ASIA SILK HOLDINGS LIMITED (Incorporated in the Republic of Singapore under Registration No: D)

Transcription

1 ASIA SILK HOLDINGS LIMITED (Incorporated in the Republic of Singapore under Registration No: D) Financial Statements And Dividend Announcement for the 6 Months Ended 30 June 2011 This Announcement and its contents have been reviewed by the Company s Sponsor, CIMB Bank Berhad, Singapore Branch (the "Sponsor"), for compliance with the relevant rules of the Singapore Exchange Securities Trading Limited ( SGX-ST ). The Sponsor has not independently verified the contents of this announcement. This announcement has not been examined or approved by the SGX-ST and the SGX-ST assumes no responsibility for the contents of this announcement, including the correctness of any of the statements or opinions made or reports contained in this announcement. The contact person for the Sponsor is Mr Eric Wong (Director, Corporate Finance), CIMB Bank Berhad, Singapore Branch, 50 Raffles Place, #09-01 Singapore Land Tower, Singapore , telephone (65) The figures presented below for the current period have not been audited. PART I - INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2 & Q3), HALF-YEAR AND FULL YEAR RESULTS 1(a) A consolidated statement of comprehensive income (for the group) together with a comparative statement for the corresponding period of the immediately preceding financial year. (Re-stated)* Increase / (decrease) RMB 000 RMB 000 % Continuing Operations Revenue Cost of sales Gross profit Other income Distribution costs Administrative expenses (2,304) (1,066) NM Other expenses Finance costs Loss before tax (2,304) (1,066) NM Income tax Loss from continuing operations, net of tax (2,304) (1,066) NM Discontinued Operations Loss from discontinued operation, net of tax (5,339) (2,210) NM Loss for the financial period (7,643) (3,276) NM Other comprehensive income, net of tax: Currency translation differences on consolidation 8 - NM Total comprehensive loss for the financial period (7,635) (3,276) NM Attributable to: Equity holders of the Company - Loss from continuing operations (2,304) (1,066) NM - Loss from discontinued operations (5,339) (2,210) NM Loss for the financial period attributable to equity holders of the Company (7,643) (3,276) NM Non-controlling interests - Loss from continuing operations Loss from discontinued operations Loss for the financial period attributable to non-controlling interests *The comparative figures for the financial period 30 June 2010 relating to the Disposal have been presented as discontinued operations (See paragraphs 8 and 10). NM Not meaningful. 1

2 1(a) A consolidated statement of comprehensive income (for the group) together with a comparative statement for the corresponding period of the immediately preceding financial year (Cont d). (Re-stated)* Increase / (decrease) RMB 000 RMB 000 % Attributable to: Equity holders of the Company (7,635) (3,276) NM Non-controlling interest Total comprehensive loss for the financial period (7,635) (3,276) NM Attributable to: Equity holders of the Company Total comprehensive loss from continuing operations, net of tax (2,296) (1,066) NM Total comprehensive loss from discontinued operations, net of tax (5,339) (2,210) NM Total comprehensive loss for the financial period attributable to equity holders of the Company (7,635) (3,276) NM *The comparative figures for the financial period 30 June 2010 relating to the Disposal have been presented as discontinued operations (See paragraphs 8 and 10). NM Not meaningful. Notes to the Consolidated Statement of Comprehensive Income:- i. An analysis of the results of the Disposal (please refer to paragraphs 8 and 10) is as follows: (Re-stated)* Increase / (decrease) RMB 000 RMB 000 % Revenue 35,890 45,039 (20) Expenses (41,229) (47,249) (13) Loss before income tax from Disposal (5,339) (2,210) NM Income tax - - NM Loss after income tax from Disposal (5,339) (2,210) NM *The comparative figures for the period 30 June 2010 relating to the Disposal have been presented as discontinued operations (See paragraphs 8 and 10). NM Not meaningful. 2

3 1(a) A consolidated statement of comprehensive income (for the group) together with a comparative statement for the corresponding period of the immediately preceding financial year (Cont d). Notes to the Consolidated Statement of Comprehensive Income (Cont d):- ii. Loss for the financial period is arrived at after charging/(crediting): Continuing operations Discontinued operations (Re-stated)* Increase/ (decrease) (Re-stated)* % % Increase/ (decrease) Amortisation of land use rights Cost of inventories included in cost of sales 21,513 29,759 (28) Depreciation of property, plant and equipment ,412 2,125 (34) Operating lease expenses - Land (2) - Office Others Reversal of inventories written down (194) - NM Directors remuneration (87) Interest income from banks (26) (93) (72) Impairment loss on trade receivables ,176 - NM Foreign exchange (gain)/loss (127) 31 NM Loss on disposal of property, plant and equipment 24 - NM Interest expenses - bank loans (5) Impairment loss on inventories NM Doubtful trade receivables written off NM *The comparative figures for the financial period 30 June 2010 relating to the Disposal have been presented as discontinued operations (See paragraphs 8 and 10). NM Not meaningful. 3

4 1(b)(i) A balance sheet (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year Company ASSETS Non-current assets Property, plant and equipment - 17, Investments in subsidiaries Biological assets Long-term land use rights , Current assets Inventories - 11, Trade receivables - 38, Transferable notes receivables - 2, Other receivables Amounts due from related parties (trade) Amount due from a subsidiary (non-trade) ,022 Pledged term deposits - 2, Bank and cash balances 2,204 4,254 2, ,204 60,104 2,812 1,024 Assets of disposal group classified as held for sale 68, ,151 60,104 2,812 1,024 Total assets 71,151 78,128 2,812 1,024 Current liabilities Trade payables - 15, Transferable notes payables - 4, Other payables 3,042 6,070 3, Amounts due to related parties (non-trade) - 26, Interest-bearing bank loans - 12, ,042 64,872 3, Liabilities directly associated with disposal group classified as held for sale 60, Total liabilities 63,684 64,872 3, Net assets/(liabilities) 7,467 13,256 (230) 220 EQUITY Share capital 71,120 69,274 71,120 69,274 Reserves (6,498) (56,018) (71,350) (69,054) Capital and reserves attributable to the Company s equity holders 64,622 13,256 (230) 220 Reserve of disposal group classified as held for sale (57,155) Total equity 7,467 13,256 (230) 220 4

5 1(b)(i) A balance sheet (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year (Cont d). Details of the disposal group classified as held for sale are as follows: Current Assets Property, plant and equipment 15,858 Long-term land use rights 715 Inventories 9,465 Trade receivables 27,813 Transferable notes receivables 1,050 Other receivables 547 Amounts due from related parties (trade) 146 Bank and cash balances 13,353 68,947 Current liabilities Trade payables 13,348 Interest-bearing bank loans 15,200 Other payables 5,157 Amounts due to related parties (non-trade) 26,937 60,642 Net assets directly associated with disposal group classified as held for sale 8,305 1(b)(ii) Aggregate amount of group s borrowings and debt securities. Amount repayable in one year or less, or on demand As at 30 June 2011 As at 31 December 2010 Secured Unsecured Secured Unsecured RMB 000 RMB 000 RMB 000 RMB ,200 - See Note (a) Amount repayable after one year As at 30 June 2011 As at 31 December 2010 Secured Unsecured Secured Unsecured RMB 000 RMB 000 RMB 000 RMB Note (a): The continuing operations of the had no borrowings and debt securities as at 30 June The comparative figures as at 31 December 2010 represented the borrowings of the Disposal which have been classified as liabilities directly associated with disposal group classified as held for sale in the statement of financial position as at 30 June Included in the liabilities directly associated with disposal group classified as held for sale in the statement of financial position as at 30 June 2011 was secured borrowings of the Disposal of RMB15,200,000. Please refer to paragraph 8 on the details of the secured borrowings. 5

6 1(c) A consolidated statement of cash flows (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year. Cash flows from operating activities Loss before tax from continuing operations (2,304) (1,066) Loss before tax from discontinued operations (5,339) (2,210) Total loss before tax (7,643) (3,276) Adjustments for : Depreciation of property, plant and equipment 1,412 2,125 Amortisation of land use rights Loss on disposal of property, plant and equipment 24 - Interest income (26) (93) Interest expenses Operating cash flows before working capital changes (5,778) (786) Inventories 2,389 2,715 Trade receivables and other receivables 12,331 19,717 Trade payables and other payables (4,335) (20,345) Amounts due from related parties 109 (69) Amounts due to related parties 147 (329) Cash generated from operations 4, Interest received Net cash generated from operating activities 4, Cash flows from investing activities Purchase of property, plant and equipment (48) (441) Proceeds from disposal of property, plant and equipment 26 - Net cash used in investing activities (22) (441) Cash flows from financing activities Proceeds from bank loans 3,000 - Proceeds from issuance of shares 1,925 - Share issuance expenses (79) - Decrease in term deposits pledged to banks for banking facilities 2,000 6,400 Interest paid (418) (438) Net cash from financing activities 6,428 5,962 Net increase in cash and cash equivalents 11,295 6,517 Cash and cash equivalents at beginning of financial period 4,254 9,962 Effect of exchange rate changes on opening cash and cash equivalents 8 - Cash and cash equivalents at end of financial period 15,557 # 16,479 # Cash and cash equivalents at the end of the current financial period in the cash flow statement included approximately RMB13,353,000 which belonged to the Disposal. The impact of the Disposal on the cash flows of the is as follows: Cash flows from operating activities 4,956 2,159 Cash flows from investing activities (23) (441) Cash flows from financing activities 4,582 5,962 Total cash inflow 9,515 7,680 6

7 1(d)(i) A statement (for the issuer and group) showing either (i) all changes in equity or (ii) changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year Attributable to equity holders of the Company Share Capital # Foreign currency translation reserve Statutory reserve Revenue reserve Total Reserve of disposal group classified as held for sale Noncontrolling interests Total equity RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 Balance at 1 January , ,761 (60,162) 13, ,256 Issuance of share capital 1,925 1,925-1,925 Share issuance expenses (79) (79) - (79) Loss for the financial period (2,304) (2,304) (5,339) (7,643) Other comprehensive income Currency translation differences Total comprehensive income/ (loss) for the financial period 8 (2,304) (2,296) (5,339) (7,635) Reserve attributable to disposal group classified as held for sale (3,761) 55,577 51,816 (51,816) Balance at 30 June , (6,889) 64,622 (57,155) - 7,467 Balance at 1 January , ,761 (54,119) 19, ,246 Loss for the financial period (3,276) (3,276) - (3,276) Total comprehensive loss for the financial period (3,276) (3,276) - (3,276) Balance at 30 June , ,761 (57,395) (15,970) - - (15,970) # Please refer to paragraph 1(d)(ii) on the changes in the Company s share capital during the financial period and paragraph 10 on the Proposed Capital Reduction Exercise. 7

8 1(d)(i) A statement (for the issuer and group) showing either (i) all changes in equity or (ii) changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year (Cont d). Share capital # Foreign currency translation reserve Revenue Reserve Total equity Company RMB 000 RMB 000 RMB 000 RMB Balance at 1 January ,274 1,637 (70,691) 220 Issuance of share capital 1,925 1,925 Share issuance expenses (79) (79) Loss for the financial period (2,304) (2,304) Other comprehensive income Currency translation differences 8 8 Total comprehensive income/(loss) for the financial period 8 (2,304) (2,296) Balance at 30 June ,120 1,645 (72,995) (230) Balance at 1 January ,274 1,584 (69,140) 1,718 Loss for the financial period (1,066) (1,066) Total comprehensive loss for the financial period - (1,066) (1,066) Balance at 30 June ,274 1,584 (70,206) 652 # Please refer to paragraph 1(d)(ii) on the changes in the Company s share capital during the financial period and paragraph 10 on the Proposed Capital Reduction Exercise. 8

9 1(d)(ii) Details of any changes in the company's share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on. State also the number of shares that may be issued on conversion of all the outstanding convertibles, as well as the number of shares held as treasury shares, if any, against the total number of issued shares excluding treasury shares of the issuer, as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year. On 9 March 2011, the Company entered into 2 conditional subscription agreements with two (2) individuals to allot and issue 12,000,000 new ordinary shares ( Subscription Shares ) in the capital of the Company at an issue price of S$ per Subscription Share, amounting to an aggregate consideration of S$369,600 (RMB 1,925,000) for general working capital purposes. The Subscription Shares have been issued, listed and quoted for trading on the official list of the Singapore Exchange Securities Trading Limited ( SGX-ST ) on 13 April The Company announced on 15 April 2011 that S$228,000 of the net proceeds from the issuance of the Subscription Shares ( Net Proceeds ) have been utilised and that the Company will make periodic announcements on the utilisation of the net proceeds as and when the balance of the Net Proceeds is materially utilised. Details of the Company s share capital as at 30 June 2011 are as follows: Number of shares Share Capital S$ 000 RMB 000 Balance as at 31 December ,000,000 14,305 69,274 Issue of shares during the financial period 12,000, ,925 Share issue expense - (15) (79) Balance as at 30 June ,000,000 14,659 71,120 Please refer to paragraph 10 on the Proposed Capital Reduction Exercise. Convertible Securities There are no shares that may be issued on conversion of any outstanding convertibles as at the end of the current financial period and as at the end of the immediately preceding financial year. 1(d)(iii) To show the total number of issued shares excluding treasury shares as at the end of the current financial period and as at the end of the immediately preceding year. As at The As at Total number of issued shares (excluding treasury shares) 137,000, ,000,000 The Company has no treasury shares as at 30 June 2011 and 31 December (d)(iv) A statement showing all sales, transfers, disposal, cancellation and/or use of treasury shares as at the end of the current financial period reported on. Not applicable. 2. Whether the figures have been audited or reviewed and in accordance with which auditing standard or practice. The figures have not been audited nor reviewed by the Company s auditors. 3. Where the figures have been audited or reviewed, the auditors report (including any qualifications or emphasis of a matter). Not applicable. 9

10 4. Whether the same accounting policies and methods of computation as in the issuer s most recently audited annual financial statements have been applied. Except as disclosed in paragraph 5 below, the adopted the same accounting policies and methods of computation in the financial statements for the current reporting year as compared to the most recently audited financial statements for the financial year 31 December If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change. During the current financial period, the adopted the following new or am Financial Reporting Standards (FRS) and Interpretations to FRS ( INT FRS ) that are effective for annual periods beginning on or after 1 January 2011: Amendments to FRS 24 Amendments to FRS 32 Amendments to INT FRS 114 INT FRS 119 Related party disclosures Financial Instruments: Presentation Classification of right issues Prepayments of a minimum funding requirement Extinguishing financial liabilities with equity instruments The adoption of the new and revised FRS and INT FRS is assessed to have no material impact to the s accounting policies and methods of computation. 6. Earnings per ordinary share of the group for the current financial period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends. Continuing operations Discontinued operations Total (Re-stated)* (Re-stated)* (Re-stated)* Loss for the financial period attributable to equity holders of the Company (RMB 000) (2,304) (1,066) (5,339) (2,210) (7,643) (3,276) Weighted average number of ordinary shares on issue ( 000) 130, , , , , ,000 a. Basic loss per share based on the weighted average number of ordinary shares on issue (in RMB fen) (1.77) (0.85) (4.11) (1.77) (5.88) (2.62) b. On a diluted basis (in RMB fen) (1.77) (0.85) (4.11) (1.77) (5.88) (2.62) *The comparative figures for the financial period 30 June 2010 relating to the Disposal have been presented as discontinued operations (See paragraphs 8 and 10). Basic and diluted loss per share for the six months financial period 30 June 2011 is calculated by dividing the net loss for the financial period attributable to ordinary shareholders by the weighted average number of ordinary shares. 10

11 7. Net asset value (for the issuer and group) per ordinary share based on, the total number of issued shares excluding treasury shares of the issuer at the end of the:- (a) current financial period reported on; and (b) immediately preceding financial year. Company Net assets attributable to the shareholders (RMB 000) 7,467 13,256 NA 220 Net asset value per ordinary share (RMB fen) NA 0.18 Net asset value per ordinary share of the and Company was calculated by dividing the net asset value attributable to equity shareholders of the and Company by the number of ordinary shares of the Company as at 30 June 2011 of 137,000,000 (31 December 2010: 125,000,000). NA Not applicable as the Company had a net liability value of RMB230,000 as at 30 June A review of the performance of the group, to the extent necessary for a reasonable understanding of the group s business. It must include a discussion of the following:- (a) (b) any significant factors that affected the turnover, costs, and earnings of the group for the current financial period reported on, including (where applicable) seasonal or cyclical factors; and any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on. At the Extraordinary General Meeting held on 29 June 2011, the Shareholders of the Company approved the disposal of the Company s entire legal and beneficial interests in Wuxi Dingqiu Silk Co., Ltd. (which includes the subsidiaries of Wuxi Dingqiu) ( Wuxi Dingqiu ) for an aggregate cash consideration of S$2,000,000 (approximately RMB10,420,000). For more information on the Proposed Disposal of Wuxi Dingqiu, please refer to the Company s Circular dated 7 June Please also refer to paragraph 10 for further details on the Proposed Disposal. In compliance with FRS105 on Non-current Assets Held-for-sale and Discontinued Operations, the assets and liabilities related to Wuxi Dingqiu have been presented as the Company s Disposal under disposal group classified as held-for-sale ( Disposal ) on the statement of financial position and the results from the Disposal are presented separately on the statement of comprehensive income as Discontinued operations. The comparative figures in the consolidated statement of comprehensive income for the corresponding financial period 30 June 2010 relating to the discontinued operations have been re-presented. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (For the purpose of this review, HY2011 refers to the results of the during the six months financial period 30 June 2011 and HY 2010 refers to the comparative six months financial period 30 June 2010.) Continuing operations The does not have business or operations other than the Disposal. Loss for the financial period from continuing operations arose from administrative expenses incurred by the, which had increased by RMB1,238,000 from RMB1,066,000 in HY2010 to RMB2,304,000 in HY2011. These were mainly due to legal and professional fees incurred on the various Corporate Exercises undertaken by the Company during HY

12 8. A review of the performance of the group, to the extent necessary for a reasonable understanding of the group s business. It must include a discussion of the following:- (a) (b) any significant factors that affected the turnover, costs, and earnings of the group for the current financial period reported on, including (where applicable) seasonal or cyclical factors; and any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on (Cont d). CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Cont d) Discontinued operations Revenue from the Disposal decreased by RMB9,149,000 from RMB45,039,000 in HY2010 to RMB35,890,000 in HY2011. The decrease in revenue was due mainly to the decrease in the overall demand of textile products in the industry. The Disposal recorded a higher loss of RMB5,339,000 in HY2011, an increase of RMB3,129,000 from RMB2,210,000 in HY2010 contributed by increases in salaries cost, payment of newly introduced environmental tax duty in China and impairment for trade receivables no longer collectible. The performance of the Disposal was within the Company s anticipation of the challenges faced by the Disposal which formed the basis of the Proposed Disposal (please also refer to paragraph 10). CONSOLIDATED STATEMENT OF FINANCIAL POSITION Current Assets The s current assets including those of Disposal amounted to RMB71,151,000 as at 30 June This was an increase of RMB11,047,000 from RMB60,104,000 as at 31 December 2010 due mainly to classification of the Disposal s non-current assets which comprised property, plant and equipment and long-term land use rights as current assets and increase in bank and cash balances; partially offset by decrease in inventories with tighter inventory management, decrease in trade and other receivables as a result of receipts from receivables and impairment allowance for receivables no longer collectible and repayment from transferrable notes receivables. Current Liabilities The s current liabilities including those of Disposal amounted to RMB63,684,000 as at 30 June This was a decrease of RMB1,187,000 from RMB64,872,000 as at 31 December 2010 due mainly to repayment to trade payables and transferrable notes payables; partially offset by additional bank loans, advance deposit received from the sale of the Disposal and accruals for higher legal and professional fees as a result of the Corporate Exercises undertaken by the Company in HY2011. The bank loans of the Disposal were secured by the following: (i) Pledge of property of Wuxi Dingqiu Silk Co., Ltd, a subsidiary; (ii) Pledge of properties and land use rights of Jiangsu Hunting Garment Co., Ltd, a related party; (iii) Pledge of property and land use rights of Jiangsu Xindingqiu Silk Spinning Science & Technology Co., Ltd ( Jiangsu Xindingqiu ), a related party; and (iv) Corporate guarantee by Jiangsu Xindingqiu. These loans are repayable within the next six months. Shareholders Equity Shareholders equity of the was RMB7,467,000 as at 30 June This was a decrease of RMB5,789,000 from RMB13,256,000 as at 31 December 2010 due mainly to loss attributable to shareholders during HY2011 partially offset by proceeds from the issuance of the Subscription Shares. CONSOLIDATED STATEMENT OF CASH FLOWS The had cash and cash equivalents of RMB15,557,000 as at 30 June 2011, an increase of RMB11,295,000 from RMB4,254,000 as at 31 December 2010 and after taking into consideration the effect of exchange rate changes on opening cash and cash equivalents of RMB8,000. The increase was due to net cash generated from operating activities of RMB4,889,000, net cash from financing activities of RMB6,428,000, partially offset by cash used in investing activities of RMB22,000. Net cash generated from operating activities was due mainly to net cash generated from operation, as a result of receipts from trade and other receivables and tighter control over purchases of inventory and partially offset by payments to trade and other payables. Net cash generated from financing activities was contributed by proceeds from bank loans, proceeds from issuance of Subscription Shares net of share issuance expenses and release of term deposit previously pledged to bank for banking facilities partially offset by interest paid on bank loans. Net cash used in investing activities arose from purchases of property, plant and equipment. 12

13 9. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results. No forecast or prospect statement had been issued for the current reporting period. 10. A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months. The following are the ongoing Corporate Exercises undertaken by the Company: (i) Proposed Disposal of the Company s entire legal and beneficial interests in Wuxi Dingqiu Silk Co., Ltd. and Proposed Capital Reduction Exercise to reduce the Company s issued and fully paid-up share capital and (Please refer to the Company s Circular dated 7 June 2011). (a) At the Extraordinary General Meeting held on 29 June 2011, the Shareholders of the Company approved the disposal of the Company s entire legal and beneficial interests in Wuxi Dingqiu Silk Co., Ltd. ( Wuxi Dingqiu ). The Company entered into a conditional sale and purchase agreement on 25 May 2011 (as supplemented by the Supplemental Agreement) (the Agreement ) with Hunting (Hong Kong) Company Limited (the Purchaser ), a company incorporated in the Hong Kong SAR to dispose of the Company s entire legal and beneficial interests of Wuxi Dingqiu (which includes the subsidiaries of Wuxi Dingqiu) for an aggregate cash consideration of S$2,000,000 (approximately RMB10,420,000). The Consideration was arrived at after arms length negotiations and on a willing-buyer willing-seller basis, taking into consideration, inter alia, the business valuation undertaken by the Valuer. The net Consideration represents an excess of approximately S$1,800,000 over the book value of the Company s investments in the Textile as at 31 December 2010, which is nil or an approximately S$558,000 (approximately RMB2,905,000) deficit against the audited consolidated net tangible assets of Wuxi Dingqiu as at 31 December The Consideration shall be paid in two (2) tranches in the following manners (A) S$500,000 shall be paid as a deposit to the Company s bank account in Singapore within ten (10) days from the time the Agreement was executed (the amount had been received by the Company as at 30 June 2011); and (B) the balance of the Consideration shall be paid to the Company s bank account in Singapore within five (5) days from the date the relevant authorities in the PRC grant approval for the transfer of the interest in Wuxi Dingqiu from the Company to the Purchaser. The disposal is scheduled for completion in September/October (b) At the same Extraordinary General Meeting, the Shareholders of the Company approved a capital reduction exercise ( Capital Reduction ) pursuant to Section 78A read together with Section 78C of the Companies Act (Cap. 50), through the cancellation of the issued share capital of the Company which has been lost or is unrepresented by available assets to the extent of S$14,262,135 (approximately RMB70,691,144) and an amount equal to S$14,262,135 (approximately RMB70,691,144), being the credit arising from the cancellation of the issued share capital of the Company, shall be applied to write off in its entirety the accumulated losses of the Company of S$14,262,135 (approximately RMB70,691,144) as at 31 December 2010 ( Accumulated Losses ). Provided if there is no application made by any creditor of the Company for the cancellation of the Capital Reduction Exercise within the timeframe prescribed by the Companies Act or if such application was made, the dismissal thereof by the judicial authorities; and upon the completion of the lodgment of the relevant documents and approval from relevant regulatory authorities relating to the Capital Reduction with ACRA, the Capital Reduction will be effected likely in August After the Proposed Capital Reduction Exercise, the Company will have an issued and paid-up share capital of $396,882. There will be no change in the total number of issued shares in the Company held by Shareholders immediately after the Capital Reduction Exercise, nor will the Capital Reduction Exercise involve the payment to any Shareholders of any paid-up share capital of the Company. (ii) Proposed Acquisition of the entire issued and paid-up capital of Chaswood Resources Sdn Bhd and Proposed Consolidation of every ten (10) ordinary shares into one (1) ordinary share, fractional entitlements to be disregarded (Please refer to the Announcements dated 25 March 2011, 22 July 2011, 25 July 2011 and 8 August 2011). On 25 March 2011, the Company entered into a non-binding memorandum of understanding ( MOU ) with Posh Corridor Sdn Bhd and Andrew Roach Reddy (collectively, the Vendors ) in respect of the proposed acquisition by the Company of the entire issued and paid-up share capital (the Sale Shares ) of Chaswood Resources Sdn Bhd ( Chaswood ) from the Vendors (the Proposed Acquisition ). The Proposed Acquisition is subject to the Company s satisfactory due diligence and finalization of the terms and conditions relating to the Sale Shares. On 25 July 2011, the Company announced that it had entered into a sale and purchase agreement on the same date (the "SPA") the Vendors in respect of the Proposed Acquisition for a purchase consideration of S$60,785,347(equivalent to approximately RM150,000,000 based on the exchange rate of S$1:RM as at 20 July 2011, published in Bloomberg L.P.) which shall be satisfied in full by the allotment and issue of 2,026,178,233 new ordinary shares in the capital of the Company (prior to the Proposed Share Consolidation (as defined below)) (the Consideration Shares ) to the Vendors at an issue price of S$0.03 per Consideration Share. 13

14 10. A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months (Cont d). (ii) Proposed Acquisition of the entire issued and paid-up capital of Chaswood Resources Sdn Bhd and Proposed Consolidation of every ten (10) ordinary shares into one (1) ordinary share, fractional entitlements to be disregarded (Please refer to the Announcements dated 25 March 2011, 22 July 2011, 25 July 2011 and 8 August 2011) (Cont d). In connection with the Proposed Acquisition, the Company proposes to undertake a consolidation (the Proposed Share Consolidation ) of every ten (10) ordinary shares in the issued and paid up share capital of the Company (the "Shares"), held by shareholders of the Company (the "Shareholders") at a time and date to be determined by the Directors of the Company for the purposes of the Proposed Share Consolidation, into one (1) Share (each a "Consolidated Share"), fractional entitlements to be disregarded. As a result, the Proposed Acquisition, if undertaken and completed, is expected to result in a very substantial acquisition or reverse take-over of the Company pursuant to Rule 1015 of the SGX-ST s Listing Manual Section B: Rules of Catalist ( Catalist Rules ). In connection with the Proposed Acquisition, the Vendors, upon completion of the allotment and issuance of the Consideration Shares, will be required to make a mandatory general offer for all the remaining issued shares in the Company not already owned, controlled or agreed to be acquired by them pursuant to Rule 14 of the Singapore Code on Take-Overs and Mergers (the Code ). As such, the Vendors, on 8 August 2011, sought a waiver of their obligation to make a mandatory general offer under Rule 14 of the Code from the Securities Industry Council ( SIC ). The completion of the SPA is conditional upon the fulfillment of the conditions precedent set out in Paragraph 4.2 of the Company s announcement dated 25 July 2011 (including, inter-alia, the SIC waiver mentioned above). The Proposed Acquisition will be completed within two (2) weeks from the fulfillment or waiver of all the conditions precedent. The Proposed Acquisition is ongoing. (iii) Receipt of Approval for the Continued trading of the Company s shares after the Company becomes a Cash Company (Please refer to the Company s Announcement dated 15 July 2011). Following the completion of the Proposed Disposal, the assets of the Company will consist wholly of cash and accordingly, the Company will be rendered as a cash company within the meaning of Rule 1017 of the Catalist Rules. Pursuant to Rule 1017(1) of the Catalist Rules, upon completion of the Proposed Disposal, the Company must place 90% of its cash and shortdated securities (including existing cash balance and the Consideration) in an account opened with and operated by an escrow agent which is part of any financial institution licensed and approved by the Monetary Authority of Singapore (the Authority ). The amount that is placed in the escrow account cannot be drawn down until the completion of the acquisition of a business which is able to satisfy the SGX-ST s requirements for a new listing, except for payment of expenses incurred in a reverse takeover approved by shareholders and pro-rata distributions to shareholders. On 14 July 2011, the Singapore Exchange Securities Trading Limited (the SGX-ST ) advised that it has no objection to the continued trading of the shares ( Shares ) of the Company on the Catalist Board of the SGX-ST on the basis that the Company, its Directors and controlling shareholders have undertaken to satisfy all the conditions stated in Rule 1017(1) of the Listing Manual Section B: Rules of Catalist of the SGX-ST (the Catalist Rules ) and subject to the Continuing Sponsor of the Company monitoring the progress of the opening of the escrow account (the Trading Confirmation ). However, SGX-ST reserves the right to (A) suspend trading of the Shares should the Company fail to comply with Rule 1017(1) of the Catalist Rules; and (B) amend/vary the Trading Confirmation as it deems fit, and the Trading Confirmation is subject to changes in the SGX-ST s policies. The Company has provided an undertaking to SGX-ST that it shall upon the completion of the Proposed Disposal in compliance with Rule 1017(1) of the Catalist Rules and to provide monthly valuation of its assets and utilization of cash, and quarterly updates of milestones in obtaining a new business, to the market via SGXNET. 11. Dividend (a) Current Financial Period Reported On Any dividend declared/recomm for the current financial period reported on? No ordinary dividend has been recomm or declared. (b) Corresponding Period of the Immediately Preceding Financial Year Any dividend declared/recomm for the current financial period reported on? No ordinary dividend was recomm or declared. (c) Date payable Not applicable. (d) Books closure date Not applicable. 14

15 12. If no dividend has been declared (recomm), a statement to that effect No dividend has been recomm or declared for the financial period. 13. Interested Person Transactions During the financial period 30 June 2011, there were no interested person transactions entered into by the. 14. Confirmation pursuant to Rule 705(5) of the Listing Manual We, Edwin Sugiarto and N. Sivagurunathan V. Narayanasamy, on behalf of the Board of Directors of Asia Silk Holdings Limited ( the Company ), do hereby confirm that to the best of our knowledge, nothing has come to the attention of the Board of Directors of the Company which may render the unaudited financial results for the six months 30 June 2011 to be false and misleading in any material aspect. BY ORDER OF THE BOARD EDWIN SUGIARTO NON-INDEPENDENT NON-EXECUTIVE CHAIRMAN 11 AUGUST