Giken Sakata (S) Limited ANNUAL REPORT 2013

Transcription

1 ANNUAL REPORT 2013 PROGRESSING WITH PRECISIONS This document has been prepared by the Company and its contents have been reviewed by the Company s Sponsor, Stamford Corporate Services Pte Ltd for compliance with the relevant rules of Singapore Exchange Securities Trading Limited ( SGX-ST ). The Company s Sponsor has not independently verified the contents of this document. This document has not been examined or approved by SGX-ST and SGX-ST assumes no responsibility for the contents of this document, including the correctness of any of the statements or opinions made or reports contained in this document. The contact person for the Sponsor is Mr Bernard Lui Tel: (65) bernard.lui@stamfordlaw.com.sg 3

2 CONTENTS 01 Core Competencies 02 Our Corporate Policy & Our Commitments 03 Financial Summary 04 Chairman s Message 05 CEO s Message 07 Board of Directors 10 Corporate Data 11 Corporate Governance 18 Financial Contents 88 Statistics of Shareholdings 90 Notice of Annual General Meeting 93 Appendix to the Notice of Annual General Meeting Proxy Form 4

3 Boosting our core competencies We strengthen our manufacturing capabilities while continuing our environmental - friendly practices. We ensure that we remain committed to quality in every step of the production process to deliver only superior products and services to our customers. 1

4 Our corporate policy a. To satisfy the diverse needs of our customers by providing quality products and services in a cost effective manner, with timely delivery and good after-sales services. b. To develop solid strategic business alliances with our customers, suppliers and associates and achieve a competitive edge for growth in these partnerships. Our commitments a. We are committed to continuously and consistently offer quality products and services to the full satisfaction of our customers. We sought to capitalise on the super-precision technological know-how and experience that we have developed over a long period of time. b. We are committed to a clean environment and ecologically peaceful world. We believe that the amenity of our working environment is one of the factors to producing quality products and providing quality services. We undertake environmental management to fulfill our social responsibilities in our business activities. c. We are committed to protect and reward our customers, suppliers and associates, our shareholders, our employees and their families and the community at large. 2

5 financial summary Financial Performance Turnover S$ mil Net Profit / (Loss) Before Tax S$ mil Net Profit / (Loss) After Tax S$ mil (2.2) (2.4) FY/FP FY/FP FY/FP Financial Position 2013 S$ mil 2012 S$ mil 2011 S$ mil 2010 S$ mil 2009 S$ mil Property, Plant & Equipment Associate Other Non-Current Assets Current Assets Total Assets Other Non-Current Liabilities Long-Term Borrowings Short-Term Borrowings Other Current Liabilities Total Liabilities Translation Reserve (0.3) Statutory Reserve Revenue Reserve (13.5) (13.8) (14.1) (11.5) (11.5) Share Capital Total Capital & Reserve Non-Controlling Interests Total Capital, Reserve & Non-Controlling Interests Financial Ratios Net Tangible Assets Per Share S$ (Cents) Earnings/(loss) Per Share Before Tax S$ (Cents) (1.7) Earnings/(loss) Per Share After Tax S$ (Cents) (1.8) Gearing Ratio

6 Chairman s message In October 2013, the Company issued a total of million new ordinary shares to raise a total capital fund of S$3.16 million. This will strengthen the funding requirements of the for its existing business. The Board of Directors and the Management of Giken thank you very much for your support during this Financial Year The recorded a turnover of S$ million for the financial year with a gross profit of S$9.49 million. The achieved a net profit after tax of S$0.45 million. The Company signed a debt restructuring agreement with its creditor banks in 2008 to repay its total outstanding loan over a period of 6 years. As at 31 August 2013, the outstanding balance owing is S$1.89 million. In October 2013, the Company issued a total of million new ordinary shares to raise a total capital fund of S$3.16 million. This will strengthen the funding requirements of the for its existing business. In the year ahead, the expects some existing projects to be phased out while engaging in new projects from existing and new customers. However, the is concerned about the uncertain state of the European and American economies. The will continue to intensify its marketing and sales activities to secure more projects and exercise cost management measures to maintain its competitiveness. The continues to support good corporate governance to enable it to be accountable to its investors, customers, suppliers, business associates, employees and the community. I would like to thank Mr Lai Kim Fatt and Mr Chua Khing Seng, who had resigned from the Board and Mr Tadanori Kawanishi and Mr Daniel Goh, who would not be seeking re-election at the coming Annual General Meeting. I would also like to welcome Mr Sydney Yeung and Mr Sanford Chee, who joined the Board on 1 November 2013 and 1 December 2013 respectively. Lastly, I sincerely thank all our shareholders, customers, suppliers, bankers and business associates for their continuing support throughout these years. We also thank all our fellow directors and all the staff within the for their dedication and contribution. Chin Siew Gim Chairman 2 December

7 Ceo s message While we remain focused on prudently managing costs, we have our eyes centred on developing and leveraging on new business opportunities. Our aim is to create and build a geographically balanced customer portfolio to diversify our revenue base as well as to mitigate any heavy reliance on any particular customer or industry. Dear shareholders, This year, built on the recovery and turnaround momentum of the previous year. Despite facing headwinds in several directions, the was steadfast in turning in a profitable bottom line for the second year running. Net earnings rose by 20.9% from S$373,000 to S$451,000 backed by 41.6% revenue growth, from S$89.5 million to S$126.8 million. Cash and cash equivalents stood at S$4.0 million, after taking into account S$1.9 million for loan repayment under the Debt Restructuring Agreement (DRA); S$2.8 million net cash was generated from operations. Earnings per share rose by 21.4% from 0.28 cents to 0.34 cents while net asset value per share climbed 8.4% from 6.08 cents to 6.59 cents. Cost Saving Initiatives Producing Positive Results I am pleased to note that the loan under the DRA has been reduced to S$1.9 million at the end of FY2013, and this would be fully repaid by the end of the next financial year. The subsequent annual savings from these financial obligations would contribute to stronger cash reserves that could potentially be used for future working capital needs. As would the cost saving initiatives and automation efforts implemented a few years back, these efforts have now borne fruit and we are starting to see tangible results. General productivity across the company has increased arising from effective resource and asset utilisation. Our stringent and disciplined cost management regime has also resulted in a leaner cost structure that boosted profitability. These conscious and company-wide undertakings are necessary to mitigate and anticipate strong external headwinds that may tip the balance of the positive steps we have undertaken internally. Wages from our external operations, in particular, Batam, Indonesia, have been on the steady rise in response to the legislative changes to the remuneration practices that called for an upward revision to wage levels. We are anticipating another round of wage increase in the coming financial year. Singapore too faces its own manpower challenge; the new workers quota implemented by the Ministry of Manpower has resulted in a labour crunch that has pushed salary upwards. Whilst China s double digit salary increases have now become an annual affair. Taken together, these wage increases would undoubtedly have a significant impact on our operating expenses. As such, it is critical to achieve even higher resource optimisation through enhanced productivity, value engineering and more strategic deployment of automation. Developing a More Balanced Geographical Customer Portfolio While we remain focused on prudently managing costs, we have our eyes centred on developing and leveraging on new business opportunities. Our aim is to create and build a geographically balanced customer portfolio to diversify our revenue base as well as to mitigate any heavy reliance on any particular customer or industry. To date, we have been fairly successful in this endeavour. Sales from the European customer in the Consumer Electronics sphere has since taken off from the end of the last financial year and is contributing significantly to our income stream. Business with our other European and American customers secured in other market segments such as Medical segment is also doing well. We expect to expand our portfolio of Northern Hemisphere customers in the upcoming year. 5

8 Ceo s message Asia will continue to be one of our core regions of growth as we continue to cement business relationships. This year however, after an encouraging start, demand for a new turnkey product launched by one of our major Asian customers began to dip due to lackluster response to its newly launched gaming offering. As a result, this has led to a sharp drop in revenue from this product in the second half of FY2013. We expect demand to taper further going into next year. This underlines the importance of balancing our exposure across customer segments and the continual need to create and identify new sources of opportunities. Coupled with the necessary marketing and business development efforts, we are cognisant of the need to be equipped with the financial wherewithal to be ready when the right opportunity presents itself. New Share Placement On 23 August 2013, the company announced it had entered into a share placement agreement to issue up to 55,234,000 new ordinary shares in at an issue price of S$0.024 per share and a subscription agreement with Roots Capital Asia Limited pursuant to which the latter shall subscribe for 76,275,000 new ordinary shares in the company at a subscription price of S$0.024 per share. This share placement exercise raised S$3.0 million net proceeds that will be primarily used for working capital needs including for new projects. Together with the better balanced business portfolio, cost management initiatives as well as a firmer cash position, the is now in a stronger vantage position to carve new frontiers and fortify its competitiveness. Let me take this opportunity to express my heartfelt appreciation to our Board of Directors, key management team and all our staff for their dedication and valued contribution. I would also like to thank our customers, suppliers and business partners for their loyal and valuable support. Tan Kay Guan Chief Executive Officer 6

9 board OF DIRECTORS MR CHIN SIEW GIM Mr Chin Siew Gim is the Non-Executive Chairman of the Company. He was appointed to the Company s Board of Directors in 1992 as Independent Director and as Non-Executive Chairman in He is also the Chairman of the Company s Audit Committee, Nominating Committee and Remuneration Committee. Mr. Chin was last re-elected as a Director on 27 December Mr Chin graduated with a Bachelor Degree of Science in Engineering (Architecture) from the National University of Yokohama in 1966 and a Bachelor Degree of Architecture from the University of Melbourne in Mr Chin has more than 40 years of experience in Architectural Design, Space Planning & Project Management and he is currently the Principal of S G Chin & Associates Chartered Architects. He is a member of both the Singapore Institute of Architects and the Royal Institute of British Architects. In addition, he is also a Fellow of the Royal Australian Institute of Architects. Mr Chin is actively involved in the world s largest service organisation Lions Club International and had served as District Governor ( ) and Council Chairman ( ) of Multiple District 308, which covers 3 countries, namely Brunei, Malaysia and Singapore. He is currently the Chairman of the Management Board of the Lions Home for the Elders which runs two nursing and respite care of aged destitute home with approximately 350 residents, located at Toa Payoh Rise and Bedok South Avenue 2 respectively. Mr Chin s other activities include being the past Chairman of the School Advisory Committee of the North View Secondary School for over 10 years. He was the past President of the Japanese University Graduates Association of Singapore ( ) and a past committee member of the CHIJ school s Board of Management for 14 years. MR TAN KAY GUAN Mr Tan Kay Guan is an Executive Director and the Chief Executive Officer (CEO) of the Company. He is also a member of the Company s Nominating Committee. Mr Tan was appointed to the Board on 15 February 2008 and assumed the CEO position on 1 November He was re-elected to the Board on 27 December Mr Tan who holds a Bachelor of Engineering (First Class Honors) degree from the Japan National Defence Academy, was previously an Executive Director of Miyoshi Precision Limited, a substantial shareholder of the Company. Mr Tan was formerly with the Singapore Armed Forces. Mr Tan is also the President Commissioner of PT Giken Precision Indonesia and President of Changzhou Giken Precision Co Ltd, both subsidiaries of the Company. Mr Tan was awarded the Public Administration Medal (Bronze) (Military), PPA(G)(Tentera), by the President of Singapore in the 2011 National Day award, for his contribution to the Singapore Armed Forces. Mr Tan presently serves voluntarily in the Singapore Armed Forces, and he holds the rank of a colonel. Mr Tan is currently the President of the Japanese University Graduates Association of Singapore. 7

10 board OF DIRECTORS MR GOH LAI HAI MR TADANORI KAWANISHI Mr Tadanori Kawanishi is an Executive Director and the Executive Vice President of the Company. Mr Kawanishi is also the head of the Mechanism Division and the President- Director of PT Giken Precision Indonesia (GPI), a subsidiary of the Company. He was appointed to the Board on 1 February Mr Kawanishi, who holds a Bachelor of Engineering degree, joined the Company in He was appointed the President Director of GPI in 2008 and the Executive Vice President of the Company on 1 November Mr Kawanishi is due to retire as director of the company pursuant to Article 91 of the Articles of Association of the Company, has decided not to seek for re-election. Mr Daniel Goh Lai Hai is an Executive Director and head of the Microshaft Division of the Company. Mr Goh is also a Director & General Manager of Changzhou Giken Precision Co Ltd (CGP), a subsidiary of the Company. He was appointed to the Board on 1 September Mr Goh, who holds a Diploma in Mechanical Engineering, joined the Company in 1987 and was appointed as the General Manager of the Microshaft Division in 2002 and as the General Manager of CGP in Mr Goh is due to retire as director of the company pursuant to Article 91 of the Articles of Association of the Company, has decided not to seek for re-election. MR SANFORD CHEE MR CHUA KHING SENG Mr Richard Chua Khing Seng is an Independent Director of the Company. He is also a member of the Company s Audit Committee and Remuneration Committee. He was appointed to the Board on 20 April He was last re-elected to the Board in 2011 and he resigned from Board on 30 November Mr Chua who holds a Bachelor of Engineering (Mechanical Engineering) degree from the Tokyo Institute of Technology in Japan, is currently the Vice President & Director, Southeast Asia and South Asia Regions, Yamato Asia Pte Ltd. Mr Chua had previously served as a Regional Director (China) cum Regional Director (Regionalisation Program for Engineering ) for the Singapore Economic Development Board and the Managing Director of Yusen Logistics (S) Pte Ltd. Mr Chua is a former President of the Japanese University Graduates Association of Singapore. Mr Sanford Chee is an Independent Director of the Company. He was appointed to the Board on 1 December Mr Chee holds a Master of Business Administration degree (Finance Major) from The Wharton School, University of Pennsylvania in USA and a Bachelor of Accountancy Degree (First Class Honours) from the Nanyang Technology University in Singapore. He is currently the Research Director of an equity long/short hedge fund. Mr Chee was previously the Managing Director at Tiedemann Global Emerging Markets, responsible for equities investment across Asia. Before joining Tiedemann, Mr Chee was an Associate at York Capital Management Asia Advisors. Mr Chee had also worked as an investment banker at Lazard, a consultant at McKinsey and Bain and as a portfolio manager at Koeneman Capital Management. 8

11 PROF LAI KIM FATT Prof Lai Kim Fatt was appointed an Independent Director of the Company in September He is also a member of the Company s Audit Committee, Nomination Committee and Remuneration Committee. He was last re-elected to the Board in 2011 and he resigned from Board on 30 November Prof Lai has an Honours Degree, 1st Class (Civil Engineering) from the National Defence Academy, Japan and a Master of Science Degree (Systems Management) from the Air Force Institute of Technology, USA. Prof Lai is currently the Consulting Government Programs Leader (Singapore) for IBM Singapore Pte Ltd. Prof Lai is also the President & Founding Member of the Neighbourhood Care Services, a volunteer welfare organisation set up in 2005 to run Before and After School Care (BASC) services in primary schools in the Yishun area in Singapore. Prof Lai is also the Assistant Branch Secretary of the Kampong Chai Chee PCF Centre and a District Councillor for the South East Community Development Council. Prof Lai is a former President of the Japanese University Graduates Association of Singapore. Prof Lai was awarded the Public Administration Medal (Silver) (Bar), PPA(P) (L), by the President of Singapore in the 2003 National Day award, for his contribution in the nation-wide fight against SARS. He was also presented the Person of the Year 2004 IT Award by the Singapore Computer Society for his outstanding professional performance and contribution to IT in Singapore. MR NG SAY TIONG Mr Ng Say Tiong is an Executive Director and Chief Financial Officer cum Company Secretary of the Company. Mr Ng is also a Director of Changzhou Giken Precision Co Ltd, a subsidiary of the Company. He was appointed to the Board on 1 February He was last re-elected to the Board on 27 December Mr Ng, who holds a Bachelor of Accountancy and Master of Business (International Marketing) degree, joined the Company in He was appointed as the Company Secretary in 1997 and assumed the Chief Financial Officer function in Mr Ng is currently the Chairman of the Fuchun Community Club Management Committee and Treasurer of the Marsiling Citizen Consultative Committee. He was awarded a Public Service Medal by the President of Singapore in the 2012 National Day award. MR SYDNEY YEUNG KIN BOND Mr Sydney Yeung Kin Bond is a Non-Executive Non-Independent Director of the Company. He was appointed to the Board on 1 November Mr Yeung holds a Bachelor of Science degree from Fordham University in USA. He is the founder director and shareholder of Roots Capital Asia Limited, a substantial shareholder of the Company. Mr Yeung is also currently the Managing Director of Pioneer Capital Management Inc, an Independent Director of China Gaoxian Fibre Fabric Holdings Limited (Listed on the Singapore Stock Exchange) and Ares Asia Limited (Listed on the Hong Kong Stock Exchange) and a director of Global Initiatives Communications Pte Ltd, Maiplay Pte Ltd, Arella Worldwide Limited and Roots Capital Strategic Pte Ltd. Mr Yeung has many years of experience in the financial industry, starting his career in the Institutional Equity Division at Morgan Stanley New York and as the Managing Director of International Trading at Van der Moolen, a US securities specialist firm. Mr Yeung is an active member of the Rotary Club in Singapore. 9

12 Corporate data Board of Directors Chin Siew Gim (Non-Executive Chairman, Independent Director) Tan Kay Guan (Chief Executive Officer, Executive Director) Tadanori Kawanishi (Executive Director) Ng Say Tiong (Executive Director) Goh Lai Hai (Executive Director) Lai Kim Fatt (Independent Director) (Resigned on 30 November 2013) Chua Khing Seng (Independent Director) (Resigned on 30 November 2013) Yeung Kin Bond (Non-Executive Non-Independent Director) (Appointed on 1 November 2013) Chee Sanford (Independent Director) (Appointed on 1 December 2013) Executive Management Committee Tan Kay Guan (Chief Executive Officer) Tadanori Kawanishi (Executive Vice President) Ng Say Tiong (Chief Financial Officer) Daniel Goh (Chief Operating Officer, Microshaft Division) Lee Kok Beng (General Manager, Mechanism Division) Audit Committee Chin Siew Gim (Chairman) Lai Kim Fatt (Member) Chua Khing Seng (Member) Nominating Committee Chin Siew Gim (Chairman) Tan Kay Guan (Member) Lai Kim Fatt (Member) Remuneration Committee Chin Siew Gim (Chairman) Lai Kim Fatt (Member) Chua Khing Seng (Member) Registered Office 50 Raffles Place #32-01 Singapore Land Tower, Singapore Telephone: (65) Fax: (65) Principal Business Address Blk 4012 Ang Mo Kio Ave 10, #05-01 Techplace 1, Singapore Company Registration Number W Company Website Auditors BDO LLP, Public Accountants and Chartered Accountants Partner-in-charge : Mr Philip Aw (First appointed in respect of the financial year ended 31 August 2011) Sponsor Stamford Corporate Services Pte Ltd Registrar, Transfer Office and Warrant Agent Boardroom Corporate & Advisory Services Pte Ltd 50 Raffles Place, #32-01 Singapore Land Tower, Singapore Principal Bankers The Development Bank of Singapore Ltd The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch Malayan Banking Berhad, Singapore Branch Mizuho Corporate Bank, Limited, Singapore Branch Company Secretary Ng Say Tiong 10

13 CORPORATE GOVERNANCE REPORT The Company is committed to raising the standard of corporate governance in order to protect the interest of its shareholders. The Board of Directors fully supports the Best Practices Guide (the Code ) on corporate governance as recommended by the Singapore Exchange Securities Trading Limited ( SGX-ST ) and has put in place various mechanisms to ensure that effective corporate governance is practised. Board of Directors The Board of Directors consists of members with varied experience and expertise. The Board currently comprises seven members, three of whom are independent directors. The Board is chaired by Mr Chin Siew Gim, in his capacity as the Non-Executive Chairman. Mr Chin is also considered to be an independent director. The day-to-day operational activities of the is handled by an Executive Management Committee, headed by the Chief Executive Officer of the Company, Mr Tan Kay Guan. None of the directors are related to one another. Apart from its statutory responsibilities, the Board reviews and approves the s strategic plans, key operational initiatives and major investment and funding decisions. It also identifies principal risks of the s business and implements appropriate systems to manage those risks, reviews the s fi nancial performance and evaluates the performance and compensation of senior management personnel. These functions are carried out either directly or through Board Committees. The number of meetings held in the year by the Board and the attendance thereat are as follows: No. of meetings Board Meetings Attendance Mr Chin Siew Gim (Non-Executive Chairman) 2 2 Mr Tan Kay Guan (CEO) 2 2 Mr Tadanori Kawanishi (Executive Director) 2 2 Mr Ng Say Tiong (Executive Director) 2 2 Mr Goh Lai Hai (Executive Director) 2 2 Prof Lai Kim Fatt (Independent Director) (Resigned on 30 November 2013) 2 2 Mr Chua Khing Seng (Independent Director) (Resigned on 30 November 2013) 2 2 Mr Yeung Kin Bond, Sydney (Non-Executive Non-Independent Director) (Appointed on 1 November 2013) Mr Sanford Chee (Independent Director) (Appointed on 1 December 2013) NA NA NA NA 11

14 Corporate GOVERNANCE REPORT Board Committees The has set up the following Board Committees to help carry out the various functions of the Board (1) Executive Management Committee The Executive Management Committee comprises 5 members. It is chaired by the Chief Executive Officer of the Company and includes the Chief Financial Officer, the Heads of the Mechanism Division and Microshaft Division and the General Manager of the Mechanism Division. The Executive Management Committee handles the day-to-day operational activities or the Company and its subsidiaries. The members meet on a regular basis, attended by members who are physically available to attend the meeting. (2) Audit Committee The Audit Committee is chaired by Mr Chin Siew Gim, the Non-Executive Chairman and an independent director and includes Prof Lai Kim Fatt and Mr Chua Khing Seng (both Independent Directors) as members. Prof Lai and Mr Chua resigned from the Committee on 30 November 2013 and the Committee will be reconstituted. The Audit Committee convened three meetings during the period under review, attended by members of the Audit Committee and relevant management staff. The Audit Committee has also met with the external auditors, without the presence of the Company s management staff, at least once a year. The Audit Committee carries out its functions in accordance with Section 201B (5) of the Companies Act and the Code of Corporate Governance, including the following: (a) (b) (c) (d) (e) (f) (g) review the audit plans and results of the external and internal audits; review the s fi nancial and operating results and accounting policies; review the fi nancial statements of the Company and the consolidated fi nance statements of the before their submission to the Directors of the Company and the external auditors report on those fi nancial statements; review the announcement of the half-year and full-year results of the Company and the to the SGX-ST; ensures the co-operation and assistance given by the management to external auditors; makes recommendation to the Board of Directors on the appointment of the external auditors; and reviews the Interested Person Transactions as defi ned in Chapter 9 of the Listing Manual of SGX- ST as is required by SGX-ST and ensures that the transactions were on normal commercial terms and not prejudicial to the interests of the members of the Company. The Audit Committee has reviewed all non-audit services provided by the external auditors to the and is satisfied that the nature and extent of such services would not affect the independence of the external auditors. There was no non-audit fee paid to the Company s external and other auditor for the fi nancial year ended 31 August

15 CORPORATE GOVERNANCE REPORT The Audit Committee has full access to and co-operation by the management and has been given the resources required for it to discharge its function properly. It also has full discretion to invite any Director and executive officer to attend its meetings. The external auditors have unrestricted access to the Audit Committee. The Audit Committee has recommended to the Board of Directors the nomination of BDO LLP, for reappointment as external auditors of the Company at the forthcoming Annual General Meeting. The number of meetings held in the year by the Audit Committee and the attendance thereat are as follows: Audit Committee Meetings No. of meetings Attendance Mr Chin Siew Gim (Non-Executive Chairman) 3 3 Prof Lai Kim Fatt (Independent Director) 3 3 Mr Chua Khing Seng (Independent Director) 3 3 Based on the internal controls and fi nancial controls established and maintained by the and reviews performed by the management and external auditors respectively, the Audit Committee and the Board are of the opinion that the s internal controls, addressing fi nancial, operational and compliance risks, were adequate as at 31 August (3) Nominating Committee The Nominating Committee is chaired by Mr Chin Siew Gim, the Non-Executive Chairman and an independent director and includes Mr Tan Kay Guan (Chief Executive Officer) and Prof Lai Kim Fatt (Independent Director) as members. Prof Lai resigned from the Committee on 30 November 2013 and the Committee will be reconstituted. The Nominating Committee met and reviewed the following during the period under review: (a) (b) (c) (d) (e) the adherence to the Code of Corporate Governance; the appointment of new director to the Board; the recommendation of directors seeking re-appointment at the Annual General Meeting; the independence of the independent directors; and the changes of senior management personnel. The number of meetings held in the year by the Nominating Committee and the attendance thereat are as follows: Nominating Committee Meetings No. of meetings Attendance Mr Chin Siew Gim (Non-Executive Chairman) 1 1 Mr Tan Kay Guan (CEO) 1 1 Prof Lai Kim Fatt (Independent Director)

16 Corporate GOVERNANCE REPORT The Nominating Committee is satisfied that the current size and composition of the Board has adequate ability to meet the Company s existing scope of needs and the nature of operations. From time to time, the Nominating Committee will review the appropriateness of the current Board size, taking into consideration the changes in the nature and scope of operations as well as the regulatory environment. When reviewing directors for appointment and re-appointment, the Nominating Committee appraises the candidates to ensure that they possess relevant experience and have the calibre to contribute to the and its businesses, having regard to the attributes of the existing Board and the requirements of the group. New Directors are appointed by way of a Board resolution, upon their nomination by the Nominating Committee. In accordance with the Company s Articles, these new directors are appointed by the Board are subject to re-election by shareholders at the fi rst opportunity after their appointment. The Articles also provide that at least one third of the remaining Directors are subject to re-election by rotation at each Annual General Meeting ( AGM ). This will enable all shareholders to exercise their rights in selecting all Board members. The Board of Directors will assess the effectiveness of the Board as a whole by the business performance of the. The executive directors are assessed on the performance of the division for which they are responsible for. (4) Remuneration Committee The Remuneration Committee is chaired by Mr Chin Siew Gim, the Non-Executive Chairman and an independent director and includes Prof Lai Kim Fatt and Mr Chua Khing Seng (both Independent Directors) as members. Prof Lai and Mr Chua resigned from the Committee on 30 November 2013 and the Committee will be reconstituted. The Remuneration Committee met and reviewed the following during the period under review: (a) (b) (c) the remuneration package for executive directors and key executives; the fees for the non-executive directors; and the bonus and incentive for the staffs. The number of meetings held in the year by the Remuneration Committee and the attendance thereat are as follows: Remuneration Committee Meetings No. of meetings Attendance Mr Chin Siew Gim (Non-Executive Chairman) 1 1 Prof Lai Kim Fatt (Independent Director) 1 1 Mr Chua Khing Seng (Independent Director)

17 CORPORATE GOVERNANCE REPORT Remuneration Matters The s remuneration policy is to provide compensation packages at market rates which reward good performance and attract, retain and motivate the directors and executives. Remuneration paid to the directors of the Company for the period under review are as follows: Name of Director Salary, Allowances & Benefits Bonus Directors Fees Total Below S$250,000 Chin Siew Gim (Non-Executive Chairman) Lai Kim Fatt (Non-Executive Director) (Resigned on 30 November 2013) Chua Khing Seng (Non-Executive Director) (Resigned on 30 November 2013) Yeung Kin Bond, Sydney (Non-Executive Director) (Appointed on 1 November 2013) Sanford Chee (Non-Executive Director) (Appointed on 1 December 2013) Ng Say Tiong (Executive Director) Tadanori Kawanishi (Executive Director) Goh Lai Hai (Executive Director) 100% 100% 100% 100% 100% 100% 92% 8% 100% 87% 13% 100% 91% 9% 100% S$250,000 S$499,999 Tan Kay Guan (Chief Executive Officer) 96% 4% 100% The remuneration of each of the key management of the (excluding Directors of the Company) does not exceed S$250,000 for the fi nancial year ended 31 August None of the employees of the whose annual remuneration exceeds S$150,000 are immediate family members of the Chief Executive Office or any other Director of the Company as at 31 August Placement & Subscription of New Shares in the Company The Company convened an Extraordinary General Meeting on 16 October 2013 and approved the issue and allotment of up to 55,234,000 placement shares and issue and allotment of 76,275,000 subscription shares to Roots Capital Asia Limited, at an issue price of S$0.024 per share. 15

18 Corporate GOVERNANCE REPORT The placement shares and subscription shares were duly issued and allotted on 22 October The Company announced on 23 August 2013 that the net proceeds of about S$3,036,000 (after deducting expenses relating thereto), will be used by the Company in the following proportions: Use of Proceeds Percentage Allocation (%) Repayment of Loans Approximately 30% to 60% General Working Capital of the Approximately 40% to 70% As at the date of this Annual Report, the utilisation of the net proceeds are as follows : Use of Proceeds Repayment of Loans General Working Capital of the Not Utlised Yet Amount Utilised S$326,000 S$1,910,000 S$800,000 Interested Person Transactions The Company has established a procedure for recording and reporting interested person transactions. All interested person transactions are subject to review by the Audit Committee to ensure they were carried out on a normal commercial terms. Details of interested person transactions during the fi nancial period which fall under Rule 920 of the Listing Manual are as follows: Name of Interested Person Miyoshi Precision Limited Aggregate value of all interested person transactions during the financial period under review (excluding transactions less than S$100,000 and transactions conducted under shareholders mandate pursuant to Rule 920) (in S$ 000) Aggregate value of all interested person transactions conducted under the shareholders mandate pursuant to Rule 920 (excluding transactions less than S$100,000) (in S$ 000) Sale of Parts Nil 197 Purchase of Parts Nil 534 Miyoshi Precision (Malaysia) Sdn Bhd Rental of Equipments Nil 236 Material Contracts No material contracts were entered into between the Company or any of its subsidiaries involving the interest of any director or controlling shareholders, which are either subsisting at the end of the fi nancial year or, if not then subsisting, entered into since the end of previous fi nancial year except for the related party transactions and directors remunerations disclosed in the fi nancial statement. 16

19 CORPORATE GOVERNANCE REPORT Communications with Shareholders The Company does not practice selective disclosure. In line with continuous disclosure obligations of the Company pursuant to the SGX-ST s listing rules and the Singapore Companies Act, the Company s policy is that all shareholders should be equally and timely informed of all major developments that impact the. Information is communicated to all shareholders on a timely basis through: (a) (b) (c) (d) (e) Annual Reports that are prepared and issued to all shareholders. The Company makes every effort to ensure that all relevant information about the and other disclosures that are required by the SGX- ST, the Companies Act and Singapore Statements of Accounting Standard, are included in the Annual Report; Periodic fi nancial statements containing a summary of the fi nancial information and affairs of the for the period that are reported through the SGXNET; Notices and explanatory notes for annual general meetings and extraordinary general meeting; Disclosures to the SGX-ST; and The s website at at which shareholders can access information on the. The website provides, inter alia, information on the s corporate disclosure, corporate data, corporate profile and Annual Reports. Shareholders are encouraged to attend the AGM to ensure a high level of accountability and to stay informed of the s strategy and objectives. The Board welcomes questions from shareholders, either formally at the AGM or informally, before and after the AGM. The AGM serves as the principal forum for shareholders to obtain information and give feedback about the. Dealing in Securities Following the introduction of the Code, the Company has brought to the attention of its employees the implications of insider trading and recommendations of the Code. Giken has adopted and implemented an internal compliance of the Code which prohibits securities dealings by directors and employees while in possession of unpublished price-sensitive information. Officers are discouraged to deal in the Company s securities on short-term considerations. Directors, executives and any other employees who have access to material price-sensitive information are prohibited from dealing in securities of the Company prior to the announcement of a matter that involves material unpublished price-sensitive information. They are required to report on all their dealings in the Company s securities to the Company. They are also prohibited from dealing in the Company s securities during the period commencing one month before the announcement of the Company s interim or full-year results and ending on the day after the announcement of the interim and full-year results. Catalist Sponsor In compliance with Rule 1204 (21) of the Catalist Rule, a non-sponsor fee of S$14,900 was paid to the Sponsor, Stamford Corporate Services Pte. Ltd., for the year under review. 17

20 FINANCIAL CONTENTS 19 Directors Report 23 Statement by Directors 24 Independent Auditor s Report 25 Consolidated Statement of Comprehensive Income 26 Statements of Financial Position 28 Statements of Changes in Equity 30 Consolidated Statement of Cash Flows 32 Notes to the Financial Statements

21 DIRECTORS REPORT The Directors of the Company present their report to the members together with the audited fi nancial statements of (the Company ) and its subsidiaries (the ) for the fi nancial year ended 31 August 2013 and the statement of fi nancial position as at 31 August 2013 and statement of changes in equity of the Company for the fi nancial year ended 31 August Directors The Directors of the Company in office at the date of this report are as follows: Chin Siew Gim Tan Kay Guan Tadanori Kawanishi Ng Say Tiong Goh Lai Hai Yeung Kin Bond, Sydney (Appointed on 1 November 2013) Chee Sanford (Appointed on 1 December 2013) 2. 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 is to enable the Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures, of the Company or any other body corporate except as disclosed in Paragraph 3 below. 3. Directors interests in shares and debentures According to the register kept by the Company for the purposes of Section 164 of the Singapore Companies Act, Chapter 50 (the Act ), none of the Directors holding office 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 follow: As at 1 September 2012 Shareholdings registered in the name of Director As at 31 August 2013 As at 21 September 2013 As at 1 September 2012 Shareholdings in which Director is deemed to have an interest As at 31 August 2013 As at 21 September 2013 Number of ordinary shares The Company Tan Kay Guan 330, , ,000 Holding company Miyoshi Precision Limited Tan Kay Guan 2,250,500 2,250,500 19

22 DIRECTORS REPORT 3. Directors interests in shares and debentures (Continued) Number of share options to subscribe for the holding company s ordinary shares Tan Kay Guan As at 1 September 2012 As at 31 August 2013 Options granted on 29 January 2004 (1) 381, ,000 Options granted on 29 January 2005 (2) 381, ,000 Options granted on 31 January 2007 (3) 381, ,000 On 4 May 2001, the shareholders of the holding company, Miyoshi Precision Limited, approved the Miyoshi Employees Share Option Scheme (the Scheme ). The Scheme is administered by a committee ( Committee ) whose members are: - Mr Sin Kwong Wah, Andrew (Chairman) - Mr Masayoshi Taira - Mr Tan Kay Guan - Ms Gan Yoke Fong, Karen (1) Options granted on 29 January 2004 Options were granted pursuant to the Scheme to 41 employees and directors (collectively the Participants ) of the holding company to subscribe for 3,100,000 ordinary shares in the holding company at the subscription price of $0.252 per share with no discount. 2,940,000 options were accepted by the Participants. (2) Options granted on 29 January 2005 Options were granted pursuant to the Scheme to 39 employees and directors (collectively the Participants ) of the holding company to subscribe for 3,090,000 ordinary shares in the holding company at the subscription price of $0.180 per share with no discount. 2,970,000 options were accepted by the Participants. (3) Options granted on 31 January 2007 Options were granted pursuant to the Scheme to 35 employees and directors (collectively the Participants ) of the holding company to subscribe for 3,150,000 ordinary shares in the holding company at the subscription price of $0.239 per share with no discount. 3,150,000 options were accepted by the Participants. The subscription price was equal to the average of the last dealt price for a share, with reference to the daily official list published by the Singapore Exchange Securities Trading Limited for the last fi ve consecutive market days immediately preceding the date of grant. By virtue of section 7 of the Act, Tan Kay Guan is deemed to have interests in all the subsidiaries of the Company. In accordance with the continuing listing requirements of the Singapore Exchange Securities Trading Limited ( SGX-ST ), the Directors of the Company state that, according to the Register of the Directors Shareholdings, the change in Directors interest as at 21 September 2013 in the shares of the Company has been disclosed. 20

23 DIRECTORS REPORT 4. Directors contractual benefits Since the end of the previous fi nancial year, no Director of the Company has received or become entitled to receive a benefit which is required to be disclosed under Section 201(8) of the Act, by reason of a contract made by the Company or by a related corporation with the Director, or with a fi rm of which the Director is a member, or with a company in which the Director has a substantial fi nancial interest, except for salaries, bonuses and other benefits as disclosed in the fi nancial statements and that Mr Tan Kay Guan, who is also a director of the holding company, has received remuneration in that capacity. 5. Share options There were no share options granted by the Company or its subsidiaries during the fi nancial year. There were no shares issued during the fi nancial year by virtue of the exercise of options to take up unissued shares of the Company or its subsidiaries. There were no unissued shares of the Company or its subsidiaries under option at the end of the fi nancial year. 6. Audit committee The Audit Committee ( AC ) is chaired by Mr Chin Siew Gim, the Non-Executive Chairman and an independent director and includes Prof Lai Kim Fatt and Mr Chua Khing Seng (both Independent Directors) as members. Prof Lai and Mr Chua resigned from the AC on 30 November 2013 and the AC will be reconstituted. The AC convened three meetings during the fi nancial year under review, attended by the members of the AC and relevant management staff. The AC also meets with the external auditor without the presence of the Company s management, at least once a year. The AC carries out its functions in accordance with Section 201B (5) of the Act and the Code of Corporate Governance, including the following: (i) (ii) (iii) (iv) (v) (vi) Reviews the audit plans and results of the Company s external and internal audits; Reviews the s fi nancial and operating results and accounting policies; Reviews statements of fi nancial position and changes in equity of the Company and the consolidated fi nancial statements of the before their submission to the Directors of the Company and the external auditor s report on those fi nancial statements; Reviews the half-yearly and annual announcements on the results of the and fi nancial position of the Company and of the ; Ensures that co-operation and assistance is given by the management to external auditor; Makes recommendations to the Board of Directors on the appointment of external auditor; and 21

24 DIRECTORS REPORT 6. Audit committee (Continued) (vii) Reviews the Interested Person Transactions as defi ned in Chapter 9 of the Rules of Catalist of the Singapore Exchange Securities Trading Limited ( SGX-ST ) as is required by SGX-ST and ensures that the transactions were on normal commercial terms and not prejudicial to the interests of the members of the Company. The AC has full access to and co-operation of the management and has been given the resources required for it to discharge its function properly. It also has full discretion to invite any Director and executive officer to attend its meetings. The external auditor has unrestricted access to the AC. The AC has reviewed all non-audit services provided by the external auditor to the and is satisfied that the nature and extent of such services would not affect the independence and objectivity of the external auditor. The AC has recommended to the Board of Directors the nomination of BDO LLP, for re-appointment as external auditor of the Company at the forthcoming Annual General Meeting. Based on the internal and fi nancial controls established and maintained by the and the reviews performed by the management and external auditor, the AC and the Board are of the opinion that the s internal controls addressing fi nancial, operational and compliance risks, have adequate as at 31 August Auditor The auditor, BDO LLP, has expressed his willingness to accept re-appointment. 8. Additional disclosure requirements of the Listing Manual of the Singapore Exchange Securities Trading Limited The auditors of the subsidiaries of the Company are disclosed in Note 16 to the fi nancial statements. In the opinion of the Board of Directors and AC, Rule 712 and Rule 715 of the Listing Manual Section B: Rules of Catalist of the Singapore Exchange Securities Trading Limited have been complied with. On behalf of the Board of Directors Tan Kay Guan Director Ng Say Tiong Director Singapore 2 December

25 STATEMENT BY DIRECTORS In the opinion of the Directors, (a) (b) the consolidated fi nancial statements of the, the statement of fi nancial position and statement of changes in equity of the Company together with the notes thereon are properly drawn up in accordance with the provisions of the Singapore Companies Act, Chapter 50 and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the and of the Company as at 31 August 2013 and of the results, changes in equity and cash flows of the and changes in equity of the Company for the fi nancial year then ended; and at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due. On behalf of the Board of Directors Tan Kay Guan Director Ng Say Tiong Director Singapore 2 December

26 INDEPENDENT AUDITOR S REPORT To the Members of Report on the Financial Statements We have audited the accompanying consolidated fi nancial statements of (the Company ) and its subsidiaries (the ) which comprise the statements of fi nancial position of the and of the Company as at 31 August 2013, and the consolidated statements of comprehensive income, changes in equity and cash flows of the and the statements of changes in equity of the Company for the fi nancial year then ended, and a summary of signifi cant accounting policies and other explanatory information as set out on pages 25 to 87. 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, Chapter 50 (the Act ) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets. Auditor s Responsibility Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation of fi nancial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the fi nancial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated fi nancial statements of the, the statement of fi nancial position and statement of changes in equity 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 and of the Company as at 31 August 2013 and the results, changes in equity and cash flows of the and changes in equity of the Company 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 have been properly kept in accordance with the provisions of the Act. BDO LLP Public Accountants and Chartered Accountants Singapore 2 December