SCINTRONIX CORPORATION LTD.

Transcription

1 SCINTRONIX CORPORATION LTD.

2 Contents Corporate Profile Our Businesses Letter to Shareholders Board of Directors Key Management Corporate Structure Financial Summary Corporate Information Financial Contents

3 About Us Corporate Mission To be a premier innovative solution provider with impeccable service to customers, amidst a workforce that is filled with a vibrant spirit that strives for perfection. Quality Policy Our quality policy dictates an unfaltering commitment coupled with uncompromising work ethics that is driven through continual improvement to meet total customer satisfaction. Environmental Policy We are committed to protect and improve our environment by seeking continual improvement to our environment, and ensuring safety and health of our employees and any other person/s performing work in our premises, as our environment relates to our products and services Annual Report / Scintronix Corporation Ltd.

4 Corporate Profile Scintronix provides OEM/ODM services in electronics manufacturing, and mechanical components & sub-assemblies for the automotives, consumer electronics, telecommunications, optical industrial and medical industries. Our group offers comprehensive one-stop services ranging from electronics hardware/asic design, software/firmware development, industrial design (ID), mechanical design, mould design, mould fabrication, plastic injection moulding, PCBA, to various finishing processes, sub-assembly/assembly and final box build activities. Scintronix supplies PCBAs, finished products, moulds and finished mechanical components & assemblies to MNCs in Asia, Europe and the United States of America 02

5 Our Businesses Sub-assembly Mould Design PCB Assembly Box Build Finishing Processes Tool Making Injection Moulding Annual Report / Scintronix Corporation Ltd.

6 Letter to Shareholders Reinforcing growth for now and the future Group revenue for Financial Year 2011 strengthened 6.5% to $27.8 million, compared to $26.1 million in Financial Year Dear Shareholders, The past year has been a bracing time for us. Importantly, the broad, group-wide changes we were implementing begun to bear fruit. Our integration of Eng Seng Plastics of Malaysia enabled us to realise synergies and economies of scale, while our consolidation efforts in Shanghai and Malaysia will allow us to better manage resources and costs going forward. At the same time, we had to contend with an increasingly uncertain business climate compounded by rising raw material prices and production costs, as well as under-utilisation of machines. Based on that mixed scenario, Group revenue for Financial Year 2011 strengthened 6.5% to $27.8 million, compared to $26.1 million in Financial Year Revenue from new acquisition Eng Seng Plastics increased by approximately $8.8 million while revenue from TTL Dongguan Technology decreased by about $1.3 million as the company lost some key customers. With increasing costs, resultant gross profit decreased by 60% to $1.8 million, from approximately $4.5 million the year before. Gross profit margins correspondingly slimmed down from about 17.2% to 6.6%, year-onyear. The weakening of the US Dollar and Euro also adversely affected our business in the year in review. After accounting for expenses and income tax, our bottom-line registered a Group net loss of $10.2 million, as opposed to Group net profit of $0.9 million the previous year. 04

7 On a per share basis, diluted earnings per share was a loss of 2.86 cts for FY2011 as compared to a gain of 0.30 cts in the previous corresponding period. Net asset value per ordinary share as of financial year-end 30 June 2011 was 5.76 cts, as compared to 8.92 cts a year before. Operations Review Over the year, we completed the purchase of Malaysian company Eng Seng Plastics and made progress in its integration into our Group operations. We have seen steady sales from Eng Seng s core customers and new projects secured for the coming months, to replace the current ones. Going forward, we believe there is much more synergy and opportunity we can derive through the integration of Eng Seng Plastics. In line with our aim of entering high tonnage production, we purchased 2 high tonnage machines of 1,600 and 2,100 tonnes capacity in April 2011 and installed in August 2011 in our plant in Senai, Johor. We are also undertaking renovation works at that plant to facilitate the move into high tonnage production, which we anticipate will begin in the latter half of calendar year This opens up a new front for us, widening our repertoire of product offerings to major customers while facilitating further client acquisition. Up in Shanghai, we consolidated our design and fabrication services in an effort to enhance competence, improve productivity and mitigate costs. In Singapore, we secured a turnkey project with a UK company, Miura Systems, to manufacture and supply electronic payment terminals. With this contract, we have successfully entered the Electronic Manufacturing Service business. Production is scheduled to commence end-2011 and the initial projected value is US$10 million over a period of two years. During the year in review, we also continued to break new ground in our automotive and consumer businesses with new and significant manufacturing contracts for two key customers. Segmental Analysis In our geographical market segments, Malaysia sales posted the highest jump from $2.4 million in FY2010 to $10.4 million largely due to contribution from Eng Seng Plastics. Sales from China dropped 53% from S$7.7m in FY2010 to S$3.6m in FY2011, largely due to lower sales from local customers. Sales from Europe and USA dipped slightly from S$13.2m in FY2010 to S$10.7m due to an overstock situation for our key customer in Europe. Analysing our business segments, our Mould Design and Fabrication business shrunk 38% from $3.9 million to $2.4 million, year-onyear. This was largely due to a consolidation of our tooling facilities in Malaysia and Dongguan, China. Plastic Injection Moulding remained our largest business segment, with sales increasing about 5% from $19.0 million in FY2010 to $19.9 million in FY2011 mainly due to contributions from Eng Seng Plastics. Improved sales boosted our Finishing Annual Report / Scintronix Corporation Ltd.

8 Letter to Shareholders Processes segment sales by 72%, albeit from a low base of $3.2 million in FY2010 to $5.5 million in FY2011. Expenses Administrative expenses increased about three-fold, from $5.0 million in FY 2010 to $14.9 million in FY This was mainly due to impairment of inventory, trade and other receivables, plant and machinery amounting to S$6.9 million. Balance Sheet The Group s current assets increased approximately $3.7 million or 16% from $23.3 million in FY2010 to approximately $27.0 million in FY2011. This was due to consolidation of Eng Seng Plastics into the Group. Meanwhile, noncurrent assets increased from $20.9 million in FY2010 to $22.6 million in FY2011 mainly due to the consolidation of Eng Seng Plastics into the Group. The Group s current liabilities increased by $7.7 million or 49% from $15.6 million in FY2010 to $23.3 million in FY2011. This was primarily from the Group integration of Eng Seng Plastics, and increase in bills payable in TTL Promex Manufacturing Shanghai Co., Ltd and Scintronix Manufacturing (M) Sdn Bhd. Business Strategy and Outlook The outlook for the plastics industry remains challenging for the next 12 months as we experience a period of heightened uncertainty. The long-standing sovereign debt problems in Europe, Japan s lacklustre economy and the recently worsening US economy continue to weigh on world economic prospects. Aside from a tepid and unclear outlook for the global economy, we also anticipate continued currency volatility. With the weakening of the Euro and the US Dollar over the past year, Scintronix was greatly impacted as most of our dealings were in these currencies. We believe the outlook for these two currencies remains hazy. As such, we will have to continue mitigating currency risk through currency hedging and contract limits. Rampant inflation in places like China also adds to the competitive outlook. As a company with international operations, we are not immune to these developments and will have to manage it. We will continue focusing on cost control measures such as those in our manufacturing sites in Shanghai and Dongguan which aim to mitigate rising labour costs. These measures include reviewing and extending the search for more cost-effective sites. Additionally, we hope to boost sales through our start-up activities in Malaysia and aim to expand the automotive and electronic segments in Malaysia and China. In terms of business segments, we believe that the consolidation of offerings in Mould Design and Fabrication into our Shanghai facility will give us increased capacity and better management of our cost structure with larger economies of scale. As for Plastic Injection Moulding, we aim to expand our footprint in the automotive sector while scaling up to high tonnage production and newer technology. The Finishing Processes segment has room to grow, and we aim to explore new processes in IMD/IML production as well as Cubic Processes, making investments in these areas when appropriate. As we expand, we will consider various options, both organically and through acquisitions. We will also explore various capital raising measures. 06

9 Towards that end, over the year, we have placed out a total of 45.3 million shares raising net proceeds of $3.96 million. This will go towards working capital and free up resources for possible strategic acquisitions. Barring unforeseen circumstances, we are cautiously optimistic that results for FY2012 will be better. Changes to the Board we move into the new financial year. To end, on behalf of the Board, I would like to extend my gratitude to our directors, management and staff for their effort and expertise. We are also grateful to our shareholders for your continued trust in us. We look forward to a new year. Thank you. Tan Kee Liang Executive Chairman In November 2010, we appointed Alan Yong Thiam Fook as an independent, non-executive director of the company. He brings with him many years of experience in finance with other listed companies and we look forward to his contributions. On behalf of the Board, we also bid farewell to independent director Teo Seng Chee who was not re-elected in November Conclusion As I write this letter, the global business environment is exhibiting many uncertainties. While we cannot foresee how events will unfold, we are certain that our plans to consolidate certain operations, expand into high tonnage production, and realize the potential in Eng Seng Plastics will stand our Group in good stead as Financial Year 2010 has been a challenging and eventful year for us, one with ongoing restructuring for greater financial stability, new business partners, expanding country initiatives and achievements in operational efficiency Annual Report / Scintronix Corporation Ltd.

10 Board of Directors Tan Kee Liang Executive Chairman Mr Tan was appointed as our Executive Chairman on 1 August Prior to this appointment, Mr Tan was first appointed as Non-Executive Director on 18 January 2008 and thereafter as Non-Executive Chairman on 29 March Mr Tan is responsible for the leadership of the Board and ensuring its effectiveness in all aspects. He also provides overall leadership and strategy for the Group, and is responsible for the overall performance of the Group. Mr Tan has more than 20 years of R&D and manufacturing experience. He was formerly the Managing Director of Scinetic Engineering Pte Ltd, which he founded in Between 1990 and 1997, Mr Tan was with GES Singapore Pte Ltd where his last appointment was General Manager. Prior to joining GES, Mr Tan was with Ministry of Defence holding various R&D and engineering management related appointment. Mr Tan holds a First Class Honors Degree in Cybernetics and Control Engineering from University of Reading (U.K.). Mr Tan was awarded the Ford Prize by Ford Motor Company Limited (UK) in JERRY Long Lian Leng Jerry Executive Director / Chief Executive Officer Mr Long is Executive Director and Chief Executive Officer. He s responsible for the Group s business activities and provides leadership and direction to the Group. He jointly develops the Group s strategy with our Executive Chairman. Mr. Long has more than 20 years of experience in electronics and engineering industry, working for Wincor Nixdorft Pte Ltd for 15 years, holding various managerial positions in the company. He was the General Manager of Evictronics Engineering Pte Ltd in 1994 and Vice President of Operations for Scinetic Engineering Pte Ltd in 2005 before joining Scintronix Corporation as Vice President, Business Development in He was appointed to the current position in Mr. Long holds a Bachelor of Business Administration Degree from the Royal Melbourne Institute of Technology and a Master of Business Administration Degree from the University of Surrey Yu Swee Sing Independent, Non-Executive Director Mr Yu was appointed as our Non-Executive Director on 23 October 2008 and re-designated to Independent, Non-Executive Director on 8 September He is the Chairman of the Remuneration Committee and a member of the Audit Committee and Nominating committee with effect from 09 November Mr. Yu was the Managing Director of Enersave Holding Ltd from 1998 to Prior to that, he was the Managing Director of Ideas Engineering Pte Ltd from 1988 to He graduated from the Singapore Polytechnic with a Diploma in Electronic and Communication. YONG THIAM FOOK ALAN Independent, Non-Executive Director Mr Yong was appointed as our Independent Director on 22 November He is the Chairman of the Audit Committee and a member of the Nominating Committee and Remuneration Committee. Mr Yong has more than 30 years experience in financial accounting. He is currently a Director of Beng Kuang Marine Ltd. He was a member of the Association of Chartered Accountant (England and Wales) and is currently a Fellow member of the Institute of Certified Public Accountant in Singapore. Huang Yen San Petrus Independent, Non-Executive Director Mr Huang was appointed as our Independent Director on 8 July He is the Chairman of the Nominating Committee and a member of the Audit Committee and Remuneration Committee. He was admitted to the Bar of England & Wales in 1985 and to the Singapore Bar. He is currently a Director with Drew & Napier LLC. He holds a M.A. (Law) (Honours) from the University of Cambridge and LL.M. from the National University of Singapore. 08

11 Key Management Yap Kok Yeong Mr Yap is the General Manager of our subsidiary in Malaysia, Scintronix Manufacturing (M) Sdn Bhd (STXMM). His key responsibilities include overseeing all sales and marketing activities, business development and operations and meeting the corporate business objectives. Prior to his current appointment, Mr Yap was the Strategic Business Development Director in the Group. He has many years of experience in product design, project management and manufacturing. Mr Yap holds a Bachelor of Applied Science Degree (Computer Engineering) from the Nanyang Technological University. Lau Seng Kiong Mr Lau is the Group General Manager of our subsidiary in Shanghai, TTL Manufacturing, TTL Promex Manufacturing, TTL Promex Precision Engineering and in Dongguan, TTL Technology and TTL Precision Engineering. He is responsible for the overall operations in China. His key responsibilities include overseeing all sales and marketing activities, business development and operations of China and meeting the corporate objectives. He has more than 20 years experience in managerial position. Mr. Lau holds a Diploma in Sales & Marketing Institute of Singapore. Chow Mei Ling Ferleen Ms Chow joined the Group as a Financial Controller in She was promoted to the Group Financial Controller from 1 July 2010.She is responsible for Group s Finance, Human Resources and Administration functions. Ms Chow has more than 10 years of experience in finance. Ms Chow holds a LCCI Group Diploma in Accounting and a Bachelor of Business Degree from the University of Southern Queensland. ONG CHIN TONG Mr Ong is the General Manager of our subsidiary in Malaysia, Eng Seng Plastic Industries (M) Sdn Bhd. His key responsibilities include overseeing all sales and marketing activities, business development, operations and meeting the corporate objectives. He has more than 30 years of industrial working experience Annual Report / Scintronix Corporation Ltd.

12 Corporate Structure Scintronix Manufacturing Pte. Ltd. (100%) Scintronix Manufacturing (M) Sdn Bhd (100%) eng seng plastic industries Sdn Bhd (100%) SCINTRONIX CORPORATION LTD. TTL Manufacturing (Shanghai) Co Ltd (100%) Scintronix Technology Pte. Ltd. (100%) Scintronix Engineering Pte. Ltd. (100%) TTL Promex Manufacturing (Shanghai) Co Ltd (100%) TTL Promex Precision Engineering (Shanghai) Co Ltd (100%) Scintronix Technology (Zhejiang) Co Ltd (100%) Scintronix Europe S.R.L. (Italy) 80% TTL Holdings USA, Inc. (Representative Office) TTL Technology (Dongguan) Co Ltd (100%) Singapore Malaysia PRC Europe Hong kong TTL Precision Engineering (Dongguan) Co Ltd (100%) TTL Trading (HONG KONG) Ltd (100%) 10

13 Financial Summary Financial Highlights and Analysis FY2011 FY2007 FY2008 FY2009 FY2010 FY2011 Operating Results (S$ 000) Turnover Profit / (Loss) Before Tax Profit / (Loss) After Tax Return On Turnover (%) 36,711 (4,654) (4,533) (12.68%) 40, % 25,247 (5,663) (5,472) (22.43%) 26, % 27,843 (10,300) (10,185) (36.99%) Net Margin (%) Return On Average shareholders Equity (%) Return On Average Assets (%) (12.35%) (21.36%) (16.80%) 0.30% 0.46% 0.32% (21.67%) (23.36%) (16.69%) 3.56% 3.35% 2.1% (36.58%) (49.51%) (20.53%) Financial Position (S$ 000) Total Assets Total Debt Debt Equity Ratio (Times) Total Equity 39,510 18, ,223 38,430 12, ,086 32,792 9, ,429 44,205 15, ,762 49,611 27, ,570 Per Share data (Cents) Number of Shares Share Options Earnings / (Loss) Net Assets Value 185,079,537 24,500,000 (2.45) ,079,537 7,010, ,079,537 1,820,000 (2.23) ,331, , ,672,168 7,120,000 (2.86) 5.76 Share Price Movement Chart (S$) /10 05/10 07/10 09/10 11/10 01/11 03/11 05/11 07/11 09/ Annual Report / Scintronix Corporation Ltd.

14 Corporate Information BOARD OF DIRECTORS Executive: Tan Kee Liang (Chairman) Long Lian Leng Jerry (Chief Executive Officer) Non-Executive: Yong Thiam Fook Alan (Independent) Huang Yen San Petrus (Independent) Yu Swee Sing (Independent) AUDIT COMMITTEE Yong Thiam Fook Alan (Chairman) Huang Yen San Petrus Yu Swee Sing REMUNERATION COMMITTEE Yu Swee Sing (Chairman) Yong Thiam Fook Alan Huang Yen San Petrus NOMINATING COMMITTEE Huang Yen San Petrus (Chairman) Yong Thiam Fook Alan Yu Swee Sing REGISTERED OFFICE/BUSINESS OFFICE 8 Kallang Way 4 Singapore Tel: Fax: SHARE REGISTRAR B.A.C.S Private Limited 63 Cantonment Road Singapore AUDITORS Nexia TS Public Accounting Corp 100 Beach Road Shaw Tower #30-00 Singapore PARTNER-IN-CHARGE Chin Chee Choon (appointed with effect from financial year ended 30 June 2011) COMPANY SECRETARY Tan Lay Hong 12

15 FINANCIAL CONTENTS Directors Report Statement by Directors Independent Auditor s Report Consolidated Statement of Comprehensive Income Balance Sheet Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Financial Statements Corporate Governance Report Statistics of Shareholdings Notice of Annual General Meeting Proxy Form

16 DIRECTORS REPORT The directors present their report to the members together with the audited financial statements of the Group for the financial year ended 30 June 2011 and the balance sheet of the Company as at 30 June Directors The directors of the Company in office at the date of this report are as follows: Tan Kee Liang Long Lian Leng Jerry Yong Thiam Fook Alan Huang Yen San Petrus Yu Swee Sing Arrangements to enable directors to acquire shares and debentures Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object was 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, other than as disclosed under Share options and Performance share plan on pages 15 to 18 of this report. Directors interests in shares or debentures (a) According to the register of directors shareholdings, none of the directors holding office at the end of the financial year had any interest in the shares or debentures of the Company or its related corporations, except as follows: Holdings registered in name of director At At Holdings in which director is deemed to have an interest At At Company (No. of ordinary shares) Tan Kee Liang 98,500,000 78,500,000 Long Lian Leng Jerry 5,000,000 5,000,000 14

17 DIRECTORS REPORT Directors interests in shares or debentures (continued) (b) According to the register of directors shareholdings, certain directors holding office at the end of the financial year had interests in options to subscribe for ordinary shares of the Company granted pursuant to the Scintronix Group Share Option Scheme (the Scheme ) and Scintronix Performance Share Plan (the PSP ) as set out below and under Share options and Performance share plan on pages 15 to 18 of this report. No. of unissued ordinary shares under option At At Tan Kee Liang 500,000 Long Lian Leng Jerry 1,200,000 Huang Yen San Petrus 200,000 Yu Swee Seng 200,000 Yong Thiam Fook 200,000 (c) The directors interests in the ordinary shares of the Company as at 21 July 2011 were the same as those as at 30 June Directors contractual benefits Since the end of the previous financial year, no director has received or become entitled to receive a benefit by reason of a contract made by the Company or 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 accompanying financial statements and in this report. Share options The Company implemented the Scintronix Group Share Option Scheme (formerly known as TTLH Share Option Scheme 2002) (the "Scheme") which was approved at the extraordinary general meeting ( EGM ) held on 22 November The Scheme is to provide an opportunity for all employees (including executive directors and controlling shareholders or their associates who are employees) and non-executive directors who have contributed significantly to the growth and performance of the Group. During the financial year, the Scheme was amended by resolution and approved by shareholders at an EGM held on 12 November The rationale for the amendments to the Scheme is following the Companies (Amendment) Act, latest provisions of the Listing Manual and the Company had undergone a change in name. Under the Scheme, the total number of ordinary shares which the Company may grant under the Scheme or any other share incentive schemes or share plans shall not exceed fifteen per cent (15%) of the issued share capital of the Company (excluding Treasury Shares) on the day immediately preceding the date of grant. The duration of the Scheme is ten (10) years commencing on the date upon the Scheme is adopted. The Scheme is further extended for another ten (10) years following the amendments. The Scheme is administered by the Remuneration Committee ( RC ) which comprises three directors, namely Yong Thiam Fook Alan, Yu Swee Sing and Huang Yen San Petrus. A member of the RC who is also a participant of the Scheme must not be involved in its deliberation in respect of options granted or to be granted to him Annual Report / Scintronix Corporation Ltd.

18 DIRECTORS REPORT The exercise price for each ordinary share in respect of which an option is exercisable shall be determined by the RC as follows: (i) (ii) at a price equal to the prevailing market price of the ordinary shares of the Company based on the last dealt price per share as indicated in the daily official list or any publication published by the SGX-ST for the five (5) consecutive trading days immediately preceding the date of grant of that option (the Market Price ); or at a price which is set at a discount to the Market Price provided that the maximum discount shall not exceed 20% of the Market Price as at the date of the grant of that option. Options granted with the exercise price set at Market Price shall only be exercisable after one (1) year from of the date of grant of that option. Options granted with exercise price set at a discount to Market Price shall only be exercisable after twenty four (24) months from the date of grant of that option. All options granted shall be exercised before the end of one hundred and twenty (120) months (or sixty (60) months where the participant is a non-executive director) of the date of grant of that option and subject to such other conditions as may be introduced by the RC from time to time. The lapsing of option is provided upon the occurrence of certain events, which includes:- (a) (b) (c) (d) (e) (f) (g) acceptance of the option not within the time stated; ceasing of the participant s employment; any misconduct or beach of the Company s regulation; bankruptcy of the participant; death of the participant; take-over of the Company; and the winding-up of the Company (voluntary or otherwise). Details of the options to subscribe for ordinary shares of the Company granted to directors, executive officers and employees of the Group pursuant to the Scheme described above are as follows: Date of grant Balance as at Granted during the year Exercised during the year Cancelled during the year Balance as at Exercise price Exercisable period , (50,000) 70,000 S$ to , (60,000) 100,000 S$ to , (150,000) - S$ to , (100,000) - S$ to ,950,000 - (2,000,000) 6,950,000 S$ to ,000 8,950,000 - (2,360,000) 7,120,000 16

19 DIRECTORS REPORT Share options (continued) Details of the options to subscribe for ordinary shares of the Company granted to directors of the Company pursuant to the Scheme were as follows: Name of director Granted in financial year ended Aggregate granted since commencement of scheme to Aggregate exercised since commencement of scheme to Aggregate outstanding as at Tan Kee Liang (1) 500, , ,000 Long Lian Leng Jerry (1) 1,200,000 1,200,000 1,200,000 Huang Yen San Petrus (1) 200, , ,000 Yong Thiam Fook Alan (1) 200, , ,000 Yu Swee Sing (1) 200, , ,000 Total 2,300,000 2,300,000 2,300,000 1 The options granted to these directors are exercisable from to at the exercise price of S$0.068 if the vesting conditions are met. Since the commencement of the Scheme till the end of the financial year: No options have been granted to the controlling shareholders of the Company and their associates; No participant other than Tan Kee Liang and Long Lian Leng Jerry as mentioned above has received 5% or more of the total options available under the plans; No options that entitle the holder to participate, by virtue of the options, in any share issue of any other corporation have been granted; and No options have been granted at a discount Annual Report / Scintronix Corporation Ltd.

20 DIRECTORS REPORT Performance share plan The Company implemented the Scintronix Group Performance Share Plan (the "PSP") which was approved at the extraordinary general meeting held on 12 November 2010 which provides for the award of fully paid-up ordinary shares in the capital of the Company, free of consideration to selected employees of the Company and its subsidiaries, including the directors of the Company, and other selected participants when and after pre-determined performance target(s) have been accomplished within the performance period. The PSP is a share incentive scheme which will allow the Company, inter alia, to target specific performance objectives and to provide an incentive for participants to achieve these performance targets. The directors believe that the new plan will help to achieve the following positive objectives: (a) (b) (c) (d) incentivise employees to improve performance and achieve sustainable growth for the Group in the changing business environment; foster an ownership culture within the Group which aligns the interests of the participants with that of the shareholders; motivates participants to achieve key financial and operational goals of the Group and/ or their respective business units; and make total employee remuneration sufficiently competitive to recruit and retain staff having skills that commensurate with the Group s ambition to become a world-class corporation. The PSP is administered by the Remuneration Committee ( RC ) which comprises three directors, namely Yong Thiam Fook Alan, Yu Swee Sing and Huang Yen San Petrus. The PSP shall continue in force at the discretion of the RC, subject to a maximum period of ten (10) years commencing on the date on which the PSP is adopted by the Company in general meeting, provided always that the PSP may continue beyond the above stipulated period with the approval of Shareholders by ordinary resolution in general meeting, and of any relevant authorities which may then be required. The Company may deliver shares pursuant to awards granted under the PSP by way of:- (i) (ii) issuance of new shares; or delivery of existing shares held in treasury The total number of ordinary shares over which the Company may grant under the PSP shall not exceed 15% of the issued share capital of the Company (excluding Treasury Shares) on the day preceding the date of grant. The adoption of the PSP is to complement the existing Scintronix Group Share Option Scheme (the Scheme ). Since the commencement of the PSP, the Company has not granted any awards under the PSP. 18

21 DIRECTORS REPORT Audit Committee The members of the Audit Committee ( AC ) at the end of the financial year were as follows: Yong Thiam Fook Alan (Chairman) - appointed with effect from 22 November 2010 Huang Yen San Petrus Yu Swee Sing All members of the AC were non-executive directors. The AC carried out its functions in accordance with Section 201B (5) of the Singapore Companies Act. In performing those functions, the AC: Reviews the scope and results of internal audit procedures with the internal auditor; Reviews the adequacy of the Group s internal financial controls, operational and compliance controls and risk management policies and systems; Reviews with the independent auditor the audit plan and its report on the weaknesses of internal accounting controls arising from the statutory audit; Reviews the assistance given by management to the independent auditor, and discusses problems and concerns, if any, arising from the statutory audit, with the management; Reviews the balance sheet of the Company and the consolidated financial statements of the Group for the financial year ended 30 June 2011 before their submission to the Board of Directors, as well as the independent auditor s report on the balance sheet of the Company and the consolidated financial statements of the Group; Reviews the half-year and annual financial statements of the Group before submission to the Board for approval, focusing, in particular, on changes in accounting policies and practices, major risk areas, significant adjustments resulting from the audit, compliance with accounting standards as well as compliance with any stock exchange and statutory/regulatory requirements; Reviews and discusses with the independent auditor any suspected fraud and irregularity, or suspected infringement of any relevant laws, rules and regulations, which has or is likely to have a material impact on the Group s operating results or financial position, and management response; Reviews non-audit services performed by the independent auditor to ensure that the nature and extent of such services will not prejudice the independence and objectivity of the independent auditor before recommending to the Board; Reviews the independence and objectivity of the independent auditor; Considers the appointment and re-appointment of the independent auditor and approve the remuneration and terms of engagement of the independent auditor; and Reviews transactions falling within the scope of Chapter 9 of the Singapore Exchange Securities Trading Limited ( SGX-ST ) Listing Manual to ensure interested party transactions are on normal commercial terms and not prejudicial to the interests of the Company Annual Report / Scintronix Corporation Ltd.

22 DIRECTORS REPORT Audit Committee (continued) The Audit Committee has recommended to the board that the independent auditor, Nexia TS Public Accounting Corporation, be nominated for re-appointment at the forthcoming Annual General Meeting of the Company. Independent Auditor The independent auditor, Nexia TS Public Accounting Corporation, has expressed its willingness to accept re-appointment. On behalf of the directors Tan Kee Liang Director Long Lian Leng Jerry Director 12 October

23 STATEMENT BY DIRECTORS In the opinion of the directors, (a) (b) the balance sheet of the Company and the consolidated financial statements of the Group as set out on pages 24 to 91 are drawn up so as to give a true and fair view of the state of affairs of the Company and of the Group as at 30 June 2011 and of the results of the business, changes in equity and cash flows of the Group for the financial year then ended, and at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due. The Board of Directors has, on the date of this statement, authorised these financial statements for issue. On behalf of the directors Tan Kee Liang Director Long Lian Leng Jerry Director 12 October Annual Report / Scintronix Corporation Ltd.

24 INDEPENDENT AUDITOR S REPORT To the Members of Scintronix Corporation Ltd. Report on the Financial Statements We have audited the accompanying financial statements of Scintronix Corporation Ltd (the Company ) and its subsidiaries (the Group ), which comprise the consolidated balance sheet of the Group and the balance sheet of the Company as at 30 June 2011, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows of the Group for the financial year then ended, and a summary of significant accounting policies and other explanatory information. Management s Responsibility for the Financial Statements Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act (the Act ) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition, that transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets. Auditor s Responsibility Our responsibility is to express an opinion on these 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 about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s 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 auditor considers internal controls relevant to the entity s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 22

25 INDEPENDENT AUDITOR S REPORT To the Members of Scintronix Corporation Ltd. Opinion In our opinion, the consolidated financial statements of the Group and the balance sheet of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 30 June 2011, and the results, changes in equity and cash flows of the Group for the financial year ended on that date. Other Matters The financial statements of Scintronix Corporation Ltd for the financial year ended 30 June 2010 were audited by another independent auditor whose report dated 23 October 2010 expressed a qualified opinion as detailed in Note 38 to the financial statements. Report on other Legal and Regulatory Requirements In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors, have been properly kept in accordance with the provisions of the Act. Nexia TS Public Accounting Corporation Public Accountants and Certified Public Accountants Director-in charge: Chin Chee Choon (Appointed since financial year ended 30 June 2011) Singapore 12 October Annual Report / Scintronix Corporation Ltd.

26 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Note $ 000 $ 000 Revenue 4 27,843 26,115 Cost of sales (25,999) (21,625) Gross profit 1,844 4,490 Other income Other gains net 8 3,110 1,502 Expenses - Distribution (133) (101) - Administrative (14,857) (5,091) - Finance 9 (600) (200) (Loss) / profit before income tax (10,300) 873 Income tax credit 10(a) Net (loss) / profit (10,185) 930 Other comprehensive loss, net of tax Currency translation differences arising from consolidation (753) (377) Total comprehensive (loss) / income (10,938) 553 (Loss) / Profit attributable to: Equity holders of the Company (10,185) 930 Total comprehensive (loss) / income attributable to: Equity holders of the Company (10,938) 553 (Loss) / Earnings per share attributable to equity holders of the Company (cents per share) - Basic 11 (2.86) Diluted 11 (2.86) 0.30 The accompanying notes form an integral part of these financial statements. 24

27 BALANCE SHEET As at 30 June 2011 Group Company Note $ 000 $ 000 $ 000 $ 000 ASSETS Current assets Cash and cash equivalents 12 4,388 5, ,049 Trade and other receivables 13 16,721 12,504 7,032 6,880 Inventories 14 5,914 5,248 Assets held for sale ,023 23,350 7,647 9,929 Non-current assets Investment in associated company 17 Investments in subsidiaries 18 5,635 18,568 Investment properties Property, plant and equipment 20 20,047 18, Intangible assets 21 2,002 1,462 22,588 20,855 5,957 18,918 Total assets 49,611 44,205 13,604 28,847 LIABILITIES Current liabilities Trade and other payables 22 16,037 13,382 11, Current income tax liabilities 7 3 Borrowings 23 7,259 2, ,303 15,671 11, Non-current liabilities Borrowings 23 4, Deferred income tax liabilities 25 1, , Total liabilities 29,041 16,443 11, NET ASSETS 20,570 27,762 1,733 28,203 EQUITY Capital and reserves attributable to equity holders of the Company Share capital 26 36,066 32,102 36,066 32,102 Other reserves 27 (457) (Accumulated losses) / Retained profits (15,039) (4,516) (34,467) (3,913) Total equity 20,570 27,762 1,733 28,203 The accompanying notes form an integral part of these financial statements Annual Report / Scintronix Corporation Ltd.

28 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Note Share capital $ 000 Share option reserve Currency translation reserve Accumulated (losses) / retained profits Total equity $ 000 $ 000 $ 000 $ Beginning of financial year 32, (4,516) 27,762 Employee share option scheme - Value of employee services Issue of new shares 26 4,073 4,073 Share issue expenses 26 (109) (109) Dividend relating to 2010 paid 29 (338) (338) Total comprehensive loss for the year (753) (10,185) (10,938) End of financial year 36, (591) (15,039) 20, Beginning of financial year 28, (5,481) 23,429 Employee share option scheme - Value of employee services 26 (35) 35 Share issue expenses 26 (220) (220) Issue of shares pursuant to conversion of convertible bonds 26 4,000 4,000 Total comprehensive (loss) / income for the year (377) End of financial year 32, (4,516) 27,762 (a) (a) (a) Not available for distribution The accompanying notes form an integral part of these financial statements. 26

29 CONSOLIDATED STATEMENT OF CASH FLOWS Note $ 000 $ 000 Cash flows from operating activities Net (loss) / profit (10,185) 930 Adjustments for - Income tax expense (115) (57) - Bargain purchase on acquisition 12(A) (2,418) (2,134) - Depreciation of property, plant and equipment 20 3,233 2,599 - (Gain)/loss on disposal of property, plant and equipment (254) 33 - Allowance for /(reversal of) impairment of property, plant and equipment 20 2,681 (232) - Property, plant and equipment written off Fair value gain on investment property (37) - Gain on disposal of assets held for sale (37) - Impairment of goodwill Loss on assets held for sale 36 - Amortisation of intangible assets Interest income (98) (5) - Interest expense Unrealised currency translation losses (5,391) 1,689 Change in working capital, net of effects from acquisition of subsidiary - Inventories 895 (1,760) - Trade and other receivables 231 (4,809) - Trade and other payables (1,024) 1,655 Cash used in operations (5,289) (3,225) Interest received 98 5 Interest paid (600) (200) Income tax paid 115 (28) Net cash used in operating activities (5,676) (3,448) Cash flows from investing activities Acquisition of subsidiary and business, net of cash acquired 12(A) (780) (724) Additions to property, plant and equipment 20 (1,656) (619) Disposal of property, plant and equipment Disposal of assets held for sale 273 Net cash used in investing activities (1,883) (1,293) Cash flows from financing activities Proceeds from issuance of ordinary shares 26 2,283 3,780 Proceeds from borrowings 5, Repayment of borrowings (898) (86) Repayment of lease liabilities (262) (77) Dividends paid to equity holders of the Company 29 (338) Bank deposits pledged (667) Net cash provided by financing activities 5,233 3,875 Net decrease in cash and cash equivalents (2,326) (866) Cash and cash equivalents Beginning of financial year 4,568 5,434 End of financial year 12 2,242 4,568 The accompanying notes form an integral part of these financial statements Annual Report / Scintronix Corporation Ltd.

30 These notes form an integral part of and should be read in conjunction with the accompanying financial statements. The financial statements of the Group and the Company for the financial year ended 30 June 2011 were authorised for issue in accordance with a resolution of directors on 12 October General information Scintronix Corporation Ltd. (the Company ) is listed on the Singapore Exchange and incorporated and domiciled in Singapore. The address of its registered office is No. 8 Kallang Way 4, Singapore The principal activities of the Company are that of an investment holding company. The principal activities of the subsidiaries are set out in Note Significant accounting policies 2.1 Basis of preparation These financial statements have been prepared in accordance with Singapore Financial Reporting Standards ( FRS ). 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 management to exercise its judgement in the process of applying the Group s accounting policies. It also requires the use of certain critical accounting estimates and assumptions. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 3. Interpretations and amendments to published standards effective in 2010 On 1 July 2010, the Group adopted the new or amended FRS and Interpretations to FRS ( INT FRS ) that are mandatory for application from that date. Changes to the Group s accounting policies have been made as required, in accordance with the transitional provisions in the respective FRS and INT FRS. The adoption of these new or amended FRS and INT FRS did not result in substantial changes to the Group s and Company s accounting policies and had no material effect on the amounts reported for the current or prior financial years except as disclosed below: 28

31 2. Significant accounting policies (continued) 2.1 Basis of preparation (continued) (a) Amendment to FRS 7 Statement of Cash Flows (effective for annual periods beginning on or after 1 January 2010) 2.2 Revenue recognition Under the amendment, only expenditures that result in a recognised asset in the balance sheet can be classified as investing activities in the statement of cash flows. Previously, such expenditure could be classified as investing activities in the statement of cash flows. This change has been applied retrospectively. It had no material effect on the amounts presented in the statement of cash flows for the current or prior year except for the acquisition-related costs incurred as a part of the acquisition of Eng Seng amounting to $78,245. These have been classified within operating activities in the statement of cash flows in the current financial year as they have not been capitalised as part of goodwill in accordance with FRS 103 (revised). Previously such acquisition-related costs would have been classified within investing activities in the statement of cash flows. Sales comprise the fair value of the consideration received or receivable for the sale of goods and rendering of services in the ordinary course of the Group s activities. Sales are presented, net of value-added tax, rebates and discounts, and after eliminating sales within the Group. The Group recognises revenue when the amount of revenue and related cost can be reliably measured, it is probable that the collectability of the related receivables is reasonably assured and when the specific criteria for each of the Group s activities are met as follows: (a) Sale of goods Sale of goods is recognised when significant risks and rewards of ownership of the goods to the customers, which generally coincide with delivery and acceptance of the goods sold. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible of return of goods. (b) Contract work-in-progress for manufacturing of moulds Please refer to Note 2.7 for the accounting policy for revenue from contract work-inprogress. (c) Interest income Interest income is recognised using the effective interest method. (d) Rental income Rental income from operating leases (net of any incentives given to the lessees) is recognised on a straight-line basis over the lease term. (e) Dividend income Dividend from equity is recognised when the right to receive payment is established Annual Report / Scintronix Corporation Ltd.

32 2. Significant accounting policies (continued) 2.3 Group accounting (a) Subsidiaries (i) Consolidation Subsidiaries are entities (including special purpose entities) over which the Group has power to govern the financial and operating policies so as to obtain benefits from its activities, generally accompanied by a shareholding giving rise to a majority of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date on which control ceases. In preparing the consolidated financial statements, transactions, balances and unrealised gains on transactions between group entities are eliminated. Unrealised losses are also eliminated but are considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Non-controlling interests are that part of the net results of operations and of net assets of a subsidiary attributable to the interests which are not owned directly or indirectly by the equity holders of the Company. They are shown separately in the consolidated statement of comprehensive income, statement of changes in equity and balance sheet. Total comprehensive income is attributed to the non-controlling interests based on their respective interests in a subsidiary, even if this results in the non-controlling interests having a deficit balance. (ii) Acquisition of businesses The acquisition method of accounting is used to account for business combinations by the Group. The consideration transferred for the acquisition of a subsidiary comprises the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred. 30