Annual Report Putting You in the Green Lane

Transcription

1 Annual Report 2008 Putting You in the Green Lane

2 Contents 01 Corporate Information 02 Corporate Profile 04 Chairman s Message 06 Board of Directors 08 Key Management 09 Financial Highlights 11 Corporate Governance 18 Director s Reports 22 Statement by Directors 23 Independent Auditors Report 24 Balance Sheet 26 Consolidated Profit and Loss Account 27 Consolidated Statement of Changes in Equity 30 Consolidated Statement of Cash Flows Supplementary Information 86 Statistics of Shareholdings 88 Notice of Annual General Meeting Proxy Form

3 Asian Micro Holdings Annual Report 2008 Corporate Information 1 Board of Directors Executive Lim Kee Victor Lim CEO and Group Managing Director Leong Lai Heng Executive Director Lim Kee Hing Executive Director Non-Executive Dr. Wang Kai Yuen Non-Executive Chairman Teo Kio Chang Chiaw Choon Independent Director Tan Siew Bin, Ronnie Independent Director Audit Committee Dr. Wang Kai Yuen Chairman Teo Kio Chang Chiaw Choon Tan Siew Bin, Ronnie Nominating Committee Teo Kio Chang Chiaw Choon Chairman Dr. Wang Kai Yuen Tan Siew Bin, Ronnie Remuneration Committee Dr. Wang Kai Yuen Chairman Teo Kio Chang Chiaw Choon Tan Siew Bin, Ronnie Company Secretary Ng Lai Ying Registered & Business Office 3 Tech Park Crescent Tuas Tech Park Singapore Tel : / Fax : Website: Solicitors Central Chambers Law Corporation 150, Cecil Street #16-00, Singapore Tan Peng Chin LLC, 30 Raffles Place #11-00 Chevron House Singapore Bankers Malayan Banking Berhad Standard Chartered Bank Limited Oversea-Chinese Banking Corporation Limited Share Registrar B.A.C.S. Private Limited 63 Cantonment Road Singapore Auditors Ernst & Young LLP One Raffles Quay North Tower Level 18 Singapore Partner-in-charge: Tham Chee Soon (since financial year ended 30 June 2006) FuelMaker for home CNG re-filling and factory private CNG re-filing station Compression System Compression System Compression System Fast-Fill Storage

4 Corporate Profile Asian Micro Holdings Limited (listed in the SGX- SESDAQ in September 1999), offers natural gas related products and services, and provides recycling and precision cleaning of packaging trays and media/disk cassettes used in the hard disk drive and semiconductor industries in Singapore, China and Thailand. The Group has a wide network of Natural Gas Vehicle (NGV) conversion centres in Thailand, Malaysia, and Singapore. The Group s primary focus is on conversion of heavy duty diesel vehicle using Dual Diesel Fuel ( DDF ) system to cut down the usage of diesel and also on the conversion of petrol vehicles to run on Bi-Fuel system where natural gas can be used to replace petrol. Conversions allow the vehicles to use Compressed Natural Gas ( CNG ). CNG consists primarily of methane and is widely considered to be an environmentally friendly alternative to diesel and gasoline because of its low hydrocarbon emissions. CNG vehicles also provide smoother rides, have better start-ups, and have longer life spans. The Group also aims to continually explore innovative methods of introducing consumers to the use of natural gas through the import of specialized vehicles like CNG tractor heads and CNG forklifts. Its recent research includes the development of a system which enables the conversion of diesel vehicles to operate on petrol-cng systems. 2 Asian Micro Holdings Annual Report 2008

5 Asian Micro Holdings Annual Report In order to complement the conversion business, the Group also imports NGV conversion kits, Compressed Natural Gas (CNG) cylinders and other CNG accessories like CNG spark plugs and CNG valve saver kits for trading. As part of its ongoing green efforts, the Group intends venture into the production of Liquefied Natural Gas (LNG) with the use of small-scale liquefaction plants and may produce cryogenic tanks for the storage and transportation of LNG. The Group intends to grow itself into an energy company entering the oil and gas sector by specializing in alternative and renewable fuels, namely natural gas.

6 Chairman s Message On behalf of the Board of Directors, I am pleased to present the Annual Report and the Audited Financial Statements of Asian Micro Holdings Limited and its subsidiaries for the financial year ended 30 June Dr. Wang Kai Yuen Chairman Financial performance For FY 2008, the Group s consolidated revenue jumped 44.5% or S$6.5 million from S$14.6 million in FY 2007 to S$21.1 million in FY The increase in revenue is mainly due to the Group s Natural Gas Vehicle ( NGV ) related business started during the financial year and the increase in revenue from the Group s clean room packaging manufacturing business. The Group had set up 3 NGV conversion centres in Thailand and 1 NGV conversion centre in Singapore and recorded S$6.9 million revenue for NGV related business in FY The increase revenue is offset slightly by the decrease in the revenue from the Group s tray recycling business and plastic waste recycling business during the financial year. The decrease in the Group s tray recycling business is mainly due to the decrease in volume and the depreciation of United State Dollar against Singapore Dollar during the financial year. Net loss attributable to shareholders after taking into consideration of taxation and minority interest amounted to S$5.5 million as compared to a net profit of S$1.7 million in FY The net loss incurred in FY 2008 is mainly due to the impairment of the goodwill on consolidation and the increased in loss from the Group s tray recycling business. The increased in loss from the Group s tray recycling business is mainly due to a large drop in the volume of the Group s tray recycling business as a result of the slowdown in the hard disk drive industry and the sharp depreciation of United State Dollar against Singapore Dollar during the financial year as the Group bills its customers in United State Dollar. 4 Asian Micro Holdings Annual Report 2008

7 Asian Micro Holdings Annual Report Looking Ahead While the Group s tray cleaning business remains challenging in coming financial year, the Group has managed to re-negotiate the pricing of its tray cleaning contract with customers and will continue its costcutting measures to streamline its tray cleaning business operation. The CNG conversion market in Singapore remains challenging in view of the limited CNG suppliers and CNG refill stations. On the other hand, the CNG conversion market in Thailand is expected to be fast growing and the Group will continue to focus on the conversion business in Thailand. In addition, the Group may expand its CNG conversion business to other South East Asia countries. One of the Group s subsidiaries has obtained approval for the sales of the CNG Mono Prime Mover in Thailand. Given the large price difference between petrol/diesel and CNG in Thailand, there is a great potential in selling the CNG Mono Prime Mover in Thailand. The Group expects to sell the CNG Mono Prime Mover in Singapore in the coming financial year. Corporate Governance The Group continues to remain committed to maintaining our regime of high standards of corporate governance. We pledge to provide timely and accurate information through announcements and investor relations activities for the benefit of all stakeholders. Appreciation On behalf of the Board, I would like to thank all our shareholders for their continued loyalty to the Company. We also acknowledge the support of our customers, bankers, business associates of our Company in the year 2008, and we are looking forward to your continued support to help us achieve a better 2009 and beyond. Last, but not least, I would like to thank all staff and management for their dedicated service and teamwork in One of our Group s subsidiaries has also obtained approval for the sales of Compressed Natural Gas ( CNG ) forklift from the Land Transportation Authority of Singapore ( LTA ) for use in food, air and sea logistic and local warehousing industries. The Group has started Dual Diesel Fuel system (DDF) conversion business in Thailand in the reporting financial year and expects to start DDF conversion business in Singapore and Malaysia in this coming financial year. The Group has plans to make in-roads towards Liquefied Natural Gas related business. We will continue to fine-tune our business strategies and sharpen our focus on new businesses that would deliver sustainable value to our shareholders. Dr. Wang Kai Yuen Chairman 30 September 2008

8 Board of Directors Dr Wang Kai Yuen 2. Mr Victor Lim 3. Ms Leong Lai Heng 4. Mr Lim Kee Hing 5. Mr Teo Kio Chang Chiaw Choon 6. Mr Tan Siew Bin, Ronnie 6 Asian Micro Holdings Annual Report 2008

9 Asian Micro Holdings Annual Report Dr Wang Kai Yuen Mr Lim Kee Hing Dr Wang Kai Yuen was appointed as an Independent Non- Executive Chairman of the Group on 26th August He had been an Independent Non-Executive Director of the Group since He is also the Chairman of the Company s Audit and Remuneration committees and a member of the Nominating Committee. He is currently the Managing Director of Xerox Singapore Software Centre and holds several other directorships including directorships in ComfortDelGro Corporation Limited, COSCO Corporation (Singapore) Ltd, Hiap Hoe Limited, Matex International Ltd, Xpress Holdings Limited, Superbowl Holdings Limited, Koon Holdings Limited, China Lifestyle Food & Beverages Group Limited, HLH Group Limited and EOC Limited. Dr Wang holds a Bachelor of Engineering (Electrical Engineering) (Hons) from the University of Singapore and a Masters of Science (Industrial Engineering), a Masters of Science (Electrical Engineering) and a PhD (Electrical Engineering) from Stanford University, USA. Mr Victor Lim Mr Victor Lim is the Chief Executive Officer and Group Managing Director of the Company. Mr Lim is the key founder of the Group and currently provides the overall strategic direction and policy decisions of the Group. Prior to setting up the Group, Mr Lim was the Engineering Support Manager in Micropolis Singapore Ltd from 1983 to Mr Lim holds a Diploma in Production Engineering from the Singapore Polytechnic and has more than 20 years experience in the electronic and hard disk drive industry. Mr Lim Kee Hing was appointed as an Executive Director of the Company in August He is currently responsible for the operation of precision cleaning of packaging trays and media cassettes, clean room grade packaging products manufacturing and clean room supplies trading activities in Singapore, China and Thailand. Mr Teo Kio Chang Chiaw Choon Mr Teo Kio Chang Chiaw Choon is an Independent Non-Executive Director of the Company since He is also the Chairman of the Group s Nominating Committee and a member of the Audit and Remuneration Committees. He is a partner of KC Teo Consultants, a management consultancy firm since Mr. Chang holds a Bachelor of Science (Honours) degree from the Nanyang University. Mr Tan Siew Bin, Ronnie Mr. Tan Siew Bin, Ronnie was appointed as an Independent and Non-Executive Director of the Company since 8 May He is also a member of the Group s Audit, Remuneration and Nominating Committees. Mr. Tan is one of the founding Directors of Central Chambers Law Corporation in Singapore with 16 years of practice. He is a Notary Public, Commissioner for Oaths and heads of the Civil and Criminal practice. Mr. Tan began his legal practice as a litigator and moved into areas of corporate and commercial advice. He is currently a member of the Singapore Institute of Directors. Mr. Tan holds a Bachelor of Laws from University of London and admitted to the English and Singapore Bar in 1989 and 1991 respectively. Ms Leong Lai Heng Ms Leong Lai Heng is an Executive Director of the Company and oversees the Group s administrative matters and is responsible for staff matters such as recruitment and payroll, corporate affairs as well as general office administration.

10 Key Management Leow Wei Chieh Winchester Lin Mr. Leow is the Group Financial Controller and he oversees all matters relating to finance and corporate matters. He is responsible for financial reporting, treasury function, financial planning and control of the Group. He also oversees the Group s corporate affairs, fund raising activities and regulatory compliance. He joined PricewaterhouseCoopers Singapore in 2000 and was with the Assurance and Business Advisory Services division where his main responsibilities included statutory compliance and special audits. He left PricewaterhouseCoopers as an Audit Manager before he joined the Group in May Mr. Leow graduated from Nanyang Technological University with a Bachelor of Accountancy (First Class Honours) and a Minor in Banking and Finance in He is awarded the Chartered Financial Analyst designation from the CFA Institute since He is a non-practicing member of the Institute of Certified Public Accountants of Singapore since William Chan Mr. Lin is the Business Development Manager for the Group s Natural Gas Vehicle ( NGV ) related business division in Thailand. He is responsible for the development and expansion of the Group s new business activities in Natural Gas Vehicle conversion in Thailand. Besides overseeing the operation of the conversion centres in Thailand, he is also responsible for the marketing of CNG Sinotruk Prime Movers for Thailand s market. Prior to this, Mr. Lin joined the Group as a Sales Executive in June 2007 after completing his National Service with the Singapore Armed Forces. He obtained a Diploma in Marketing from the Nanyang Polytechnic in April Ng Lee Yian Ms Ng joined the company since April 2007 as Senior Accountant. She is responsible for all accounting and financial matters of the Group. Ms Ng is a Certified Public Accountant and with more than 10 years of experience in the finance and accounting profession. Ms Ng graduated from Victoria University of Wellington, New Zealand with a degree in Bachelor of Accountancy. Mr Chan is the Marketing Director for Asian Micro (S) Pte Ltd, and ACI Industries Pte Ltd. His key role is to assist the Group CEO in the marketing activities of the Group s core businesses in Singapore and overseas. Prior to joining the Group in 1996, he worked as a Sales Engineer for Niche Tech Pte Ltd and German Technical Consultants Pte Ltd from 1990 to Mr. Chan holds a diploma in Electrical Engineering from Singapore Polytechnic and a diploma in Sales and Marketing from Marketing Institute of Singapore. CNG Forklift to cut diesel emission and health hazard for warehouses 8 Asian Micro Holdings Annual Report 2008

11 Asian Micro Holdings Annual Report 2008 Financial Highlights 9 Results of Operation S$ 000 S$ 000 S$ 000 S$ 000 S$ 000 ( restated) ( restated) Turnover 29,967 28,127 26,326 14,584 21,115 Profit / (Loss) before taxation and 1,435 2,606 3,041 (777) (5,496) minority interests Taxation (16) (774) (311) (41) 9 Profit/(Loss) from discontinued operation, net of tax ,372 (145) Profit / (Loss) after taxation but 1,419 1,832 2,729 1,554 (5,632) before minority interests Attributable to : Equity holders of the Company 1,580 1,916 2,080 1,679 (5,445) Minority Interests (125) (187) Financial Position Fixed Assets 5,310 7,292 8,652 9,464 5,183 Goodwill on Acquisition Investment Property 2,700 2,600 2,600 2,600 3,200 Deferrred Tax Assets - - Associated Company 217 2, Other Investments - - Convertible Loan - - Current Assets 11,758 12,096 11,799 10,993 12,198 Current Liabilities (9,542) (11,419) (7,617) (8,515) (6,576) Net Current Assets (Liabilities) 2, ,182 2,478 5,622 Non Current Liabilities (3,193) (3,021) (3,532) (2,881) (1,750) Representing Shareholders Equity 7,172 10,200 12,646 12,576 12,204 Minority Interests EPS before Taxation (S$cents) (1.59) EPS after Taxation & MI (S$cents) (1.59) NTA per Share (S$cents) CNG Prime Mover to eliminate diesel usage and provide clean emission

12 Financial Highlights Turnover (S$ 000) Net Profit (Loss) Attributable to Shareholders (S$ 000) 21,115 14,584 26,326 28,127 29,967 1,679 2,080 1,916 1, China / Hong Kong 2,071 (5,445) Malaysia 1,038 Thailand 9,383 Turnover by Geographical Region (S$ 000) Singapore 7,155 Malaysia 1,038 USA 902 Thailand 9,383 Singapore 7,155 USA 902 Others 566 China / Hong Kong 2,071 Others ,115 Manafacturing 3,411 Natural Gas Vehicle related business 6,943 Tray Recycling 10,626 Plastic Waste Recycling 135 Turnover by Business Activities (S$ 000) Tray Recycling 10,626 Manufacturing 3,411 Plastic Waste Recycling 135 Trading - Natural Gas Vehicle related business 6,943 21, Asian Micro Holdings Annual Report 2008

13 Asian Micro Holdings Annual Report 2008 Report on Corporate Governance 11 Asian Micro Holdings Limited (the Company ) recognizes the importance of corporate governance and is committed to uphold the high standards of corporate governance, and to put in place effective self-regulatory corporate practices to preserve and enhance long term shareholders value. This report outlines the Company s corporate governance practices with specific reference to the Code of Corporate Governance 2005 (the Code ). BOARD MATTERS Principle 1 Board s Conduct of its Affairs The Board meets regularly and as warranted by circumstances. The principal functions of the Board, apart from its statutory responsibilities are: (a) to approve the Group s corporate policies ; (b) to approve annual budgets, key operational issues, major funding and investment proposals ; (c) to set overall strategies and supervision of the Group s business and affairs ; (d) to review the financial performance of the Group ; (e) to approve nominations of Directors and appointment to the various Board committees and key managerial personnel ; and (f) to assume responsibility for corporate governance. The Company has adopted a policy which welcomes Directors to request for further explanations, briefings or informal discussions on any aspect of the Company s operations or businesses from Management. Management monitors closely changes to regulations and accounting standards. To keep pace with regulatory changes, where these changes have an important bearing on the Company or Directors disclosure obligations, Directors are briefed either during Board meetings or at specially convened sessions. Principle 2 Board Composition and Balance The Board comprises the following members: Executive Directors Mr. Lim Kee Victor Lim Ms. Leong Lai Heng Mr. Lim Kee Hing (Chief Executive Officer & Group Managing Director) Independent Non-Executive Directors Dr. Wang Kai Yuen Mr. Teo Kio Chang Chiaw Choon Mr. Tan Siew Bin, Ronnie (Chairman)

14 Report on Corporate Governance The Board constantly reviews its composition of Directors to ensure that such composition is appropriate and that Independent Directors make up at least one-third of the Board. The Board will continually examine its size, the standing of its members in the business community, their experience and knowledge to allow discussions on matters of policy, strategy and performance to be critical, informed and constructive. Key information on the Directors is set out below and on pages 6 and 7 of this Annual Report. Name of Director Mr. Lim Kee Victor Lim Age Shareholding in Company & its Related 30 June ,030,439 Ms. Leong Lai Heng 50 73,801,982 Mr. Lim Kee Hing 60 2,410,000 Dr. Wang Kai Yuen 61 1,526,000 Mr. Teo Kio Chang Chiaw Choon ,000 Mr. Tan Siew Bin, Ronnie 47 0 Directorship (a) Date first appointed (b) Date last re-elected (a) 18/2/1997 (b) NA (a) 18/2/1997 (b) 23/10/2007 (a) 20/8/1999 (b) 20/10/2005 (a) 20/8/1999 (b) 18/10/2006 (a) 20/8/1999 (b) 20/10/2005 (a) 8/5/2007 (b) 23/10/ Due for re-election at next AGM Retiring pursuant to Article Retiring pursuant to Article Principle 3 Chairman and Chief Executive Officer The roles of the Chairman and Chief Executive Officer are separate to ensure an appropriate balance of power, increased accountability and greater capacity of the Board for independent decision-making. The Chairman and the Chief Executive Officer are not related. The responsibilities of the Chairman include: (a) (b) (c) scheduling meetings that enable the Board to perform its duties responsibly while not interfering with the flow of the Company s operations ; exercising control over quality, quantity and timeliness of the flow of information between Management and the Board ; and assisting to ensure compliance with the Company s guidelines on corporate governance. Mr. Lim Kee Victor Lim, the Group Chief Executive Officer and Group Managing Director, sets the business strategies and directions for the Group and manages the business operations of the Group with Ms. Leong Lai Heng and Mr. Lim Kee Hing, who are Executive Directors and other management staff. Principle 4 Board Membership The Nominating Committee ( NC ) comprises three Directors, of whom, including the Chairman, are independent nonexecutive Directors. The members are: Mr. Teo Kio Chang Chiaw Choon Dr. Wang Kai Yuen Mr. Tan Siew Bin, Ronnie (Chairman) 12 Asian Micro Holdings Annual Report 2008

15 Asian Micro Holdings Annual Report 2008 Report on Corporate Governance 13 The responsibilities of the NC are to make recommendations to the Board on all Board appointments. In addition, the functions of the NC include the following: to develop and maintain a formal and transparent process for the appointment of Directors to the Board and all things incidental including to re-nominate and re-elect Directors at regular intervals and to determine annually whether or not a Director is independent ; to access the effectiveness of the Board as a whole, and the contribution by each Director to the effectiveness of the Board ; to decide how the performance of the Board may be evaluated and to propose objective performance criteria ; to report to the Board its findings from time to time on matters arising and requiring the attention of the NC ; and to undertake such other reviews, projects, functions, duties and responsibilities as may be requested by the Board. New Directors are appointed by the Board Resolutions, after the NC has recommended their appointments. Pursuant to Article 88 of the Company s Articles of Association, such new Directors must submit themselves for re-election at the next Annual General Meeting ( AGM ) of the Company. Article 89 of the Company s Articles of Association requires one-third of the Directors (excluding the Managing Director), or the number nearest to one-third, to retire and subject themselves to re-election by shareholders at every AGM. Principle 5 Board Performance In determining the objective performance criteria for evaluation and determination for the FY2008, the NC had considered the attendance, participation and contribution of individual Directors at Board and Committee meetings to evaluate each Director s performance. The attendances of the Directors at meetings of the Board and Board Committees during the year are as follows: Board Meeting Audit Committee Remuneration Committee Nominating Committee No. of meeting held : Name of Director : Lim Kee Victor Lim 2 NA NA NA Leong Lai Heng 2 NA NA NA Lim Kee Hing 2 NA NA NA Dr. Wang Kai Yuen Teo Kio Chang Chiaw Choon Tan Siew Bin, Ronnie Principle 6 Access to Information Board members are provided with adequate and timely information prior to Board meetings, and on an ongoing basis, have separate and independent access to the Company s senior management. Detailed Board papers are prepared for each Board meeting. The Board papers include sufficient information on financial, business and corporate issues from Management to enable Directors to be properly informed on issues to be considered at Board Meetings.

16 Report on Corporate Governance The Company Secretary attends all Board meetings and is responsible to ensure that established procedures and all relevant statutes and regulations are complied with. Directors have separate and independent access to the Company Secretary. The Board takes independent professional advice as and when necessary to enable it to discharge its duty and responsibilities effectively. The Board is updated on the regulations of the Singapore Exchange Securities Trading Limited ( SGX-ST ), Companies Act, the Code and other statutory requirements, on a regular basis. REMUNERATION MATTERS Principle 7 Procedures for Developing Remuneration Policies Principle 8 Level and Mix of Remuneration Principle 9 Disclosure on Remuneration The Remuneration Committee ( RC ) comprises the following members: Dr. Wang Kai Yuen Mr. Teo Kio Chang Chiaw Choon Mr. Tan Siew Bin, Ronnie (Chairman) The RC is guided by its terms of reference, which set out its principal responsibilities as follows: to review and recommend to the Board an appropriate and competitive framework of remuneration for the Board and key executives of the Group to attract, retain and motivate management staff of the required caliber to manage the Company successfully ; to determine and recommend to the Board specific remuneration packages for each Executive Director, taking into account factors including remuneration packages of Executive Directors in comparable industries as well as the performance of the Company and that of the Executive Directors ; to review Management s of the fees for Independent Non-Executive Directors ; and to ensure the remuneration policies and systems of the Group to support the Group s objectives and strategies. The remuneration package adopted for the Executive Directors is as per the Service Contract entered into between the respective Executive Director and the Company. The NC, together with the RC, decides on the specific remuneration packages for an Executive Director upon recruitment. Thereafter, the RC reviews subsequent increments, bonuses and allowances where these payments are discretionary. No Director or member of the RC is involved in deciding his or her own remuneration. The RC reviews what compensation commitments the executive directors service contracts would entail in event of early termination, and aims to be fair and avoid rewarding inadequate performance. The Service Contract may be terminated by either the Company or executive directors giving to the other not less than six months written notice. Independent Non-Executive Directors do not enter into any Service Contracts with the Company. Save for receipt of directors fees and participation in the Company s Employees Share Option Scheme, Independent Non-Executive Directors do not receive any remuneration from the Company. Directors fees are set in accordance with a remuneration framework comprising basic fees, attendance fees and additional fees for serving on any of the Board Committees. Directors fees are approved by the shareholders of the Company as a lump sum payment at the Annual General Meeting of the Company. 14 Asian Micro Holdings Annual Report 2008

17 Asian Micro Holdings Annual Report 2008 Report on Corporate Governance 15 No immediate family members of a Director or the Chief Executive Officer have remuneration exceeding S$150,000 during the year. A breakdown showing the level and mix of remuneration paid to each Director (in percentage terms) for FY2008 is as follows: Remuneration band and name of directors Fee Salary Other Benefits Profit Sharing Total % % % % % S$500,000 and above : Lim Kee Victor Lim S$250,000 to S$499,999 : Leong Lai Heng Below S$250,000 : Lim Kee Hing Dr. Wang Kai Yuen Teo Kio Chang Chiaw Choon Tan Siew Bin, Ronnie The following table sets out the range of gross remuneration received by the top five executives (excluding Executive Directors) of the Group for FY2008: Remuneration Bands No. of Executives $100,000 to $200,000 1 Below S$100,000 4 ACCOUNTABILITY AND AUDIT Principle 10 Accountability In presenting the annual financial statements and half-yearly announcements to shareholders, it is the aim of the Board to provide the shareholders with a detailed analysis, explanation and assessment of the Group s financial position and prospects. Management currently provides all members of the Board with appropriately detailed management accounts of the Group s performance, position and prospects on a half-yearly and such management accounts are provided to executive directors on a monthly basis. Principle 11 Audit Committee Principle 12 Internal Control Principle 13 Internal Audit The Audit Committee ( AC ) comprises the following members, all of whom are Independent Non-Executive Directors, appropriately qualified to discharge their responsibilities: Dr. Wang Kai Yuen Mr. Teo Kio Chang Chiaw Choon Mr. Tan Siew Bin, Ronnie (Chairman)

18 Report on Corporate Governance The AC met twice (2) in FY2008. The AC is guided by its terms of reference and has the following principal functions: - to recommend to the Board of Directors the External Auditors to be nominated ; to review the scope, audit plans, results and effectiveness of the Internal and External Auditors ; to review any related significant findings and recommendations of the External Auditors, together with Management s responses thereto ; to review the adequacy of the Group s system of internal controls, financial and management reporting systems ; to review with Management on significant risks or exposures that exist and assesses the steps that Management has taken to minimize such risks to the Group ; to review with Management the announcement of the interim and full-year results of the Group and its financial statements ; to review interested party transactions as may be required by the regulatory authorities or the provisions of the Companies Act ; to review legal and regulatory matters that may have a material impact on the financial statements and reports action and minutes of the AC to the Board of Directors with such recommendations as the AC considers appropriate; and to review arrangements by which staff of the Company may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters. The AC has full access to and received co-operation from Management, and has full discretion to invite members of the management to attend its meetings. Reasonable resources have been given to enable it to discharge its functions. Minutes of the AC meetings are circulated to the Board for its information. The AC has conducted an annual review of all non-audit services by the external auditors to satisfy itself that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors. The Board recognizes its responsibility for the Group s system of internal controls and the need to review its adequacy and integrity regularly in order to safeguard the Group s assets and therefore shareholders investments in the Group. The Company s senior management has made regular visits to the operating units within the Group. A management structure with clearly defined lines of responsibility that promotes effective internal control is in place. To further strengthen internal control, Management will consider the establishment of an independent internal audit function either on an in-house or outsourced basis. COMMUNICATION WITH SHAREHOLDERS Principle 14 Communication with Shareholders Principle 15 Greater Shareholder Participation In line with the continuous disclosure obligations of the Company and pursuant to the Listing Manual of the SGX-ST and the Companies Act, Chapter 50, shareholders shall be informed of all major developments that impact the Group, in a timely manner. 16 Asian Micro Holdings Annual Report 2008

19 Asian Micro Holdings Annual Report 2008 Report on Corporate Governance 17 The Company does not practice selective disclosure. All material and price sensitive information as well as information on the Company s new initiatives are publicly released via SGXNET. In addition, the Company also responds to enquiries from shareholders, investors, analysts, fund managers and the press. All shareholders of the Company receive a copy of the Annual Report and Notice of Annual General Meeting ( AGM ) annually. Notice of the AGM is also advertised in a daily newspaper and made available on the SGX-ST website. At the AGM, shareholders are given the opportunity to air their views and ask questions regarding the Company and the Group. The Company s Articles of Association allow shareholders to appoint one or two proxies to attend and vote in their stead at the AGM. Each item of special business included in the Notice of meetings is accompanied, where appropriate, by an explanation for the proposed resolution. Separate resolutions are proposed for substantially separate issues at meetings. The Chairmen of the Audit, Remuneration and Nominating Committees are normally available at the AGM to answer questions relating to the work of these committees. RISK MANAGEMENT The Company does not have a Risk Management Committee. However, Management reviews regularly the Company s business and operational activities to identify areas of significant business risks as well as appropriate measures to control and mitigate these risks. Management reviews all significant control policies and procedures and highlights all significant matters to the Board and the Audit Committee. DEALINGS IN SECURITIES The Company has adopted an internal code modeled after the Code of Best Practices on Securities Transactions. Directors and Officers are not allowed to deal in the Company s shares while in possession of unpublished material price sensitive information and shall not deal in the Company s securities during the period commencing one month before the announcement of the Company s half-year or full year financial results. MATERIAL CONTRACTS Save for the service contracts between the Executive Directors and the Company, and the interested person transactions described below, there were other no material contracts of the Company or its subsidiaries involving the interest of the chief executive officer or any director or controlling shareholders which are either still subsisting at the end of the financial year or, if not then subsisting, entered into since the end of the previous financial year. INTERESTED PERSON TRANSACTIONS The Company has established procedures to ensure that all transactions with interested persons are reported on a timely manner to the Audit Committee and such transactions are carried out on normal commercial terms and will not be prejudicial to the interests of the Company and its minority shareholders. The aggregate value of interested person transactions entered into FY2008 is as follows: - Name of interested person American Converters Industries Pte Ltd Ultraline Technology (S) Pte Ltd Aggregate value of all interested person transactions during the financial year under review (excluding transaction less than S$100,000 and transactions conducted under shareholders mandate pursuant to Rule 920) S$237,000 S$340,890

20 Directors Report The directors are pleased to present their report to the members together with the audited consolidated financial statements of Asian Micro Holdings Limited (the Company ) and its subsidiaries (collectively, the Group ) and the balance sheet and statement of changes in equity of the Company for the financial year ended 30 June Directors The directors of the Company in office at the date of this report are: Dr. Wang Kai Yuen Lim Kee Victor Lim Leong Lai Heng Lim Kee Hing Teo Kio Chang Chiaw Choon Tan Siew Bin, Ronnie Arrangements to enable directors to acquire shares and debentures Except for the Asian Micro Holdings Limited Employees Share Option Plan as described below, neither at the end of nor at any time during the financial 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 or debentures of the Company or any other body corporate. Directors interests in shares and debentures The following directors, who held office at the end of the financial year, had, according to the register of directors shareholdings required to be kept under section 164 of the Companies Act, Cap. 50, an interest in shares of the Company and related corporations (other than wholly-owned subsidiaries), as stated below: The Company Asian Micro Holdings Limited (Ordinary shares) Direct interest Deemed interest At At At At At At 1 July 30 June 21 July 1 July 30 June 21 July Lim Kee Victor Lim 75,026,439 78,526,439 78,526,439 79,877,526 79,877,526 79,877,526 Leong Lai Heng 74,561,982 74,561,982 74,561,982 80,341,983 83,841,983 83,841,983 Lim Kee Hing 1,160,000 2,410,000 2,410, Dr. Wang Kai Yuen 1,526,000 1,526,000 1,526, Teo Kio Chang Chiaw Choon 550, , , Asian Micro Holdings Annual Report 2008

21 Directors Report Asian Micro Holdings Annual Report Directors interests in shares and debentures (cont d) Direct interest At At At beginning end of the 21 July Exercise of the year year 2008 price Exercise period $ The Company Asian Micro Holdings Limited (Options to subscribe for ordinary shares) Lim Kee Hing 400, , , October 2002 September ,000,000 1,600,000 1,600, October 2004 September , , , June 2008 September 2011 Dr. Wang Kai Yuen 574, , , August 2004 September ,180,000 1,180,000 1,180, October 2004 September ,000,000 2,000,000 2,000, June 2008 September 2011 Teo Kio Chang Chiaw Choon 500, August 2004 September ,500,000 1,500,000 1,500, October 2004 September , , , June 2008 September 2011 Tan Siew Bin, Ronnie 16,000 16,000 16, June 2008 September 2011 By virtue of Section 7 of the Singapore Companies Act, Cap. 50, Lim Kee Victor Lim and Leong Lai Heng are deemed to have an interest in shares of the subsidiaries of the Company. Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares, share options, warrants or debentures of the Company or of related corporations either at the beginning or end of the financial year or 21 July Directors contractual benefits Except as disclosed in the financial statements, since the end of the previous financial year, no director of the Company has received or become entitled to receive a benefit (other than as disclosed as directors remuneration and fees in the accompanying financial statements and emoluments received from related corporations) by reason of a contract made by the Company or a related corporation with the director, or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest, except for significant transactions with related parties as disclosed in Note 32 to the accompanying financial statements. Share options Asian Micro Holdings Limited Employees Share Option Plan 1. Asian Micro Holdings Limited Employees Share Option Plan (the Plan ) was approved by the shareholders at an extraordinary general meeting held on 28 September Members who administered the Plan during the financial year are: Lim Kee Victor Lim Leong Lai Heng Teo Kio Chang Chiaw Choon

22 Directors Report Share options (cont d) 3. During the financial year ended 30 June 2008: The Company granted 500,000 share options under the Plan. These options are only exercisable after the first anniversary of the Date of Grant of options. These options expire on 28 September 2011 and are exercisable if the employee remains in service. 3,189,000 ordinary shares were issued at a weighted average exercise price of $0.08 upon the exercise of options granted pursuant to the Plan. 4. Details of all the options to subscribe for ordinary shares of the Company pursuant to the Plan as at 30 June 2008 are as follows: Exercise price Grant date Expiry date (S$) Number of options October 2001 September ,000 November 2001 September ,000 May 2002 September ,000 June 2002 September ,000 August 2003 September ,000 August 2003 September ,000 October 2003 September ,646,000 October 2005 September ,000 May 2007 September ,000 June 2007 September ,000 June 2007 September ,516,000 July 2007 September ,000 8,738, Details of the options to subscribe for ordinary shares of the Company granted to directors of the Company pursuant to the Plan are as follows: Aggregate Aggregate Aggregate options options Aggregate Options options cancelled exercised options granted granted since since since outstanding during the commence- commence- commence- as at end of Name of directors financial year ment of Plan ment of Plan ment of Plan financial year Lim Kee Hing - 3,400,000 - (1,200,000) 2,200,000 Dr Wang Kai Yuen - 4,880,000 - (1,126,000) 3,754,000 Teo Kio Chang Chiaw Choon - 3,400,000 - (1,700,000) 1,700,000 Ronnie Tan Siew Bin - 16, , Asian Micro Holdings Annual Report 2008

23 Directors Report Asian Micro Holdings Annual Report Share options (cont d) 6. Apart from the following who have in aggregate received 5% or more of the total number of options available under the Plan, none of the other executive directors and employees of the Group who participated in the Plan has received 5% or more of the total number of options available under the Plan: Total options granted Total % of options under the Plan Dr Wang Kai Yuen 4,880, % Lim Kee Hing 3,400, % Teo Kio Chang Chiaw Choon 3,400, % Except for the above, no options have been granted to other directors, controlling shareholders of the Company or their associates. The options do not entitle the holder to participate, by virtue of the options, in any share issue of any other corporation. No options had been exercised from the financial year end to the date of this report. No unissued shares, other than those referred to above, are under option as at the date of this report. None of the options were granted at a discount during the financial year. Audit committee The audit committee carried out its functions in accordance with Section 201B(5) of the Singapore Companies Act, Cap. 50. The functions performed are detailed in the Report on Corporate Governance. Auditors Ernst & Young LLP have expressed their willingness to accept re-appointment as auditors. On behalf of the Board of directors, Lim Kee Victor Lim Director Leong Lai Heng Director Singapore 30 September 2008

24 Statement by Directors We, Lim Kee Victor Lim and Leong Lai Heng, being two of the directors of Asian Micro Holdings Limited, do hereby state that, in the opinion of the directors, (i) (ii) the accompanying balance sheets, consolidated profit and loss account, statements of changes in equity and consolidated cash flow statement together with notes thereto are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 30 June 2008 and the results of the business, changes in equity and cash flows of the Group and the changes in equity of the Company for the year ended on that date, 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, Lim Kee Victor Lim Director Leong Lai Heng Director Singapore 30 September Asian Micro Holdings Annual Report 2008

25 Independent Auditors Report to the Members of Asian Micro Holdings Limited Asian Micro Holdings Annual Report We have audited the accompanying financial statements of Asian Micro Holdings Limited (the Company ) and its subsidiaries ( the Group ) set out on pages 24 to 83, which comprise the balance sheets of the Group and the Company as at 30 June 2008, and the statements of changes in equity of the Group and the Company and the profit and loss account and cash flow statement of the Group for the year then ended, and a summary of significant accounting policies and other explanatory notes. Management s responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the Act) and Singapore Financial Reporting Standards. This responsibility includes 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 account and balance sheet and to maintain accountability of assets; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements 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 financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, (a) (b) the consolidated financial statements of the Group and the balance sheet 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 Group and Company as at 30 June 2008 and the results, changes in equity and cash flows of the Group and the changes in equity of the Company for the year ended on that date; and 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. Ernst & Young LLP Public Accountants and Certified Public Accountants Singapore 30 September 2008

26 Balance Sheets as at 30 June 2008 Group Company Note $ $ $ $ (Restated) (Restated) Non-current assets Property, plant and equipment 3 5,182,910 9,463, Intangible assets 4-751, Investments in subsidiaries ,011,511 4,928,720 Investments in associated companies 6 352, ,934 84,926 - Investment property 7 3,200,000 2,600, Current assets Inventories 8 3,929,383 2,246, Trade receivables 9 3,319,185 3,793, Other receivables and deposits , ,149 31, ,716 Prepayments 353,558 96, Tax recoverable 38,202-36,203 36,203 Due from subsidiaries (non-trade) ,350,339 4,848,651 Due from affiliated companies (non-trade) 11 5, , Due from affiliated company (trade) 11 60,311 67, Due from associated company (trade) , Due from a director 11 24, , Due from related parties (trade) , Due from related parties (non-trade) , Other current assets 93, Fixed deposits ,003 2,145, ,906 1,836,420 Cash and bank balances 12 1,458,728 1,798,108 22, ,240 12,013,435 10,993,569 3,648,006 7,254,230 Assets of disposal group classified as held for sale , ,198,025 10,993,569 3,648,006 7,254,230 Current liabilities Bank overdrafts ,703 95, Trade payables 13 1,399,056 1,961, Other payables ,279 1,860, , ,321 Other liabilities ,388 1,227, , ,012 Due to directors (non-trade) 11 12, , Due to affiliated company (non-trade) , , Due to associated company (trade) 11 54, Due to related parties (non-trade) , Bills payable to banks 14 1,462, , Interest-bearing loans and borrowings ,897 2,478, ,525 Provision for taxation 170, , ,505,921 8,514, ,319 1,183,858 Liabilities directly associated with disposal group classified as held for sale 27 69, ,575,726 8,514, ,319 1,183,858 Net current assets 5,622,299 2,478,857 3,298,687 6,070,372 The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 24 Asian Micro Holdings Annual Report 2008