Epicentre Holdings Limited Annual Repor t 2010

Transcription

1 Annual Repor t Orchard Road, Wheelock Place, #02-20/22 Singapore Telephone: Facsimile:

2 20mm 20mm i.love.it Innovation Learning Ownership Vision Excellence Integrity Teamwork vision To be the Best Digital Lifestyle Store in Asia. Delivering a delightful customer s shopping experience and providing value adds to our stakeholders; mission Total Commitment to Customers, unmatched service excellence and innovative services for their one stop shop Digital Lifestyle needs. This document has been prepared by the Company and its contents have been reviewed by the Company s sponsor ( Sponsor ), Asian Corporate Advisors Pte. Ltd., for compliance with the relevant rules of the Singapore Exchange Securities Trading Limited ( Exchange ). The Company s Sponsor has not independently verified the contents of this document including the correctness of any of the figures used, statements or opinions made. This document has not been examined or approved by the Exchange and the Exchange 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 Liau H.K. Telephone number: mm 20mm

3 1 Corporate Profile As an Apple Premium Reseller, Epicentre carries a wide range of Apple brand products, accessories and a variety of software as well as complementary products under its own proprietary iworld brand. Incorporated in Singapore in April 2002 and listed on Singapore Exchange in January 2008, Epicentre Holdings Limited is the first Apple Premium Reseller in Asia specialising in the sale of Apple brand products and its complementary products. Headquartered in Singapore and listed on the Singapore Exchange in January 2008, Epicentre has nine outlets in Singapore and Malaysia. Epicentre offers customers an one-stop shop Digital Lifestyle shopping experience. Customers can enjoy an interactive shopping experience where they are encouraged to touch, feel and test the range of Apple products offered. Other than a wide range of Apple products and accessories, Epicentre also provides training and hands-on coaching on Everything Mac & more.... Epicentre also provides after-sales support at its stores. This includes the iconcierge where support and guidance for Mac users can be obtained and trade-in service, where Apple products can be brought in for a valuation and trade in for a new one. innovation innovation Provide fresh, new & effective ideas, actions, services & value add to our customers, employees and stakeholders. Contents Corporate Profile 1 Chairman s Statement 3 Awards and Achievements 5 Board of Directors 6 Ten Reasons to Buy from EpiCentre 9 Store Listing 10 Corporate Information 13 Financial Highlights 15 Group Structure 16 Corporate Governance 17 Financial Contents 27 Financial Statements 28 Statistics of Shareholdings 81 Addendum 83 Notice of Annual General Meeting 101 Notice of Books Closure 107 Proxy Form

4 2 learning learning Continuous Learning. Open learning and sharing of knowledge with one another.

5 3 Chairman s Statement Dear Valued Shareholders, While FY 2010 was a challenging year, with an erratic economic environment persisting throughout, despite a slower economy which impacted consumers and the retail market, the Epicenter Group successfully overcame the odds to turn in a strong performance. As a reflection of the financial results, group revenue grew by 35.4% to S$88.1 million against S$65.1 million in FY Although revenue from third-party and proprietary brand complementary products saw a year-on-year increase of 53.9% to S$16.2 million, the bulk of the Group s revenue increase can be attributed to the consistent strong demand for our Apple branded products. The increase in revenue derived from Apple branded products accounted for 75.3% of the total increase and the revenue from Apple branded products contributed 88% to the total revenue in FY As part of our ongoing efforts to further sharpen the Group s brand image, we embarked on a re-branding exercise that involved a change in name from Afor Limited to. This move was carefully designed to help align our marketing efforts with our corporate branding and enable consumers to better identify the company as an Apple Premium Reseller. Three new Singapore outlets opened during the year at 313@ Somerset, Marina Bay Sands and ION Orchard and together successfully contributed a S$25.3 million increase to our total revenue. Our new stores in Malaysia, which opened in 2H of FY 2010, contributed to the already positive growth generated by improved market sentiments, with revenue generated from this region surging by 14.8 percent to S$10.5 million against S$9.2 million in FY We will continue expanding in Malaysia by setting up more new outlets at prime locations in the country. Two new Epicentre outlets at the Lim Kok Wing Campus Store and IOI Mall opened in March 2010 and June 2010 respectively. The Campus Store has already made a positive contribution to our revenue in Malaysia, which posted a year-on-year increase of S$1.4 million to S$10.5 million. We ended the year on a high note with nine outlets six in Singapore and three in Malaysia and a strong springboard for future growth in the coming years in existing and new markets. One of the most exciting developments, and a key focus of our expansion strategy, is our plan to venture into the China market both in the form of joint venture partnerships and also through mergers and acquisitions. Designed to leverage our already successful business model and established market networks, we are confident that we will be able to address China s pent-up demand for Apple-branded products. In view of the Group s profitable performance and in appreciation of our valued shareholders, the Board recommends a first and final tax-exempt (one-tier) dividend of 2.0 cents per ordinary share for the financial year ended 30 June 2010, to be approved at the forthcoming Annual General Meeting on 29 October Going forward, we expect the economic conditions to remain uncertain with increasing competition in the industry and a tight labour force. However, a sense of optimism underpinned by the launch of the ipad and iphone 4, together with a backdrop of global economic recovery, will continue to drive demand for technology gadgets and consumer spending. On behalf of the Board of Directors, I wish to take this opportunity to welcome Mr. Ron Tan aboard as our non-executive independent director. Mr. Tan brings to the Group a finely balanced mix of public, corporate and entrepreneurial experiences in the field of licensing and merchandising, retail, franchising and intellectual property production. His wealth of experience will greatly benefit the Group as he contributes new and fresh perspectives to enhance the Group s business strategies and directions. I would like to express my appreciation to the management and staff for their commitment and dedication throughout We are grateful to all our customers, suppliers and business associates for their unwavering support and contribution over the years, and we look forward to forging more close partnerships to deliver even better value and services to our customers in Lastly, I would also like to thank our shareholders for their support and confidence in our Group, and the Board members for their invaluable counsel and guidance. Operations Review FY 2010 was a profitable year for the Group with net profit attributable to shareholders reported to be at S$3.4 million, which translated to a substantial 87.7% increase as compared to S$1.8 million in FY In view of the improved profit, earnings per share for the year based on the weighted average number of ordinary shares issued, rose significantly to 3.6 cents with net tangible assets backing per ordinary share based on our issued share capital being reported at 19 cents. Cost of sales was expectedly higher at S$73.8 million on the back of a strong surge in revenue. In line with our expansion plan, our inventory has also increased from S$5.1 million in FY 2009 to S$8.1 million in FY This was partly due to the increase in the total number of stores from four to nine, as well as an anticipated increase in consumer demand for Apple branded products. As a result of the higher working capital required to support the marketing efforts and setting up of new stores, the Group s net cash position was reported to be S$9.3 million in FY 2010 as compared to S$10.1 million last fiscal year. During the year, we have also been consistent in our efforts to manage costs and improve productivity within the organization. We continue to work diligently together with suppliers to bring the best value to our clients. We have reaped the benefits of the Enterprise Resource Planning (ERP) system which we launched last year, internalizing a system that facilitates faster information flow, so as to enable better accountability and faster decision-making. Additionally, our Customer Relationship Management (CRM) system has also enhanced our competency, enabling us to further improve the experience of our customers. As we move forward, we will continue to secure more strategic locations for the setting up of outlets. Building on our strong established marketing competency, we will also assess suitable opportunities with other lifestyle brands to expand our business. Jimmy Fong Teck Loon Executive Chairman and Chief Executive Officer

6 ownership ownership Take pride in your work; be accountable with your job. Act on the best interests of the company. Speed in execution and implementation.

7 5 Awards and Achievements 01 - Apple South Asia Conference 2010, Platinum Partner Award 02 - Singapore Prestige Brand Award Promising Brand Winner 03 - Apple Top 3 Merchandising Award Apple Top APR POS Asia Apple Top POS - Asia Apple Best POS Asia Best Apple Centre Gold Singapore

8 6 Board of Directors From left to right: Mr. Siow Chee Keong, Mr. Lee Keen Whye, Ms. Brenda Yeo, Mr. Jimmy Fong Teck Loon, Mr. Ron Tan Aik Ti, Mr. Liu Zhipeng Jimmy Fong Teck Loon Executive Chairman & Chief Executive Officer Mr Fong is our Executive Chairman and Chief Executive Officer and was the founder of the Group. He was appointed to our Board on 9 April He is responsible for setting the strategic direction, tracking the financial and profitability growth of the Group, managing the business and overseeing all aspects of business growth and development of the Group. He has more than 12 years of experience in audit, management, IT and finance with commercial and financial organisations in Asia and Singapore. In 1991, he began his career as a Trainee Bank Officer and was with Oversea- Chinese Banking Corporation as an IT system auditor before moving on to hold various senior audit and finance positions in financial institutions and corporations, such as, Citibank, Schlumberger Oilfield Services, Sun Microsystems and I.B.M. World Trade Asia Corporation. Prior to establishing our Company in 2002, he held senior management positions in finance and was the Director of Finance for the Asia Pacific region with Intensia Asia Pacific. He holds a Bachelor of Commerce and Administration from the Victoria University of Wellington, New Zealand, majoring in accountancy with a minor in IT. In 1998, he also obtained a Master of Business Administration from Rutgers, the State University of New Jersey, the USA. Brenda Yeo Executive Director Ms Yeo is our Executive Director who was appointed to our Board on 21 February She oversees the human resource department of our Group and has more than 7 years of experience in human resource. In 2005, she first joined our Group as a human resource executive and was promoted to a personal assistant in She holds a Diploma in Human Resource Management from the International Business and Management Education Centre. Siow Chee Keong Lead Independent Director Mr Siow is is our Lead Independent Director and was appointed to our Board on 10 December He has more than 25 years of audit and management experience in operations, business systems, information technology, finance and accounting with commercial and financial organisations in Canada, USA, England and Singapore. He is currently the Managing Director of JF Virtus Pte. Ltd. and offers audit, risk and consultancy services to exchange listed companies. Mr Siow qualified as a Chartered Certified Accountant with the Association of Chartered Certified Accountants in 1981, a Certified Internal Auditor with the Institute of Internal Auditors Inc. in 1985, a Certified General Accountants with the Certified General Accountants of Canada in 1990 and is a member of the Institute of Certified Public Accountants of Singapore. He graduated from the University of Warwick, England, with a Master of Business Administration. Mr Siow is on board of several listed and private companies, and is a member of the Singapore Institute of Directors.

9 7 vision vision Ability to think and plan ahead according to business needs. Liu Zhipeng Independent Director Ron Tan Aik Ti Independent Director Mr Liu is our Independent director and was appointed to our Board on 10 December Mr Liu is an advocate and solicitor of the Supreme Court of Singapore and currently also a director with Quantum Law Corporation, where he advises on corporate and commercial matters, banking, finance and real estate matters. Mr Liu graduated from the University of Nottingham and joined Messrs William Lai & Alan Wong (now known as WLAW LLC) as a legal assistant after being called to the Singapore Bar in July Mr Liu then joined Societe Generale as their in-house legal counsel from 1999 to Prior to joining Quantum Law Corporation, Mr Liu was an associate with Wong Partnership LLP s Corporate Real Estate Department from April 2006 to April 2007 and a partner with Chang See Hiang & Partners from November 2000 to February Mr. Tan was appointed to our Board in Exercising a wealth of experience in licensing, merchandising, retail and distribution markets, Mr. Tan is currently the Director of Friven Asia Production (since 2008), the exclusive Asian licensee and merchandiser of the popular Hi-5 Group. The company was acquired by a SGX-listed company Friven& Co in March Mr. Tan is also concurrently the Managing Director of VINCI Pte Ltd (since 2006), a licensing and merchandising company in Asia. Mr. Tan has also served in various distinguished and management positions at Media Corporation of Singapore, LexisNexis Asia Pacific in Singapore and Hong Kong, and the Singapore Tourism Board/ Economic Development Board of Singapore. Mr. Tan was awarded the prestigious Singapore Government scholarship to pursue his Bachelor degree in Tourism at the University of Hawaii at Manoa. Lee Keen Whye Independent Director Mr Lee is our Independent Director and was appointed to our Board on 10 December He is the Managing Director of Strategic Alliance Capital Pte Ltd ( SAC ), a venture capital and investment management advisory company. Prior to founding SAC, Mr Lee was the founder and Managing Director of Rothschild Ventures Asia Pte Ltd, a member of the N M Rothschild & Sons global merchant banking group, and worked there from 1990 to He was Associate Director with Kay Hian James Capel Pte Ltd which he joined in 1987 as Head of Research for Singapore and Malaysia. Between 1985 and 1987, Mr Lee was based in California and worked with venture capital companies seeking investments in emerging growth companies. Prior to that, he was an Investment Manager with the Government of Singapore Investment Corporation. Mr Lee currently sits on the boards of several companies, including Santak Holdings Ltd, Oniontech Limited and Ultro Technologies Limited, which are listed on the SGX-ST. Mr Lee holds a Master s Degree in Business Administration from Harvard Business School and a Bachelor s Degree in Business Administration from the University of Singapore.

10 excellence excellence Perform 2Q & 1T. Quality Service to Customers. Quantity to Sales. Transcend Beyond Job Scope.

11 9 Ten Reasons to Buy from EpiCentre Free Membership Best Value Deals Free Seminars and Training Great Locations Trade-in Services Latest and Widest Range of Apple Accessories iconcierge Services Qualified and Certified Mac Evangelist 30-Day Extended Exchange Period One-Stop Service Centre

12 10 Store Listing Singapore Orchard (New) 2 Orchard Turn #B3-14, ION Orchard Singapore Tel : EpiCentre@313 Somerset (New) 313 Orchard Road, #01-19/20, 313@Somerset Singapore Tel: EpiCentre@Marina Bay Sands (New) 2 Bayfront Avenue #B2-100A The Shoppes at Marina Bay Sands Singapore Tel: Malaysia EpiCentre@IOI Mall (New) Lot E27 & 28, Ground Floor, IOI Mall, Batu 9 Jalan Puchong, Bandar Puchong Jaya 47100, Puchong, Selangor Darul Ehsan Tel: /0871 EpiCentre@Lim Kok Wing Campus Store (New) Lot 27, Innovasi 1-1, Jalan Teknorat 1/ , Cyberjaya, Selangor Darul Ehsan Tel:

13 Orchard Road #02-20/23, Wheelock Place Singapore Tel : EpiCentre@Bugis 200 Victoria Street #01-56, Bugis Junction Singapore Tel : EpiCentre@Suntec 3 Temasek Boulevard #02-179, Suntec City Mall Singapore Tel : EpiCentre@Pavilion KL 168 Jalan Bukit Bintang Lot , Level 5, Pavilion Kuala Lumpur Tel :

14 12 integrity integrity Be honest; keep to promise and deliver as promised.

15 13 Corporate Information FULL NAME OF COMPANY COMPANY REGISTRATION NUMBER G WEBSITE BOARD OF DIRECTORS Jimmy Fong Teck Loon (Executive Chairman and Chief Executive Officer) Brenda Yeo (Executive Director) Lee Keen Whye (Independent Director) Liu Zhipeng (Independent Director) Ron Tan Aik Ti (Independent Director) Siow Chee Keong (Independent Director) AUDIT COMMITTEE Siow Chee Keong (Chairman) Lee Keen Whye Liu Zhipeng Ron Tan Aik Ti NOMINATING COMMITTEE Liu Zhipeng (Chairman) Jimmy Fong Teck Loon Lee Keen Whye Ron Tan Aik Ti Siow Chee Keong REMUNERATION COMMITTEE Lee Keen Whye (Chairman) Liu Zhipeng Ron Tan Aik Ti Siow Chee Keong REGISTERED OFFICE 501 Orchard Road #02-20/22, Wheelock Place Singapore Telephone: Facsimile: COMPANY SECRETARY Chew Kok Liang Nathaniel Chelvarajah Vanniasingham AUDITORS BDO LLP Public Accountants and Certified Public Accountants 19 Keppel Road #02-01, Jit Poh Building Singapore Partner-in-charge: Lew Wan Ming Appointed since financial year ended 30 June 2009 SHARE REGISTRAR & SHARE TRANSFER OFFICE Boardroom Corporate & Advisory Services Pte. Ltd. 50 Raffles Place #32-01, Singapore Land Tower Singapore Telephone: Facsimile: PRINCIPAL BANKERS Oversea-Chinese Banking Corporation Limited Citibank, N.A., Singapore Branch Standard Chartered Bank

16 14 teamwork teamwork Be proactive to achieve Company s vision, mission & objective. Trust in each other s professionalism.

17 15 Financial Highlights Revenue (S$M) Net Profit Attributable to Shareholders (S$M) Gross Profit (S$M) Profit Before Tax (S$M)

18 16 Group Structure Epicentre Holdings Limited Epicentre Pte. Ltd. 100% Epicentre Solutions Pte. Ltd. 100% Epi Lifestyle Pte. Ltd. 100% Afor Sdn Bhd 100% Group of Companies SINGAPORE 501 Orchard Road, Wheelock Place, #02-20/22 Singapore Telephone: Facsimile: Epicentre Pte. Ltd. 501 Orchard Road, Wheelock Place, #02-20/22 Singapore Telephone: Facsimile: Epicentre Solutions Pte. Ltd. 501 Orchard Road, Wheelock Place, #02-20/22 Singapore Telephone: Facsimile: Epi Lifestyle Pte. Ltd. 501 Orchard Road, Wheelock Place, #02-20/22 Singapore Telephone: Facsimile: MALAYSIA Afor Sdn. Bhd Central Plaza Suite th Floor, 34 Jalan Sultan Ismail, Kuala Lumpur, Malaysia Telephone: Facsimile:

19 17 Corporate Governance The corporate governance report sets out how the Company has effectively applied the principles of good corporate governance in a disclosure-based regime where accountability of the Board to the Company s shareholders and of the management to the Board provides the framework for achieving a mutually beneficial tripartite relationship aimed at creating, enhancing and growing sustainable shareholders value. The Board of Directors (the Board ) of (the Company ) is committed to ensure that high standards of corporate governance and transparency are practiced for the protection of shareholders interest. This report outlines the Company s corporate governance processes with specific reference to the Code of Corporate Governance (the Code ). The Board s conduct of its Affairs Principle 1: Every company should be headed by an effective Board to lead and control the company. The Board is collectively responsible for the success of the company. The Board works with Management to achieve this and the Management remains accountable to the Board. The Board of Directors (the Board ) comprises four independent directors and two executive directors having the appropriate mix of core competencies and diversity of experience to direct and lead the Company. At the date of this report, the Board comprises the following members: Mr. Jimmy Fong Teck Loon (Chairman and Chief Executive Officer) Ms. Brenda Yeo (Executive Director) Mr. Siow Chee Keong Mr. Lee Keen Whye Mr. Liu Zhipeng Mr. Ron Tan Aik Ti (appointed on 3 August 2010) The primary role of the Board is to protect and enhance long-term shareholders value. Generally the responsibilities of the Board include: reporting to the shareholders and the market; approving corporate strategy; reviewing business results, monitoring budgetary controls and corrective action (if required); sanctioning and monitoring major investment, funding decisions, and strategic commitments; ensuring adequate risk management processes; reviewing internal controls and internal and external auditor reports; approving the release of the Group s half yearly and full year unaudited financial results, related party transactions of material nature and the submission of the unaudited financial results and the relevant checklists to the Sponsor; assumes responsibility of the Corporate Governance Report; monitoring the Board composition, director selection and Board processes and performance; reviewing and approving executive director s remuneration; the reviewing, removal and appointment of the company secretary; and reviewing of material transactions of the Company.

20 18 Corporate Governance Regular meetings are held to review the performance of the business and approve the public release of periodic financial results. The Board has formed Board Committees namely the Audit Committee, the Nominating Committee and the Remuneration Committee to assist in carrying out and discharging its duties and responsibilities efficiently and effectively. The following table shows the number of meetings held by the Board and Board Committees and the attendance of the Directors for the financial year ended 30 June Director Board Audit Committee Remuneration Committee Nominating Committee Number of Meetings Held Number of Meetings Attended Jimmy Fong Teck Loon 2 3* 1* 1 Johnson Goh Ann Ann (1) 1 1* 1* 1* Brenda Yeo 2 3* 1* 1* Siow Chee Keong Lee Keen Whye Liu Zhipeng Ron Tan Aik Ti (2) * By invitation (1) Johnson Goh Ann Ann resigned on 14 December (2) Ron Tan Aik Ti was appointed to the Board on 3 August Board Composition and Balance Principle 2: There should be a strong and independent element on the Board, which is able to exercise objective judgement on corporate affairs independently, in particular, from Management. No individual or small group of individuals should be allowed to dominate the Board s decision making. The Board consists of six directors of whom 4 are Independent Directors. The criterion for independence is based on the definition given in the Code. The Board considers an independent Director as one who has no relationship with the Company, its related companies or officers that could interfere, or be reasonably perceived to interfere, with the exercise of the Director s independent judgement of the conduct of the Group s affairs. The composition of the Board is reviewed on an annual basis by the Nominating Committee to ensure that the Board has the appropriate mix of expertise and experience, and collectively possess the necessary core competencies in business, investment, industry knowledge, accounting and legal for effective functioning and informed decision-making.

21 19 Corporate Governance As at current date, Independent Directors comprise more than one third of the Board s composition. The Board has undertaken a full review of its composition. It is of the opinion that, with a significant majority of the Directors being non-executive and Independent Directors, the Board continues to be able to exercise objective judgement independently of the management. The non-executive and Independent Directors have constructively challenged and contributed to various proposals and reviewed strategy, management performance and reporting framework. Key information regarding the Directors is given in the Board of Directors section on pages 6 to 7 of the annual report. Chairman and Chief Executive Officer Principle 3: There should be a clear division of responsibilities at the top of the company the working of the Board and the executive responsibility of the company s business which will ensure a balance of power and authority, such that no one individual represents a considerable concentration of power. The Board is of the view that it is in the best interests of the Group to adopt a single leadership structure, whereby the CEO and Chairman of the Board is the same person, so as to ensure the decision-making process of the Group would not be unnecessarily hindered. As such, the Board believes that there are adequate safeguards in place against an uneven concentration of power and authority in a single individual. The respective Board Committees vet all major decisions made by the Chief Executive Officer, Mr. Jimmy Fong Teck Loon. The Group Executive Chairman ( Executive Chairman ) and Chief Executive Officer, Mr. Jimmy Fong, plays a pivotal role overseeing the overall management and strategic development of the Group. As Executive Chairman and Chief Executive Officer of the Group, he formulates the policies and supervises the business operations. He schedules Board meetings as and when required and sets the agenda for the Board meetings. In addition, he sets guidelines on and ensures quality, quantity, accuracy, and timeliness of information flow between the Board, Management and shareholders of the Company and also encourages the constructive relationship within the Board between executive director and non-executive directors, and between the Board and the management. He is also instrumental in increasing its geographical network by expanding into overseas market. The Company has also appointed Mr. Siow Chee Keong as the Lead Independent Director pursuant to the recommendations of the Code. The Lead Independent Director will be available to shareholders where they have concerns when contact through the normal channels of the Executive Chairman and Chief Executive Officer has failed to resolve or for which such contact is in-appropriate. Board Membership Principle 4: There should be a formal and transparent process for the appointment of new directors to the Board. As a principle of good corporate governance, all directors should be required to submit themselves for re-nomination and re-election at regular intervals. The Nominating Committee ( NC ) comprises the following five directors all of whom, including the Chairman are independent except for Mr. Jimmy Fong Teck Loon. Mr. Liu Zhipeng (Chairman) Mr. Jimmy Fong Teck Loon Mr. Siow Chee Keong Mr. Lee Keen Whye Mr. Ron Tan Aik Ti

22 20 Corporate Governance The NC functions under the terms of reference which sets out its responsibilities as follows: to recommend to the Board on all new board appointments, re-appointments and re-nominations; to consider and determine on an annual basis, whether or not a Director is independent; and to assess the performance and effectiveness of the Board as a whole and the effectiveness and contribution of each Director to the Board. The independence of each Director is reviewed annually by the NC based on the Code s definition of what constitute an independent Director. The Articles of Association of the Company require: one-third of the Directors are to retire from office at each Annual General Meeting ( AGM ). Accordingly, the Directors will submit themselves for re-nomination and re-election at regular intervals of at least once every three years; and the directors appointed during the course of the year must retire and submit themselves for re-election at the next Annual General Meeting of the Company following their appointments. Board Performance Principle 5: There should be a formal assessment of the effectiveness of the Board as a whole and the contribution by each director to the effectiveness of the Board. The Nominating Committee ( NC ) assesses the performance of the Board as a whole in view of the complementary and collective nature of the Directors contributions. The NC has established objective performance criteria by which the Board s performance and individual Director s performance may be evaluated. The NC examines and considers the Board s size and is satisfied that it is appropriate for effective decision making, taking into account the nature and scope of the Company s operations. Mr. Jimmy Fong Teck Loon, Executive Chairman, Mr. Lee Keen Whye and Mr. Ron Tan Aik Ti both non-executive Directors are due to retire by rotation at the forthcoming annual general meeting in accordance with the Articles of Association of the Company. Arising from the NC s evaluation of the Board and individual Director s performance which among other factors, includes their attendance at the Board meetings, the intensity of participation in the proceedings at the meetings and the quality of their contributions to the Company, the NC recommends to the Board the nomination of these Directors for re-election at the forthcoming annual general meeting. Access to Information Principle 6: In order to fulfill their responsibilities, Board members should be provided with complete, adequate and timely information prior to board meetings and on an on-going basis. All Directors are from time to time furnished with information concerning the Company to enable them to be fully cognizant of the decisions and actions of the Company s executive management. The Board has unrestricted access to the Company s records and information.

23 21 Corporate Governance Senior members of the management staff are available to provide explanatory information in the form of briefings to the Directors or formal presentations in attendance at Board meetings, or by external and internal auditors. The Board has separate and independent access to the Company Secretary and to other senior management executives of the Company and of the Group at all times in carrying out their duties. The Company Secretary attends all Board meetings and meetings of the Board Committees and ensures that the Board procedures are followed and that applicable rules and regulations are complied with. The minutes of all Board Committees meetings are circulated to the Board. The members are aware that they can take independent professional advice, if necessary, at the Company s expense. Remuneration Committee Procedures for Developing Remuneration Policies Principle 7: There should be a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual directors. No director should be involved in deciding his own remuneration. The Remuneration Committee ( RC ) comprises four directors and all are non-executive and independent. The members of the RC are: Mr. Lee Keen Whye (Chairman) Mr. Siow Chee Keong Mr. Liu Zhipeng Mr. Ron Tan Aik Ti The RC recommends to the Board a framework of remuneration for the Directors and Executive Officers, and determine specific remuneration package for each Executive Director. The recommendations are submitted for endorsement by the Board. All aspects of remuneration, including but not limited to Directors fees, salaries, allowances, bonuses and benefits in kind, are covered by the RC. Each RC member will abstain from voting on any resolution in respect of his remuneration package. The RC functions under the following terms of reference which sets out its responsibilities: to recommend to the Board a framework for remuneration for the Directors and key executives of the Company; to determine specific remuneration package of each Executive Director; to review the appropriateness of remuneration awarded to non-executive directors; and to review the remuneration of employees occupying managerial positions who are related to Directors and substantial shareholders. The recommendations of the RC are submitted to the Board for endorsement. The RC is provided with access to expert professional advice on the remuneration matters as and when necessary. The expense of such services is borne by the Company.

24 22 Corporate Governance Level and Mix of Remuneration Principle 8: The level of remuneration should be appropriate to attract, retain and motivate the directors needed to run the company successfully but companies should avoid paying more than is necessary for this purpose. A significant proportion of executive directors remuneration should be structured so as to link rewards to corporate and individual performance. Disclosure on Remuneration Principle 9: Each company should provide clear disclosure of its remuneration policy, level and mix of remuneration, and the procedure for setting remuneration, in the company s annual report. It should provide disclosure in relation to its remuneration policies to enable investors to understand the link between remuneration paid to directors and key executives, and performance. In setting the remuneration packages, the RC takes into consideration the remuneration and employment conditions within the industry and in comparable companies. The remuneration of Non-Executive Directors is also reviewed to ensure that the remuneration commensurate with the contributions and responsibilities of the Directors. The fees structure for Directors is assessed by the Board annually after benchmarking such fees against those in the public and private sectors. believes that the fees are competitive and its Directors are adequately compensated in line with market norms. The Executive Chairman had service agreement which covers the terms of employment, salaries and other benefits. None of the Non- Executive Directors has any service contracts with the Company and they receive remuneration by way of Directors fees. These Directors fees are proposed by the Company as a lump sum to be approved by shareholders at the AGM. The details of the remuneration of Executive and Non-Executive Directors of the Company, disclosed in the relevant bands, for services rendered during the financial year ended 30 June 2010 are as follows: Remuneration Band Directors Salary & Bonus % Fees % Total % S$250,000 to S$499,999 Jimmy Fong Teck Loon Below S$250,000 Johnson Goh Ann Ann Brenda Yeo* Siow Chee Keong Lee Keen Whye Liu Zhipeng * Brenda Yeo, Executive Director, is the spouse of Mr. Jimmy Fong Teck Loon, Executive Chairman and Chief Executive Officer as well as the substantial shareholder. Save as disclosed above, none of the employee who is an immediate family member of Directors and substantial shareholders.

25 23 Corporate Governance Key Executives of the Group The Code requires the disclosures of the remuneration of, at minimum, the top five executives who are not Directors and who are within the remuneration band of S$250,000. The range of the gross remuneration of the top five executives of the Group for the financial year ended 30 June 2010 is shown below: Remuneration Band Number of Key Executives S$250,000 to S$499,999 Below S$250, Accountability and Audit Accountability Principle 10: The Board should present a balanced and understandable assessment of the company s performance, position and prospects. The Board is accountable to the shareholders and is mindful of its obligations to furnish timely information and to ensure full disclosure of material information to shareholders in compliance with statutory requirements and the Listing Manual of SGX-ST, Section B rules of Catalist. Price sensitive information is publicly released either before the Company meets with any group of investors or analysts or simultaneously with such meetings. Financial results and annual reports are announced or issued within legally prescribed period. In turn, management of the Company provides the Board with balanced and understandable accounts of the Group s performance, financial position and business prospects on a regular basis. Audit Committee Principle 11: The Board should establish an Audit Committee with written terms of reference which clearly set out its authority and duties. The Audit Committee comprises the following members: Mr. Siow Chee Keong (Chairman) Mr. Lee Keen Whye Mr. Liu Zhipeng Mr. Ron Tan Aik Ti All the members are Independent and Non-Executive Directors.

26 24 Corporate Governance The Audit Committee functions under the terms of reference which sets out its responsibilities as follows: to review the audit plans of both the external and internal auditors; to review the auditors reports and their evaluation of the Company s and the Group s system of internal controls; to review the effectiveness and adequacy of internal audit function which is outsourced to a professional firm; to review the co-operation given by the Company s officers to the internal and external auditors; to review the financial statements of the Company and the Group before submission to the Board; to nominate and review the appointment of internal and external auditors; to review with auditors and Management on the general internal control procedures; to review the independence of the internal and external auditors; and to review interested person transactions, if any; to review all announcements relating to or in respect of the financial performance of the Group. The Audit Committee has the power to conduct or authorize investigations into any matters within the Audit Committee s scope of responsibility. The Audit Committee is authorized to obtain independent professional advice if it deems necessary in the discharge of its responsibilities. Each member of the Audit Committee abstains from voting any resolutions in respect of matters he is interested in. The Audit Committee has full access to and co-operation of the Management and has full discretion to invite any Director or executive officer to attend its meetings, and has been given reasonable resources to enable it to discharge its functions. The Audit Committee meets with both the external and internal auditors without the presence of Management at least once a year. The Audit Committee reviews the independence of the external auditors annually. The Audit Committee, having reviewed the range and value of non-audit services rendered by the external auditor, BDO LLP, was satisfied that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors. The Audit Committee recommended that BDO LLP be nominated for re-appointment as auditors at the forthcoming AGM. The Company has in place a whistle-blowing framework where staff of the Company can access the Chairman and members of the Audit Committee or the Head of Human Resource to raise concerns about improprieties in matters of financial reporting or other matters. The Audit Committee is adequately qualified to discharge their responsibility and each member has the relevant expertise and experience in accounting, legal business and financial management. Internal Controls and Risk Management Principle 12: The Board should ensure that Management maintains a sound system of internal controls to safeguard the shareholders investments and the company s assets. The Audit Committee ensures that a review of the effectiveness of the Company s internal controls, including financial, operational and compliance controls and risk management, is conducted annually. In this respect, the Audit Committee reviews the audit plans, and the findings of the auditors and ensures that the Company follows up on the auditors recommendations raised, if any, during the audit process.

27 25 Corporate Governance The Company has in place a system of internal control and risk management, the effectiveness of which are reviewed periodically within the financial year of the Company, for ensuring proper accounting records and reliable financial information as well as management of business risks with a view of safeguarding shareholders investments and the Company s assets. Risk Management The Board, through its Audit Committee, manages the risk profile of the Company. In line with this, it has requested the Chief Financial Officer to highlight key risk areas of the Group s various businesses and review risk treatments on a regular basis. In addition, the Internal Auditors are engaged to develop a risk-based internal audit plan to review financial, operational and compliance risks across the Group. Business Risk The Group is primarily engaged in retailing of Apple branded and proprietary brands of electronics consumer products. Its revenue is affected by economic sentiment, consumer spending and market acceptance of the newly launched products in various geographical regions in which the Group operates. In view of this, SWOT analysis is used to regularly review the ongoing viability of our retail network and how market share may be maintained/increased. Financial Risk The Group maintains sufficient cash reserves to meet its obligations as and when it falls due. The bulk of the Group s purchases are denominated in US Dollar. In order to minimize the Group s exposure to foreign currency fluctuation, it engages in foreign currency hedging based on purchase commitments. Internal Audit Principle 13: The company should establish an internal audit function that is independent of the activities it audits. The Company outsources its internal audit function to an external CPA firm. The internal auditor reports directly to the Audit Committee on all internal audit matters. The primary functions of internal audit are to: assess if adequate systems of internal controls are in place to protect the funds and assets of the Group and to ensure control procedures are complied with; assess if operations of the business processes under review are conducted efficiently and effectively; and identify and recommend improvement to internal control procedures, where required. Communications with Shareholders Principle 14: Companies should engage in regular, effective and fair communication with shareholders. Principle 15: Companies should encourage greater shareholder participation at AGMs, and allow shareholders the opportunity to communicate their views on various matters affecting the company. In line with continuous obligations of the Company under the Listing Manual of the SGX-ST, Section B rules of Catalist, the Board s policy is that all shareholders be informed of all major developments that impact the Group.

28 26 Corporate Governance Information is also disseminated to shareholders on a timely basis through: SGXNET announcements and news release; Annual Report prepared and issued to all shareholders; and Notices of and explanatory memoranda for AGMs and extraordinary general meetings ( EGMs ). The Company s AGMs are the principal forums for dialogue with shareholders. The Chairmen of the Audit, Remuneration and Nominating Committees are normally available at the meetings to answer any question relating to the work of these committees. The external auditors are also present to assist the Directors in addressing any relevant queries by the shareholders. Shareholders are encouraged to attend the AGMs/EGMs to ensure a high level of accountability and to stay apprised of the Group s strategy and goals. Notices of the meetings are advertised in newspapers and announced on SGXNET. Dealings in Securities In accordance with best practices and Listing Rule, the Company has in place a policy prohibiting share dealings by Directors and employees of the Company for the period of one month prior to the announcement of the Company s half yearly results and one month prior to the announcement of the yearly results as the case may be, and ending on the date of the announcement of the relevant results. Directors and employees are expected to observe the insider trading laws at all times even when dealing in securities within permitted trading period. Officers are also advised not to deal in the Company s securities on short-term considerations. Interested Person Transactions The Company adopted an internal policy in respect of any transactions with interested person and has established procedures for review and approval of the interested person transactions entered into by the Group. The aggregate value of interested person transactions entered during the financial year was as follows: Name of interested person Aggregate value of all interested person transactions during the financial year under review (excluding transactions conducted under shareholders mandate pursuant to Rule 920) S$ Aggregate value of all interested person transactions conducted under shareholders mandate pursuant to Rule 920 (excluding transactions less than $100,000) S$ Material Contracts There was no material contract entered into by the Company or any of its subsidiary companies involving the interest of the Chief Executive Officer, any Director, or controlling shareholder. Catalist Sponsor No non-sponsored fee was paid to the Sponsor during the financial year ended 30 June 2010.

29 Financial Contents Report of the Directors 28 Statement by Directors 31 Independent Auditors Report 32 Statements of Financial Position 33 Consolidated Statement of Comprehensive Income 34 Consolidated Statement of Changes in Equity 35 Consolidated Statement of Cash Flows 36 Notes to the Financial Statements 37 Statistics of Shareholdings 81 Addendum 83 Notice of Annual General Meeting 101 Notice of Books Closure 107 Proxy Form

30 28 Report of the Directors The Directors of the Company present their report to the members together with the audited financial statements of the Group for the financial year ended 30 June 2010 and the statement of financial position of the Company as at 30 June Directors The Directors of the Company in office at the date of this report are: Jimmy Fong Teck Loon Brenda Yeo Lee Keen Whye Siow Chee Keong Liu Zhipeng Ron Tan Aik Ti (Appointed on 3 August 2010) 2. Arrangements to enable Directors to acquire shares or debentures 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 in or debentures of the Company or any other body corporate. 3. Directors interests in shares or debentures According to the Register of Directors Shareholdings kept by the Company under Section 164 of the Singapore Companies Act, Cap. 50, (the Act ), none of the Directors of the Company who held office at the end of the financial year had any interests in the shares or debentures of the Company or its related corporations except as detailed below: Shareholdings registered in the name of Directors Balance at 1 July 2009 Balance at 30 June 2010 Shareholdings in which Directors are deemed to have an interest Balance at 1 July 2009 Number of ordinary shares Balance at 30 June 2010 Company Jimmy Fong Teck Loon 50,369,800 50,369, , ,000 Brenda Yeo 630, ,000 50,369,800 50,369,800 Lee Keen Whye 100, ,000 Siow Chee Keong 100, ,000 Liu Zhipeng 100, ,000 By virtue of Section 7 of the Act, Jimmy Fong Teck Loon is deemed to have interests in the shares of all the subsidiaries of the Company as at the end of the financial year. Jimmy Fong Teck Loon is deemed to be interested in the shares held by his wife, Brenda Yeo, and vice versa.

31 29 Report of the Directors 3. Directors interests in shares or debentures (Continued) In accordance with the continuing listing requirements of the Singapore Exchange Securities Trading Limited, the Directors of the Company state that, according to the Register of Directors Shareholdings, the Directors interests as at 21 July 2010 in the shares of the Company have not changed from those disclosed as at 30 June Directors contractual benefits Since the end of the previous financial year, no Director of the Company has received or become entitled to receive a benefit by reason of a contract made by the Company or by a related corporation with the Director or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except as disclosed in the financial statements. 5. Share options There were no share options granted by the Company or its subsidiaries during the financial year. There were no shares issued since the commencement of the plan to the end of the financial year pursuant to the Epicentre Holdings Limited Performance Share Plan. The RC is responsible to administer the plan. There were no unissued shares of the Company or of its subsidiaries under options as at the end of the financial year. 6. Audit committee The Audit Committee comprises the following members, who are all non-executive Directors and a majority of whom, including the Chairman, are Independent Directors. The members of the Audit Committee during the financial year and at the date of this report are: Siow Chee Keong Lee Keen Whye Liu Zhipeng Ron Tan Aik Ti (Chairman) The Audit Committee performs the functions specified in Section 201B (5) of the Act. In performing those functions, the Audit Committee reviewed the audit plans and the overall scope of examination by the external auditors of the Group and of the Company. The Audit Committee also reviewed the independence of the external auditors of the Company and the nature and extent of the non-audit services provided by the external auditors. The Audit Committee also reviewed the assistance provided by the Company s officers to the external auditors and the consolidated financial statements of the Group and the statement of financial position of the Company as well as the Independent Auditors Report thereon prior to their submission to the Directors of the Company for adoption and reviewed the interested person transactions as defined in Chapter 9 of the Listing Manual of the Singapore Exchange.

32 30 Report of the Directors 6. Audit committee (Continued) The Audit Committee has full access to and has the co-operation of the management and has been given the resources required for it to discharge its function properly. It has also 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 re-appointment as auditors of the Company at the forthcoming Annual General Meeting. The Audit Committee has carried out an annual review of non-audit services provided 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 prior to recommending their recommendation. 7. Auditors The auditors, BDO LLP, have expressed their willingness to accept re-appointment. On behalf of the Board of Directors Jimmy Fong Teck Loon Director Brenda Yeo Director Singapore 27 September 2010

33 31 Statement by Directors In the opinion of the Board of Directors, (a) the consolidated financial statements of the Group and the statement of financial position of the Company are drawn up in accordance with the provisions of the Singapore Companies Act, Cap. 50 and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 30 June 2010, and of the results, changes in equity and cash flows of the Group for the financial year then ended; and (b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due. On behalf of the Board of Directors Jimmy Fong Teck Loon Director Brenda Yeo Director Singapore 27 September 2010

34 32 Independent Auditors Report TO THE MEMBERS OF EPICENTRE HOLDINGS LIMITED (FORMERLY KNOWN AS AFOR LIMITED) We have audited the accompanying financial statements of (Formerly known as Afor Limited) (the Company ) and its subsidiaries (the Group ) which comprise the statements of financial position of the Group and of the Company as at 30 June 2010, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows of the Group for the financial 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: (a) (b) (c) 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; 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 auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider 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 statement of financial position of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 30 June 2010 and of the results, changes in equity and cash flows of the Group for the financial year ended on that date; and the accounting and other records required by the Act to be kept by the Company and by the subsidiaries incorporated in Singapore of which we are the auditors, have been properly kept in accordance with the provisions of the Act. BDO LLP Public Accountants and Certified Public Accountants Singapore 27 September 2010

35 33 Statements of Financial Position AS AT 30 JUNE 2010 Group Company Note $ 000 $ 000 $ 000 $ 000 Non-current assets Plant and equipment 4 1, Investments in subsidiaries , , Current assets Inventories 6 8,065 5,080 Trade and other receivables 7 6,330 3,856 9,864 5,620 Derivative financial instruments Cash and cash equivalents 9 10,994 12,437 3,492 8,068 25,434 21,373 13,401 13,688 Less: Current liabilities Trade and other payables 10 8,733 7, Provisions Finance lease payable Current income tax payable ,453 7, Net current assets 15,981 13,994 12,753 13,069 Less: Non-current liabilities Finance lease payable Deferred tax liabilities ,762 14,351 13,863 13,633 Capital and reserves Share capital 14 6,709 6,709 6,709 6,709 Foreign currency translation reserve Accumulated profits 11,027 7,639 7,154 6,924 Equity attributable to owners of the parent 17,762 14,351 13,863 13,633 The accompanying notes form an integral part of these financial statements.

36 34 Consolidated Statement of Comprehensive Income FOR THE FINANCIAL YEAR ENDED 30 JUNE 2010 Note $ 000 $ 000 Revenue 16 88,082 65,063 Cost of sales (73,768) (54,154) Gross profit 14,314 10,909 Other income 17 1, Administrative expenses (8,776) (6,881) Selling and distribution costs (2,850) (2,678) Profit before income tax 18 4,097 2,133 Income tax expense 19 (709) (313) Profit for the financial year attributable to owners of the parent 3,388 1,820 Other comprehensive income 20 Foreign currency translation relating to financial statements of foreign subsidiary, net of tax 23 (3) Total comprehensive income for the financial year attributable to owners of the parent 3,411 1,817 Earnings per share (in cents) 21 Basic/Diluted The accompanying notes form an integral part of these financial statements.

37 35 Consolidated Statement of Changes in Equity FOR THE FINANCIAL YEAR ENDED 30 JUNE 2010 Note Share capital Foreign currency translation reserve Accumulated profits Equity attributable to owners of the parent $ 000 $ 000 $ 000 $ 000 Balance as at 1 July , ,639 14,351 Total comprehensive income for the financial year 23 3,388 3,411 Balance as at 30 June , ,027 17,762 Balance as at 1 July , ,157 14,872 Total comprehensive income for for the financial year (3) 1,820 1,817 Dividends 22 (2,338) (2,338) Balance as at 30 June , ,639 14,351 The accompanying notes form an integral part of these financial statements.

38 36 Consolidated Statement of Cash Flows FOR THE FINANCIAL YEAR ENDED 30 JUNE 2010 Note $ 000 $ 000 Cash flows from operating activities Profit before income tax 4,097 2,133 Adjustments for: Allowance for doubtful third parties trade receivables 7 Bad trade receivables written off 75 Write-back of allowance for doubtful third parties trade receivables no longer required (7) Depreciation of plant and equipment Interest income (14) (33) Loss on disposal of plant and equipment 11 Obsolete inventories written off Provision for reinstatement cost (139) Plant and equipment written off 9 Operating profit before working capital changes 4,586 2,631 Working capital changes: Inventories (2,926) 283 Trade and other receivables (2,457) (116) Trade and other payables 1,502 2,010 Provisions 139 Cash generated from operations 844 4,808 Interest received Income taxes paid (399) (796) Net cash from operating activities 459 4,045 Cash flows from investing activities Purchase of plant and equipment 4 (1,896) (266) Proceeds from disposal of plant and equipment 10 Net cash used in investing activities (1,896) (256) Cash flows from financing activities Dividends paid (2,338) Decrease/(Increase) in fixed deposits pledged 585 (195) Finance lease payments (6) (6) Net cash from/(used in) financing activities 579 (2,539) Net change in cash and cash equivalents (858) 1,250 Cash and cash equivalents at beginning of financial year 10,139 8,889 Cash and cash equivalents at end of financial year 9 9,281 10,139 The accompanying notes form an integral part of these financial statements.

39 37 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE 2010 These notes form an integral part of and should be read in conjunction with the financial statements. 1. General corporate information The consolidated financial statements of the Group and the statement of financial position of the Company for the financial year ended 30 June 2010 were authorised for issue by the Board of Directors on 27 September The Company is a public limited company, incorporated and domiciled in Singapore. The principal place of business and registered office is at 501 Orchard Road, #02-20/22, Wheelock Place, Singapore The Company s registration number is G. With effect from 29 June 2010, the Company has changed its name from Afor Limited to. The principal activities of the Company are those of distribution and selling of computers and investment holding company. The principal activities of the subsidiaries are set out in Note 5 to the financial statements. 2. Summary of significant accounting policies 2.1 Basis of preparation of financial statements The financial statements have been prepared in accordance with the provisions of the Singapore Companies Act, Cap. 50 and Singapore Financial Reporting Standards ( FRS ). The financial statements are presented in Singapore dollar and all values are rounded to the nearest thousand ($ 000) except when otherwise indicated. The financial statements have been prepared under the historical cost convention, except as disclosed in the accounting policies below. The preparation of financial statements in conformity with FRS requires the management to exercise judgement in the process of applying the Group s and the Company s accounting policies and requires the use of accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the end of the financial year, and the reported amounts of revenue and expenses during the financial year. Although these estimates are based on the management s best knowledge of historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances, actual results may ultimately differ from those estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the financial year in which the estimate is revised if the revision affects only that financial year, or in the financial year of the revision and future financial years if the revision affects both current and future financial years. Critical accounting judgements and key sources of estimation uncertainty used that are significant to the financial statements are disclosed in Note 3 to the financial statements. During the financial year, the Group and the Company adopted the new or revised FRS and Interpretations of FRS ( INT FRS ) that are relevant to their operations and effective for the current financial year. Changes to the Group s and the Company s accounting policies have been made as required in accordance with the relevant transitional provisions in the respective FRS and INT FRS. The adoption of the new or revised FRS and INT FRS did not result in any substantial changes to the Group s and the Company s accounting policies and has no material effect on the amounts reported for the current and prior financial years except as discussed below.

40 38 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Summary of significant accounting policies (Continued) 2.1 Basis of preparation of financial statements (Continued) FRS 1 Presentation of Financial Statements Revised Presentation The Group has adopted FRS 1 (2008) from 1 July FRS 1 (2008) requires the Group to present all changes in equity arising from transactions with non-owners in profit or loss separately from those equity changes arising from transactions with owners in their capacity as owners to be presented in the statement of changes in equity. FRS 1 (2008) also requires the Group to disclose income tax relating to each component of other comprehensive income and to disclose reclassification adjustments relating to components of other comprehensive income. Where the Group restates or reclassifies comparative information, the Group will be required to present a restated balance as of the beginning of the earliest comparative period in addition to the current requirement to present the statements of financial position as at the end of the current period and comparative period. The Group has chosen to present both income statement and statement of comprehensive income in a single consolidated statement of comprehensive income. FRS 27 (2009) Consolidated and Separate Financial Statements FRS 27 (2009) requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. In the event when control is lost, any remaining interest in the entity is re-measured to fair value, and a gain or loss is recognised in the profit or loss. The Group will apply FRS 27 (2009) prospectively to transactions with non-controlling interests from July FRS 108 Operating Segments The Group has adopted FRS 108 from 1 July FRS 108 replaces FRS 14 Segment Reporting and requires a management approach, under which segment information is presented on the same basis as that used for internal reporting purposes to the chief operating decision maker. FRS 103 Business Combinations (Revised) The Group has adopted FRS 103 (Revised 2009) from 1 July The amendments in FRS 103 (Revised 2009) on accounting for business combination transactions are significant and the main changes relate to measurement of all items of consideration transferred by acquirer at fair value at the acquisition date, the election of measuring non-controlling interest at fair value or at its proportionate interest in fair value of identifiable assets and liabilities at acquisition date and the transaction costs incurred in connection with the business combination is expensed as and when they are incurred and cannot be capitalised. The impact of FRS 103 (Revised) can only be determined once the detail of future business combination transactions is known. The amendments to this revised Standard will be adopted prospectively for transactions after the date of adoption of the revised Standard and therefore, no restatements will be required in respect of transactions prior to the date of adoption.

41 39 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Summary of significant accounting policies (Continued) 2.1 Basis of preparation of financial statements (Continued) FRS and INT FRS issued but not yet effective The Group and the Company have not adopted the following FRS and INT FRS that have been issued but not yet effective: Effective date (Annual periods beginning on or after) FRS 24 : Related Party Disclosures (Revised) 1 January 2011 FRS 32 : Amendment to FRS 32 Classification of Rights Issues 1 February 2010 FRS 101 : Amendments to FRS 101 Additional Exemptions for First-time Adopters 1 January 2010 : Am endments to FRS 101 Limited Exemptions from Comparative FRS 107 Disclosures for First-time Adopters 1 July 2010 FRS 102 : Am endments to FRS 102 Group Cash-settled Share-based Payment Transactions 1 January 2010 INT FRS 114 : Am endments to INT FRS 114 Prepayments of a Minimum Funding Requirement 1 January 2011 INT FRS 115 : Agreements for the Construction of Real Estate 1 January 2011 INT FRS 119 : Extinguishing Financial Liabilities with Equity Instruments 1 July 2010 Consequential amendments were also made to various standards as a result of these new or revised standards. The Group and the Company expect that the adoption of the above pronouncements, if applicable, will have no material impact on the financial statements in the period of initial application.

42 40 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Summary of significant accounting policies (Continued) 2.2 Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries. Subsidiaries are entities over which the Company has the power to govern the financial operating policies, generally accompanied by a shareholding giving rise to the majority of the voting rights, as to obtain benefits from their activities. Subsidiaries are consolidated from the date on which control is transferred to the Group up to the effective date on which control ceases, as appropriate. Intra-group balances and transactions and any unrealised income and expenses arising from intra-group transactions are eliminated on consolidation. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no impairment. The financial statements of the subsidiaries are prepared for the same financial year as that of the Company, using consistent accounting policies. Where necessary, accounting policies of subsidiaries are changed to ensure consistency with the policies adopted by other members of the Group. Non-controlling interests in subsidiaries are identified separately from the Group s equity therein. Non-controlling interests in the acquiree may be initially measured either at fair value or at the non-controlling interests proportionate share of the fair value of the acquiree s identifiable net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance. Changes in the Group s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. The carrying amounts of the Group s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the parent. When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities or the subsidiary and any non-controlling interests. Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted for (i.e. reclassified to profit or loss or transferred directly to retained earnings) in the same manner as would be required if the relevant assets or liabilities were disposed of. The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under FRS 39 Financial Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition of an investment in an associate or jointly controlled entity. Investments in subsidiaries are carried at cost less any impairment in net recoverable value that has been recognised in profit or loss.

43 41 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Summary of significant accounting policies (Continued) 2.3 Business combination The acquisition of subsidiaries is accounted for using the acquisition method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred. Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments (see below). All other subsequent changes in the fair value of contingent consideration classified as an asset or liability are accounted for in accordance with relevant FRS. Changes in the fair value of contingent consideration classified as equity are not recognised. The acquiree s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under FRS 103 are recognised at their fair values at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for sale in accordance with FRS 105 Non-Current Assets Held for Sale and Discontinued Operations, which are recognised and measured at the lower of cost and fair value less costs to sell. Where a business combination is achieved in stages, the Group s previously held interests in the acquired entity are remeasured to fair value at the acquisition date (i.e. the date the Group attains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of. The acquiree s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under FRS 103 are recognised at their fair value at the acquisition date, except that: deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with FRS 12 Income Taxes and FRS 19 Employee Benefits respectively; liabilities or equity instruments related to the replacement by the Group of an acquiree s share-based payment awards are measured in accordance with FRS 102 Share-based Payment; and assets (or disposal groups) that are classified as held for sale in accordance with FRS 105 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see below), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date. The measurement period if the period from the date of acquisition to the date the Group obtains complete information about facts and circumstances that existed as of the acquisition date and is subject to a maximum of one year.

44 42 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Summary of significant accounting policies (Continued) 2.3 Business combination (Continued) Goodwill arising on acquisition is recognised as an asset at the acquisition date and initially measured at cost, being the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer previously held equity interest (if any) in the entity over net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the Group s interest in the net fair value of the acquiree s identifiable net assets exceeds the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer s previously held equity interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain. 2.4 Plant and equipment Plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. The cost of plant and equipment includes its purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Dismantlement, removal or restoration costs are included as part of the cost of plant and equipment if the obligation for dismantlement, removal or restoration is incurred as a consequence of acquiring or using the plant and equipment. Depreciation is calculated on the straight-line method so as to allocate the depreciable amount of the plant and equipment over the estimated useful lives as follows: Years Demo equipment 3 Office equipment 3 Furniture and fittings 3 Renovation 3 Motor vehicle 10 The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. The estimated useful lives, residual values and depreciation methods are reviewed, and adjusted as appropriate, at the end of each financial year. Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, if there is no certainty that the lessee will obtain ownership by the end of the lease term, the asset shall be fully depreciated over the shorter of the lease term and its useful life. The gain or loss arising on disposal or retirement of an item of plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss. Fully depreciated plant and equipment are retained in the financial statements until they are no longer in use.

45 43 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Summary of significant accounting policies (Continued) 2.5 Impairment of non-financial assets At the end of each financial year, the Group reviews the carrying amounts of its non-financial assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cashgenerating unit to which the asset belongs. The recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. 2.6 Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined on a first-in, first-out basis and includes all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price at which inventories can be realised in the ordinary course of business after allowing for the costs of realisation. Allowance is made for obsolete, slow-moving and defective inventories.

46 44 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Summary of significant accounting policies (Continued) 2.7 Financial instruments Financial assets and financial liabilities are recognised on the Group s consolidated statement of financial position when the Group becomes a party to the contractual provisions of the instrument. Effective interest method The effective interest method is a method of calculating the amortised cost of a financial instrument and allocating the interest income or expense over the relevant period. The effective interest rate exactly discounts estimated future cash receipts or payments (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial instrument, or where appropriate, a shorter period, to the net carrying amount of the financial instrument. Income and expense are recognised on an effective interest basis for debt instruments other than those financial instruments at fair value through profit or loss. Financial assets All financial assets are recognised on a trade date where the purchase of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value. Financial assets are classified into the following specified categories: financial assets at fair value through profit or loss ( FVTPL ), held-to-maturity investments, loans and receivables and available-for-sale financial assets. The classification depends on the nature and purpose for which these financial assets were acquired and is determined at the time of initial recognition. Loans and receivables Trade and other receivables that have fixed or determinable payments that are not quoted in active market are classified as loans and receivables. Loans and receivables are measured at amortised cost, using the effective interest method less impairment. Interest is recognised by applying the effective interest method, except for short-term receivables when the recognition of interest would be immaterial. Impairment of financial assets Financial assets, other than FVTPL, are assessed for indicators of impairment at the end of each financial year. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

47 45 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Summary of significant accounting policies (Continued) 2.7 Financial instruments (Continued) Impairment of financial assets The carrying amounts of all financial assets are reduced by the impairment loss directly with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds receivables. Financial liabilities and equity instruments Classification as debt or equity Financial liabilities and equity instruments issued by Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are classified as equity and recognised at the fair value of the consideration received by the Group and the Company. Incremental costs directly attributable to the issuance of new equity instruments are shown in the equity as a deduction from the proceeds.

48 46 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Summary of significant accounting policies (Continued) 2.7 Financial instruments (Continued) Financial liabilities and equity instruments (Continued) Financial liabilities Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities. Financial liabilities are classified as at fair value through profit or loss if the financial liability is either held for trading or it is designated as such upon initial recognition. Other financial liabilities Trade and other payables Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, where applicable, using the effective interest method, with interest expense recognised on an effective yield basis. Derecognition of financial liabilities The Group derecognises financial liabilities when, and only when, the Group s obligations are discharged, cancelled or they expire. Derivative financial instruments and hedging activities The Group enters into a variety of derivative financial instruments to manage its exposure to foreign exchange rate risk, including foreign exchange forward contracts. Derivatives are initially recognised at their fair values at the date the derivative contract is entered into and are subsequently re-measured to their fair values at the end of each financial year. The method of recognising the resulting gain or loss depends on whether the derivative is designated and effective as a hedging instrument, and if so, the nature of the item being hedged. Fair value changes on derivatives that are not designated or do not qualify for hedge accounting are recognised in profit or loss when the changes arise.

49 47 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Summary of significant accounting policies (Continued) 2.8 Cash and cash equivalents Cash and cash equivalents consist of cash and bank balances and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. 2.9 Revenue recognition Revenue is measured at the fair value of the consideration received or receivable. Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured. Revenue is presented, net of rebates, discounts and sales related taxes. Revenue from sale of goods is recognised upon passage of title to the customer which coincides with the delivery and acceptance. Interest income is recognised on a time-proportion basis using the effective interest method. Sponsorship income is recognised upon public presentation for media advertising. Facilities fees income is recognised on a straight-line basis over the term of the service agreement. Marketing income is recognised upon confirmation of the achievement of certain sales quota Employee benefits Defined contribution plan Contributions to defined contribution plans are recognised as an expense in profit or loss in the same financial year as the employment that gives rise to the contributions. Employee leave entitlement Employee entitlements to annual leave are recognised when they accrue to employees. An accrual is made for estimated liability for unutilised annual leave as a result of services rendered by employees up to the end of the financial year.

50 48 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Summary of significant accounting policies (Continued) 2.11 Government grant Jobs credit scheme The Singapore government introduced a cash grant known as the jobs credit scheme in its Budget for 2009 in a bid to help businesses preserve jobs in the economic downturn. The amounts received for jobs credit are to be paid to eligible employers and the amount an employer can receive would depend on the fulfillment of the conditions as stated in the Scheme. The Group recognises the amounts received for jobs credit at their fair value as other income in the month of receipt of these grants from the government Leases When the Group and the Company are the lessees of a finance lease Leases in which the Group and the Company assume substantially the risks and rewards of ownership are classified as finance lease. Upon initial recognition, plant and equipment acquired through finance lease is capitalised at the lower of its fair value and the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Lease payments are apportioned between finance charge and reduction of the lease liability. The finance charge is allocated to each period during the lease term so as to achieve a constant periodic rate of interest on the remaining balance of the finance lease liability. Finance charge is recognised in profit or loss. When the Group and the Company are the lessees of operating leases Leases of assets in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are recognised in profit or loss on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the financial year in which termination takes place. Contingent rents are recognised as an expense in profit or loss in the financial year in which they are incurred.

51 49 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Summary of significant accounting policies (Continued) 2.13 Provisions Provisions are recognised when the Group and the Company have a present legal or constructive obligation as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the financial year, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. Changes in the estimated timing or amount of the expenditure or discount rate are recognised in the consolidated comprehensive income when the changes arise Income tax expense Income tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported profit or loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or tax deductible. The Group s liability for current tax is calculated using tax rates (and tax laws) that have been enacted or substantively enacted in countries where the Company and subsidiaries operate by the end of the financial year. Deferred tax is recognised on the differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and are accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised on taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at the end of each financial year and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

52 50 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Summary of significant accounting policies (Continued) 2.14 Income tax expense (Continued) Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised based on the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the financial year. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items credited or debited directly to equity, in which case the tax is also recognised directly in equity, or where they arise from the initial accounting for a business combination. In the case of a business combination, the tax effect is taken into account in calculating goodwill or determining the excess of the acquirer s interest in the net fair value of the acquiree s identifiable assets, liabilities and contingent liabilities over cost. Deferred tax liabilities are recognised for all taxable temporary differences associated with investment in subsidiary, except where the timing of the reversal of the temporary difference can be controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future Foreign currencies transactions and translation Items included in the individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates ( functional currency ). The consolidated financial statements of the Group and the statement of financial position of the Company are presented in Singapore dollar, which is the functional currency of the Company and the presentation currency for the consolidated financial statements. In preparing the financial statements, transactions in currencies other than the entity s functional currency ( foreign currencies ) are recorded at the rates of exchange prevailing on the date of the transaction. At the end of each financial year, monetary items denominated in foreign currencies are re-translated at the rates prevailing at the end of the financial year. Non-monetary items carried at fair value that are denominated in foreign currencies are re-translated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not re-translated. Exchange differences arising on the settlements of monetary items and on re-translating of monetary items are included in the statement of comprehensive income for the financial year. Exchange differences arising on the re-translation of nonmonetary items carried at fair value are included in profit or loss for the financial year except for differences arising on the re-translation of non-monetary items in respect of which gains and losses are recognised directly in other comprehensive income. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in other comprehensive income.

53 51 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Summary of significant accounting policies (Continued) 2.15 Foreign currencies transactions and translation (Continued) For the purpose of presenting consolidated financial statements of the Group, the results and financial position of the Group s entity that has a functional currency different from the presentation currency are translated into the presentation currency as follows: (i) (ii) (iii) assets and liabilities are translated at the closing exchange rate at the reporting date; income and expenses for the statement of comprehensive income are translated at average exchange rate for the financial year (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated using the exchange rates at the dates of the transactions); and all resulting exchange differences are recognised in other comprehensive income Dividends Interim dividends are recorded in the financial year in which they are declared payable. Final dividends on ordinary shares are recognised as a liability in the financial year in which the dividends are approved by the shareholders Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the group of executive directors and the chief executive officer who makes strategic decisions. 3. Critical accounting judgements and key sources of estimation uncertainty In the application of the Group s accounting policies, which are described in Note 2, management made judgements, estimates and assumptions about the carrying amounts of assets and liabilities that were not readily apparent from other sources. The estimates and associated assumptions were based on historical experience and other factors that were considered to be reasonable under the circumstances. Actual results may differ from these estimates. These estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

54 52 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Critical accounting judgements and key sources of estimation uncertainty (Continued) 3.1 Critical judgements in applying the accounting policies The following are the critical judgements, apart from those involving estimations that management has made in the process of applying the Group s accounting policies and which have the significant effect on the amounts recognised in the financial statements. (i) Impairment of investments in subsidiaries and financial assets The Group and the Company follow the guidance of FRS 36 and FRS 39 on determining whether an investment or a financial asset is impaired. This determination requires significant judgement. The Group and the Company evaluate, among other factors, the duration and extent to which the fair value of an investment or a financial asset is less than its cost and the financial health of and near-term business outlook for the investment or financial asset, including factors such as industry and sector performance, changes in technology and operational and financing cash flow. 3.2 Key sources of estimation uncertainty The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the financial year that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities and reported amounts of revenue and expenses within the next financial year, are discussed below. (i) Depreciation of plant and equipment Plant and equipment are depreciated on a straight-line basis over their estimated useful lives. The management estimates the useful lives of these assets to be within 3 to 10 years. The carrying amounts of the Group s and the Company s plant and equipment as at 30 June 2010 were approximately $1,860,000 and $146,000 (2009: $406,000 and $106,000) respectively. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.

55 53 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Critical accounting judgements and key sources of estimation uncertainty (Continued) 3.2 Key sources of estimation uncertainty (Continued) (ii) Allowance for inventory obsolescence Inventories are stated at the lower of cost and net realisable value. The management primarily determines cost of inventories using the first-in, first out method. The management estimates the net realisable value of inventories based on assessment of receipt or committed sales prices and provides for excess and obsolete inventories based on historical and estimated future demand and related pricing. In determining excess quantities, the management considers recent sales activities, related margin and market positioning of its products. However, factors beyond its control, such as demand levels and pricing competition, could change from period to period. Such factors may require the Group to reduce the value of its inventories. The carrying amount of the Group s inventories as at 30 June 2010 was approximately $8,065,000 (2009: $5,080,000). (iii) Allowance for doubtful receivables The management establishes allowance for doubtful receivables on a case-by-case basis when they believe that payment of amounts owed is unlikely to occur. In establishing these allowances, the management considers the historical experience and changes to its customers financial position. If the financial conditions of receivables were to deteriorate, resulting in impairment of their abilities to make the required payments, additional allowances may be required. The carrying amounts of the Group s and the Company s trade and other receivables as at 30 June 2010 were approximately $6,330,000 and $9,864,000 (2009: $3,856,000 and $5,620,000) respectively. (iv) Income taxes Significant judgements are involved in determining the Group s and the Company s income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters differs from the amounts that were initially recognised, such differences will impact the current income tax and deferred tax provisions, in the financial year in which such determination is made. The carrying amounts of the Group s and the Company s current income tax payable as at 30 June 2010 were approximately $575,000 and $9,000 (2009: $301,000 and $151,000) respectively. The carrying amounts of the Group s and the Company s deferred tax liabilities as at 30 June 2010 were approximately $78,000 and $15,000 (2009: $42,000 and $15,000) respectively. (v) Provision for reinstatement costs The Group and the Company measure the provision for reinstatement costs of leased premises to their original state with reference to the terms and conditions of each respective tenancy agreement and the expected date of reinstatement. The calculation of provision for reinstatement costs requires management to estimate the expected future cash outflows as a result of site restoration at their best estimate. The carrying amounts of the Group s and the Company s provision for reinstatement costs as at 30 June 2010 were approximately $139,000 and $54,000 (2009: $Nil and $Nil) respectively.

56 54 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Plant and equipment Demo Office Furniture Motor equipment equipment and fittings Renovation vehicle Total Group $ 000 $ 000 $ 000 $ 000 $ 000 $ Cost Balance at 1 July ,155 Additions ,664 2,035 Disposals (1) (1) Currency re-alignment Balance at 30 June , ,218 Accumulated depreciation Balance at 1 July Depreciation Disposals (1) (1) Currency re-alignment Balance at 30 June ,358 Net book value At 30 June , , Cost Balance at 1 July Additions Disposals (27) (27) Written-off (15) (10) (25) Currency re-alignment (3) (2) (1) (6) Balance at 30 June ,155 Accumulated depreciation Balance at 1 July Depreciation Disposals (6) (6) Written-off (14) (2) (16) Currency re-alignment (1) (1) (1) (3) Balance at 30 June Net book value At 30 June

57 55 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Plant and equipment (Continued) Demo Office Furniture Motor equipment equipment and fittings Renovation vehicle Total Company $ 000 $ 000 $ 000 $ 000 $ 000 $ Cost Balance at 1 July Additions Disposals (114) (33) (343) (490) Balance at 30 June Accumulated depreciation Balance at 1 July Depreciation Disposals (96) (30) (336) (462) Balance at 30 June Net book value At 30 June Cost Balance at 1 July Additions Disposals (27) (27) Written-off (1) (10) (11) Balance at 30 June Accumulated depreciation Balance at 1 July Depreciation Disposals (6) (6) Written-off (1) (1) (2) Balance at 30 June Net book value At 30 June As at 30 June 2010, the net book value of motor vehicle of the Group and the Company which was acquired under finance lease arrangement was approximately $37,000 and $37,000 (2009: $42,000 and $42,000) respectively. Finance leased asset is pledged as a security for the related finance lease liability (Note 12).

58 56 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Plant and equipment (Continued) For the purpose of consolidated statement of cash flows, the Group s additions to plant and equipment were financed as follows: Group $ 000 $ 000 Additions during the financial year 2, Less: Provision for reinstatement costs (139) Cash payment to acquire plant and equipment 1, Investments in subsidiaries Group $ 000 $ 000 Unquoted equity shares, at cost The particulars of the subsidiaries are as follows: Name of company (Country of incorporation) Effective equity interest % % Principal activities Epicentre Solutions Pte. Ltd. (1) (Singapore) Epicentre Pte. Ltd. (1) (Singapore) Afor Sdn. Bhd. (2) (Malaysia) Epi Lifestyle Pte. Ltd. (3) (Singapore) Providing IT solutions to educational institutions within Singapore Retail of Apple brand products and complementary products Retail of Apple brand products and complementary products 100 Dormant (1) Audited by BDO LLP, Singapore (2) Audited by BDO, Malaysia (3) Not considered as significant subsidiary as defined under Rule 718 of the Listing Manual of the Singapore Exchange Securities Trading Limited.

59 57 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Investments in subsidiaries (Continued) Incorporation of a subsidiary On 13 April 2010, the Company incorporated a wholly-owned subsidiary, Epi Lifestyle Pte. Ltd., and subscribed to 500,000 ordinary shares totaling $500,000 issued by the subsidiary. Capital injection in a subsidiary in previous financial year On 21 January 2009, Epicentre Pte. Ltd. increased its issued and paid-up capital from $2 comprising 2 ordinary shares to $315,000 comprising 315,000 ordinary shares through allotment and issuance of 314,998 new ordinary shares to the Company, for a total cash consideration of $314, Inventories Group Company $ 000 $ 000 $ 000 $ 000 Trading goods 8,065 5,080 The cost of inventories recognised as an expense and included in cost of sales line item in consolidated statement of comprehensive income amounted to approximately $73,768,000 (2009: $54,154,000). As at 30 June 2010, the Group carried out a review of the realisable values of its inventories and the review led to the write-off of inventories of approximately $53,000 (2009: 165,000) that has been included in administrative expenses line item in the consolidated statement of comprehensive income.

60 58 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Trade and other receivables Group Company $ 000 $ 000 $ 000 $ 000 Trade receivables third parties 4,127 1, subsidiaries 428 4,127 1, Allowance for doubtful trade receivables third parties (7) 4,127 1, Advance payments to suppliers Other receivables and rebate accruals Rental and other deposits 1, Prepayments Due from subsidiaries non-trade 9,551 4,493 6,330 3,856 9,864 5,620 Trade receivables are non-interest bearing and generally on 30 to 60 days (2009: 30 to 60 days ) terms. The trade amounts due from subsidiaries are unsecured, non-interest bearing and repayable within the normal trade credit terms. The non-trade amounts due from subsidiaries are unsecured, non-interest bearing and repayable on demand. Movements in allowance for doubtful third parties trade receivables were as follows: Group $ 000 $ 000 Balance at beginning of financial year 7 Allowance made during the financial year 7 Write-back of allowance no longer required (7) Balance at end of financial year 7 Allowance for doubtful third parties trade receivables of approximately $Nil (2009: $7,000) was recognised in consolidated statement of comprehensive income under administrative expenses line item subsequent to a debt recovery assessment performed during the financial year.

61 59 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Trade and other receivables (Continued) Trade and other receivables are denominated in the following currencies: Group Company $ 000 $ 000 $ 000 $ 000 Singapore dollar 5,410 2,945 9,864 5,612 United States dollar Ringgit Malaysia ,330 3,856 9,864 5, Derivative financial instruments Group and Company $ 000 $ 000 Assets Foreign currency forward contracts 45 Foreign currency forward contracts Foreign currency forward contracts are agreements to buy or sell fixed amounts of currency at agreed exchange rates to be settled in the future. The Group and the Company enter into various foreign exchange forward contracts to reduce its exposure on anticipated transactions and firm commitments, primarily for forecasted cash outflows denominated in currencies other than the Company s and the respective subsidiaries functional currencies. These foreign currency forward contracts generally have maturity dates of less than 6 months. As at the end of the financial year, the Group and the Company had entered into foreign currency forward contracts as follows: Average exchange rates Foreign currency Notional amount Fair value Settlement date $ 000 Buy United States dollar 1.39 $9,176 US$6, August to 23 December Buy United States dollar 1.49 $1,493 US$1,000 1 July to 23 December 2010 The above derivatives are measured at fair values at the end of the financial year. Their fair values are determined based on the market prices for equivalent instruments at the end of financial year. In previous financial year, fair value gain/(loss) and the respective derivative financial instruments have not been recognised as the amount was immaterial.

62 60 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Cash and cash equivalents Group Company $ 000 $ 000 $ 000 $ 000 Cash and bank balances 8,737 10,139 1,346 5,873 Fixed deposits with banks 2,257 2,298 2,146 2,195 Cash and cash equivalents on statements of financial position 10,994 12,437 3,492 8,068 Fixed deposits pledged (1,713) (2,298) Cash and cash equivalents as per consolidated statement of cash flows 9,281 10,139 Fixed deposits mature on varying dates within 1 to 2 year (2009: 1 to 3 year) from the end of the financial year with options for early termination. The effective interest rates on the fixed deposits range from 0.35% to 1.83% (2009: 0% to 2.2%) per annum. As at the end of the financial year, fixed deposits of the Group and of the Company amounting to approximately $1,713,000 and $1,713,000 (2009: $2,298,000 and $2,195,000) respectively are pledged to banks for banking facilities issued to the Group and to the Company. As at the end of the financial year, the Group and the Company have banking facilities as follows: Group Company $ 000 $ 000 $ 000 $ 000 Facilities granted 29,338 13,852 29,338 13,649 Facilities utilised currency forward exchange 9,176 2,906 9,176 2,906 bankers guarantee 2,499 2,523 2,499 2,523 11,675 5,429 11,675 5,429 As at the end of the financial year, the Group s and the Company s banking facilities amounted to approximately $29,338,000 and $29,338,000 (2009: $13,852,000 and $13,649,000) respectively were secured by fixed deposits with banks.

63 61 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Cash and cash equivalents (Continued) Cash and cash equivalents in the statements of financial position are denominated in the following currencies: Group Company $ 000 $ 000 $ 000 $ 000 Singapore dollar 8,348 10,296 2,104 6,592 United States dollar 2,220 1,499 1,388 1,476 Ringgit Malaysia ,994 12,437 3,492 8, Trade and other payables Group Company $ 000 $ 000 $ 000 $ 000 Trade payables third parties 7,314 6, Accrued operating expenses Deposits placed by customers Other payables ,733 7, Trade payables are unsecured, non-interest bearing, and are normally settled between 30 to 60 days (2009: 30 to 60 days ) credit terms. Trade and other payables are denominated in the following currencies: Group Company $ 000 $ 000 $ 000 $ 000 Singapore dollar 3,118 2, United States dollar 5,131 4, Ringgit Malaysia ,733 7,

64 62 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Provisions Group Company $ 000 $ 000 $ 000 $ 000 Balance at beginning of financial year Provision made during the financial year Balance at end of financial year The provision for reinstatement costs are the estimated costs of dismantlement, removal or restoration of plant and equipment arising from the use of assets, which are capitalised and included in the cost of plant and equipment. 12. Finance lease payable Group and Company Minimum lease payments Future finance charges Present value of minimum lease payments $ 000 $ 000 $ Within one financial year 7 (1) 6 After one financial year but within five financial years (1) Within one financial year 7 (1) 6 After one financial year but within five financial years 8 (1) 7 15 (2) 13 The lease term is 4 (2009: 4) years and the effective interest rate for finance lease is 6.04% (2009: 6.04%) per annum. Interest rates are fixed at the contract date, and thus expose the Group and the Company to fair value interest rate risk. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. The Group s and the Company s obligations under finance leases are secured by the lessor s title to the leased assets, which will revert to the lessor in the event of default by the Group and the Company. The fair value of finance lease payable at the end of the financial year approximates its carrying value. The finance lease payable is denominated in Singapore dollar.

65 63 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Deferred tax liabilities Group Company $ 000 $ 000 $ 000 $ 000 Balance at beginning of financial year Transferred to/(from) consolidated statement of comprehensive income 36 (9) (36) Balance at end of financial year Deferred tax liabilities arise as a result of temporary differences between the tax written down values and the net book values of plant and equipment. 14. Share capital Group and Company No. of shares No. of shares $ 000 $ 000 Issued and fully-paid: At beginning and end of financial year 93,501,600 93,501,600 6,709 6,709 The holders of ordinary shares are entitled to receive dividends as and when declared by the Group. All ordinary shares have no par value and carry one vote per share without restriction. All shares rank equally with regards to the Group s residual assets. 15. Foreign currency translation reserve The foreign currency translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign subsidiary whose functional currency is different from that of the Group s presentation currency and is non-distributable. Movements in this reserve are set out in the consolidated statement of changes in equity. 16. Revenue Revenue represents the invoiced value of goods sold less goods returned, discounts allowed and goods and services tax.

66 64 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Other income Group $ 000 $ 000 Interest income Facilities fees Marketing income Sponsorship income Foreign exchange gain, net 532 Government grant Jobs credit scheme Others , Profit before income tax The above is arrived at after charging: Group $ 000 $ 000 Administrative expenses Allowance for doubtful third parties trade receivables 7 Write-back of allowance for doubtful third parties trade receivables no longer required (7) Bad trade receivables written off 75 Depreciation of plant and equipment Directors fees Directors of the Company Foreign exchange loss, net 260 Obsolete inventories written off Loss on disposal of plant and equipment 11 Operating lease expenses 2,607 1,559

67 65 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Profit before income tax (Continued) Group $ 000 $ 000 Administrative expenses Non-audit fees paid auditors of the Company 4 3 other auditors of subsidiaries 5 4 Plant and equipment written off 9 Staff costs salaries, wages, and bonuses 3,582 3,154 contributions to defined contribution plans other employee benefits Selling and distribution costs Advertising and promotion 1,105 1,250 Commission expenses Credit card charges 1,302 1,121 Included in the staff costs were Directors remuneration as shown in Note 24 to the financial statements. 19. Income tax expense Group $ 000 $ 000 Current income tax current financial year underprovision in prior financial years Deferred tax current financial year overprovision in prior financial years (36) 36 (9) Total income tax expense recognised in consolidated statement of comprehensive income

68 66 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Income tax expense (Continued) Reconciliation of effective income tax rate Group $ 000 $ 000 Profit before income tax 4,097 2,133 Income tax calculated at Singapore s statutory income tax rate of 17% Effect of different income tax rate in other country Effect of changes in tax rates (12) Expenses not deductible for income tax purposes Income not deductible for tax purposes (36) Singapore s statutory stepped income tax exemption (35) (56) Underprovision of current income tax in prior financial years Overprovision of deferred tax in prior financial years (36) Utilisation of previously unrecognised deferred tax asset (40) Enhanced tax deduction (8) Others (8) Unrecognised deferred tax assets Group $ 000 $ 000 Balance at beginning of financial year 50 Utilisation of previously unrecognised deferred tax asset (40) Effect of changes in tax rates (10) Balance at end of financial year

69 67 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Other comprehensive income Before-tax amount Group Tax expense Net-of-tax amount Before-tax amount Tax expense Net-of-tax amount $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Foreign currency translation relating to financial statements of foreign subsidiary (3) (3) Other comprehensive income (3) (3) 21. Earnings per share The calculations for earnings per share are based on: Group Net profit after income tax attributable to owners of the parent ($ 000) 3,388 1,820 Actual number of ordinary shares in issue during the financial year applicable to basic and diluted earnings per share 93,501,600 93,501,600 Basic/Diluted earnings per share (in cents) Basic earnings per share is calculated by dividing the net profit after income tax attributable to owners of the parent by the actual number of ordinary shares in issue during the financial year. As the Group has no dilutive potential ordinary shares, the diluted earnings per share are equivalent to basic earnings per share. 22. Dividends Group and Company $ 000 $ 000 Interim tax-exempt (one-tier) dividend declared and paid of $0.005 per share in respect of the current financial year 468 First and final tax-exempt (one-tier) dividends declared and paid of $0.02 per share in respect of financial year ended 30 June ,870 2,338 The Directors of the Company recommend a final tax-exempt dividend of $0.02 per share approximately amounting to $1,870,000 be paid in respect of current financial year. This final dividend has not been recognised as a liability as at the date of the end of the reporting period as it is subject to approval at the Annual General Meeting of the Company.

70 68 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Commitments Operating leases Group and Company as lessees As at the end of the financial year, there were operating leases for rental payable in subsequent accounting periods as follows: Group Company $ 000 $ 000 $ 000 $ 000 Within one financial year 3,188 2, After one financial year but within five financial years 3,508 2, ,202 6,696 5, ,080 The above operating lease commitments are based on existing rental rates. Some of the operating leases of premises provide for rentals based on percentage of sales derived from the rented premises. 24. Significant related party transactions For the purpose of these financial statements, parties are considered to be related to the Group or the Company if the Group or the Company have the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities. In addition to the information disclosed elsewhere in the financial statements, the following are significant related party transactions at rates and terms agreed between the parties: Company $ 000 $ 000 Subsidiaries Sales to subsidiaries 519 Purchases from a subsidiary 19 Management fees to subsidiaries 2,747 Settlement of liabilities on behalf of subsidiaries 7,216 7,662 Settlement of liabilities on behalf by subsidiaries 219 Transfer of assets and liabilities to a subsidiary due to restructuring exercise 2,899

71 69 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Significant related party transactions (Continued) Compensation of key management personnel The remuneration of the key management personnel who are also the Directors of the Company during the financial year are as follows: Group and Company $ 000 $ 000 Directors fees Short-term benefits Post-employment benefits Segment information Management has determined the operating segments based on the reports review by the chief operating decision maker. A segment is a distinguishable component of the Group that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. Management monitors the operating results of the segments separately for the purpose of making decision about resources to be allocated and of assessing performance. Segments performances are evaluated based on operation profit or loss which is similar to the accounting profit or loss. The Group has two reportable segments being apple brand products and third party and proprietary brand complementary products. The Group s reportable segments are strategic business units that are organised based on their function and targeted customers group. They are managed separately because each business unit requires different skill sets and market strategies. Management monitors the operating results of the segments separately for the purpose of making decisions about resources to be allocated and of assessing performance. Segment performance is evaluated based on operation profit or loss which is similar to the accounting profit or loss.

72 70 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Segment information (Continued) Income taxes are managed on a Group basis. The accounting policies of the operating segments are the same of those described in the summary of significant accounting policies. There is no asymmetrical allocation to reportable segments. Management evaluates performance on the basis of profit or loss from operation before tax expense not including non-recurring gains and losses and foreign exchange gains or losses. There is no change from prior periods in the measurement methods used to determine reportable segment profit or loss. The Group accounts for intersegment sales and transfer as if the sales or transfer were to third parties, which approximate market prices. These intersegment transactions are eliminated on consolidation. Third party and proprietary brand Apple brand products complementary products Elimination Consolidated $ 000 $ 000 $ 000 $ Revenue External revenue 71,857 16,225 88,082 Inter-segment revenue (347) 72,082 16,347 (347) 88,082 Results Segment results 3,377 2,964 6,341 Other income 372 Unallocated expense (2,616) Profit before income tax 4,097 Income tax expense (709) Profit after income tax 3,388 Assets and liabilities Segment assets 22,078 6,196 (980) 27,294 Segment liabilities 7,245 1,634 8,879 Current income tax payable 575 Deferred tax liabilities 78 Total liabilities 9,532 Capital expenditure 1, ,035 Depreciation

73 71 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Segment information (Continued) Third party and proprietary brand Apple brand products complementary products Elimination Consolidated $ 000 $ 000 $ 000 $ Revenue External revenue 54,516 10,547 65,063 Inter-segment revenue (673) 54,828 10,908 (673) 65,063 Results Segment results 1, ,350 Other income 783 Profit before income tax 2,133 Income tax expense (313) Profit after income tax 1,820 Assets and liabilities Segment assets 22,137 5,501 (5,859) 21,779 Segment liabilities 10,443 2,021 (5,379) 7,085 Current income tax payable 301 Deferred tax liabilities 42 Total liabilities 7,428 Capital expenditure Depreciation Geographic information The Group s business segments operate in two main geographical areas. Revenue is based on the countries in which the customers are located. Non-current assets shown by the geographical area in which the assets are located.

74 72 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Segment information (Continued) Geographic information (Continued) Revenue from external customers Singapore Malaysia Consolidated $ 000 $ 000 $ Revenue from external customers 77,543 10,539 88, Revenue from external customers 55,882 9,181 65,063 Location of non-current assets Singapore Malaysia Consolidated $ 000 $ 000 $ Non-current assets 1, , Non-current assets Major customers The Group does not have a major customer whose revenue is 5% or more of the Group s revenue. 26. Financial instruments, financial risks and capital management The Group s and the Company s activities expose them to a variety of financial risks: credit risk, market risk (including currency risk and interest rate risk) and liquidity risk. The Group and the Company have adopted risk management policies and utilise a variety of techniques to manage exposure to the financial risks Credit risk Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in a loss to the Group and the Company. The Group does not have any significant credit exposure to any single counterparty or any group of counterparties having similar characteristics. The Company has significant credit exposure arising from the non-trade amounts due from subsidiaries amounting to approximately $9,551,000 (2009: $4,493,000) as at the end of the financial year. As the Group and the Company do not hold any collateral, the maximum exposure to credit risk for each class of financial instrument is the carrying amount of that class of financial instrument.

75 73 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Financial instruments, financial risks and capital management (Continued) 26.1 Credit risk (Continued) The Group s major classes of financial assets are bank deposits and trade receivables. The Company s major classes of financial assets are bank deposits, trade receivables and non-trade receivables from its subsidiaries. The table below is an analysis of gross trade receivables as at 30 June Group Company $ 000 $ 000 $ 000 $ 000 Not past due and not impaired 3,620 1, Past due Total trade receivables 4,127 1, The age analysis of past due trade receivables is as follows: Group Company $ 000 $ 000 $ 000 $ 000 Past due 61 to 90 days Past due more than 90 days The table below is an analysis of the Company s gross non-trade receivables from its subsidiaries as at 30 June Company $ 000 $ 000 Not past due and not impaired 9,375 2,792 Past due 176 1,701 Total non-trade receivables from subsidiaries 9,551 4,493 The age analysis of the Company s past due non-trade receivables from its subsidiaries is as follows: Company $ 000 $ 000 Past due 61 to 90 days 131 Past due more than 90 days 176 1, ,701

76 74 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Financial instruments, financial risks and capital management (Continued) 26.2 Market risk (i) Foreign exchange risk management Currency risk arises from transactions denominated in currencies other than the respective functional currencies of the entities in the Group. The Group transacts business mainly in Singapore dollar. The Group and the Company hedge their foreign currency exposure using derivative financial instruments. The Group and the Company manage foreign currency risks by close monitoring of the timing of inception and settlement of the foreign currency transactions. As at the end of the financial year, the carrying amounts of monetary assets and monetary liabilities denominated in currencies other than the respective entity s functional currency are disclosed in the respective notes to the financial statements. The Group s currency exposure based on the information available to key management is as follows: 2010 Financial assets Financial liabilities Trade and other receivables, excluding advance payments to suppliers and prepayments Cash and cash equivalents Total Trade and other payables excluding deposits placed by customers Finance lease payables Total Net financial assets/ (liabilities) Net financial assets denominated in the respective entities functional currencies Currency exposure $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Singapore dollar 5,033 8,348 13,381 (2,680) (8) (2,688) 10,693 (10,693) United States dollar 487 2,220 2,707 (5,131) (5,131) (2,424) (2,424) Ringgit Malaysia (484) (484) 365 (365) 5,943 10,994 16,937 (8,295) (8) (8,303) 8,634

77 75 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Financial instruments, financial risks and capital management (Continued) 26.2 Market risk (Continued) (i) Foreign exchange risk management (Continued) The Group s currency exposure based on the information available to key management is as follows: 2009 Financial assets Financial liabilities Trade and other receivables, excluding advance payments to suppliers and prepayments Cash and cash equivalents Total Trade and other payables excluding deposits placed by customers Finance lease payables Total Net financial assets/ (liabilities) Net financial assets denominated in the respective entities functional currencies Currency exposure $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Singapore dollar 2,793 10,296 13,089 (1,677) (15) (1,692) 11,397 (10,176) 1,221 United States dollar 415 1,499 1,914 (4,847) (4,847) (2,933) (2,933) Ringgit Malaysia (117) (117) 780 (780) 3,463 12,437 15,900 (6,641) (15) (6,656) 9,244

78 76 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Financial instruments, financial risks and capital management (Continued) 26.2 Market risk (Continued) (i) Foreign exchange risk management (Continued) The Company s currency exposure based on the information available to key management is as follows (Continued): 2010 Financial assets Financial liabilities Trade and other receivables, excluding advance payments to suppliers and prepayments Cash and cash equivalents Total Trade and other payables excluding deposits placed by customers Finance lease payables Total Net financial assets/ (liabilities) Net financial assets denominated in the respective entities functional currencies Currency exposure $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Singapore dollar 9,645 2,104 11,749 (579) (8) (587) 11,162 (11,162) United States dollar 1,388 1,388 1,388 1,388 9,645 3,492 13,137 (579) (8) (587) 12,550

79 77 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Financial instruments, financial risks and capital management (Continued) 26.2 Market risk (Continued) (i) Foreign exchange risk management (Continued) The Company s currency exposure based on the information available to key management is as follows: 2009 Financial assets Financial liabilities Trade and other receivables, excluding advance payments to suppliers and prepayments Cash and cash equivalents Total Trade and other payables excluding deposits placed by customers Finance lease payables Total Net financial assets/ (liabilities) Net financial assets denominated in the respective entities functional currencies Currency exposure $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Singapore dollar 5,461 6,592 12,053 (417) (15) (432) 11,621 (11,621) United States dollar 1,476 1,476 (11) (11) 1,465 1,465 5,461 8,068 13,529 (428) (15) (443) 13,086

80 78 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Financial instruments, financial risks and capital management (Continued) 26.2 Market risk (Continued) (i) Foreign exchange risk management (Continued) Foreign currency sensitivity analysis The Group s and the Company s exposure to foreign currency risks are mainly in Singapore dollar and United States dollar. The following table details the Group s and the Company s sensitivity to a 5% increase and decrease in respective foreign currencies against Singapore dollar. 5% is the sensitivity rate used when reporting foreign currency risk. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the financial year end for a 5% change in foreign currency rates. Increase/(Decrease) on Profit before income tax Group Company $ 000 $ 000 $ 000 $ 000 Singapore dollar Strengthened 5% 61 Weakened 5% (61) United States dollar Strengthened 5% (121) (147) Weakened 5% (69) (73) (ii) Interest rate risk The Group s and the Company s exposure to market risk for changes in interest rates relates primarily to finance lease liability as shown in Note 12 to the financial statements. The Group s and the Company s results are affected by changes in interest rates due to the impact of such changes on interest income and expenses from fixed deposits and interest-bearing finance lease liability which are at floating interest rates. It is the Group s and the Company s policy to obtain quotes from reputable banks to ensure that the most favourable rates are made available to the Group and the Company. No sensitivity analysis is prepared as the Group and the Company do not expect any material effect on the Group s and the Company s profit or loss arising from the effects of reasonably possible changes to interest rates on interest-bearing financial instruments at the end of the financial year.

81 79 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Financial instruments, financial risks and capital management (Continued) 26.3 Liquidity risk Liquidity risks refer to the risks in which the Group and the Company encounter difficulties in meeting short-term obligations. Liquidity risks are managed by matching the payment and receipt cycle. The Group and the Company manage their debt maturity profile, operating cash flows and the availability of funding so as to ensure that all repayment and funding needs are met. As part of the overall prudent liquidity management, the Group and the Company maintain sufficient levels of cash and available banking facilities to meet their working capital requirements. The table below analyses the maturity profile of the Group s and Company s financial liabilities based on contractual undiscounted cash flows. Within one financial year After one financial year but within five financial years Total $ 000 $ 000 $ 000 Group 2010 Financial liabilities 8,733 8,733 Finance lease payable Financial liabilities 7,072 7,072 Finance lease payable Company 2010 Financial liabilities Finance lease payable Financial liabilities Finance lease payable

82 80 Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE Financial instruments, financial risks and capital management (Continued) 26.4 Capital management policies and objectives The Group and the Company manage their capital to ensure that the Group and the Company will be able to continue as going concern and to maintain an optimal capital structure so as to maximise shareholders value. The Group and the Company manage their capital structure and make adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group and the Company may adjust the return capital to shareholders or issue new share, make dividend payment or obtain new borrowings. No changes were made in the objectives, policies or processes during the financial year. The Group and the Company do not have any externally imposed capital requirements for the financial year Fair value of financial assets and financial liabilities The carrying amounts of the Group s and the Company s current financial assets and financial liabilities approximate their respective fair values as at the end of the reporting date due to the relatively short-term maturity of these financial instruments. The fair value of non-current liability in relation to finance lease payable is disclosed in Note 12 to the financial statements.

83 81 Statistics of Shareholdings AS AT 21 SEPTEMBER 2010 Number of equity shares : 93,501,600 Class of equity shares : Ordinary Shares Voting Rights : One vote per ordinary share Treasury Shares : Nil ANALYSIS OF SHAREHOLDINGS SIZE OF SHAREHOLDINGS NO. OF SHAREHOLDERS % NO. OF SHARES % ,000 10, ,998, ,001 1,000, ,533, ,000,001 and above ,970, TOTAL ,501, TOP TWENTY SHAREHOLDERS NAME NO. OF SHARES % 1. FONG TECK LOON 50,369, GOH ANN ANN JOHNSON 10,710, LAM WAI HENG 5,833, ROWSLEY SPORTS PTE LTD 4,968, LI CHOW CHIN 4,490, CHALLENGER TECHNOLOGIES LTD 1,499, ABN AMRO NOMINEES SINGAPORE PTE LTD 1,100, DMG & PARTNERS SECURITIES PTE LTD 933, MERRILL LYNCH (SINGAPORE) PTE LTD 798, BRENDA YEO 630, PHILLIP SECURITIES PTE LTD 570, DBS VICKERS SECURITIES (SINGAPORE) PTE LTD 529, DBS NOMINEES PTE LTD 480, TAN KAY YEONG 350, POON YU MING AGNES (MRS TAN-POON YU MING AGNES) 309, NAH WEE KEE 306, STEVEN NG CHEONG LIAN 300, TOMASZ JAKUB MIALKOS 300, LAI WENG KAY 272, HO YUNG RAIN 234, TOTAL 84,981, Note: The percentage of shareholding above is computed based on the total issued shares of 93,501,600.

84 82 Statistics of Shareholdings AS AT 21 SEPTEMBER 2010 SUBSTANTIAL SHAREHOLDERS AS AT 21 SEPTEMBER 2010 (As recorded in the Register of Substantial Shareholders) Direct Interest Deemed Interest No. of shares % No. of shares % 1. Jimmy Fong Teck Loon (1) 50,369,800** , Brenda Yeo (1) 630, ,369, Johnson Goh Ann Ann 10,710, Lam Wai Heng 5,833, Rowsley Sports Pte. Ltd. 4,968, Rowsley Ltd (2) 4,968, Garville Pte Ltd (2) 4,968, Lim Eng Hock (2) 4,968, Notes:- ** Includes 792,000 shares held by DMG & Partners Securities Pte Ltd. (1) Jimmy Fong Teck Loon is deemed interested in the shares held by his wife, Brenda Yeo and vice versa by virtue of Section 7 of the Companies Act, Cap. 50. (2) Deemed to be interested in the shares held by Rowsley Sports Pte. Ltd. by virtue of Section 7 of the Companies Act, Cap. 50. PERCENTAGE OF SHAREHOLDING IN PUBLIC S HANDS 22.02% of the Company s shares are held in the hands of public. Accordingly, the Company has complied with Rule 723 of the Listing Manual Section B: Rules of Catalist.

85 83 Addendum ADDENDUM DATED 13 OCTOBER 2010 THIS ADDENDUM IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. This addendum (the Addendum ) is circulated to the shareholders of (the Company ) together with the Company s annual report for financial year ended 30 June The purpose of this Addendum is to provide the shareholders of Epicentre Holdings Limited with relevant information relating to and to seek shareholders approval to renew the Share Buyback Mandate to be tabled at the Annual General Meeting to be held at 1 Plymouth Avenue, Raffles Town Club, Dunearn 3, Level 1, Singapore on Friday, 29 October 2010 at 2.30 p.m.. If you are in any doubt as to the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant, tax adviser or other professional adviser immediately. If you have sold or transferred all your shares in the capital of, you should immediately send this Addendum, the Notice of Annual General Meeting and the Proxy Form to the purchaser or transferee or to the bank, stockbroker or agent through whom the sale or transfer was effected for onward transmission to the purchaser or transferee. The Notice of the Annual General Meeting and the Proxy Form are enclosed with the. The Singapore Exchange Securities Trading Limited ( SGX-ST ) has not examined the contents of this Addendum. The SGX-ST assumes no responsibility for the contents of this Addendum, including the correctness of any of the statements or opinions made or reports contained in this Addendum. This Addendum has been prepared by the Company and its contents have been reviewed by the Company s sponsor ( Sponsor ), Asian Corporate Advisors Pte. Ltd. ( Asian Corporate Advisors ), for compliance with the relevant rules of the SGX-ST. The Company s Sponsor has not independently verified the contents of this Addendum including the correctness of any of the figures used, statements or opinions made. The contact person for the Sponsor is Mr Liau H.K.. Telephone number: (Company Registration No: G) (Incorporated in the Republic of Singapore) ADDENDUM TO ANNUAL REPORT IN RELATION TO THE RENEWAL OF THE SHARE BUYBACK MANDATE

86 84 Addendum DEFINITIONS For the purpose of this Addendum, the following definitions apply throughout, unless the context otherwise requires: ACRA Act or Companies Act Addendum AGM or Annual General Meeting Board or Directors Catalist Rules CDP Companies Amendment Act 2005 Company or Epicentre Director EPS FY June EGM or June Extraordinary General Meeting Group Accounting and Corporate Regulatory Authority of Singapore Companies Act (Chapter 50) of Singapore, as amended or modified from time to time This Addendum to Shareholders dated 13 October 2010 in relation to the proposal as set out in section 1.1 The annual general meeting of the Company to be held at 1 Plymouth Avenue, Raffles Town Club, Dunearn 3, Level 1, Singapore on Friday, 29 October 2010 at 2.30 p.m., to approve, inter-alia, the renewal of the Share Buyback Mandate in accordance with the terms and conditions as set out in this Addendum as well as the Companies Act and the Catalist Rules The board of directors or directors of the Company, including executive, non-executive, independent and non-independent directors of the Company for the time being The provisions of Section A and Section B: Rules of Catalist of the SGX-ST of the Listing Manual (excluding the Best Practices Guide, the Code, and the Practice Notes) as amended, supplemented or modified from time to time The Central Depository (Pte) Limited Companies (Amendment) Act 2005 of Singapore A director of the Company Earnings per Share Financial year ended or ending 30 June (as the case may be) unless otherwise specified The extraordinary general meeting of the Company held on 29 June 2010, which had approved, inter-alia, the adoption of a share buyback mandate in accordance with the terms and conditions as set out in the circular dated 7 June 2010 as well as the Companies Act and the Catalist Rules The Company and its subsidiaries, collectively Latest Practicable Date The latest practicable date prior to the printing of this Addendum, being 6 October 2010 Listing Manual Market Day Notice of AGM The listing manual of the SGX-ST, as amended, supplemented or modified from time to time A day on which the SGX-ST is open for trading in securities The notice of AGM found in the annual report of the Company for 2010, for the purposes of considering and, if thought fit, passing with or without modifications, the resolutions as set out therein

87 85 Addendum NTA Securities Account SGX Catalist or Catalist SGX-ST SGXNET Share Buyback Share Buyback Mandate Shareholder(s) Shares Sponsor Substantial Shareholder Take-over Code Net tangible assets of the Group A securities account maintained by a Depositor with CDP but does not include a securities sub-account Catalist, a market regulated by the SGX-ST, formerly known as the SGX-ST Dealing and Automated Quotation System Singapore Exchange Securities Trading Limited The SGXNET Corporate Announcement System The buy back of Shares by the Company in accordance with the terms set out in this Addendum as well as the Companies Act and the Catalist Rules General mandate to be given by the Shareholders to authorise the Directors to effect Share Buyback Registered holders of Shares in the Register of Members of the Company, except that where the registered holder is CDP, the term Shareholders shall, in relation to such Shares and where the context so admits, mean the Depositors in the Depository Register maintained by the CDP and whose Securities Accounts are credited with those Shares. Any reference to Shares held by or shareholdings of Shareholders shall include Shares standing to the credit of their respective Securities Accounts Ordinary shares in the capital of the Company and each a Share Asian Corporate Advisors Pte. Ltd. A person who has an interest (directly or indirectly) of five per cent. (5%) or more of the total issued share capital of the Company The Singapore Code of Takeovers and Mergers, as amended or modified from time to time Treasury Share(s) (a) A Share which was (or is treated as having been) purchased by the Company in circumstances in which Section 76H of the Act applies; and (b) Has been held by the Company continuously since the treasury share was so purchased. Unit Share Market Currencies, Units and Others S$ and cents or The unit share market of the SGX-ST which allows trading of shares in single shares. Singapore dollars and cents, respectively % or per cent. Percentage or per centum The terms Depositor, Depository Agent and Depository Register shall have the meanings ascribed to them respectively by Section 130A of the Act. The term Direct Account Holder shall have the meaning ascribed to the term account holder in Section 130A of the Act.

88 86 Addendum Words importing the singular shall, where applicable, include the plural and vice versa and words importing the masculine gender shall, where applicable, include the feminine and neuter genders. References to persons shall include corporations. Any reference in this Addendum to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any term or word defined under the Securities and Futures Act (Chapter 289) of Singapore or the Companies Act or the Catalist Rules or any statutory or regulatory modification thereof and used in this Addendum shall where applicable have the same meaning ascribed to it under the Securities and Futures Act (Chapter 289) of Singapore, the Companies Act or the Catalist Rules or such statutory modification, as the case may be, unless otherwise provided. All discrepancies in the figures included herein between the listed amounts and totals thereof are due to rounding. Accordingly, figures shown as totals in this Addendum may not be an arithmetic aggregation of the figures that precede them. Any reference to a time of a day in the Addendum is a reference to Singapore time unless otherwise stated and shall include such other date(s) or time(s) as may be announced from time to time by or on behalf of the Company.

89 87 Addendum EPICENTRE HOLDINGS LIMITED (Company Registration No: G) (Incorporated in the Republic of Singapore) Directors Mr. Jimmy Fong Teck Loon (Executive Chairman and Chief Executive Officer) Ms. Brenda Yeo (Executive Director) Mr. Lee Keen Whye (Independent Director) Mr. Liu Zhipeng (Independent Director) Mr. Ron Tan Aik Ti (Independent Director) Mr. Siow Chee Keong (Independent Director) Registered Office 501 Orchard Road #02-20/22 Wheelock Place Singapore October 2010 To: The shareholders of Dear Sir or Madam We refer to item 11 of the Notice of AGM for the Company, which is an ordinary resolution to be proposed at the AGM for the renewal of the Company s Share Buyback Mandate ( Resolution 11 ). The purpose of this Addendum is to provide Shareholders with information relating to Resolution THE RENEWAL OF THE SHARE BUYBACK MANDATE 1.1 Background At the June EGM, Shareholders had approved, inter alia, the adoption of a Share Buyback Mandate to enable the Company to purchase or otherwise acquire Shares. The Share Buyback Mandate which was previously approved on 29 June 2010 will expire on the date of the forthcoming AGM to be held on 29 October Accordingly, the Directors propose that the Share Buyback Mandate be renewed at the forthcoming AGM. Approval is being sought from Shareholders at the AGM for the renewal of the Share Buyback Mandate for the purchase by the Company of its issued Shares. If approved, the Share Buyback Mandate will take effect from the date of the AGM and continue in force until the date of the next annual general meeting of the Company or such date as the next annual general meeting is required by law to be held, unless prior thereto, Share Buybacks are, carried out to the full extent mandated or the Share Buyback Mandate is revoked or varied by the Company in a general meeting. The Share Buyback Mandate will be put to Shareholders for renewal at each subsequent annual general meeting of the Company.

90 88 Addendum 1.2 Rationale for the Share Buyback Mandate The rationale for the Company to undertake the purchase or acquisition of its issued Shares is as follows:- (a) (b) (c) (d) (e) (f) Directors and management are constantly seeking to increase Shareholders value and to improve, inter alia, the return on equity of the Group. The purchase by a company of its issued shares at the appropriate price level is one of the ways through which the return on equity of the Group may be enhanced; Share purchases or acquisitions provide the Company with an easy mechanism to facilitate the return of surplus cash over and above the ordinary capital requirements, in an expedient and cost efficient manner; The Share Buyback Mandate will give the Directors the flexibility to purchase or acquire Shares as and when circumstances permit. The Directors believe that the Share Buyback Mandate provides the Company and its Directors with a mechanism to facilitate the use of surplus cash over and above the Company s ordinary working capital requirements, in an expedient and cost-efficient manner. The Share Buyback Mandate would also allow the Directors to exercise greater control over the Company s share capital structure, dividend policy and cash reserves and may lead to an enhancement of EPS and/ or NTA per Share of the Company and the Group; The Directors further believe that a Share Buyback conducted by the Company may help mitigate short-term market volatility, offset the effects of short-term speculation or demand and bolster Shareholders confidence; The Share Buyback Mandate will only be exercised as and when the Directors consider it to be in the best interests of the Company taking into consideration factors such as market conditions and funding arrangements as applicable, and in appropriate circumstances which the Directors believe will not result in any material adverse effect on the liquidity and the orderly trading of the Shares, as well as the working capital requirements and the gearing level of the Group; and Share purchases may also buffer short-term price volatility and offset the effects of share price speculation. Shareholders should note that purchases of Shares pursuant to the Share Buyback Mandate may not be carried out to the full limit as authorised. 1.3 Authority and Limits of the Share Buyback Mandate The authority and limitations placed on purchases or acquisitions of Shares by the Company under the Share Buyback Mandate, if renewed at the forthcoming AGM, are the same as previously approved by Shareholders at the June EGM. The authority and limitations are summarised below: Maximum Number of Shares Only Shares which are issued and fully paid-up may be purchased or acquired by the Company. The total number of Shares that may be purchased or acquired is limited to that number of Shares representing not more than ten per cent. (10%) of the issued ordinary share capital of the Company as at the date of the respective general meetings at which the Share Buyback Mandate is approved or renewed (as the case may be). Purely for illustrative purposes, on the basis of 93,501,600 Shares in issue as at the Latest Practicable Date, and assuming that no further Shares are issued on or prior to the AGM, not more than 9,350,160 (representing approximately ten per cent. (10%) of the total number of issued Shares (excluding Treasury Shares) may be purchased or acquired by the Company pursuant to the Share Buyback Mandate.

91 89 Addendum Duration of Authority Purchases of Shares may be made, at any time and from time to time, on and from the date of approval up to the earliest of the date on which:- (a) (b) (c) the next annual general meeting of the Company is held or required by law to be held; Share Buybacks have been carried out to the full extent mandated; or the authority conferred by the Share Buyback Mandate is varied or revoked by the Shareholders in a general meeting Manner of Purchase of Shares Purchases or acquisitions of Shares can be effected by the Company by way of:- (a) (b) on-market purchases transacted on the Catalist through the SGX-ST s Central Limited Order Book Trading System through the ready market through one or more duly licensed stock brokers appointed by the Company for the purpose of the Share Buyback ( On-Market Purchases ); and/or an off-market (if effected otherwise than on Catalist) in accordance with any equal access scheme as defined in Section 76C of the Companies Act, and otherwise in accordance with all other applicable laws and regulations and Catalist Rules ( Off-Market Purchase ). The Directors may impose such terms and conditions, which are consistent with the Share Buyback Mandate, the Catalist Rules and the Companies Act, as they consider fit in the interests of the Company in connection with or in relation to an equal access scheme or schemes. Under the Companies Act, an equal access scheme must satisfy all the following conditions:- (a) (b) (c) offers for the purchase or acquisition of issued Shares shall be made to every person who holds issued Shares to purchase or acquire the same percentage of their issued Shares; all of the abovementioned persons shall be given a reasonable opportunity to accept the offers made; and the terms of all the offers shall be the same, except that there shall be disregarded: (i) (ii) (iii) differences in consideration attributable to the fact that the offers may relate to Shares with different accrued dividend entitlements (if applicable) differences in consideration attributable to the fact that the offers relate to Shares with different amounts remaining unpaid; and differences in the offers introduced solely to ensure that each person is left with a whole number of Shares In addition, if the Company wishes to make an Off-Market Purchase in accordance with an equal access scheme, the Company must, as required by the Catalist Rules, issue an offer document to all Shareholders containing at least the following information:- (a) (b) the terms and conditions of the offer; the period and procedures for acceptances;

92 90 Addendum (c) (d) (e) (f) (g) the reasons for the proposed Share Buyback; the consequences, if any, of Share Buyback by the Company that will arise under the Take-over Code or other applicable take-over rules; whether the Share Buyback, if made, would have any effect on the listing of the Shares on the Catalist; details of any Share Buyback made by the Company in the previous twelve (12) months (whether On-Market Purchases or Off-Market Purchases), giving the total number of Shares purchased, the purchase price per Share or the highest and lowest prices paid for the purchases, where relevant, and the total consideration paid for the purchases; and whether the Shares purchased by the Company will be cancelled or held as Treasury Shares Maximum Purchase Price The purchase price to be paid for a Share in the event of any Share Buyback shall not exceed the Maximum Price (as defined below), which: (a) in the case of On-Market Purchases, shall mean the price per Share based on not more than five per cent. (5%) above the average of the closing market prices of the Shares over the last five (5) Market Days on the Catalist, on which transactions in the Shares were recorded immediately preceding the day of the market purchase by the Company and deemed to be adjusted for any corporate action occurring after the relevant five (5) day period; and (b) in the case of Off-Market Purchases, shall mean the price per Share based on not more than twenty per cent. (20%) above the average of the closing market prices of the Shares over the last five (5) Market Days on the Catalist, on which transactions in the Shares were recorded immediately preceding the day on which the Company makes an announcement of an offer under an equal access scheme, in either case, excluding related expenses of the purchase or acquisition (the Maximum Price ). For the above purposes, Average Closing Price means the average of the closing market prices of the Shares over the last five (5) Market Days on which transactions in the Share were recorded on the Catalist immediately preceding the date of the On-Market Purchase by the Company, or as the case may be, the date of the making of the offer pursuant to the Off-Market Purchase, and deemed to be adjusted for any corporate action that occurs after the relevant five (5) day period. date of making of the offer means the date on which the Company announces its intention to make an offer for the purchase or acquisition of Shares from Shareholders, stating therein the relevant terms of the equal access scheme for effecting the Off-Market Purchase 1.4 Status of Purchased Shares Under Section 76B of the Companies Act, any Shares purchased or acquired by the Company through a Share Buyback shall be deemed to be cancelled immediately on purchase or acquisition unless held as Treasury Shares in accordance with Section 76H of the Companies Act.

93 91 Addendum Some of the provisions on Treasury Shares under the Companies Act are summarised below: (a) (b) The number of shares held as Treasury Shares cannot at any time exceed 10% of the total number of shares issued by a company. The company shall be entered in its register of members as the member holding those shares. Where shares purchased or acquired by the company are held as Treasury Shares, the company may at any time: (i) (ii) (iii) (iv) (v) sell the Treasury Shares for cash; transfer the Treasury Shares for the purposes of or pursuant to an employees share scheme; transfer the Treasury Shares as consideration for the acquisition of shares in or assets of another company or assets of a person; cancel the Treasury Shares (or any of them); or sell, transfer or otherwise use the Treasury Shares for such other purposes as may be prescribed by the Minister for Finance. (c) (d) Where shares purchased or acquired by a company are cancelled, such shares will be automatically de-listed by the SGX-ST. Certificates in respect of such cancelled shares will be cancelled and destroyed by the company as soon as is reasonably practicable after the shares have been acquired. The shares held in treasury shall be treated as having no voting rights and shall not be entitled to any dividend or other distribution (whether in cash or otherwise) of the company s assets (including any distribution of assets to members on a winding up). However, the allotment of shares as fully paid bonus shares in respect of treasury shares is allowed. Also, a sub-division or consolidation of any treasury share into Treasury Shares of a smaller or larger amount is allowed so long as the total value of the Treasury Shares after the sub-division or consolidation is the same as before. 1.5 Sources of funds The Company may only apply funds for the purchase or acquisition of Shares in accordance with the Article and the applicable laws and regulations in Singapore. The Companies Act, as amended by the Companies Amendment Act 2005, now permits the Company to also purchase its own Shares out of capital, as well as from its distributable profits, provided that:- (a) (b) the Company is able to pay its debts in full at the time it purchases the Shares and will be able to pay its debts as they fall due in the normal course of business in the twelve (12) months immediately following the purchase; and the value of the Company s assets is not less than the value of its liabilities (including contingent liabilities) and will not after the purchase of Shares become less than the value of its liabilities (including contingent liabilities). Further, for the purpose of determining the value of a contingent liability, the Directors or managers of the Company may take into account the following: (a) (b) the likelihood of the contingency occurring; and any claim the Company is entitled to make and can reasonably expect to be met to reduce or extinguish the contingent liability. The Company intends to use its internal resources and/or external borrowings to finance purchases of its Shares pursuant to the Share Buyback Mandate.

94 92 Addendum 1.6 Financial Effects of the Share Buyback Mandate It is not possible for the Company to realistically calculate or quantify the financial effects on the Company and the Group arising from purchases or acquisitions of Shares that may be made pursuant to the Share Buyback Mandate on the NTA and EPS as the resultant effect would depend on, inter alia, the aggregate number of Shares purchased or acquired, whether the purchase or acquisition is made out of capital or profits, the purchase price paid for such Shares and the amount borrowed (if any) by the Company to fund the purchase or acquisition of the Shares and whether the Shares purchased or acquired are cancelled or held as Treasury Shares. The financial effects on the Company and the Group, based on the audited financial statements of the Company and the Group for the financial year ended 30 June 2010, are based on the assumptions set out below: Share Buyback made out of capital or profits Under the Companies Act, Share Buyback may be made out of the Company s profits and/or capital so long as the Company is solvent. Where the consideration paid by the Company for a Share Buyback is made out of profits, such consideration (excluding related brokerage, goods and services tax, stamp duties and other related expenses) will correspondingly reduce the amount available for the distribution of cash dividends by the Company. Where the consideration paid by the Company for Share Buyback is made out of capital, the amount available for the distribution of cash dividends by the Company will not be reduced. Maximum Price to be Paid for Share Buyback Based on 93,501,600 Shares in issue as at the Latest Practicable Date, the exercise in full of the Share Buyback Mandate will result in the purchase or acquisition of 9,350,160 Shares, representing approximately ten per cent. (10%) of the issued Shares. For illustrative purposes only, in the case of an On-Market Purchase by the Company and assuming that the Company purchases or acquires the 9,350,160 Shares at the Maximum Price of approximately for one Share (being five per cent. (5%) above the average of the closing market prices of the Shares over the last five Market Days on which transactions in the Shares were recorded on the Catalist immediately preceding the Latest Practicable Date), the maximum amount of funds required for the purchase or acquisition of the 9,350,160 Shares is approximately S$2.7 million. For illustrative purposes only, in the case of an Off-Market Purchase by the Company and assuming that the Company purchases or acquires the 9,350,160 Shares at the Maximum Price of approximately for one Share (being the price equivalent to twenty per cent. (20%) above the average of the closing market prices of the Shares over the last five Market Days on which transactions in the Shares were recorded on the Catalist immediately preceding the Latest Practicable Date), the maximum amount of funds required for the purchase or acquisition of the 9,350,160 Shares is approximately S$3.1 million. For illustrative purposes, on the basis of the foregoing assumptions, the financial effects of the purchase or acquisition of such Shares by the Company on the audited accounts of the Company and the Group for the financial year ended 30 June 2010 are set out in the following pages.

95 93 Addendum As at 30 June 2010 ON-MARKET PURCHASES (A) Purchases made entirely out of capital and cancelled (B) Purchases made entirely out of capital and held as Treasury Shares Before Share Buyback Group After Share Buyback and cancelled (1) After Share Buyback and held as Treasury Shares (1) Before Share Buyback Company After Share Buyback and cancelled (1) After Share Buyback and held as Treasury Shares (1) ( 000) ( 000) ( 000) ( 000) ( 000) ( 000) As at 30 June 2010 Total equity 17,762 15,033 15,033 13,863 11,134 11,134 NTA (2) 17,762 15,033 15,033 13,863 11,134 11,134 Current assets 25,434 24,069 24,069 13,401 12,036 12,036 Current liabilities 9,453 10,818 10, ,013 2,013 Working capital 15,981 13,252 13,252 12,753 10,024 10,024 Total borrowings (3) 7 1,372 1, ,372 1,372 Number of Shares (4) 93,501,600 84,151,440 93,501,600 93,501,600 84,151,440 93,501,600 Financial ratios NTA per Share (cents) Gearing (5) (%) Current Ratio (6) (times) Notes: (1) The above is calculated on the assumption that Share Buybacks by the Group are funded by 50% of internal sources of funds and 50% of non-current borrowings with no interest charge on the borrowings. (2) NTA equals total equity less intangible assets. (3) Total borrowings equal aggregate of short-term loans, long-term loans and finance lease obligations. (4) Based on issued Share capital of 93,501,600 Shares as at 30 June (5) Gearing equals total borrowings divided by total equity. (6) Current ratio equals current assets divided by current liabilities. (7) All discrepancies in the figures included herein between the listed and total amounts thereof are due to rounding. Accordingly, figures shown as totals in this addendum may not be an arithmetic aggregation of the figures that precede them.

96 94 Addendum OFF-MARKET PURCHASES (A) (B) Purchases made entirely out of capital and cancelled Purchases made entirely out of capital and held as Treasury Shares Before Share Buyback Group After Share Buyback and cancelled (1) After Share Buyback and held as Treasury Shares (1) Before Share Buyback Company After Share Buyback and cancelled (1) After Share Buyback and held as Treasury Shares (1) ( 000) ( 000) ( 000) ( 000) ( 000) ( 000) As at 30 June 2010 Total equity 17,762 14,643 14,643 13,863 10,744 10,744 NTA (2) 17,762 14,643 14,643 13,863 10,744 10,744 Current assets 25,434 23,874 23,874 13,401 11,841 11,841 Current liabilities 9,453 11,013 11, ,208 2,208 Working capital 15,981 12,862 12,862 12,753 9,634 9,634 Total borrowings (3) 7 1,567 1, ,567 1,567 Number of Shares (4) 93,501,600 84,151,440 93,501,600 93,501,600 84,151,440 93,501,600 Financial ratios NTA per Share (cents) Gearing (5) (%) Current Ratio (6) (times) Notes: (1) The above is calculated on the assumption that Share Buybacks by the Group are funded by 50% of internal sources of funds and 50% of non-current borrowings with no interest charge on the borrowings. (2) NTA equals total equity less intangible assets. (3) Total borrowings equal aggregate of short-term loans, long-term loans and finance lease obligations. (4) Based on issued Share capital of 93,501,600 Shares as at 30 June (5) Gearing equals total borrowings divided by total equity. (6) Current ratio equals current assets divided by current liabilities. (7) All discrepancies in the figures included herein between the listed and total amounts thereof are due to rounding. Accordingly, figures shown as totals in this addendum may not be an arithmetic aggregation of the figures that precede them.

97 95 Addendum The actual impact will depend on the number and price of the Shares bought back. The Directors do not propose to exercise the Share Buyback Mandate to such an extent that it would have a material adverse effect on the working capital requirements and capital adequacy position of the Company. Share Buyback will only be effected after assessing the relative impact of a Share Buyback taking into consideration both financial factors (such as cash surplus, debt position and working capital requirements) and non-financial factors (such as share market conditions and performance of the Shares). The Directors will be prudent in exercising the Share Buyback Mandate only to such extent which the Directors believe will enhance Shareholders value giving consideration to the prevailing market conditions, the financial position of the Group and other relevant factors. Shareholders should note that the financial effects illustrated above are based on certain assumptions and are purely for illustration purposes only. In particular, it is important to note that the above analysis is based on the audited accounts of the Company and the Group as at 30 June 2010 is not necessarily representative of the future financial performance of the Group or the Company or the Shares. Although the Share Buyback Mandate would authorise the Company to buy back up to ten per cent. (10%) of the Company s issued Shares, the Company may not necessarily buy back or be able to buy back the total number of Shares that may be purchased or acquired in accordance to or as permitted under the Share Buyback Mandate. In addition, the Company may cancel all or part of the Shares repurchased or hold all or part of the Shares repurchased as Treasury Shares. 1.7 Requirements under the Companies Act and Catalist Rules Within thirty (30) days of the passing of a Shareholders resolution to approve the Share Buyback Mandate, the Company shall lodge a copy of such resolution with ACRA. Within thirty (30) days of a Share purchase or acquisition on the Catalist or otherwise, the Company shall lodge with ACRA a notification of the Share purchase or acquisition in the prescribed form. Such notification shall include, inter alia, the date of the purchase, the number of Shares purchased, the number of Shares cancelled and/or the number of Shares held as Treasury Shares, the Company s issued share capital before and after the Share purchase, the amount of consideration paid by the Company for the purchase and whether the Shares were purchased out of the profits or capital of the Company. Under the Catalist Rules, a listed company may purchase shares by way of On-Market Purchases at a price per share which is, inter alia, not more than five per cent. (5%) above the average of the closing market prices of the shares over the last five (5) Market Days, on which transactions in the shares were recorded, preceding the day on which the purchases were made (the average closing market price ). The Maximum Price for a Share in relation to On-Market Purchases by the Company conforms to this restriction. The Catalist Rules also specify that a listed company shall announce all purchases or acquisitions of its shares via SGXNET not later than 9.00 a.m.:- (a) (b) in the case of an On-Market Purchase, on the Market Day following the day of purchase of any of its shares; and in the case of an Off-Market Purchase under an equal access scheme, by 9.00 a.m. on the second Market Day after the close of acceptances of the offer.

98 96 Addendum Such announcement shall be in the form of Appendix 8D of the Catalist Rules which includes, without limitation, details of the total number of shares authorised for purchase, the date of purchase, prices paid for the total number of shares purchased, the purchase price per share, the highest and lowest shares purchased to date and the number of issued shares after purchase. While the Catalist Rules do not expressly prohibit any purchase of shares by a listed company during any particular time(s), because the listed company would be regarded as an insider in relation to any proposed purchase or acquisition of its issued shares, the Company will not undertake any purchase of Shares pursuant to the Share Buyback Mandate at any time after any matter or development of a price-sensitive nature has occurred or has been the subject of consideration and/or a decision of the Board until such price-sensitive information has been publicly announced. In particular, in line with the best practices guide on securities dealings under Rule 1204(18) of the Catalist Rules, the Company will not purchase or acquire any Shares through On-Market Purchases and/or Off-Market Purchases during the period of one month immediately preceding the announcement of the Company s half yearly results or the annual (full-year) results. 1.8 Listing Status The Company is required under Rule 723 of the Catalist Rules to ensure that at least ten per cent. (10%) of its Shares are in the hands of the public at all times. The public, as defined under the Catalist Rules, are persons other than the Directors, chief executive officer, substantial shareholders or controlling shareholders of the Company and its subsidiaries, as well as the associates (as defined in the Catalist Rules) of such persons. As at the Latest Practicable Date, there are 20,590,000 Shares in the hands of the public (as defined above), representing approximately 22.0 per cent. of the issued share capital of the Company. Assuming that the Company purchases its Shares through Market Purchases up to the full ten per cent. (10%) limit pursuant to the Share Buyback Mandate and all such Shares purchased are held by the public, the number of Shares in the hands of the public would be reduced by approximately 9,350,160 Shares, the resultant percentage of the issued Shares held by public Shareholders would be reduced to approximately 13.4 per cent. Accordingly, based on the data available as the Latest Practicable Date as aforesaid, and assuming that there is no change in the shareholdings of the respective public and non-public shareholders of the Company, the Company is of the view that there is a sufficient number of the Shares in issue held by public Shareholders which would permit the Company to undertake purchases or acquisitions of its Shares through On-Market Purchases up to the full ten per cent. (10%) limit pursuant to the Share Buyback Mandate without affecting the listing status of the Shares on the Catalist and the number of Shares remaining on the hands of the public will not fall to such a level as to cause market illiquidity. In undertaking any purchases of its Shares through Market Purchases, the Directors will use their best efforts to ensure that a sufficient number of Shares remain in public hands so that the Share Buyback(s) will not:- (a) (b) adversely affect the listing status of the Shares on the Catalist; or adversely affect the orderly trading of Shares.

99 97 Addendum 1.9 Take-over Implications Appendix 2 of the Take-over Code contains the Share Buyback Guidance Note applicable as at the Latest Practicable Date. The take-over implications arising from any purchase or acquisition by the Company of its Shares are set out below. (i) (ii) (iii) (iv) Under Appendix 2 of the Take-over Code, an increase of a Shareholder s proportionate interest in the voting rights of the Company resulting from a Share Buyback by the Company will be treated as an acquisition for the purpose of Rule 14 of the Take-over Code ( Rule 14 ). Consequently, a Shareholder or group of Shareholders acting in concert with a Director could obtain or consolidate effective control of the Company, and become obligated to make a take-over offer for the Company under Rule 14. Pursuant to Rule 14, a Shareholder and persons acting in concert with the Shareholder will incur an obligation to make a mandatory take-over offer if, inter alia, he and persons acting in concert with him increase their voting rights in the Company to thirty per cent. (30%) or more or, if they, together holding between thirty per cent. (30%) and fifty per cent. (50%) of the Company s voting rights, increase their voting rights in the Company by more than one per cent. (1%) in any period of six (6) months. Persons acting in concert comprise individuals or companies who, pursuant to an agreement or understanding (whether formal or informal) co-operate, through the acquisition by any of them of shares in a company to obtain or consolidate effective control of that company. Unless the contrary is established, the following persons will be presumed to be acting in concert, namely (i) a company with any of its directors; and (ii) a company, its parent, subsidiaries and fellow subsidiaries, and their associated companies, and companies of which such companies are associated companies, all with each other. For this purpose, ownership or control of at least twenty per cent. (20%) but not more than fifty per cent. (50%) of the voting rights of a company will be regarded as the test of associated company status. The effect of Rule 14 and Appendix 2 of the Take-over Code is that, unless exempted, Directors and persons acting in concert with them will incur an obligation to make a take-over offer under Rule 14 if, as a result of the Company purchasing or acquiring its Shares, the voting rights of such Directors and their concert parties would increase to thirty per cent. (30%) or more, or if the voting rights of such Directors and their concert parties fall between thirty per cent. (30%) and fifty per cent. (50%) of the Company s voting rights, the voting rights of such Directors and their concert parties would increase by more than one per cent. (1%) in any period of six (6) months. In calculating the percentage of voting rights of such Directors and their concert parties, treasury shares shall be excluded. Under Appendix 2 of the Take-over Code, a Shareholder not acting in concert with the Directors will not be required to make a take-over offer for the Company under Rule 14 if, as a result of Share Buybacks, the voting rights of such Shareholder would increase to thirty per cent. (30%) or more, or, if such Shareholder holds between thirty per cent. (30%) and fifty per cent. (50%) of the Company s voting rights, the voting rights of such Shareholder would increase by more than one per cent. (1%) in any period of six (6) months. Such Shareholder need not abstain from voting in respect of the resolution authorising the Share Buyback Mandate. Shareholders will be subject to the provisions of Rule 14 if they acquire any Shares after Share Buybacks by the Company. For the purpose of the Take-over Code, an increase in the percentage of voting rights as a result of Share Buybacks will be taken into account in determining whether a Shareholder and persons acting in concert with him have increased their voting rights by more than one per cent. (1%) in any period of six (6) months.

100 98 Addendum (v) If the Company decides to cease the purchase of Shares before it has purchased such number of Shares authorised by its Shareholders at the latest annual general meeting, the Company will promptly inform its Shareholders of such cessation. This will assist Shareholders to determine if they can buy any more Shares without incurring an obligation under Rule 14. Based on the shareholdings of the Directors and Substantial Shareholders of the Company as at the Latest Practicable Date, the Share Buyback Mandate is not expected to result in any Director or Substantial Shareholder incurring an obligation to make a general offer for the Shares of the Company under Rule 14 or Appendix 2 of the Take-over Code. Shareholders who are in doubt as to their obligations, if any, to make a mandatory takeover offer under the Take-over Code as a result of Share Buybacks by the Company are advised to consult their professional advisers and/or the Securities Industry Council and/or other relevant authorities at the earliest opportunity. Purely for illustrative purposes, on the basis of 93,501,600 Shares in issue as at the Latest Practicable Date, and assuming that no further Shares are issued on or prior to the AGM, not more than 9,350,160 Shares (representing ten per cent. (10%) of the Shares in issue as at that date) may be purchased or acquired by the Company pursuant to the Share Buyback Mandate, if so approved by Shareholders at the AGM. Assuming that such granted Share Buyback Mandate is validly and fully exercised prior to the next AGM for it to re-purchase the maximum allowed number of Shares being 9,350,160 Shares (on the basis that there would have been no change to the number of Shares in issue at the time of such exercise) and that such re-purchased Shares are not acquired from Directors and the Substantial Shareholders and are deemed cancelled immediately upon purchase, based on the Register of Directors Shareholdings and Register of Substantial Shareholders of the Company as at the Latest Practicable Date, the shareholdings of the Directors and substantial Shareholders would be changed as follows: Before the Share Buyback After the Share Buyback Direct interest Deemed interest Direct interest Deemed interest No. of Shares % No. of Shares % No. of Shares % No. of Shares % Directors Jimmy Fong Teck Loon (1) 50,369,800** 53.9% 630, % 50,369,800** 59.9% 630, % Brenda (1) 630, % 50,369, % 630, % 50,369, % Lee Keen Whye 100, % 0.0% 100, % 0.0% Siow Chee Kheong 100, % 0.0% 100, % 0.0% Liu Zhipeng 100, % 0.0% 100, % 0.0% Substantial Shareholders Johnson Goh Ann Ann 10,710, % 0.0% 10,710, % 0.0% Lam Wai Heng 5,833, % 0.0% 5,833, % 0.0% Rowsley Sports Pte. Ltd. 4,968, % 0.0% 4,968, % 0.0% Rowsley Ltd (2) 0.0% 4,968, % 0.0% 4,968, % Garville Pte Ltd (2) 0.0% 4,968, % 0.0% 4,968, % Lim Eng Hock (2) 0.0% 4,968, % 0.0% 4,968, % ** Includes 792,000 shares held by DMG & Partners Securities Pte Ltd. Notes: (1) Jimmy Fong Teck Loon is deemed interested in the shares held by his wife, Brenda Yeo and vice versa by virtue of Section 7 of the Companies Act, Cap. 50. (2) Deemed to be interested in the shares held by Rowsley Sports Pte. Ltd. by virtue of Section 7 of the Companies Act, Cap. 50.

101 99 Addendum 1.10 No Shares Purchased or Acquired in the Previous Twelve Months The Company has not made any purchase or acquisition of its Shares (whether via On-Market Purchases or Off-Market Purchases in the 12 months preceding the Latest Practicable Date) Taxation Shareholders who are in doubt as to their respective tax positions or any tax implications, or who may be subject to tax in a jurisdiction outside Singapore, should consult their own professional advisers. 2. DIRECTORS AND SUBSTANTIAL SHAREHOLDERS INTERESTS The interests of the Directors and substantial Shareholders of the Company as at the Latest Practicable Date, as recorded in the Company s Register of Directors Shareholdings and the Register of Substantial Shareholders respectively, are set out as follows. Directors Interests Direct interest Deemed interest No. of Shares % No. of Shares % Directors Jimmy Fong Teck Loon (1) 50,369,800** 53.9% 630, % Brenda Yeo (1) 630, % 50,369, % Lee Keen Whye 100, % 0.0% Siow Chee Kheong 100, % 0.0% Liu Zhipeng 100, % 0.0% Substantial Shareholders Interests Johnson Goh Ann Ann 10,710, % 0.0% Lam Wai Heng 5,833, % 0.0% Rowsley Sports Pte. Ltd. 4,968, % 0.0% Rowsley Ltd (2) 0.0% 4,968, % Garville Pte Ltd (2) 0.0% 4,968, % Lim Eng Hock (2) 0.0% 4,968, % ** Includes 792,000 shares held by DMG & Partners Securities Pte Ltd. Notes: (1) Jimmy Fong Teck Loon is deemed interested in the shares held by his wife, Brenda Yeo and vice versa by virtue of Section 7 of the Companies Act, Cap. 50. (2) Deemed to be interested in the shares held by Rowsley Sports Pte. Ltd. by virtue of Section 7 of the Companies Act, Cap. 50.

102 100 Addendum 3. ACTIONS TO BE TAKEN BY SHAREHOLDERS Shareholders who are unable to attend the AGM and wish to appoint a proxy to attend and vote on their behalf should sign and return the Proxy Form attached to the Notice of AGM in accordance with the instructions printed thereon as soon as possible and in any event so as to arrive at the registered office of the Company at 501 Orchard Road, #02-20/22 Wheelock Place, Singapore , not later than 48 hours before the time fixed for the AGM. The appointment of a proxy by a Shareholder does not preclude him from attending and voting in person at the AGM if he subsequently wishes to do so, in place of his proxy. CPF investors may wish to check with their CPF Approved Nominees on the procedure and deadline for the submission of their written instructions to their CPF Approved Nominees to vote on their behalf. A Depositor shall not be regarded as a Shareholder entitled to attend the AGM and to speak or vote thereat unless he/she is shown to have Shares entered against his/her name in the Depository Register, as certified by the CDP, as at 48 hours before the AGM. 4. DIRECTORS RECOMMENDATION The Directors are of the opinion that the renewal of the Share Buyback Mandate is in the best interests of the Company. Accordingly, they recommend that Shareholders vote in favour of the Resolution 11 relating to the renewal of the Share Buyback Mandate at the forthcoming AGM. 5. DIRECTORS RESPONSIBILITY STATEMENT The Directors collectively and individually accept full responsibility for the accuracy of the information given in this Addendum and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, the facts stated and opinions expressed in this Addendum are fair and accurate in all material respects as at the date hereof and that there are no materials facts the omission of which would make any statement in this letter misleading. 6. DOCUMENTS FOR INSPECTION Copies of the Company s annual report for FY 2010 and its memorandum and articles of association are available for inspection at the registered office of the Company at 501 Orchard Road, #02-20/22 Wheelock Place, Singapore during normal business hours from the date hereof up to and including the date of the forthcoming AGM. Yours faithfully For and on behalf of the Board of Directors Jimmy Fong Teck Loon Executive Chairman and Chief Executive Officer

103 101 Notice of Annual General Meeting NOTICE IS HEREBY GIVEN that the Annual General Meeting of EPICENTRE HOLDINGS LIMITED ( the Company ) will be held at 1 Plymouth Avenue, Raffles Town Club, Dunearn 3, Level 1, Singapore on Friday, 29 October 2010 at 2.30 p.m. for the following purposes: AS ORDINARY BUSINESS 1. To receive and adopt the Directors Report and the Audited Accounts of the Company and the Group for the year ended 30 June 2010 together with the Auditors Report thereon. (Resolution 1) 2. To declare a final dividend of 2 Singapore cents per share one-tier tax exempt for the financial year ended 30 June (2009: Nil) (Resolution 2) 3. To approve the payment of Directors fees of S$100,000 for the financial year ended 30 June (2009: S$100,000) (Resolution 3) 4. To re-elect the following Directors of the Company retiring pursuant to Articles 92 and 93 of the Articles of Association of the Company: Mr Jimmy Fong Teck Loon (Retiring under Article 93) (Resolution 4) Mr Ron Tan Aik Ti (Retiring under Article 92) (Resolution 5) [See Explanatory Note (i)] Mr Lee Keen Whye who is retiring by rotation pursuant to Article 93 of the Articles of Association of the Company has given his notice to the Company that he will be not seeking re-election as Director of the Company. 5. To re-appoint Messrs BDO LLP as the Auditors of the Company and to authorise the Directors of the Company to fix their remuneration. (Resolution 6) 6. To transact any other ordinary business which may normally be transacted at an Annual General Meeting. AS SPECIAL BUSINESS To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without any modifications: 7. Authority to issue shares in the capital of the Company pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806 of the Listing Manual of the Singapore Exchange Securities Trading Limited That pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806 of the SGX-ST Listing Manual Section B: Rules of Catalist, the Directors of the Company be authorised and empowered to: (a) (i) issue shares in the Company ( shares ) whether by way of rights, bonus or otherwise; and/or (ii) make or grant offers, agreements or options (collectively, Instruments ) that might or would require shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) options, warrants, debentures or other instruments convertible into shares, at any time and upon such terms and conditions and for such purposes and to such persons as the Directors of the Company may in their absolute discretion deem fit; and

104 102 Notice of Annual General Meeting (b) (notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue shares in pursuant of any Instrument made or granted by the Directors of the Company while this Resolution was in force, (the Share Issue Mandate ) provided that: (1) The aggregate number of shares (including shares to be issued in pursuance of the Instruments, made or granted pursuant to this Resolution) and Instruments to be issued pursuant to this Resolution shall not exceed one hundred per centum (100%) of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of shares and Instruments to be issued other than on a pro rata basis to existing shareholders of the Company shall not exceed fifty per centum (50%) of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with subparagraph (2) below); (2) (subject to such calculation as may be prescribed by the Singapore Exchange Securities Trading Limited) for the purpose of determining the aggregate number of shares and Instruments that may be issued under sub-paragraph (1) above, the percentage of total issued shares and Instruments shall be based on the number of issued shares (excluding treasury shares) in the capital of the Company at the time of the passing of this Resolution, after adjusting for: (a) (b) (c) new shares arising from the conversion or exercise of the Instruments; new shares arising from exercising share options or vesting of share awards outstanding or subsisting at the time of the passing of this Resolution; and any subsequent bonus issue, consolidation or subdivision of shares; (3) in exercising the Share Issue Mandate conferred by this Resolution, the Company shall comply with the provisions of the SGX-ST Listing Manual Section B: Rules of Catalist for the time being in force (unless such compliance has been waived by the Singapore Exchange Securities Trading Limited) and the Articles of Association of the Company; and (4) unless revoked or varied by the Company in a general meeting, the Share Issue Mandate shall continue in force (i) until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier or (ii) in the case of shares to be issued in pursuance of the Instruments, made or granted pursuant to this Resolution, until the issuance of such shares in accordance with the terms of the Instruments or (iii) in relation to sub-clause (2) above, 31 December 2010 or such other deadline as may be extended by the SGX-ST. (Resolution 7) [See Explanatory Note (ii)] 8. Authority to allot and issue shares and Instruments other than on a pro rata basis at a discount not exceeding 20 per centum (20%) That notwithstanding Rule 811 of the SGX-ST Listing Manual Section B: Rules of Catalist, and subject to and pursuant to the Share Issue Mandate being obtained in Resolution 7 above, approval be and is hereby given to the Directors of the Company to allot and issue shares (including shares to be issued in pursuance of the Instruments, made or granted pursuant to the Share Issue Mandate) other than on a pro-rata basis at an issue price per share as the Directors of the Company may in their absolute discretion deem fit provided that such price shall not represent a discount of more than 20 per centum (20%) to the weighted average price per share determined in accordance with the requirements of the SGX-ST and unless revoked or varied by the Company in a general meeting, such authority shall continue in force until the conclusion of the next Annual General Meeting

105 103 Notice of Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held or 31 December 2010 or such other deadline as may be extended by the SGX-ST. (Resolution 8) [See Explanatory Note (iii)] 9. Authority to issue shares under the Performance Share Plan That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors of the Company be authorised and empowered to offer and grant awards under the Performance Share Plan ( the Plan ) (formerly known as AFOR Limited Performance Share Plan) and to issue from time to time such number of shares in the capital of the Company as may be required to be issued pursuant to the vesting of awards under the Plan, whether granted during the subsistence of this authority or otherwise, provided always that the aggregate number of additional ordinary shares to be issued pursuant to the Plan shall not exceed fifteen per centum (15%) of the total number of issued shares (excluding treasury shares) in the capital of the Company from time to time and that such authority shall, unless revoked or varied by the Company in a general meeting, continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier. (Resolution 9) [See Explanatory Note (iv)] 10. Authority to issue shares under the Scrip Dividend Scheme That pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806 of the SGX-ST Listing Manual Section B: Rules of Catalist, the Directors of the Company be authorised and empowered to issue such number of shares in the Company as may be required to be issued pursuant to the Scrip Dividend Scheme from time to time in accordance to the Terms and Conditions of the Scrip Dividend Scheme as set out on pages 81 to 86 of the Circular dated 7 June 2010 and that such authority shall, unless revoked or varied by the Company in a general meeting, continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier. (Resolution 10) [See Explanatory Note (v)] 11. Renewal of Share Buyback Mandate That: (a) for the purposes of the Companies Act (Cap. 50) of Singapore (the Act ), the exercise by the Directors of the Company of all the powers of the Company to purchase or otherwise acquire the ordinary shares in the capital of the Company not exceeding in aggregate the Prescribed Limit (as hereafter defined), at such price(s) as may be determined by the Directors of the Company from time to time up to the Maximum Price (as hereafter defined), whether by way of: (i) market purchases ( On-Market Purchase ), transacted on the Catalist through the SGX-ST s Central Limit Order Book (CLOB) trading system or, as the case may be, any other securities exchange on which the Shares may for the time being be listed and quoted, through one or more duly licensed stockbrokers appointed by the Company for the purpose; and/or

106 104 Notice of Annual General Meeting (ii) off-market purchases (each an Off-Market Purchase ) effected otherwise than on the Catalist in accordance with any equal access schemes (subject to Section 76C of the Act) as may be determined or formulated by the Directors of the Company as they consider fit, which schemes shall satisfy all the conditions prescribed by the Act, and otherwise in accordance with all other listing rules and regulations of the SGX-ST as may for the time being be applicable, be and is hereby authorised and approved generally and unconditionally (the Share Buyback Mandate ); (b) unless varied or revoked by an ordinary resolution of shareholders of the Company in general meeting, the authority conferred on the Directors of the Company pursuant to the Share Buyback Mandate may be exercised by the Directors at any time and from time to time during the period commencing from the passing of this Resolution 11 and expiring on the earlier of: (i) (ii) the date on which the next annual general meeting of the Company ( AGM ) is held or required by law to be held; or the date on which the authority contained in the Share Buyback Mandate is varied or revoked by an ordinary resolution of shareholders of the Company in general meeting; (c) in this Resolution 11: Prescribed Limit means 10% of the total number of ordinary shares of the Company as at the date of the last annual general meeting or as at the date of passing of this Resolution 11 (whichever is the higher) unless the Company has effected a reduction of the share capital of the Company in accordance with the applicable provisions of the Act, at any time during the Relevant Period, in which event the total number of ordinary shares of the Company shall be taken to be the amount of the total number of ordinary shares of the Company as altered (excluding any treasury shares that may be held by the Company from time to time); Relevant Period means the period commencing from the date on which the last AGM was held and required by law to held and expiring on the date the next AGM is held or is required by law to be held, whichever is the earlier, after the date of this Resolution 11; and Maximum Price in relation to a Share to be purchased, means an amount (excluding brokerage, stamp duties, applicable goods and services tax and other related expenses) not exceeding: (i) (ii) in the case of an On-Market Purchase: 105% of the Average Closing Price; in the case of an Off-Market Purchase: 120% of the Average Closing Price: where: Average Closing Price means, in the case of a Market Purchase, the average of the closing market prices of the Shares over the last five (5) market days, on which transactions in the Shares on the Catalist were recorded, before the day on which an On-Market purchase was made by the Company or, in the case of an Off-Market Purchase, the date of the announcement of the offer pursuant to an Off-Market Purchase, and deemed to be adjusted in accordance with the Catalist Rules for any corporate action which occurs after the relevant period of five (5) market days; and

107 105 Notice of Annual General Meeting (d) the Directors of the Company and each of them be and are hereby authorised and empowered to complete and do all such acts and things (including executing such documents as may be required) as they may consider desirable, expedient or necessary in the interest of the Company in connection with or for the purposes of giving full effect to the Share Buyback Mandate. (Resolution 11) [See Explanatory Note (vi)] By Order of the Board Chew Kok Liang Nathaniel C.V. Secretaries Singapore 13 October 2010 Explanatory Notes: (i) Mr Jimmy Fong Teck Loon will upon re-election as Director of the Company, remain as Executive Chairman and Chief Executive Officer of the Company. He will also remain a member of the Nominating Committee and will be considered nonindependent. Mr Ron Tan Aik Ti will be upon re-election as Director of the Company, remain as member of Nominating and Remuneration Committee. He will also remain a member of the Audit Committee and will be considered independent. (ii) (iii) The Ordinary Resolution 7 above, if passed, will empower the Directors of the Company from the date of this Meeting until the date of the next Annual General Meeting of the Company, or the date by which the next Annual General Meeting of the Company is required by law to be held or such authority is varied or revoked by the Company in a general meeting, whichever is the earlier, to issue shares, make or grant instruments convertible into shares and to issue shares pursuant to such instruments, up to a number not exceeding, in total, 100% of the total number of issued shares (excluding treasury shares) in the capital of the Company, of which up to 50% may be issued other than on a pro-rata basis to existing shareholders of the Company The Ordinary Resolution 8 above, if passed, will empower the Directors of Company to issue shares (including shares to be issued in pursuance of the Instruments, made or granted pursuant to the Share Issue Mandate) other than on a pro-rata basis at a discount of not more than 20% to the weighted average price per share determined in accordance with the requirements of the SGX-ST. The maximum discount of 20% is proposed pursuant to the SGX-ST s news release of 19 February 2009 which took effect on 20 February 2009, to introduce further measures to accelerate and facilitate the fund raising efforts of listed issuers. (iv) The Ordinary Resolution 9 above, if passed, will empower the Directors of the Company, from the date of this Meeting until the next Annual General Meeting of the Company, or the date by which the next Annual General Meeting of the Company is required by law to be held or such authority is varied or revoked by the Company in a general meeting, whichever is the earlier, to issue shares in the Company pursuant to the vesting of awards under the s Performance Share Plan up to a number not exceeding in total (for the entire duration of the Plan) fifteen per centum (15%) of the total number of issued shares (excluding treasury shares) in the capital of the Company from time to time.

108 106 Notice of Annual General Meeting (v) (vi) The Ordinary Resolution 10 above, if passed, will empower the Directors of the Company, from the date of this Meeting until the next Annual General Meeting of the Company, or the date by which the next Annual General Meeting of the Company is required by law to be held or when varied or revoke by the Company in a general meeting, whichever is the earlier, to issue shares in the Company from time to time pursuant to the s Scrip Dividend Scheme. The Ordinary Resolution 11 above, if passed, will empower the Directors of the Company from the date of the above Meeting until the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier, to repurchase ordinary shares of the Company by way of on-market purchases or off-market purchases of up to ten per centum (10%) of the total number of issued shares (excluding treasury shares) in the capital of the Company at the Maximum Price as defined in Addendum. *Notes 1. A Member entitled to attend and vote at the Annual General Meeting (the Meeting ) is entitled to appoint not more than two proxies to attend and vote in his/her stead. A proxy need not be a Member of the Company. 2. If the appointer is a corporation, the instrument appointing a proxy must be executed either under its seal or under the hand of an officer or attorney duly authorised. 3. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 501 Orchard Road #02-20/22 Wheelock Place, Singapore not less than forty-eight (48) hours before the time appointed for holding the Meeting. 4. This notice has been prepared by the Company and its contents have been reviewed by the Company s sponsor ( Sponsor ), Asian Corporate Advisors Pte. Ltd., for compliance with the relevant rules of the Singapore Exchange Securities Trading Limited ( Exchange ). The Company s Sponsor has not independently verified the contents of this notice including the correctness of any of the figures used, statements or opinions made. This notice has not been examined or approved by the Exchange and the Exchange assumes no responsibility for the contents of this notice including the correctness of any of the statements or opinions made or reports contained in this notice. The contact person for the Sponsor is Mr Liau H.K. Telephone number:

109 107 Notice of Books Closure NOTICE IS ALSO HEREBY GIVEN THAT the Share Transfer Books and Register of Members of the Company will be closed from 10 November 2010 to 11 November 2010 (both dates inclusive) for the purpose of determining the entitlements of shareholders to the proposed a final dividend of 2 Singapore cents per share (one-tier tax exempt) for the financial year ended 30 June For the avoidance of doubt, in the case where the registered Shareholder is the Central Depository (Pte) Limited ( CDP ) the dividend warrants shall be issued to the CDP and credited to the depositors securities accounts with the CDP in proportion to the number of shares of the Company standing to the credit of each depositor s securities account with the CDP as at 5.00 pm (Singapore time) on 9 November Duly completed registrable transfers received by the Company s Share Registrar, Boardroom Corporate & Advisory Services Pte. Ltd., 50 Raffles Place Singapore Land Tower #32-01, Singapore up to 5.00 pm on 9 November 2010 will be registered to determine entitlements to the proposed final dividend as stated above. Payment of the said dividend if approved by shareholders at the Annual General Meeting of the Company to be held on 29 October 2010 will be made on 23 November By Order of the Board Chew Kok Liang Nathaniel C.V. Secretaries Singapore 13 October 2010