREHOLDERS % NO. OF SHARES %

1 – 999 50 3.06 19,796 0.00

1,000 – 10,000 338 20.69 1,881,300 0.28

10,001 – 1,000,000 1,196 73.19 106,770,772 16.06

1,000,001 AND ABOVE 50 3.06 556,437,286 83.66

TOTAL 1,634 100.00 665,109,154 100.00

TREASURY SHARES

Number of treasury shares held : 12,500,000

% of treasury shares held against : 1.88%total number of issued shares (excluding treasury shares)

SUBSTANTIAL SHAREHOLDERS

NO. NAME DIRECT INTEREST % DEEMED INTEREST %

1 Huang Shih-An 161,620,193 24.30 148,594,465* 22.34

2 Huang Chuang Shueh-Ou 148,594,465 22.34 161,620,193** 24.30

* Deemed interest in shares held by spouse Mrs. Huang Chuang Shueh-Ou.

** Deemed interest in shares held by spouse Mr. Huang Shih-An.

STATISTICS OF SHAREHOLDINGSAS AT 18 MARCH 2011


99

TWENTY LARGEST SHAREHOLDERS

NO. NAME NO. OF SHARES %

1 HUANG SHIH-AN 161,620,193 24.30

2 HUANG CHUANG SHUEH-OU 148,594,465 22.34

3 JENG HUANG FONG MAAN 23,629,600 3.55

4 YEUNG HOI KWAN EVA 23,269,000 3.50

5 HUANG CHUNG HUEI 19,420,000 2.92

6 CITIBANK NOMINEES SINGAPORE PTE LTD 19,334,000 2.91

7 UOB KAY HIAN PTE LTD 17,061,000 2.57

8 HSBC (SINGAPORE) NOMINEES PTE LTD 11,748,512 1.77

9 HUANG YUN JU 11,557,704 1.74

10 KUO SHIH-HSIEN 11,516,000 1.73

11 KIM ENG SECURITIES PTE. LTD. 5,878,000 0.88

12 CHAN SZE MING 5,799,445 0.87

13 PHILLIP SECURITIES PTE LTD 5,776,000 0.87

14 DBS VICKERS SECURITIES (S) PTE LTD 5,632,000 0.85

15 HUANG MIN-AN 5,586,088 0.84

16 OCBC SECURITIES PRIVATE LTD 5,265,190 0.79

17 UNITED OVERSEAS BANK NOMINEES PTE LTD 4,299,000 0.65

18 TOH JOO ENG 3,990,000 0.60

19 LAM ALBERT HILL FUNG 3,786,000 0.57

20 CHUANG CHANG-KWAN 3,340,000 0.50

TOTAL 497,102,197 74.75

Percentage of Shareholding in Public’s Hand

Based on information available to the Company as at 18 March 2011, approximately 49.27% of the issued ordinary shares of the Company is held by the public and, therefore, Rule 723 of the Listing Manual issued by the Singapore Exchange Securities Trading Limited is complied with.

100

NOTICE OF ANNUAL GENERAL MEETINGEUROPTRONIC GROUP LTD (CO. REG. NO. 200009775K) (INCORPORATED IN SINGAPORE)

NOTICE IS HEREBY GIVEN that the Annual General Meeting of EUROPTRONIC GROUP LTD (the “Company”) will be held at The Conference Room, 80 Marine Parade Road #16-06, Parkway Parade, Singapore 449269 on Friday, 29 April 2011 at 9.00 a.m. for the following purposes:

AS ORDINARY BUSINESS

1. To receive and adopt the Directors’ Report and the Audited Accounts of the Company for the year ended 31 December 2010 together with the Auditors’ Report thereon. (Resolution 1)

2. To re-elect the following Directors retiring by rotation pursuant to Article 89 of the Company’s Articles of Association: Mr Huang Shih-An (Resolution 2) Mr Chen Wan Shou, Arthur (Resolution 3)

Mr Chen Wan Shou, Arthur will, upon re-election as a Director of the Company, remain a member of the Audit Committee and will be considered independent for the purposes of Rule 704(8) of the Listing Manual of the Singapore Exchange Securities Trading Limited.

3. To pass the following Ordinary Resolution pursuant to Section 153(6) of the Companies Act, Chapter 50:

“That pursuant to Section 153(6) of the Companies Act, Chapter 50, Mr Chiu Jin Yi, Cheyne be re-appointed a Director of the Company to hold offi ce until the next Annual General Meeting.”

[See Explanatory Note (i)] (Resolution 4)

Mr Chiu Jin Yi, Cheyne will, upon re-appointment as a Director of the Company, remain a member of the Audit Committee and will be considered 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$105,000 for the year ended 31 December 2010 (2009: S$105,000). (Resolution 5)

5. To re-appoint Nexia TS Public Accounting Corporation as the Company’s Auditors and to authorise the Directors to fi x their remuneration. (Resolution 6)

6. To transact any other ordinary business which may properly be transacted at an Annual General Meeting.

AS SPECIAL BUSINESS

To consider and if thought fi t, to pass the following resolutions as Ordinary Resolutions, with or without any modifi cations:

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 fi t provided that:

(a) the aggregate number of Shares (including Shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution) does not exceed fi fty percent (50%) of the total number of issued shares (excluding treasury shares) in the capital of the Company at the time of the passing of this Resolution, of which the aggregate number of Shares and convertible securities to be issued other than on a pro rata basis to all shareholders of the Company shall not exceed twenty percent (20%) of the total number of issued shares (excluding treasury shares) in the capital of the Company;



101

(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 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.

[See Explanatory Note (ii)] (Resolution 7)

8. Authority to allot and issue shares under the Europtronic Employees’ Share Option Scheme and Europtronic Performance Share Scheme

That authority be and is hereby given to the Directors of the Company to allot and issue from time to time such number of shares in the Company as may be required to be issued pursuant to the exercise of the options under Europtronic Employees’ Share Option Scheme (“ESOS”), and/or the vesting of awards under the Europtronic Performance Share Scheme (“EPSS”) respectively provided that the aggregate number of shares to be issued pursuant to the ESOS and EPSS does not exceed fi fteen percent (15%) of the total number of issued shares (excluding treasury shares) in the capital of the Company from time to time.

[See Explanatory Note (iii)] (Resolution 8)

9. Renewal of the Share Buy-Back Mandate

That:

(a) for the purposes of Sections 76C and 76E of the Companies Act, Chapter 50 (the “Act”), the exercise by the Directors of the Company of all the powers of the Company to purchase or otherwise acquire issued ordinary shares in the capital of the Company (“Shares”), not exceeding in aggregate the Prescribed Limit (as hereinafter defi ned), at such price(s) as may be determined by the Directors of the Company from time to time up to the Maximum Price (as hereinafter defi ned), whether by way of:

(i) market purchase(s) (each a “Market Purchase”) on the Singapore Exchange Securities Trading Limited (“SGX-ST”); and/or

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

and otherwise in accordance with all other laws and regulations and rules of the SGX-ST as may for the time

being be applicable, be and is hereby authorised and approved generally and unconditionally (the “Share Buy-Back Mandate”);

102


(b) unless varied or revoked by the Company in general meeting, the authority conferred on the Directors of the Company pursuant to the Share Buy-Back Mandate may be exercised by the Directors at any time and from time to time during the period commencing from the passing of this Resolution and expiring on the earlier of:

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

(ii) the date on which the purchases or acquisitions of Shares pursuant to the Share Buy-Back Mandate are carried out in full to the Prescribed Limit mandated;

(c) in this Resolution:

“Prescribed Limit” means that number of issued Shares representing ten per cent. (10%) of the total number of issued Shares (excluding Shares held as treasury shares) as at the date of the passing of this Resolution unless the Company has effected a reduction of the total number of issued Shares of the Company in accordance with the applicable provisions of the Act, at any time during the Relevant Period, in which event the number of issued Shares shall be taken to be the total number of issued Shares as altered (excluding any Shares which are held as treasury shares as at that date); and

“Relevant Period” means the period commencing from the date of the annual general meeting at which the renewal of the Share Buy-Back Mandate is approved and thereafter, expiring on the date on which the next annual general meeting is held or is required by law to be held, whichever is earlier, after the date of this Resolution; and

“Maximum Price” in relation to a Share to be purchased or acquired, whether by Market Purchases or Off-Market Purchases, means an amount (excluding brokerage, commission, stamp duties, applicable goods and services tax, clearance fees and other related expenses) not exceeding one hundred and fi ve per cent. (105%) of the Average Closing Price of the Shares;

where: “Average Closing Price” means the average of the closing market prices of a Share over the last fi ve (5)

consecutive market days on which transactions in the Shares were recorded on the SGX-ST immediately preceding the date of the Market Purchase by the Company or, as the case may be, immediately preceding the date of the making of the offer pursuant to the Off-Market Purchase, and deemed to be adjusted for any corporate action that occurs after the relevant fi ve (5) day period; and

“date of the making of the offer” means the date on which the Company announces its intention to make an offer for the purchase or acquisition of Shares from holders of Shares, stating therein the relevant terms of the equal access scheme for effecting the Off-Market Purchase; and

(d) the Directors of the Company and/or any of them be and are hereby authorised to deal with the Shares purchased by the Company, pursuant to the Share Buy-Back Mandate in any manner as they think fi t, which is permissible under the Act; and

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

[See Explanatory Note (iv)] (Resolution 9)

10. Renewal of the Disposal Mandate

That:

(i) the Company be and is hereby authorised to dispose of, in whole or in part, the interests held by the Group in Eucon Holding Limited from time to time (whether by way of market disposal and/or private placements) on the terms and subject to the conditions set out in Appendix II of this Notice to shareholders dated 13 April 2011 and this disposal mandate shall, unless revoked or varied by the Company in general meeting, continue in force up to the earliest of (a) twelve (12) months from the date of such approval; or (b) the date on which the next annual general meeting of the Company is held or is required by law to be held; or (c) the date on which the disposal is carried out to the full extent mandated under the disposal mandate; and



103

(ii) any Director of the Company be and is hereby authorised to do all such acts and things as he may consider necessary, desirable or expedient to give effect to the disposal and/or this Resolution, including without limitation to the foregoing, to negotiate, sign, execute and deliver all documents, approve any amendments, alteration or modifi cation to any document and affi x the Common Seal of the Company to any such documents (if required).

[See Explanatory Note (v)] (Resolution 10)

By Order of the Board

Hazel Chia Luang Chew Juliana Tan Beng HweeCompany Secretaries

Singapore, 13 April 2011

Explanatory Notes:

(i) The effect of the Ordinary Resolution 4 proposed in item 3 above, is to re-appoint a Director who is over 70 years of age.

(ii) The Ordinary Resolution 7 proposed in item 7 above, if passed, will empower the Directors from the date of the above Meeting until the date of the next Annual General Meeting, to allot and issue Shares and convertible securities in the Company up to an amount not exceeding fi fty percent (50%) of the total number of issued shares (excluding treasury shares) in the capital of the Company, of which up to twenty percent (20%) may be issued other than on a pro rata basis.

(iii) The Ordinary Resolution 8 proposed in item 8 above, if passed, will empower the Directors to allot and issue shares in the Company pursuant to the exercise of options under the Europtronic Employees’ Share Option Scheme (“ESOS”) and/or vesting of awards under the Europtronic Performance Share Scheme (“EPSS”), provided that the aggregate number of shares to be issued pursuant to the ESOS and EPSS shall not exceed fi fteen percent (15%) of the total number of issued shares (excluding treasury shares) in the capital of the Company from time to time. The ESOS and EPSS were approved by shareholders at Extraordinary General Meetings of the Company held on 18 February 2002 and 26 April 2005 respectively.

(iv) The Ordinary Resolution 9 proposed in item 9 above, if passed, will empower the Directors of the Company to buy-back issued ordinary shares of the Company from time to time (whether by way of On-Market Purchases or Off-Market Purchases on an equal access scheme) of up to ten per cent. (10%) of the issued ordinary shares in the capital of the Company (excluding treasury shares) at the prices of up to but not exceeding the Maximum Price, being in accordance with the terms and subject to the conditions set out in Appendix I of this Notice to shareholders dated 13 April 2011, the Act and the Listing Manual of the Singapore Exchange Securities Trading Limited. This authority will, unless revoked or varied at a general meeting, continue in force until the earlier of (a) the date that the next annual general meeting of the Company is held or is required by law to be held, or (b) the date on which the share buy-backs are fulfi lled up to the full extent mandated under the Share Buy-Back Mandate.

(v) The Ordinary Resolution 10 proposed in item 10 above, if passed, will empower the Company to dispose of, in whole or in part, the interests held by the Group in Eucon Holding Limited from time to time (whether by way of market disposal and/or private placements), being in accordance with the terms and subject to the conditions set out in Appendix II of this Notice to shareholders dated 13 April 2011, the Companies Act, Chapter 50 and the Listing Manual of the Singapore Exchange Securities Trading Limited. This authority will, unless revoked or varied at a general meeting, continue in force up to the earliest of (a) twelve (12) months from the date of such approval; or (b) the date on which the next annual general meeting of the Company is held or is required by law to be held; or (c) the date on which the disposal is carried out to the full extent mandated under the Disposal Mandate.

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 offi cer or attorney.

3. The instrument appointing a proxy must be deposited at the Registered Offi ce of the Company at 80 Marine Parade Road #16-06, Parkway Parade, Singapore 449269, not less than forty-eight (48) hours before the time appointed for holding the Meeting.

104

APPENDIX IN RELATION TO THE PROPOSED RENEWAL OF THE SHARE BUY-BACK MANDATEEUROPTRONIC GROUP LTD (CO. REG. NO. 200009775K) (INCORPORATED IN THE REPUBLIC OF SINGAPORE)

APPENDIX I

13 April 2011

This Appendix I is circulated to shareholders of Europtronic Group Ltd (the “Company”) together with the Company’s Annual Report for its fi nancial year ended 31 December 2010 (“Annual Report”). Its purpose is to provide information to shareholders for the proposed renewal of the share buy-back mandate (the “Mandate”) to be tabled at the Annual General Meeting of the Company to be held on Friday, 29 April 2011 at The Conference Room, 80 Marine Parade Road #16-06, Parkway Parade, Singapore 449269 at 9:00 a.m..

This Appendix I forms part of the Annual Report and must be read in conjunction with the Annual Report.

The Notice of Annual General Meeting and Proxy Form are enclosed with the Annual Report.

If you are in any doubt as to the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser immediately.

If you have sold all your shares in the capital of the Company, please forward this Appendix I, the Notice of Annual General Meeting and Proxy Form immediately to the purchaser or to the stockbroker, bank or agent through whom the sale was effected for onward transmission to the purchaser.

The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of any of the statements made, opinions expressed or reports contained in this Appendix I.

EUROPTRONIC GROUP LTD(Company Registration Number 200009775K)

(Incorporated in the Republic of Singapore)

APPENDIX IN RELATION TO THE PROPOSED RENEWAL OFTHE SHARE BUY-BACK MANDATE



105

CONTENTS

Page

DEFINITIONS ................................................................................................................................................................. 106

LETTER TO SHAREHOLDERS

1. INTRODUCTION ................................................................................................................................................. 108

2. THE PROPOSED RENEWAL OF THE SHARE BUY-BACK MANDATE .......................................................... 108

3. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTERESTS .............................................................. 117

4. DIRECTORS’ RECOMMENDATION ................................................................................................................... 118

5. ANNUAL GENERAL MEETING ......................................................................................................................... 118

6. ACTION TO BE TAKEN BY SHAREHOLDERS ................................................................................................. 118

7. DIRECTORS’ RESPONSIBILITY STATEMENT ................................................................................................. 118

8. DOCUMENTS AVAILABLE FOR INSPECTION ................................................................................................ 119

106


DEFINITIONS

In this Appendix I, the following defi nitions shall apply throughout unless the context otherwise requires:-

“ACRA” : Accounting and Corporate Regulatory Authority of Singapore

“AGM” : The annual general meeting of the Company to be held on Friday, 29 April 2011 at The Conference Room, 80 Marine Parade Road #16-06, Parkway Parade, Singapore 449269 at 9:00 a.m., the Notice of which is set out in the Annual Report despatched together with this Appendix I

“Annual Report” : The annual report of the Company for its fi nancial year ended 31 December 2010

“Approval Date” : The date of the AGM at which the Mandate is proposed to be renewed

“Board” : Board of Directors of the Company for the time being

“CDP” : The Central Depository (Pte) Limited

“Companies Act” : The Companies Act, Chapter 50 of Singapore, as amended or modifi ed from time to time

“Company” : Europtronic Group Ltd

“Directors” : The Directors of the Company for the time being

“Group” : The Company and its subsidiaries

“Latest Practicable Date” : 28 March 2011, being the latest practicable date prior to the printing of this Appendix I

“Listing Manual” : The Listing Manual of the SGX-ST

“Mandate” : The general mandate to authorise the Directors to exercise all the powers of the Company to purchase or otherwise acquire its issued Shares upon and subject to the terms of such mandate

“Notice” : The Notice of AGM dated 13 April 2011 “NTA” : Net tangible assets

“Relevant Period” : The period from the Approval Date to the date of the next annual general meeting or such date as the next annual general meeting of the Company is required by law to be held, whichever is the earlier

“SGX-ST” : Singapore Exchange Securities Trading Limited

“Share Buy-Back” : The purchase or acquisition by the Company of its issued Shares

“Shareholders” : Registered holders of Shares except that where the registered holder is CDP, the term “Shareholders” shall, in relation to such Shares and where the context so admits, mean the persons to whose securities accounts maintained with CDP are credited with the Shares

“Shares” : Ordinary shares of the Company

“SIC” : Securities Industry Council

“subsidiaries” : Shall have the meaning ascribed to it by the Companies Act

“Take-over Code” : Singapore Code on Take-overs and Mergers, as amended or modifi ed from time to time



107

“per cent” or “%” : Percentage or per centum

“S$” and “cents” : Singapore dollars and cents respectively

The words “Depositor” and “Depository Register” shall have the meanings ascribed to them respectively in Section 130A of the Companies Act.

Words importing the singular shall, where applicable, include the plural and vice versa, and words importing the masculine gender shall, where applicable, include the feminine and neuter genders.

Words importing persons include corporations.

Any reference in this Appendix I to any enactment is a reference to that enactment as for the time being amended or re-enacted.

Any word defi ned under the Companies Act and used in this Appendix I shall have the meaning assigned to it under the Companies Act.

Any reference to a time of day in this Appendix I shall be a reference to Singapore time.

108




Directors:- Registered Offi ce:-

Huang Shih-An (Chairman) 80 Marine Parade RoadHuang Chuang Shueh-Ou (Vice Chairman) #16-06 Parkway ParadeHuang Chien-Hung (Acting Chief Executive Offi cer) Singapore 449269Chen Wan Shou, Arthur (Independent Director) Chiu Jin Yi, Cheyne (Independent Director)Lim Lee Meng (Independent Director) 13 April 2011

To : The Shareholders of Europtronic Group Ltd

Dear Sir/Madam

PROPOSED RENEWAL OF THE SHARE BUY-BACK MANDATE

1. INTRODUCTION

The Company proposes to seek the approval of Shareholders of the Company at the AGM to be held on 29 April 2011 for the renewal of the Mandate originally approved at the extraordinary general meeting held on 19 January 2006 and renewed at the Company’s last annual general meeting held on 26 April 2010 authorising the Directors of the Company to purchase or otherwise acquire its issued Shares.

The Company refers to the Notice accompanying the Annual Report for the fi nancial year ended 31 December 2010 and the ordinary resolution 9 in relation to the renewal of the Mandate under the heading “Special Business” set out in the Notice.

The purpose of this Appendix I is to provide Shareholders with information relating to the Mandate.

2. THE PROPOSED RENEWAL OF THE SHARE BUY-BACK MANDATE

2.1 Shareholders’ Approval

Approval is being sought from Shareholders at the AGM for a renewal of the general and unconditional Mandate. If approved, the Mandate will take effect from the date of the AGM and continue in force until the date of the next annual general meeting or such date as the next annual general meeting is required by law to be held, whichever is the earlier, unless prior thereto, Share Buy-Back is carried out to the full extent mandated or the Mandate is revoked or varied by the Company in a general meeting. The Mandate may be put to Shareholders for renewal at each subsequent annual general meeting.

2.2 Rationale

The Mandate will give the Directors the flexibility to purchase or acquire its issued Shares if and when circumstances permit. The Directors believe that the Mandate provides the Company and its Directors with a mechanism to facilitate the return of surplus cash over and above the Company’s ordinary capital requirements, in an expedient and cost-effi cient manner. The Mandate would also allow the Directors to exercise greater control over the Company’s share capital structure, dividend payout and cash reserves. The Mandate may also be used to purchase existing Shares to satisfy options granted or awards given in relation to the Company’s employee share option scheme known as Europtronic Employees’ Share Option Scheme and the performance share scheme known as Europtronic Performance Share Scheme.

The Directors will only make Share Buy-Backs when they believe that it would benefi t the Company and its Shareholders, taking into consideration factors such as market conditions and funding arrangements at that time.



109

2.3 Authority and Limits on the Mandate

The authority and limitations placed on the purchases or acquisitions of Shares by the Company under the Mandate, if renewed at the forthcoming AGM, are similar in terms to those previously approved by Shareholders and for the benefi t of the Shareholders, are summarised below:-

(a) Maximum Number of Shares

Only Shares that are issued and fully paid may be purchased or acquired by the Company. The total number of Shares which may be purchased or acquired by the Company pursuant to the Mandate is limited to that number of Shares representing not more than 10% of the issued ordinary share capital of the Company as at the Approval Date, unless the Company has effected a reduction of the share capital of the Company in accordance with the applicable provisions of the Companies Act, at any time during the Relevant Period, in which event the total number of Shares of the Company shall be taken to be the total number of Shares as altered. For purposes of calculating the percentage of issued Shares above, any of the Shares which are held as treasury shares will be disregarded.

The existing issued and paid-up share capital of the Company as at the Latest Practicable Date is S$58,780,881.92 comprising 677,609,154 Shares (out of which 12,500,000 Shares were held as treasury shares). For illustration purposes only, based on the issued share capital of 665,109,154 Shares (excluding 12,500,000 treasury shares), and assuming that no further Shares are issued or purchased and kept as treasury shares on or prior to the AGM, not more than 66,510,915 Shares (representing 10% of the issued share capital of the Company as at that date excluding treasury shares) may be purchased or acquired by the Company pursuant to the Mandate.

(b) Duration of Authority

Under the Mandate, the Company may purchase or acquire its issued Shares at any time and from time to time on and from the Approval Date up to the earliest of:-

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

(ii) the date on which the authority conferred by the Mandate is revoked or varied by the Company in a general meeting; or

(iii) the date on which the Share Buy-Backs are fulfi lled up to the full extent of the Mandate.

(c) Manner of Share Buy-Backs

Share Buy-Backs may be made by way of:-

(i) an on-market Share Buy-Back (“On-Market Purchase”); and/or

(ii) an off-market Share Buy-Back (if effected otherwise than on the SGX-ST) in accordance with any equal access scheme(s) as may be determined or formulated by the Directors as they may consider fi t, which scheme(s) shall satisfy all the conditions prescribed by the Companies Act and the Listing Manual of the SGX-ST (“Off-Market Purchase”).

(d) Off-Market Purchases

Under the Companies Act, an equal access scheme must satisfy all the following conditions:-

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

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

110


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

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

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

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

In addition, under the Listing Manual, in making an Off-Market Purchase, the Company must issue an offer document to all Shareholders, which must contain at least the following information:-

(i) the terms and conditions of the offer;

(ii) the period and procedures for acceptances;

(iii) the reasons for the proposed Share Buy-Back;

(iv) the consequences, if any, of Share Buy-Backs by the Company that will arise under the Take-over Code or other applicable take-over rules;

(v) whether the Share Buy-Back, if made, would have any effect on the listing of Shares on the SGX-ST; and

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

(e) Maximum Price to be paid for the Shares

The purchase price (excluding brokerage, stamp duties, applicable goods and services tax and other related expenses) to be paid for a Share in the event of any Share Buy-Back shall not exceed the Maximum Price, which:-

(i) in the case of On-Market Purchases, shall mean the price per Share based on not more than fi ve per cent (5%) above the average closing prices of Shares on the SGX-ST on each of the 5 consecutive market days on which transactions in Shares were recorded immediately preceding the date of market purchase by the Company and deemed to be adjusted for any corporate actions occurring after the relevant 5-day period; and

(ii) in the case of Off-Market Purchases, shall mean the price per Share based on not more than fi ve per cent (5%) above the average closing prices of Shares on the SGX-ST on each of the 5 consecutive market days on which transactions in Shares were recorded immediately preceding the date that the Company makes an announcement of an offer under an equal access scheme.

2.4 Source of funds

Under the Companies Act, any purchase of Shares pursuant to the Mandate may be made out of the Company’s capital and/or distributable profi ts that are available for payment as dividends.

The Company will use internal sources of funds (comprising cash and fi xed deposits) to fi nance purchases of its Shares.

The Company has not obtained or incurred nor does it intend to obtain or incur any borrowings (other than the Company’s fi nancing of its operations in the ordinary course of its business) to fi nance any Share Buy-Back. The Company will not exercise the Mandate in full to the extent that its internal sources of funds are not suffi cient for this purpose.



111

2.5 Status of Purchased Shares

Cancellation of Shares

Any Share which is purchased by the Company shall, unless held as treasury shares to the extent permitted under the Companies Act (as set out below), be deemed cancelled immediately on purchase, and all rights and privileges attached to that Share shall expire on cancellation. All Shares purchased by the Company (other than treasury shares held by the Company to the extent permitted under the Companies Act) will be automatically delisted by the SGX-ST.

Where Shares are purchased or acquired and cancelled:-

(a) if the Shares are purchased or acquired entirely out of the capital of the Company, the Company shall reduce the amount of its share capital by the total amount of the purchase price paid by the Company for the Shares cancelled;

(b) if the Shares are purchased or acquired entirely out of the profi ts of the Company, the Company shall reduce the amount of its profi ts by the total amount of the purchase price paid by the Company for the Shares cancelled; or

(c) where the Shares are purchased or acquired out of both the capital and the profi ts of the Company, the Company shall reduce the amount of its share capital and profi ts proportionately by the total amount of the purchase price paid by the Company for the Shares cancelled.

Where the consideration paid by the Company for the purchase or acquisition of Shares is made out of profi ts, such consideration (excluding related brokerage, goods and services tax, stamp duties and clearance fees) will correspondingly reduce the amount available for the distribution of cash dividends by the Company. Where the consideration paid by the Company for the purchase or acquisition of Shares is made out of capital, the amount available for the distribution of cash dividends by the Company will not be reduced.

Treasury Shares

Pursuant to the Companies Act, shares which have been repurchased may be held as treasury shares. Treasury shares may be, inter alia, sold for cash, transferred for the purposes of or pursuant to an employee share scheme, transferred as consideration for the acquisition of shares in or assets of another company or assets of another person, cancelled, or sold, transferred or otherwise used for such other purposes as may be prescribed by the Minister for Finance. The aggregate number of shares that may be held as treasury shares shall not at any time exceed 10% of the total number of issued shares.

The treasury shares will not confer upon the Company any right to attend or vote at meetings, nor any right to receive dividends and/or other distributions (whether in cash or otherwise) of the Company’s assets (including any distribution of assets to members on a winding up). However, the allotment of fully paid bonus shares in respect of treasury shares is allowed. The treasury shares may be sub-divided or consolidated so long as the total value of the treasury shares after such sub-division or consolidation is the same as the total value of the treasury shares before the sub-division or consolidation, as the case may be.

Under Rule 704(26) of the Listing Manual, an immediate announcement must be made of any sale, transfer, cancellation and/or use of treasury shares (in each case, the “usage”). Such announcement must include details such as the date of the usage, the purpose of the usage, the number of treasury shares comprised in the usage, the number of treasury shares before and after the usage and the percentage of the number of treasury shares comprised in the usage against the total number of issued shares (of the same class as the treasury shares) which are listed on the SGX-ST before and after the usage.

As at the Latest Practicable Date, 12,500,000 Shares, representing approximately 1.84% of the total number of its issued Shares of 677,609,154 Shares, are held by the Company as treasury shares. Accordingly, where Shares purchased or acquired pursuant to the Mandate are held as treasury shares, the number of Shares to be held as treasury shares, when aggregated with the number of treasury shares currently held by the Company, shall not, subject to the Companies Act, exceed 10% of the total number of issued Shares of the Company at any time.

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2.6 Financial Effects of Share Buy-Backs

The fi nancial impact on the Company and the Group arising from purchases or acquisitions of Shares which may be made pursuant to the Mandate will depend on, inter alia, whether the Shares are purchased or acquired out of capital and/or profi ts of the Company, the aggregate number of Shares purchased or acquired, the price at which such Shares are purchased or acquired, whether the Shares purchased or acquired are cancelled or held as treasury shares and the amount (if any) borrowed by the Company to fund the purchase or acquisition.

For illustration purposes only, the fi nancial effects of the purchase or acquisition of Shares by the Company pursuant to the Mandate on the audited fi nancial statements of the Group and the Company for the fi nancial year ended 31 December 2010 and assuming the following:-

(a) the purchase or acquisition of 66,510,915 Shares, representing 10% of the Shares in issue excluding treasury shares held by the Company as at the Latest Practicable Date, by way of On-Market Purchases or Off-Market Purchases at the Maximum Price and such Shares are cancelled upon purchase or acquisition;

(b) the purchase or acquisition of 55,260,9151 Shares, representing approximately 8.31% of the Shares in issue excluding 12,500,000 treasury shares held by the Company as at the Latest Practicable Date, by way of On-Market Purchases or Off-Market Purchases at the Maximum Price and such Shares are held as treasury shares by the Company,

are set out below:- (i) If 66,510,915 Shares are purchased or acquired pursuant to the Mandate and are cancelled(1)

Company GroupBefore Share

Buy-Back

After Share

Buy-Back

Before Share

Buy-Back

After Share

Buy-Back Number of Shares (excluding treasury shares) 665,109,154 598,598,239 665,109,154 598,598,239

NTA(2) (S$’000) 55,165 53,419 42,518 40,772

Total Borrowings(3) (S$’000) – – 47,053 47,053

NTA per Share (cents) 8.29 8.92 6.39 6.81

Gearing(4) (%) – – 1.02 1.06

Current Ratio(5) (times) 5.22 4.27 1.03 1.01

Earnings per Share (cents) 0.02 0.03 (0.04) (0.05)

Notes:-

(1) The computation is based on the assumption that the Company acquires or purchases 66,510,915 Shares at the Maximum Price of S$0.026 for each Share (being the price equivalent to 5% above the average of the closing market prices of the Shares for the fi ve consecutive market days on which the Shares were traded on the SGX-ST immediately preceding the Latest Practicable Date).

(2) NTA means total net assets less intangible assets.

(3) Total borrowings means short term and long term loans and fi nance lease obligations.

(4) Gearing means total borrowings divided by total equity

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

The fi nancial effects are the same whether the Shares are purchased via On-Market Purchases or Off-Market Purchases.

1 The maximum number of Shares that the Company may acquire or purchase pursuant to the Mandate and to hold the same as treasury shares under

the provisions of the Companies Act after taking into account the number of treasury shares held by the Company as at the Latest Practicable Date.



113

(ii) If 55,260,915 Shares are purchased or acquired pursuant to the Mandate and are held as treasury shares(1)

Company Group Before After Before After

Share Buy-Back

Share Buy-Back

Share Buy-Back

Share Buy-Back

Number of Shares (excluding treasury shares) 665,109,154 609,848,239 665,109,154 609,848,239

Treasury Shares (S$’000) 569 2,006 569 2,006

NTA(2) (S$’000) 55,165 53,728 42,518 41,081

Total Borrowings(3) (S$’000) – – 47,053 47,053

NTA per Share(6) (cents) 8.29 8.81 6.39 6.74

Gearing(4) (%) – – 1.02 1.06

Current Ratio(5) (times) 5.22 4.44 1.03 1.01

Earnings per Share(6) (cents) 0.02 0.03 (0.04) (0.05)

Notes:-

(1) The computation is based on the assumption that the Company acquires or purchases 55,260,915 Shares at the Maximum Price of S$0.026 for each Share (being the price equivalent to 5% above the average of the closing market prices of the Shares for the fi ve consecutive market days on which the Shares were traded on the SGX-ST immediately preceding the Latest Practicable Date).

(2) NTA means total net assets less intangible assets.

(3) Total borrowings means short term and long term loans and fi nance lease obligations.

(4) Gearing means total borrowings divided by total equity.

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

(6) NTA per Share and earnings per Share are calculated based on 609,848,239 Shares which exclude 67,760,915 treasury shares of which 12,500,000 Shares are already held by the Company as treasury shares as at the Latest Practicable Date. Pursuant to the Companies Act, the Company is allowed to hold not more than 10% of its issued share capital as treasury shares, being 67,760,915 treasury shares.

The fi nancial effects are the same whether the Shares are purchased via On-Market Purchases or Off-Market Purchases.

As illustrated above, the Share Buy-Backs will:-

(i) reduce the number of issued Shares of the Company when the Shares purchased or acquired are cancelled;

(ii) increase the NTA per Share of the Company and the Group; and

(iii) increase the earnings per Share of the Company and the Group.

The actual impact of Share Buy-Backs will depend on the number and price of the Shares bought back. The Directors do not propose to exercise the Mandate to such an extent that it would have a material adverse effect on the working capital requirements of the Company. The purchase or acquisition of Shares will only be effected after assessing the relative impact of a Share Buy-Back taking into consideration both fi nancial factors (such as cash surplus, debt position and working capital requirements) and non-fi nancial factors (such as share market conditions and performance of the Shares).

Shareholders should note that the fi nancial effects illustrated above are for illustration purposes only. In particular, it is important to note that the above analysis is based on the latest audited accounts of the Company and the Group as at 31 December 2010 and is not necessarily representative of the future fi nancial performance of the Group. Although the Mandate would authorise the Company to buy back up to 10% of the Company’s issued Shares, the Company may not necessarily buy back or be able to buy back all 10% of the issued Shares in full.

114


2.7 Taxation

Pursuant to Section 10J of the Income Tax Act, Chapter 134 of Singapore, when a company purchases or acquires its own shares from a shareholder and makes payment out of its contributed capital, it will not be regarded as a payment of dividend. When a company purchases or acquires its own shares from a shareholder using its distributable profi ts, it is deemed as having paid a dividend to the shareholders from whom the shares are purchased or acquired.

Shareholders who are in doubt as to their respective tax positions or the tax implications of a Share Buy-Back by the Company or who may be subject to tax whether in or outside Singapore should consult their own professional advisers.

2.8 Reporting Requirements

2.8.1 The Companies Act and the listing rules of the SGX-ST require the Company to make reports in relation to the Mandate as follows:-

(a) Within thirty (30) days of the passing of a Shareholders’ resolution to approve the renewal of the Mandate, the Company is required to lodge a copy of such resolution with ACRA.

(b) The Company must notify ACRA within thirty (30) days of a repurchase of Shares on the SGX-ST or otherwise. Such notifi cation in the form as may be prescribed by ACRA shall include details of the date of the repurchase, the total number of Shares repurchased by the Company, the Company’s issued share capital as at the date of the Shareholders’ resolution approving the renewal of the Mandate and the amount of consideration paid by the Company for the repurchase of Shares.

(c) Repurchases of Shares must be reported to the SGX-ST in the forms prescribed by the listing rules of the SGX-ST and announced to the public. In the case of On-Market Purchases, it must be reported not later than 9.00 a.m. on the market day following the day on which the Company makes an On-Market Purchase and in the case of Off-Market Purchases, not later than 9.00 a.m. on the second market day following the close of acceptance of offers made by the Company.

(d) In its annual report and accounts, the Company shall make disclosure of details pertaining to purchases of Shares made during the fi nancial year, including the total number of Shares purchased during the fi nancial year under review, the purchase price paid for each Share or the highest and lowest prices paid for the purchases; and where relevant, the total consideration paid.

2.8.2 While the Listing Rules do not expressly prohibit any purchase of shares by a listed company during any particular time or times, because the listed company would be regarded as an “insider” in relation to any proposed purchase or acquisition of its shares, the Company will not undertake any purchase or acquisition of Shares pursuant to the Mandate at any time after a price sensitive matter or development has occurred or has been the subject of a decision until the price sensitive information has been publicly announced. In particular, in line with the best practices guide on securities dealings previously issued by the SGX-ST which has been adopted in the Listing Manual under Rule 1207(18)(c), the Company will not purchase or acquire any Shares through On-Market Purchases during the period commencing two (2) weeks before the announcement of the Company’s results for each of the fi rst three quarters of its fi nancial year, or one month before its full year’s results, and ending on the date of announcement of the relevant results.

2.9 Listing Status on SGX-ST

The listing rules of the SGX-ST require a listed company to ensure that at least 10% of its issued shares (excluding treasury shares, preference shares and convertible equity securities) is at all times held by the public.

As at the Latest Practicable Date, 327,681,972 Shares representing 49.27% of the issued share capital of the Company are held in the hands of the public. In the event the Company purchases the maximum 10% of its issued Shares from the public, the resultant percentage of the issued Shares held by the public would be reduced to approximately 43.63%. Accordingly, the Company is of the view that there is a suffi cient number of Shares in issue held by the public which would permit the Company to undertake purchases or acquisitions of its Shares up to the full 10% limit pursuant to the Mandate without affecting the listing status of the Shares on the SGX-ST and that the number of Shares remaining in the hands of the public will not fall to such a level as to cause market illiquidity.



115

The Directors will use their best efforts to ensure that the Company does not effect a purchase of Shares which would result in the number of Shares remaining in the hands of the public falling to such a level as to cause market illiquidity or adversely affect the orderly trade of the Shares or the listing status of the Company.

2.10 Take-over Code implications from Share Buy-Backs

The take-over implications arising from any purchase or acquisition by the Company of its Shares are set out below.

(a) Obligation to make a Take-over Offer

If, as a result of any purchase or acquisition by the Company of its Shares, the proportionate interest in the voting capital of the Company of a Shareholder and persons acting in concert with him increases, such increase will be treated as an acquisition for the purpose of Rule 14 of the Take-over Code. Consequently, a Shareholder or a group of Shareholders acting in concert with a Director could obtain or consolidate effective control of the Company and become obliged to make an offer under Rule 14 of the Take-over Code.

(b) Persons Acting in Concert Under the Take-over Code, persons acting in concert comprise individuals or companies who,

pursuant to an agreement or understanding (whether formal or informal), co-operate, through the acquisition by any of them shares in a company to obtain or consolidate effective control of the company. Unless the contrary is established, the following persons, inter alia, will be presumed to be acting in concert, namely:-

(i) a company with its parent company, subsidiaries, its fellow subsidiaries, any associated companies of the above companies, any company whose associated companies include any of the above companies and any person who has provided fi nancial assistance (other than a bank in its ordinary course of business) to any of the above companies for the purchase of voting rights;

(ii) a company with any of its directors, together with their close relatives, related trusts and any companies controlled by any of the directors, their close relatives and related trusts;

(iii) a company with any of its pension funds and employee share schemes;

(iv) a person with any investment company, unit trust or other fund in respect of the investment account which such person manages on a discretionary basis;

(v) a fi nancial or other professional adviser, with its client in respect of the shareholdings of the adviser and the persons controlling, controlled by or under the same control as the adviser and all the funds which the adviser manages on a discretionary basis, where the shareholdings of the adviser and any of those funds in the client total 10% or more of the client’s equity share capital;

(vi) directors of a company, together with their close relatives, related trusts and companies controlled by any of them, which is subject to an offer or where they have reason to believe a bona fi de offer for their company may be imminent;

(vii) partners; and

(viii) an individual, his close relatives, his related trusts, and any person who is accustomed to act according to his instructions, companies controlled by any of the above persons and any person who has provided fi nancial assistance (other than a bank in its ordinary course of business) to any of the above for the purchase of voting rights.

116


The circumstances under which Shareholders, including Directors and persons acting in concert with them respectively, will incur an obligation to make a take-over offer under Rule 14 of the Take-over Code after a purchase or acquisition of Shares by the Company are set out in Appendix 2 of the Take-over Code.

(c) Effect of Rule 14 and Appendix 2

In general terms, the effect of Rule 14 and Appendix 2 of the Take-over Code is that, unless exempted, Directors and persons acting in concert with them will incur an obligation to make a take-over offer under Rule 14 if, as a result of the Company purchasing or acquiring Shares, the voting rights of such Directors and their concert parties would increase to 30% or more, or in the event that such Directors and their concert parties hold between 30% and 50% of the Company’s voting rights, if the voting rights of such Directors and their concert parties would increase by more than 1 per cent in any period of 6 months.

Under Appendix 2 of the Take-over Code, a Shareholder not acting in concert with the Directors will not be required to make a take-over offer under Rule 14 if, as a result of the Company purchasing or acquiring its Shares, the voting rights of such Shareholder would increase to 30% or more, or, if such Shareholder holds between 30% and 50% of the Company’s voting rights, the voting rights of such Shareholder would increase by more than 1 per cent in any period of 6 months. Such Shareholder need not abstain from voting in respect of the ordinary resolution authorising the renewal of the Mandate.

(d) Application of the Take-over Code applicable to the Company

As at the Latest Practicable Date, Mr Huang Shih-An, Mrs Huang Chuang Shueh-Ou and Mr Huang Chien-Hung are Directors of the Company. Mr Huang Shih-An is the spouse of Mrs Huang Chuang Shueh-Ou and Mr Huang Chien-Hung is the son of Mr and Mrs Huang.

As at the Latest Practicable Date, Ms Huang Yun Ju, a Shareholder, holds 11,557,704 Shares and is the daughter of Mr and Mrs Huang.

Accordingly, under the Take-over Code, Mr Huang Shih-An, Mrs Huang Chuang Shueh-Ou, Mr Huang Chien-Hung and Ms Huang Yun Ju are deemed to be parties acting in concert with each other (the “Concert Party Group”).

As at the Latest Practicable Date, the voting rights of each of the persons within the Concert Party Group before and after the purchase of Shares pursuant to the Mandate, assuming (a) the Company purchases 66,510,915 Shares, being 10% of the total number of Shares in issue (excluding the number of treasury shares held by the Company as at the Latest Practicable Date) and (b) there is no change in the number of Shares held or deemed to be held by such persons would be as follows:-

Before Share Buy-Back After Share Buy-BackDirect

Interest(%)(1)

Deemed Interest

(%)(1)

TotalInterest

(%)(1)

DirectInterest

(%)(2)

DeemedInterest

(%)(2)

TotalInterest

(%)(2)

Huang Shih-An(3) 24.30 22.34 46.64 27.00 24.82 51.82Huang Chuang Shueh-Ou(3) 22.34 24.30 46.64 24.82 27.00 51.82Huang Chien-Hung 1.86 – 1.86 2.07 – 2.07

Huang Yun Ju 1.74 – 1.74 1.93 – 1.93

Notes:-

(1) Based on the issued share capital of 665,109,154 Shares (excluding 12,500,000 Shares being held as treasury shares by the Company) as at the Latest Practicable Date.

(2) Based on the issued share capital of 598,598,239 Shares (excluding 12,500,000 Shares being held as treasury shares by the Company) as at the Latest Practicable Date and assuming the Company acquired or purchased a maximum of 66,510,915 Shares pursuant to the Mandate.

(3) Mr Huang Shih-An is deemed to be interested in the Shares held by his spouse, Mrs Huang Chuang Shueh-Ou and vice versa.



117

Assuming that the Company acquired or purchased a maximum of 66,510,915 Shares pursuant to the Mandate and assuming that the voting rights of the Concert Party Group as at the Latest Practicable Date of 50.24% remain unchanged, the voting rights of the Concert Party Group will increase from 50.24% to 55.83% solely as a result of Share Buy-Backs under the Mandate. Accordingly, as the Concert Party Group’s combined shareholding interest in the Company before and after such acquisitions or purchases of Shares by the Company exceeds 50%, the Concert Party Group will not become obligated to make a mandatory offer in the event that the Company acquires or purchases the maximum number of Shares pursuant to the Mandate.

The Directors are not aware of any other Shareholder who may become obligated to make a mandatory offer in the event that the Company purchases the maximum number of 66,510,915 Shares under the Mandate.

The statements herein do not purport to be a comprehensive or exhaustive description of all implications that may arise under the Take-over Code. Shareholders are advised to consult their professional advisers and/or the Securities Industry Council and/or other relevant authorities at the earliest opportunity as to whether an obligation to make a take-over offer would arise by reason of any purchase or acquisition of Shares by the Company.

2.11 Shares bought by the Company in the previous 12 months

The Company bought back 10,000,000 Shares on 7 March 2011 and such Shares are held by the Company as treasury shares. The following are details of the said acquisition of Shares by the Company:-

Date

Number ofShares

bought back

Purchase Priceper Share

(S$)

Total Consideration (including stamp duties,

clearing charges etc) paid for the Shares

(S$)

7 March 2011 10,000,000 0.025 250,929.56

Save as disclosed above, the Company has not made any other acquisition of its issued Shares in the 12 months preceding the Latest Practicable Date.

As at the Latest Practicable Date, 12,500,000 Shares are being held by the Company as treasury shares of which 10,000,000 Shares were acquired by the Company on 7 March 2011 and the balance 2,500,000 Shares were acquired by the Company during its fi nancial year ended 31 December 2007.

3. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTERESTS

The interests of the Directors and substantial Shareholders in the Shares as at the Latest Practicable Date, as recorded in the Register of Directors’ Shareholdings and the Register of Substantial Shareholders maintained under the provisions of the Companies Act, were as follows:-

Direct Interest Deemed InterestNo. of Shares %(1) No. of Shares %(1)

DirectorsHuang Shih-An(2) 161,620,193 24.30 148,594,465 22.34Huang Chuang Shueh-Ou(2) 148,594,465 22.34 161,620,193 24.30Huang Chien-Hung 12,397,620 1.86 – –Lim Lee Meng 108,000 0.02 – –Chiu Jin Yi, Cheyne 47,000 0.01 – –Chen Wan Shou, Arthur – – – –

118


Direct Interest Deemed InterestNo. of Shares %(1) No. of Shares %(1)

Substantial Shareholders

Huang Shih-An(2) 161,620,193 24.30 148,594,465 22.34

Huang Chuang Shueh-Ou(2) 148,594,465 22.34 161,620,193 24.30

Notes:-


(2) Mr Huang Shih-An is deemed to be interested in the Shares held by his spouse, Mrs Huang Chuang Shueh-Ou and vice

versa.

4. DIRECTORS’ RECOMMENDATION

The Directors are of the opinion that the proposed renewal of the Mandate is in the best interests of the Company. Accordingly, they recommend that Shareholders vote in favour of Resolution 9, being the ordinary resolution relating to the proposed renewal of the Mandate to be proposed at the AGM.

5. ANNUAL GENERAL MEETING

The AGM, notice of which is set out in the Annual Report of the Company, will be held on Friday, 29 April 2011 at The Conference Room, 80 Marine Parade Road #16-06, Parkway Parade, Singapore 449269 at 9:00 a.m. for the purpose of considering and, if thought fi t, passing with or without modifi cations, the ordinary resolution relating to the proposed renewal of the Mandate.

6. ACTION TO BE TAKEN BY SHAREHOLDERS

Shareholders who are unable to attend the AGM and who wish to appoint a proxy to attend on their behalf are requested to complete, sign and return the Proxy Form enclosed with the Annual Report in accordance with the instructions printed thereon as soon as possible and, in any event, so as to reach the registered offi ce of the Company not less than 48 hours before the time fi xed for the AGM. The completion and lodgement of the Proxy Form by a Shareholder will not prevent him from attending and voting at the AGM in person if he so wishes.

A Depositor shall not be regarded as a member of the Company entitled to attend the AGM and to speak and vote thereat unless his name appears on the Depository Register at least 48 hours before the AGM.

7. DIRECTORS’ RESPONSIBILITY STATEMENT

This Appendix I has been seen and approved by all Directors who collectively and individually accept responsibility for this Appendix I and confi rm, after having made all reasonable enquiries, that to the best of their knowledge and belief, the facts stated and opinions expressed in this Appendix I are fair and accurate in all material respects as at the Latest Practicable Date and that there are no material facts the omission of which would make any statement in this Appendix I misleading.

Where any information contained in this Appendix I has been extracted from published or otherwise publicly available sources, the sole responsibility of the Directors is to ensure that such information has been accurately and correctly extracted from these sources.



119

8. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents may be inspected at the registered offi ce of the Company at 80 Marine Parade Road #16-06 Parkway Parade Singapore 449269 during normal business hours from the date of this Appendix I up to and including the date of the AGM:-

(a) Memorandum and Articles of Association of the Company; and

(b) Annual report of the Company for its fi nancial year ended 31 December 2010.

Yours faithfullyfor and on behalf of the Board of DirectorsEUROPTRONIC GROUP LTD

Huang Chien-HungActing Chief Executive Offi cer

120

APPENDIX IN RELATION TO THE PROPOSED RENEWAL OF THE DISPOSAL MANDATE TO AUTHORISE THE COMPANY TO DISPOSE OF, IN WHOLE OR IN PART, THE INTERESTS HELD BY THE GROUP IN EUCON HOLDING LIMITEDEUROPTRONIC GROUP LTD (CO. REG. NO. 200009775K) (INCORPORATED IN THE REPUBLIC OF SINGAPORE)

APPENDIX II

13 April 2011

This Appendix II is circulated to shareholders of Europtronic Group Ltd (the “Company”) together with the Company’s Annual Report for its fi nancial year ended 31 December 2010 (“Annual Report”). Its purpose is to provide information to shareholders for the proposed renewal of the mandate to authorise the Company to dispose of, in whole or in part, the interests held by the Group in Eucon Holding Limited (the “Disposal Mandate”) to be tabled at the Annual General Meeting of the Company to be held on Friday, 29 April 2011 at The Conference Room, 80 Marine Parade Road #16-06, Parkway Parade, Singapore 449269 at 9:00 a.m..

This Appendix II forms part of the Annual Report and must be read in conjunction with the Annual Report.

The Notice of Annual General Meeting and Proxy Form are enclosed with the Annual Report.

If you are in any doubt as to the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser immediately.

If you have sold all your shares in the capital of the Company, please forward this Appendix II, the Notice of Annual General Meeting and Proxy Form immediately to the purchaser or to the stockbroker, bank or agent through whom you effected the sale for onward transmission to the purchaser.

The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of any of the statements made, opinions expressed or reports contained in this Appendix II.



APPENDIX IN RELATION TO THE PROPOSED RENEWAL OF THE DISPOSAL MANDATE TO AUTHORISE THE COMPANY TO DISPOSE OF, IN WHOLE OR IN PART, THE INTERESTS HELD BY THE GROUP IN EUCON HOLDING LIMITED



121

CONTENTS

Page

DEFINITIONS ................................................................................................................................................................. 122

LETTER TO SHAREHOLDERS

1. INTRODUCTION ................................................................................................................................................. 124

2. THE PROPOSED RENEWAL OF THE DISPOSAL MANDATE ........................................................................ 124

3. DIRECTORS’ RECOMMENDATION ................................................................................................................... 130

4. ANNUAL GENERAL MEETING ......................................................................................................................... 130

5. ACTION TO BE TAKEN BY SHAREHOLDERS ................................................................................................. 131

6. DIRECTORS’ RESPONSIBILITY STATEMENT ................................................................................................. 131

7. DOCUMENTS AVAILABLE FOR INSPECTION ................................................................................................ 131

122


DEFINITIONS

In this Appendix II, the following defi nitions shall apply throughout unless the context otherwise requires:-

“AGM” : The annual general meeting of the Company to be held on Friday, 29 April 2011 at The Conference Room, 80 Marine Parade Road #16-06 Parkway Parade Singapore 449269 at 9:00 a.m., Notice of which is set out in the Annual Report despatched together with this Appendix II

“Annual Report” : The annual report of the Company for its fi nancial year ended 31 December 2010

“Approval Date” : The date of the AGM at which the Disposal Mandate is proposed to be renewed

“Board” : The Board of Directors of the Company for the time being

“CDP” : The Central Depository (Pte) Limited

“Companies Act” : The Companies Act, Chapter 50 of Singapore, as amended or modifi ed from time to time

“Company” : Europtronic Group Ltd

“Director” : The Directors of the Company for the time being

“Disposal” : Disposal of the relevant number of Disposal Shares by the Company under the Disposal Mandate

“Disposal Mandate” : The general mandate to authorise the Company to dispose of, in whole or in part, the interests held by the Group in Eucon upon and subject to the terms of such mandate

“Disposal Shares” : 31,552,600 Eucon Shares, representing approximately 5.54% in the issued share capital of Eucon as at the Latest Practicable Date

“Eucon” : Eucon Holding Limited (Company Registration No. 200107762R), a public company listed on the Main Board of the SGX-ST. Eucon and its subsidiaries are in the business of, inter alia, providing mechanical and laser drilling, as well as routing services, to manufacturers of printed circuit boards in Taiwan and Shanghai, People’s Republic of China

“Eucon Shares” : Ordinary shares in the capital of Eucon

“Group” : The Company and its subsidiaries

“Latest Practicable Date” : 28 March 2011, being the latest practicable date prior to the printing of this Appendix II

“Listing Manual” : The Listing Manual of the SGX-ST

“Market Day” : A day on which the SGX-ST is open for trading of securities

“Minimum Price” : Being not less than 90% of the traded volume weighted average price of Eucon Shares for the fi ve (5) consecutive Market Days immediately prior to the date of each transaction under the Disposal Mandate

“Notice” : The Notice of AGM dated 13 April 2011

“NTA” : Net tangible assets

“SGX-ST” : Singapore Exchange Securities Trading Limited



123

“Shareholders” : Registered holders of Shares except that where the registered holder is CDP, the term “Shareholders” shall, in relation to such Shares, mean the persons to whose securities accounts maintained with CDP are credited with the Shares

“Shares” : Ordinary shares of the Company

“subsidiaries” : Shall have the meaning ascribed to it by the Companies Act

“per cent” or “%” : Percentage or per centum

“S$” and “cents” : Singapore dollars and cents respectively

The words “Depositor” and “Depository Register” shall have the meanings ascribed to them respectively in Section 130A of the Companies Act.

Words importing the singular shall, where applicable, include the plural and vice versa, and words importing the masculine gender shall, where applicable, include the feminine and neuter genders.

Words importing persons include corporations.

Any reference in this Appendix II to any enactment is a reference to that enactment as for the time being amended or re-enacted.

Any word defi ned under the Companies Act and used in this Appendix II shall have the meaning assigned to it under the Companies Act.

Any reference to a time of day in this Appendix II shall be a reference to Singapore time.

124




Directors:- Registered Offi ce:-

Huang Shih-An (Chairman) 80 Marine Parade RoadHuang Chuang Shueh-Ou (Vice Chairman) #16-06 Parkway ParadeHuang Chien-Hung (Acting Chief Executive Offi cer) Singapore 449269Chen Wan Shou, Arthur (Independent Director) Chiu Jin Yi, Cheyne (Independent Director)Lim Lee Meng (Independent Director) 13 April 2011

To: The Shareholders of Europtronic Group Ltd

Dear Sir/Madam

PROPOSED RENEWAL OF THE DISPOSAL MANDATE TO AUTHORISE THE COMPANY TO DISPOSE OF, IN WHOLE OR IN PART, THE INTERESTS HELD BY THE GROUP IN EUCON HOLDING LIMITED

1. INTRODUCTION

The Company proposes to seek the approval of Shareholders of the Company at the AGM to be held on 29 April 2011 for the renewal of the Disposal Mandate. The Disposal Mandate was originally approved at the extraordinary general meeting held on 11 October 2006 and renewed at the Company’s annual general meetings held on 27 April 2007, 28 April 2008, 28 April 2009 and 26 April 2010 authorising the Company to dispose of, in whole or in part, the interests held by the Group in Eucon.

The Company refers to the Notice accompanying the Annual Report for the fi nancial year ended 31 December 2010 and resolution 10 in relation to the renewal of the Disposal Mandate under the heading “Special Business” set out in the Notice.

The purpose of this Appendix II is to provide Shareholders with information relating to the Disposal Mandate.

2. THE PROPOSED RENEWAL OF THE DISPOSAL MANDATE

2.1 Shareholders’ Approval

Chapter 10 of the Listing Manual governs the continuing listing obligations of a listed company in respect of acquisitions and realisations. Under Rule 1014, Shareholders’ approval must be obtained for “major transactions”. Rule 1006 sets out the computation for relative fi gures for acquisitions and disposals of assets by a listed issuer. Shareholders’ approval is required if any of the relevant fi gures as computed on the bases set out in Rule 1006 exceeds 20% and such a transaction is classifi ed as a “major transaction”. In determining whether a disposal transaction or a series of disposal transactions is considered a major transaction, the SGX-ST may aggregate separate transactions completed within a twelve (12) month period and treat these transactions as one under Rule 1005 of the Listing Manual.

In the event that the Company disposes of all or any part of the Disposal Shares, the applicable relative fi gures computed under Rule 1006(a), (b) and (c) may exceed 20%. While it may be that a single disposal transaction under the Disposal Mandate may, in itself, trigger the requirement of Shareholders’ approval in accordance with Rule 1014, the Directors believe that it is also possible that Shareholders’ approval will be required in the event the Disposal is undertaken by way of separate, smaller transactions within a twelve (12) month period and which the SGX-ST may aggregate and consider as a single transaction. As such, the Company is seeking the approval of Shareholders for the renewal of the Disposal Mandate.



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2.2 Rationale

The Group has in the past considered horizontal as well as vertical merger and acquisition strategies to strengthen its market position. The investment in Eucon was considered an essential part of the Group’s vertical integration strategy. The Company’s current focus is on investments that can augment its components business horizontally. As such, the Directors do not currently consider the Group’s shareholding in Eucon as a core asset. In order to concentrate on its core business and to streamline its strategic operational and investment portfolio, the Company intends to partially or fully realise the shareholdings held by the Group in Eucon through one or more transactions as and when opportunities present themselves. The Disposal Mandate will facilitate the Company in accomplishing the aforementioned and in unlocking value from its equity investment in Eucon.

As the transactions under the Disposal Mandate, when aggregated, may be considered a “major transaction” under Chapter 10 of the Listing Manual as mentioned above, the Company is seeking the prior approval of its Shareholders of the transactions contemplated under the Disposal Mandate. While the Eucon Shares are fairly liquid and marketable, favourable opportunities to sell at optimum prices may not be easy to come by, and the Company must therefore be able to commit to unconditional and binding agreements in a very short time frame.

For the reasons specifi ed above, the Board believes that it is important that the Company obtains Shareholders’ approval for the renewal of Disposal Mandate in order for the Group to dispose of suitable amounts of the Disposal Shares at the best price possible. The Disposal Mandate will allow the Group to act fl exibly and decisively on opportunities that will maximise the disposal value of the Disposal Shares but at the same time without compromising value realisation to Shareholders. The Company may dispose of the Disposal Shares on the open market and/or private placements of the Disposal Shares, subject to the provisions as stated under “Shareholders’ Protection”, paragraph 2.3 of this Appendix II.

2.3 Shareholders’ Protection

In order to protect Shareholders’ interests for any Disposals carried out under the Disposal Mandate, the Board will ensure that each transaction carried out under the Disposal Mandate will be carried out on an arm’s length basis and at the best possible price (subject always to the Minimum Price) as the circumstances of each transaction allow. Assuming that the approval of Shareholders for the renewal of the Disposal Mandate is obtained at the AGM, the executive Directors will be responsible for facilitating any Disposals according to the guidelines approved by the Board (the “Disposal Guidelines”). The Disposal Guidelines provide for, inter alia, the relevant valuation metrics to be used when carrying out Disposals under the Disposal Mandate and any material amendments to the Disposal Guidelines will be subject to the approval of the Board.

In addition, the Company will keep Shareholders informed of transactions conducted under the Disposal Mandate by doing the following:-

(i) in the event that any one transaction conducted under the Disposal Mandate, or any further transaction (when aggregated with all previous transactions conducted under the Disposal Mandate other than those transaction(s) which have been announced by the Company via the SGXNET) exceeds 5% of any of the relative fi gures computed on the bases set out in Rule 1006 of the Listing Manual, the Company will make an announcement setting out the information required under Rule 1010 of the Listing Manual. Such transactions are “discloseable transactions” as defi ned under Rule 1010; or

(ii) in the event that any one transaction conducted under the Disposal Mandate resulted in the Company’s aggregate cost in investment in Eucon falling below each multiple of 5% of the Company’s latest audited consolidated NTA, the Company will make an announcement setting out the information required under Rule 704(15)(b)(i) to (iii) relating to a sale instead of an acquisition. This is in accordance with Rule 704(16)(b) of the Listing Manual; or

(ii) upon the earlier of the disposal of all of the Disposal Shares or upon the expiry of the Disposal Mandate, the Company will make an announcement of such fact.

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2.4 Validity of the Disposal Mandate

The Disposal Mandate will take effect from the passing of the ordinary resolution to approve the renewal of the Disposal Mandate and continue in force up to the earliest of:-

(i) twelve (12) months from the date of such approval;

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

(iii) the date on which the Disposal is carried out to the full extent mandated under the Disposal Mandate (i.e., the disposal of all the Disposal Shares).

The Disposal Mandate will be put to Shareholders for renewal at each subsequent annual general meeting of the Company in the event that the Disposal has not been carried out to the full extent mandated under the Disposal Mandate during its validity period.

2.5 Financial Effects of the Disposal The pro forma fi nancial effects have been prepared based on the audited consolidated fi nancial statements

of the Group for its fi nancial year ended 31 December 2010 and on the assumption that the Disposal of all the Disposal Shares had been completed (i) on 1 January 2010 for illustrating the fi nancial effects on the consolidated profi t of the Group and (ii) on 31 December 2010 for illustrating the fi nancial effects on the NTA of the Group. Transaction costs for the Disposal are assumed to be insignifi cant and ignored for computational purposes.

The pro forma fi nancial effects of the Disposal are purely for illustrative purposes and are not indicative of

the actual fi nancial effects of the Disposal on the NTA and earnings per Share of the Group.

Based on the weighted average price of S$0.03 per Eucon Share on the Market Day preceding the Latest Practicable Date, the Group will record a gross gain of S$315,526 as a result of the Disposal. The gain of S$315,526 was derived from the difference arising from the book value of S$0.02 for each Disposal Share and the sale price of S$0.03 for each Disposal Share. Such Disposal, if effected during the fi nancial year ended 31 December 2010, will result in an increase in the profi t after tax of the Group from S$3.6 million to S$3.9 million.

The Company will dispose the Disposal Shares when a profi t can be gained from the transaction. Accordingly, the actual gain to be recorded in the Group’s accounts will be based on the market price of the Eucon Shares at the time of the Disposal by the Company.

NTA of the Group

Before Disposal After Disposal

NTA (S$’000) 42,518 42,202

Number of Shares (excluding 12,500,000 treasury shares which are held by the Company as at the Latest Practicable Date) 665,109,154 665,109,154

NTA per Share (cents) 6.39 6.35

Profi ts of the Group

Before Disposal After Disposal

Profi ts after tax (S$’000) 3,558 3,874

Weighted average number of Shares 665,109,154 665,109,154

Earnings per Share (cents) 0.53 0.58



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2.6 Relative Figures computed pursuant to Rule 1006 of the Listing Manual

The following relative fi gures are based on the following assumptions:-

(a) that the Disposal Shares are entirely disposed of at a price of S$0.03 per Eucon Share (being its weighted average price on the Market Day preceding the Latest Practicable Date);

(b) the value of each Disposal Share is based on the weighted average price of S$0.03 per Eucon Share on the Market Day preceding the Latest Practicable Date;

(c) a price of S$0.025 per Share (being its weighted average price on the Market Day preceding the Latest Practicable Date); and

(d) the Company’s market capitalisation of S$16,627,729 based on assumption (c) above and the total number of issued Shares of 665,109,154 Shares (excluding 12,500,000 treasury shares held by the Company) as at the Latest Practicable Date.

Rule 1006(a)

Based on assumption (b), the aggregate net value of the Disposal Shares under the Disposal Mandate is S$946,578. The audited net asset value of the Group for the fi nancial year ended 31 December 2010 was S$40,746,000. As such, the value of the Disposal Shares when compared with the audited net asset value of the Group is 2.32 per cent.

Rule 1006(b) The net profi t attributable to the Disposal Shares under the Disposal Mandate is S$315,526. The Group’s

audited net profi t for the fi nancial year ended 31 December 2010 was S$3,558,000. As such, the net profi t attributable to the Disposal Shares when compared with the audited net profi t of the Group is 8.87 per cent.

Rule 1006(c) The aggregate net value of the consideration received from the Disposal Shares under the Disposal Mandate

is S$946,578 and constitutes 5.69 per cent of the Group’s market capitalisation. Rule 1006(d)

As no equity will be issued by the Company as consideration for any acquisition, Rule 1006(d) is not applicable.

2.7 Number of Eucon Shares disposed by the Company

At the extraordinary general meeting held by the Company on 11 October 2006, the Shareholders of the Company had granted a Disposal Mandate to the Company for the disposal of, in whole or in part, the interests held by the Group in Eucon.

Since the approval obtained by the Company from its Shareholders for the Disposal Mandate on 11 October 2006, the Company had disposed the following number of Eucon Shares through sales on the open market, making an aggregate gross gain of S$1,338,517:-

Date of Disposal Number of Eucon Shares Disposed

Selling PricePer Eucon Share

(S$) Sales Proceed

(S$)

5 Feb 2007 2,202,000 0.195 429,390

5 Feb 2007 3,100,000 0.190 589,000

7 Feb 2007 1,445,000 0.190 274,550

7 Feb 2007 1,581,000 0.185 292,485

8 Feb 2007 2,000,000 0.185 370,000

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Date of Disposal Number of Eucon Shares Disposed

Selling PricePer Eucon Share

(S$) Sales Proceed

(S$)

8 Feb 2007 5,678,000 0.180 1,022,040

9 Feb 2007 514,000 0.180 92,520

13 Feb 2007 4,366,000 0.180 785,880

14 Feb 2007 2,000,000 0.180 360,000

24 Apr 2007 3,228,000 0.190 613,320

24 Apr 2007 1,500,000 0.195 292,500

15 Jun 2007 1,200,000 0.170 204,000

20 Jun 2007 1,000,000 0.170 170,000

21 Jun 2007 2,076,000 0.170 352,920

22 Jun 2007 331,000 0.170 56,270

25 Jun 2007 2,126,000 0.170 361,420

4 May 2010 200,000 0.045 9,000

17 May 2010 1,700,000 0.062 105,502

18 May 2010 137,000 0.070 9,590

20 May 2010 500,000 0.070 35,000

1 Oct 2010 1,637,000 0.060 98,220

4 Oct 2010 861,000 0.060 51,660

5 Oct 2010 2,000,000 0.060 120,000

6 Oct 2010 821,000 0.060 49,260

7 Oct 2010 300,000 0.060 18,000

3 Nov 2010 1,500,000 0.050 75,000

8 Dec 2010 2,000,000 0.040 80,000

9 Dec 2010 970,000 0.040 38,800

13 Dec 2010 415,000 0.045 18,675

28 Dec 2010 1,905,000 0.040 76,200

30 Dec 2010 1,039,000 0.040 41,560

14 Mar 2011 1,575,000 0.030 47,250

17 Mar 2011 393,000 0.030 11,790

18 Mar 2011 457,000 0.030 13,710

23 Mar 2011 950,000 0.030 28,500

25 Mar 2011 600,000 0.030 18,000

Total 54,307,000 7,212,012

During the twelve (12) months preceding the Latest Practicable Date, an aggregate of 19,960,000 Eucon Shares were disposed by the Company. Such shares were disposed at the price range of S$0.030 to S$0.070.

As at the Latest Practicable Date, the Group holds an aggregate of 31,552,600 Eucon Shares, representing approximately 5.54% of the issued share capital of Eucon.



129

2.8 Interests of Directors and Substantial Shareholders

As at the Latest Practicable Date, the interests of the Directors and substantial Shareholders of the Company (that is, persons whose interests in the Company’s issued share capital are equal to or more than 5 per cent) were as follows:-

Direct Interest Deemed Interest

No. of Shares %(1) No. of Shares %(1)

Directors

Huang Shih-An(2) 161,620,193 24.30 148,594,465 22.34


Huang Chien-Hung 12,397,620 1.86 – –

Lim Lee Meng 108,000 0.02 – –

Chiu Jin Yi, Cheyne 47,000 0.01 – –

Chen Wan Shou, Arthur – – – –

Substantial Shareholders

Huang Shih-An(2) 161,620,193 24.30 148,594,465 22.34


Notes:-


(2) Mr Huang Shih-An is deemed to be interested in the Shares held by his spouse, Mrs Huang Chuang Shueh-Ou and vice versa.

As at the Latest Practicable Date, the interests of the Directors in Eucon were as follows:-

Direct Interest Deemed Interest

No. of Shares %(1) No. of Shares %(1)

Directors

Huang Shih-An(2) 9,540,200 1.67 7,620,800 1.34


Huang Chien-Hung 5,640,000 0.99 – –

Chen Wan Shou, Arthur 792,000 0.14 – –

Notes:-

(1) Based on the issued share capital of Eucon of 570,000,000 shares as at the Latest Practicable Date.

(2) Mr Huang Shih-An is deemed to be interested in the Eucon Shares held by his spouse, Mrs Huang Chuang Shueh-Ou and vice versa.

The Company does not have any policy regarding the Directors’ interest in Eucon as these shareholdings are personal to the Directors. However, these Directors, namely Mr Huang Shih-An, Mrs Huang Chuang Shueh-Ou, Mr Huang Chien-Hung and Mr Chen Wan Shou, Arthur, have a common understanding that they will deal with the Disposal Shares in the best interest of the Company and its Shareholders and in priority to their personal interest. Accordingly, the Disposal Shares will be disposed off at such favourable price(s) as may be in the interest of the Company and its Shareholders in priority to any disposal by any of these Directors.

130


In addition, the Company will maintain a register to record all transactions for the sale of the Disposal Shares effected by the Company. Every Director who holds Eucon Shares is required to notify the Company of any disposal of his/her Eucon Shares within 24 hours of such disposal. The Company will collate all transactions for the disposal of the Disposal Shares by the Company and/or the Eucon Shares by the Directors on a monthly basis and submit the same to the Audit Committee for its review. The Audit Committee will review such transactions to ensure that they are consistent with the common understanding of the Directors who hold Eucon Shares as described above.

During the twelve (12) months preceding the Latest Practicable Date, the following transactions were carried out by each of Mr Huang Shih-An, Mrs Huang Chuang Shueh-Ou and Mr Huang Chien-Hung:-

(a) on 8 November 2010, Mr Huang Shih-An transferred 5,000,000 Eucon Shares to Mr Huang Chien-Hung, his son;

(b) Mrs Huang Chuang Shueh-Ou disposed an aggregate of 5,500,000 Eucon Shares on the open market. On 30 September 2010 and 1 October 2010, 2,000,000 and 1,000,000 Eucon Shares were respectively sold by Mrs Huang at the price of S$0.06 for each Eucon Share. On 4 November 2010, the balance 2,500,000 Eucon Shares were sold by Mrs Huang at the price of S$0.05 for each Eucon Share; and

(c) Mr Huang Chien-Hung disposed an aggregate of 2,160,000 Eucon Shares on the open market. On 10 February 2011, 1,200,000 Eucon Shares were sold by Mr Huang at the price of S$0.04 for each Eucon Share, on 24 February 2011, 700,000 Eucon Shares were sold at the price of S$0.035 for each Eucon Share and on 25 March 2011, the balance 260,000 Eucon Shares were sold at the price of S$0.03 for each Eucon Share.

Mr Chen Wan Shou, Arthur did not disposed any of his interests in Eucon in the twelve (12) months preceding the Latest Practicable Date.

Save as disclosed above, none of the Directors has any interest, direct or indirect, in the Disposal Mandate, other than by reason only of being a Director or a holder of Shares and/or Eucon Shares. Accordingly, Mr Huang Shih-An and Mrs Huang Chuang Shueh-Ou, being substantial Shareholders of the Company, will be able to vote in respect of the ordinary resolution relating to the renewal of the Disposal Mandate at the AGM.

As at the Latest Practicable Date, the Company has not received any notifi cation from any of the Company’s substantial Shareholders that it had, and the Company is not aware of any substantial Shareholder having any interest, direct or indirect, in the Disposal Mandate (other than by reason only of having an interest in the Company’s Shares or in Eucon Shares).

3. DIRECTORS’ RECOMMENDATION

Having fully considered the rationale and the information relating to the proposed renewal of the Disposal Mandate set out in this Appendix II, the Directors are of the opinion that the proposed renewal of the Disposal Mandate is in the best interests of the Company and accordingly they recommend that Shareholders vote in favour of Resolution 10, being the ordinary resolution relating to the proposed renewal of the Disposal Mandate to be proposed at the AGM.

4. ANNUAL GENERAL MEETING

The AGM, notice of which is set out in the Annual Report of the Company, will be held on Friday, 29 April 2011 at The Conference Room, 80 Marine Parade Road #16-06, Parkway Parade, Singapore 449269 at 9:00 a.m. for the purpose of considering and, if thought fi t, passing with or without modifi cations, the ordinary resolution relating to the renewal of the Disposal Mandate.



131

5. ACTION TO BE TAKEN BY SHAREHOLDERS

Shareholders who are unable to attend the AGM and who wish to appoint a proxy to attend on their behalf are requested to complete, sign and return the Proxy Form enclosed with the Annual Report in accordance with the instructions printed thereon as soon as possible and, in any event, so as to reach the registered offi ce of the Company not less than 48 hours before the time fi xed for the AGM. The completion and lodgement of the Proxy Form by a Shareholder will not prevent him from attending and voting at the AGM in person if he so wishes.

A Depositor shall not be regarded as a member of the Company entitled to attend the AGM and to speak and vote thereat unless his name appears on the Depository Register at least 48 hours before the AGM.

6. DIRECTORS’ RESPONSIBILITY STATEMENT

This Appendix II has been seen and approved by all Directors who collectively and individually accept responsibility for this Appendix II and confi rm, after having made all reasonable enquiries, that to the best of their knowledge and belief, the facts stated and opinions expressed in this Appendix II are fair and accurate in all material respects as at the Latest Practicable Date and that there are no material facts the omission of which would make any statement in this Appendix II misleading.

Where any information contained in this Appendix II has been extracted from published or otherwise publicly available sources, the sole responsibility of the Directors is to ensure that such information has been accurately and correctly extracted from these sources.

7. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents may be inspected at the registered offi ce of the Company at 80 Marine Parade Road #16-06 Parkway Parade Singapore 449269 during normal business hours from the date of this Appendix II up to and including the date of the AGM:-

(a) Memorandum and Articles of Association of the Company; and

(b) Annual report of the Company for its fi nancial year ended 31 December 2010.

Yours faithfullyfor and on behalf of the Board of DirectorsEUROPTRONIC GROUP LTD

Huang Chien-HungActing Chief Executive Offi cer

This page has been intentionally left blank.

EUROPTRONIC GROUP LTD(Incorporated in Singapore)(Co. Reg. No: 200009775K)

PROXY FORM(Please see notes overleaf before completing this Form)

I/We,

of

being a member/members of EUROPTRONIC GROUP LTD (the “Company”), hereby appoint:

Name NRIC/Passport No. Proportion of Shareholdings

No. of Shares %

Address

and/or (delete as appropriate)

Name NRIC/Passport No. Proportion of Shareholdings

No. of Shares %

Address

or failing *him/her, the Chairman of the Meeting as *my/our *proxy/proxies to vote for *me/us on *my/our behalf at the Annual General Meeting (the “Meeting”) of the Company to be held at The Conference Room, 80 Marine Parade Road #16-06, Parkway Parade, Singapore 449269 on Friday, 29 April 2011 at 9.00 a.m. and at any adjournment thereof. *I/We direct *my/our *proxy/proxies to vote for or against the Resolutions proposed at the Meeting as indicated hereunder. If no specifi c direction as to voting is given or in the event of any other matter arising at the Meeting and at any adjournment thereof, the *proxy/proxies will vote or abstain from voting at *his/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 Re-election of Mr Huang Shih-An as a Director

3 Re-election of Mr Chen Wan Shou, Arthur as a Director

4 Re-appointment of Mr Chiu Jin Yi, Cheyne as a Director

5 Approval of Directors’ fees amounting to S$105,000

6 Re-appointment of Nexia TS Public Accounting Corporation as Auditors

7 Share Issue Mandate

8 Authority to allot and issue shares pursuant to the Europtronic Employees’ Share Option Scheme and Europtronic Performance Share Scheme

9 Renewal of the Share Buy-Back Mandate

10 Renewal of the Disposal Mandate * Delete where inapplicable

Dated this day of 2011

Signature of Shareholder(s)or, Common Seal of Corporate Shareholder

IMPORTANT:

1. For investors who have used their CPF monies to buy EUROPTRONIC GROUP LTD’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.

Total number of Shares in: No. of Shares

(a) CDP Register

(b) Register of Members

Notes:

1. Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register (as defi ned in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of Shares. If you have Shares registered in your name in the Register of Members, you should insert that number of Shares. If you have Shares entered against your name in the Depository Register and Shares registered in your name in the Register of Members, you should insert the aggregate number of Shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the Shares held by you.

2. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend and vote in his/her stead. A proxy need not be a member of the Company.

3. Where a member appoints two proxies, the appointments shall be invalid unless he/she specifi es the proportion of his/her shareholding (expressed as a percentage of the whole) to be represented by each proxy.

4. The instrument appointing a proxy or proxies must be deposited at the registered offi ce of the Company at 80 Marine Parade Road #16-06, Parkway Parade, Singapore 449269 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 offi cer or attorney duly authorised. Where the instrument appointing a proxy or proxies is executed by an attorney on behalf of the appointor, the letter or power of attorney or a duly certifi ed copy thereof must be lodged with the instrument.

6. A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fi t to act as its representative at the Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore.

General:

The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specifi ed in the instrument appointing a proxy or proxies. In addition, in the case of Shares entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have Shares entered against his name in the Depository Register as at forty-eight (48) hours before the time appointed for holding the Meeting, as certifi ed by The Central Depository (Pte) Limited to the Company.



Co. Reg. No.: 200009775KNo 80 Marine Parade Road #16-08Parkway Parade, Singapore 449269Tel.: (65) 6447 2037 Fax: (65) 6447 1582Website: www.europtronic.comEnquiry: [email protected]

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